Case_Study_Solution

| Project Shakti- Case Study Answers | Pranay NarayaniRoll no 95PGDM Marketing | | 1. What are the key features of Shakti' What are its positive aspects and what are its drawbacks' Project Shakti is a rural distribution initiative of Hindustan Unilever Limited (HUL) that targets small villages populated by less than 5000 individuals. Project Shakti benefits business by enhancing HUL’s direct rural reach, and by enabling HUL’s brands to communicate effectively in media-dark regions. It also impacts society by creating livelihood opportunities for underprivileged rural women. Project Shakti consists of the Shakti Entrepreneur program which creates livelihood opportunities for underprivileged rural women Key features of project Shakti are: * It is an effective channel to reach to rural market which is not easily possible with the usual sales and distribution channel. * It also carries social objective along with it as it helps empowers the women of the village to enable them to support the family. * It has targeted the ladies of the house which is a good proposition as the males are busy in other wage earning activities so they might not spare time for the activities of the project Shakti. * It could be a possible source of consistent competitive advantage to HLL over its competitors, as through this channel they are able to reach directly to the consumer, and there is personal touch to consumers as Shakti entrepreneur is one among the villagers only. Positive aspects Shakti opens up a number of opportunities of good aspects. These are discussed below * A great opportunity to capture the rural market. * To increase sales in a majorly untapped market * To net up profit * A communication initiative to create a brand name synonymous with rural population * Shakti Vani to make people more health conscious * A sales and distribution platform to place its products at a faster growing market * A social platform to build up economic prospects in rural India and improve the standard of life * I-shakti portal to make people information packed Drawbacks- While ‘Shakti” is envisioned with a lot of goods, it has the possibilities of some drawbacks. * It much depends on SHG. So the places where SHGs are not prominent it has not hammered out any kind of fit mechanisms that can work well. * As its target entrepreneurs are women, it is less likely that women can work as efficiently as the men as in India there are so many social taboos are involved and also the factor that most shops are operated by men. * Selecting an entrepreneur can be sometimes conflicting in nature in SHGs. * The discounts that are offered to the entrepreneurs can be channel conflicts. * The price that is asked for from retailers is not of a great margin, so the margins that entrepreneurs receive are limited. * Being a diverse country India has cultural obstacles and language barriers to name a few. And dialects also differ from region to region 2. What was the motivation for Shakti initiative' Was it a CSR initiative' Being economically liberalized in 1991, Indian market became competitive and other companies started breathing down the neck to the existing players and as a result the profit share and revenues both plummeted. It was found that a large part of rural areas are badly snapped of the mainstream life and utterly inaccessible and non-communicable. They found an institutional void across these markets. It was to fill in this existing void that HUL was trying to build a model that might also help in long term sustenance of those involved. As per as the case is concerned it can be said that they were also motivated to improve the rural standard of lives and give a boost to their incomes. This might be a good way to serve a society. If one were to consider the definition of a CSR initiative, we see the Shakti model fits to it to a good extent. So it can be called a CSR initiative 3. How can Shakti make a contribution to HLL's bottom line' Make an economic case' Shakti was launched to capture the lower rungs of this economic pyramid. There are above 600,000 villages across India. But HUL’s reach was upto 100,000 villages. So the way Shakti was formulated it can tap a large chunk of the untapped 500 million population. So in this project HUL will be involved in direct distribution to rural market. The partnered Federations of SHGs, known as MACTS will purchase the products from HUL and the sell it to SGH entrepreneur, who then can sell it directly to the consumers or through retailers. There are many incentive mechanisms to the entrepreneurs to motivate them. HUL also tied up with some local banks to help the entrepreneurs to late repay loans. Economic Value – Number of villages- 638,365. Total population -700 million Tapped village market- 100,000 Total Population- 220 million Untapped village market- 538,365 Total population- 480 million In 2003 total turnover - 2231.232(figures in USD) In 2004 total turnover- 10040.54 So inclusion of Shakti has given a good result in its total portfolio. As it is well understood in initial phases it could not do much better but as years progressed it clocked a good revenue growth. So the there is every reason to cheer up for the economic prospect. For entrepreneurs With an investment of Rs 10000, they could achieve the sales of whopping RS 120,000 and earn Rs 700 per month and out of this Rs 200 to be paid out for loan payment. This is in addition to other incentives. 4. What are the critical challenges facing HLL in making Shakti work' What should Shakti's managers do' Challenges * Arrange government permission and secure the permission of the district administration * Regular interaction with HUL's sales force to identify potential markets and roll out project Shakti * Appoint the right women as entrepreneur * Appoint the right women as entrepreneur identify and seal partnerships with NGOs * Appoint the right SHGs and convince them about the reliable source of earnings from Shakti women as entrepreneur * Project Shakti was viewed as just a business move by a large company * Ballooning up costs for human resources, * Rising costs in managing Shakti Vani and iShakti * Internal challenges like brand building efforts and costs * Linguistic challenges * Cultural aspects- Unlike A.P women are not so independent in other states * Boosting the confidence level of the entrepreneurs Managers should strive to keep the entrepreneurs motivated to be engaged in the project. For this they should give formal training to develop skills and manage the viable business. Shakti Vani should be kept intact and thus can connect it to the people there. They can introduce some promotional products during gathering and gift for some special cases. With this the internal challenges to be rooted out and convince the brand managers to invest in establishing the HUL brands. Out of more than 30 products, four products occupy a share of 50%. So managers should stress upon these products to penetrate rural markets more. 5. If Shakti cannot become profitable, should HLL continue the program' Why' They should continue with the project. This is the project that gives them a very first mover advantage and can reap much benefit in years to come. They have already received good results out of it and Shakti had contributed 1% to 3% in its total revenues in one or two years. So still they can reach as much as an additional 250 million consumers by 2010. So focusing on the selective districts and prioritizing efforts on the existing entrepreneurs can propel HUL much ahead than its competitors. Moreover project Shakti has already established it as socially responsible organization and it has already having co-operation from some Government like A.P and people are also increasingly known to the HUL products.