Case: Project SHAKTI Auro University

Executive Summary

HLL has enjoyed a competitive advantage as a sole provider of personal hygiene care products before the liberalization of Indias economy. However, with the entry of foreign MNC, HLL is suffering from stagnant growth and lower profit margin. Project Shakti was created to address these issues. The high growth of Shakti has created managerial challenges to the project management team. As Shakti grows, the current management structure has become inefficient to make it profitable with minimum costs. Thus, restructuring management measure is crucial to sustain Shakti in the long run and to provide HLL with competitiveness.

Outline of the case project SHAKTI

Hindustan Unilever Limited is Indias largest fast moving consumer goods and Services

Company.

Over 70% population of India resides in villages so tapping into the untapped market has become necessary as compared to urban, this market company need to develop economically viable and efficient distribution channels in villages.Poor connectivity among villages and widely scattered consumers are main problems so SHAKTI project is the only one project which selected women as an entrepreneur and connected to the womens worldwide. Recently it has launched a project Shakti to penetrate the rural market for FMCG

goods. About 12000 women entrepreneurs had been appointed, covering nearly

50,000 villages in partnership with nearly 300 towns.

Company wants to scale its operation so to achieve a consumer base of around 100 million by 2006. It is estimated that this will require a network of about 25000 entrepreneurs.As mentioned in the case study it is mentioned that they covered around 50,450 villages as compared to the the year 2006. HLL has also introduced Shakti Vani to create awareness in villages about personal health and community hygiene.

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Case: Project SHAKTI Auro University

iShakti and Shakti Vani are the two major important aspects which helped Shakti to capture almost all the issues and also helped women to become independent.

Challenges of Project Shakti

Rural market is already giving HLL a competitive advantage. But competitors are also tapping into the rural market with existing HLL direct channels. Thus to continue HLL competitive edge, Project Shakti is essential. Until 2004, Shakti is contributing 3.5% , towards HLL total revenues and it still has potential to continue growing. This is because personal hygiene awareness is in the increase. Shakti may be able to achieve the founders dream of 15%-20% of total revenues, assuming that Shakti can increase the usage rate of current consumer. However it will not achieve the market penetration of over 500 million rural population as this figure signifies that HLL will nearly monopolize the rural market with80% penetration rate. The greatest challenges that Shakti face are costs and management control to make it profitable. 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 and streamline initiative made them involves high process costs and finally helped hem to recue it through RSPs. More human resource needed to train people to become entrepreneurs and maintain them

Support needed from various sectors of government

Cultural issues like language and communication

Not many SHGs to collaborate with them and hesitated to join hands with them so it was the major challenge faced by them.

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Case: Project SHAKTI Auro University

Needfulness of tapping bottom line

The Shakti system in the beginning of the project was good but not sufficient to handle the growth it had obtained. Thus changes are needed to make it more cost effective and profitable. As Shakti matures, there are a number of entrepreneurs who are more successful than the others. HLLs RSP can organize a monthly gathering for all entrepreneurs in the same district, encouraging interaction and communication among entrepreneurs. By doing so, the experience and knowledge of the successful entrepreneurs will motivates others. This will increase the efficiency of each entrepreneur (profit increase) and also decrease the amount of time spent by RSP to visit individual entrepreneur, giving RSP more time to explore untapped villages in the same district. Thus the current 500 RSP is sufficient to manage25,000 entrepreneurs. HLL should also cultivate more successful entrepreneur from existing entrepreneur as organic growth of these entrepreneur is faster and easier to give profit. As HLL penetration to rural market is only a mere 16% (1 entrepreneur in 5 villages, pg 12), the market potential and market size is big enough to give a fair share to every player, thus the conflict between Shakti entrepreneurs and direct sales channel, if ever arise will be minimal. Moreover, a control measure can be applied by limiting the number of entrepreneur in each district thus minimizing conflict.

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 HLLs revenue by 1lakh entrepreneurs

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Case: Project SHAKTI Auro University

I-Shakti and Shakti Vani survivals for Shakti

I-Shakti and Shahti Vani are Shaktis initiatives created to provide rural India with access to information and social communication. Although the setting up costs for those two programs are quite high, Rs 150 million, funding is likely to be achievable because this cost occupies about 3.6% of Shaktis revenues and therefore Shakti itself can finance these programs. Funding is also possibly receivable by persuading other profits centers to invest in the programs and by using the revenues of iShakti to finance Vani. Furthermore, iShakti will have high potential revenues from selling MR to the internal customers and to sell the channel to other interested, non-competitor parties, e.g: banks, insurance companies, farm equipment etc. Vani itself does not generate revenues directly, but it is a powerful tool to increase hygiene awareness in rural India, as a result indirectly increase HLL sales at long term. In short, iShakti and Vani will be workable and scalable to help Shakti success.

Highlights of women being entrepreneur

HLL should make a social impact on rural India. By involving in the improvement of rural living conditions, HLL can and will continue to enjoy the competitive advantages as the main company to participate in social development. The connection between business and communities will develop lifetime customers for HLL. This involvement may not be the typical role of business, but as long as it is profitable to HLL without compromising moral and legal issues, it will be a good move for HLL to increase its reputation as a socially responsible organization.

Conclusion

Project Shakti started to suffer from growing so big that the current structure needs to be adjusted. Restructuring the managing measure of RSP to entrepreneurs, focusing Shakti in selective districts and prioritizing efforts in existing entrepreneurs, Shakti will generate higher revenues with minimal increase in costs. Shakti should continue as it is providing HLL a distinct competitive edge and increase HLLs profits and growth. Moreover, Shakti helps to position HLL as socially responsible organization. These helped women to build their

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Case: Project SHAKTI Auro University

business independently and to in future can start the dealership as well by opening their own entity which can further enrich their standard of living.

Facts of the case:

Intense competition from International as well as local players in 2000.

Necessary for HLL to penetrate the untapped rural with urban markets saturated.

Rural Markets were scattered over large areas and per capita consumption was low.

Shakti was promoted as a CSR activity.

Project Shakti was a unique sales channel due to the reasons apart from its scale and deep rural reach was that it reached the final consumer rather than an outlet which would then sell to consumers. Shakti created a vast local, credible, one-to-one endorsers.

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