A comprehensive study of costs associated with establishing satellite production of the clean home delivery kit in Nepal

Degree Name

MA in International and Intercultural Management

First Advisor

Beverly Winterscheid

Abstract

In Nepal, to help alleviate the problem of infant and maternal mortality and morbidity caused by tetanus and sepsis due to unsafe birthing practices, a single use childbirth delivery kit was developed. This Clean Home Delivery Kit (CHDK) is produced and sold by a woman-owned micro-enterprise based in Kathmandu, the capital city. Maternal Child Health Product Pvt. Ltd. (MCHP) is established as a for-profit company, yet operates around a social mission - to save the lives of women and children in Nepal. To address problems of market accessibility, the producing company decided to embark on a strategy to open satellite offices in cities located in the southern plains area bordering India (the terai). This research looked at the cost involved in setting up such a venture. It attempted to answer the questions: 1) Can the materials of production, rental property for office space, and labor be procured in cities in the terai? 2) Can raw materials be effectively procured from neighboring cities in India? 3) What are the political, social and cultural costs involved in expansion, and how do they stand to impact upon the producing company? Current operational overhead and production costs were researched to give a basis for comparison; then the procurement potential for CHDK raw material, labor costs, facility rental costs was explored in three primary sites in the terai. Other, non-financial costs, related to organizational culture, political influence and social need were also researched to get a more complete picture of all of the costs, quantifiable and qualitative, involved in such a strategic undertaking. Semi-structured interviews, desktop reviews, literature searches and focus group sessions were used to answer the research questions. Research revealed that procurement of raw material is difficult due to lack of industrial development in the country. Political costs of satellite establishment were found to be significant, but not insurmountable. Social costs were found to be a strong motivator in the company's drive to expand. Cultural costs to the organization of expansion were found to be significant as expansion plans could push the company into operating more as a for-profit company. This research will help the organization ultimately shape its plans for expansion and serves to illustrate a more comprehensive approach to site selection for non-profit industries.

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