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Nepal, a Business Perspective

               Nepal is a beautiful country with mountainous regions located in Asia with iconic trekking and visually stunning spots such as the Everest Base Camp and Annapurna Circuit. Throughout that experience, our team has seen first-hand the business practices and difficulties experienced in these extreme environments. This article aims to share some of the challenges businesses in Nepal face and to provide a few recommendations to support the creation of resilient and profitable businesses in such an environment. Information provided in this piece can often be relevant to businesses in other remote regions in the world.

Businesses in Nepal face a multitude of issues that ranges from weather, economic uncertainty, supplies and logistics, economic uncertainty, customer satisfaction, and many more. This segment will expand on a few of the key difficulties that businesses face in this mountainous climate.

Weather

             Changes in weather patterns are a constant in the region, a beautiful sunny day can change into a downpour quickly and can last for several hours or even days. These erratic changes can have a material impact on the ability of businesses to get their supplies, attract new customers, and conduct activities. Peak tourism season is limited to a few months of the year, therefore, changes in conditions in peak season can have a material impact on tourist visits and consequently profitability.

Supplies & Logistics

             Although many locals can work with nature to get their basic necessities, the growth of the tourism industry and changes to cultural norms directly impact the supply & logistics process. To ensure that the local industry continues to expand profitably, businesses need supplies to be brought in partially via Sherpas (locals), buses, trucks, cars, helicopters (which are very costly), or the back of animals such as mules and yaks depending on the difficulty of the terrain, costs, and available infrastructure.

Economic Uncertainty

             Tourisms ebbs and flows throughout the year, with peak season in the area being Spring (Mar – May) & Autumn (Sept – Nov). This cycle, alongside erratic weather patterns and unexpected roadblocks, usually increases the economic uncertainty of regional businesses. Yet, some of the economic uncertainty is partially offset by a strong tourism industry coupled with low Nepalese wages. Further, due to the country’s geographic positioning, landlocked between two powerful neighbors (China & India), the overall export costs of goods & services can be detrimental to long-term business success and sustainability. Finally, Nepal also continues to battle the after-effects of the earthquake that happened in 2015 causing large infrastructural damage and thousands of casualties.

Labour

             Most of the country’s workforce consists of underpaid blue-collar work. Tourism is a major source of income for the country, contributing roughly 7.9% of GDP. This is partially due to travelers’ willingness to pay a premium to explore the country’s breathtaking natural scenery. Employees in the tourism industry can be found working in shops, carrying goods up the mountains, acting as guides and porters to visitors of the area, while others provide supporting roles by helping to maintain and repair local infrastructure. Given geographical conditions, individuals can be affected by a variety of illnesses or accidents, a few examples are altitude sickness due to lower oxygen in high altitudes, landslides, debris fall, etc. These incidents can lead to emotional distress, loss of wages, loss of goods, and overall business disruption.

Infrastructure

Electricity

             Smaller villages that are dependent on tourism and positioned just outside of the main electricity grids are affected by the inconsistent power supply, leading to food spoilage, damage of goods, lower quality of life, and decreased customer experience in the tourism industry and even loss of life. Improvements in electricity storage technology are likely to have a material impact on the quality of life in such areas. Diversifying the energy sector by exploiting the wind, hydropower, gas, and solar energy will be essential to the long-term success of Nepal and its businesses. Some businesses in Nepal have started to install solar panels to generate power and although this is a move in the right direction, dependency on the constant sun and low storage capabilities can lead to an unreliable power supply. Some businesses may be better off implementing a combination of solar and wind energy solutions to ensure constant energy supply.

Internet

             The internet is one of the most powerful tools invented, allowing access to global information and international trade at unprecedented levels. It serves as an opportunity to expand the current market and the creation of new ones, allowing for business and societal growth. In recent years, Nepal has experienced an increase in the usage of internet and mobile services, although at differing rates due to income and geographic location. Internet penetration has moved from 0.2% of the population in 2000, to 7.9% in 2010 and 17.2% by 2016. The nation is sparsely populated, which increases the cost of grid construction and maintenance. For those able to connect to the internet, its use is mainly for basic interaction, although some have started to use the service for business purposes. The language barrier can also limit the country’s ability to fully benefit from the knowledge shared on the internet. Areas such as the Everest Base Camp trek have seen partial internet implementation. This is partially due to premium prices that tourists are willing to pay for the service.

Roads

             The quality of roads in Nepal seems to be directly correlated to the terrain. Plain regions such as the southern parts of the country usually benefit from higher quality roads since it is easier and cheaper to maintain. For the most part, northern mountainous regions either have no roads or poorly maintained ones, leading to a ‘mountain bike’ kind of experience (even when inside a 4×4 Jeep). Overall, roads around the country continue to be at a lower quality than Western counterparts or regional countries such as China and Thailand, which is the case even in the capital, Kathmandu. The poor road quality and meager maintenance have led to the loss of goods, accidents leading to death, difficulty in the transportation of goods, among other problems.

Customer Satisfaction

             At the top of the world, the best businesses tend to be good marketers and great providers of customer service. To ensure client satisfaction, businesses should look to provide basic quality services such as unspoiled food, hot water for showering & hand washing, heated and insulated rooms, clean toilets, and internet access.

             There are two mains groups regarding customer satisfaction in extreme environments: 1) the minimalist, a person interested in having the very basic experience with rustic shops, a simple place to sleep with no technology access, and;2) the comforter, a person interested in experiencing the environment’s beauty without losing the benefits of hot water, warm room, and internet. A successful business in Nepal will likely be the ones to combine the two views to provide a better overall experience.

             Tourism has been a great tool in supporting the economy of isolated regions in Nepal. It has also created conflicting priorities, where tourists may be interested in enjoying the untouched scenic view of the region by trekking while villagers may be interested in having roads to facilitate their lives. The Annapurna circuit is a good example of this conflict, where in some areas, car movement can lead to flying debris, increased noise, and visual pollution that hinders the trekking experience. For further insights in this area, please refer to ‘Customer Satisfaction: Back to Basics‘ and ‘The Golden Rules of Customer Interaction‘.

Recommendations

             To better understand weather patterns and changes in topography that may disrupt day-to-day activities, trade, and tourism, businesses should work alongside the government to use radar, satellites, and drone technology to derive data that can be used for decision making. Data analytics can provide a descriptive, diagnostic, predictive, and prescriptive insight which can help with information during a landslide, road blockage, and other situations that may negatively impact a business in Nepal.

             Emphasis should be put on infrastructure improvement to facilitate and decrease the costs of doing business. When the government can’t or won’t step in, businesses should analyze the feasibility of projects (even at a smaller scale) and work in conjunction with the local community to get such efforts implemented.

Food spoilage can be a large expense to all parties involved. When it happens, the business may not only lose the goods but also lose customers should they decide to ignore safety standards and serve it to customers. Businesses should look to buy goods that have a longer shelf-life when possible, take steps to have better control of their inventory, and look for storage solutions that allow their products to last longer. At times, villages should work together to implement costlier storage solutions that have better long-term benefits to the community.

             Data analytics can also improve supplies and logistics by allowing businesses to manage the movements of goods according to different factors such as customer demand, weather, and other potential disruptors. Forecasting expected disruptions (such as weather) can help a business take steps to prevent a higher cost of doing business. For example, forecasted weather in the coming weeks can lead businesses to request additional supply shipments at a lower cost instead of placing the order during bad weather later on. It can also serve as an opportunity for the business to be a provider to other businesses that did not analyze the conditions ahead of time.

             By having a better dataset and doing some data analysis on the customers that arrive at the establishment, a business can modify their menus accordingly. In terms of the language barrier, menu items can be enumerated and written in the 3 most common languages travelers use. English may be written in a bigger font while the country’s language and a third language such as Mandarin is written in a smaller font. The numbering system allows the waiter to process the client’s request without needing to speak the client’s language. This can increase the employees’ pool and also make the client more comfortable in communicating their request. The analysis can also be used in the restaurant industry to determine some of the food that can be served to clients beyond the main cuisine the restaurant has. For example, if a business has a significant amount of North American clients, they may want to add Hot Dogs or Burgers to the menu. There are always people eager to get a feel of their home dishes when traveling, take that into account.

Marketing & Foreign Government Grants –Trekking in Nepal is a unique experience, therefore, there is a great opportunity for businesses and the Nepalese government to maintain some relations with travelers. Good experience and continuous connection can lead to increased tourism, foreign government support, among others. For example, the government can look to maintain a better track of foreigners coming in and out of the various parks and use this material to do targeted marketing and to gain concessions and grants from foreign governments interested in supporting certain targeted causes (e.g. economic empowerment, or soft power). On the business side, creating an internet footprint via social media and websites and connecting to travelers that have come to the establishment can serve as a promotional tool for the business, with the potential to increase sales.

Customer Satisfaction – The impact of a decent, but simplistic room to sleep without odor can be a starter and be easily implemented by ensuring that there is a flow of air at times where clients are not in the room (before them arriving at the establishment). Businesses can look into investing some money for cards and board games, so people can play after their long day trek.

Electricity & water are two key basic areas that can improve customer satisfaction. Businesses should look for ways to store larger quantities of potable water when it rains and ensure that the water is safe to drink by testing it. Businesses should embrace a combination of technologies such as windmills and solar panels to diversify their electricity supply.

Product Placement – Stores should make better use of product placement to increase sales. Some examples are:

  • When it rains, place goods associated with rain closer to the client’s viewpoint.
  • When it is colder, make blankets easily accessible to clients.
  • Bake a few goods before when you expect the largest movement of clients. Make sure the smell of the baked goods reaches the client and position the good close to the entrance.

Embrace feedback & know-hows – Many customers are often professionals in their country with know-how that can be beneficial to businesses in the area. Establishments should have a feedback box so customers can share valuable information about their perspectives on the business. Actively look for clients interested in sharing their knowledge to further improve the business by creating a poster advertising the need for volunteer consulting services, whether it is tied to web development, social media, or other areas. A lot of the customers traversing the region have a vast array of knowledge and technological expertise, make sure to take advantage of it. Ensure that no laws are broken in the process, most countries have no or limited legislations for volunteering or in-kind exchanges that last less than a day or two.

             One of the key areas to long-term business & personal success is to have good financial management. For seasonal work or businesses, the months you will not be working should be covered by the ones you do, unless you intend to work elsewhere (the capital, for example). The different incomes throughout the year can have an impact on your expense structure. For those with the means, save enough for 1-2 months of business interruptions. For individuals in lower-income thresholds, save enough for two weeks in case, for example, someone gets hurt and needs support. Do not increase your expenses in line with increased income, this will give you less space for potential retirement and other investments. Investments should be made with an eye on the return, for example, in education. Material goods such as alcohol should be low on your list unless it is meant for customers. Savings can be essential to ensure business resilience that may arise due to unexpected disruptions.

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