Shakti Situation Analysis

Situation Analysis

Hindustan Unilever Limited is India’s largest fast moving consumer goods and Services Company

Over 70% population of India resides in villages so in order to tap this market the company will need to develop economically viable and efficient distribution channels in villages

Poor connectivity among villages and widely scattered consumers are main problems

Recently it has launched a project ‘Shakti’ to penetrate the rural market for FMCG goods. About 1200 women entrepreneurs had been appointed covering nearly 50,000 villages in partnership with nearly 300 NGO’s.

Company wants to scale its operations so to achieve a consumer base of around 100 million by 2006. It is estimated that this will require a network of about 25,000 entrepreneurs.

HLL has also introduced Shakti Vanti to create awareness in villages about personal health and community

Problem identification

How to improve the distribution channels to gain a consumer base of 100 million by 2006

The greatest challenge that Shakti face is costs and management control to make it profitable

Building confidence/self-sufficiency among Shakti Entrepreneurs

To achieve the objective of contributing 15-20% of HLL’s revenue by Hakh entrepreneurs

Project Shakti

Challenges

Education level of Indian women and cultural differences in different regions

Not many microfinance companies are interested in rural areas because of low income level of population

Scaling involved high process costs

More HR needed to train people to become entrepreneurs and maintain them

Support needed from various sectors of government

Cultural issues like language and communication

Almost 10-15% of Shakti’s revenues belonged to HR costs, a major concern

Lack of confidence of entrepreneurs to invest because of past failures

Not many SHGs to collaborate with

Advantages:

New markets can be tapped

Even without the direct retail outlet channel final customer can be reached

A more personalized service...