3 rangan&rajan presentation
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Global Poverty:
Business Approaches & Solutions
The Complex Business of Serving the Poor:Insights from Unilevers Project Shakti in India
Kash Rangan, HBSRohithari Rajan (Hindustan Lever)Dalip Sehgal (Hindustan Lever)
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Hindustan Lever Limited
Background
$2.3 billion subsidiary of $50 billion global food giant
Has operated in India since 1933; HLL was formed in 1956
Operates 4 business units: Detergents, Personal Care, Beverages, Foods
Gross Margins: 40% to 45%Net Margins: 10% to 15%
Market share of about 45% across categories
Built a reputation for strong management and corporate values
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Structure of Competition in Indian Markets
Global and National
HLL, P&G, Colgate Palmolive,Godrej Soaps
Local Innovation: Example, Nirma, building up since seventies
Global Entry: Heating up since the nineties
Local Brands
Unattended
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Structure of HLLs Market Reach in India
250 millionUrban Consumers
Retail Stockist Program
Annual Per-Capital Income $600 ($3,000 PPP)
Market Size of Urban and Rural Approximately Equal
L.A.B. Program
IDC ProgramStreamline Program
Shakti
250 million
Semi-UrbanRural Consumers
250 million Consumersin villages with 500 or more people
250 million ConsumersIn small villages
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100%638,365Total
0.5%3,06410,000 and
above
1.8%11,6185,000-9,999
10.8%69,1352,000-4,999
19.7%125,7581,000-1,999
25.0%159,400500-999
24.3%155,123200-499
17.9%114,267Less than
200
% of TotalNumber of VillagesPopulation
Source: Selling to the Hinterland, Pradeep Kashyap, The Businessworld Marketing Whitebook 2003-04
Distribution of Villages in India
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Hindustan Lever Sales Offices
Headquarters
Regional SalesOffice
Regional SalesOffice
Regional Sales Office
Regional SalesOffice
Project Shakti:Original Launch Site
Project Shakti: Shaded areas
Source: HLL
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Urban Stores
Self-Service Store Retail Store
Source: HLL
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Rural Retail Stores
Source: HLL
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Source: HLL
Appearance of iShakti Kiosks
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A Shakti Entrepreneur
Source: HLL
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Shakti Vani: The Communicator
Source: HLL
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Economic and Social Benefits
Sales $250/month $3,000/year
Earnings about 7%, after 3% goes towards principal ($250) and interest
Improves her per-capita income by about 50% to 100%
100,000 entrepreneurs by 2010
So, Social Benefit equals $20 to $30 million
Shakti Entrepreneur
SalesTurnover of about $250 million
If all goes well, Net Margins of about $25 million
HLL
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Challenges
Scaling up for economic profit. Moving from variable cost to fixed cost model.
Significance of Partnerships with NGO sector and Government sector inbuilding Commercial infrastructure (even Competitors).
Sustainability and Attention.
Multinationals Dilemma
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