Group 6 - MAI Final Report
Transcript of Group 6 - MAI Final Report
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Table of ContentsVision ....................................................................................................................................................... 3
Mission .................................................................................................................................................... 3
Objectives ............................................................................................................................................... 3
Target Clients .......................................................................................................................................... 4
Product .................................................................................................................................................... 4
Value Proposition .................................................................................................................................... 4
Performance Criteria ............................................................................................................................... 4
Analysis of the Organisational Functions ................................................................................................ 6
Operations .............................................................................................................................................. 6
Process of Credit Delivery ................................................................................................................... 6
Appraisal Process ................................................................................................................................ 7
Presentation of Report to the Credit Committee ............................................................................... 7
Human Resources ................................................................................................................................... 7
Employee Recruitment ....................................................................................................................... 7
Employee Capacity Building ................................................................................................................ 8
Employee Engagement ....................................................................................................................... 8
Marketing ................................................................................................................................................ 8
Product ................................................................................................................................................ 9
Place .................................................................................................................................................... 9
Promotion ......................................................................................................................................... 10
Marketing Strategy Evaluation ............................................................................................................. 11
Functional benefits ........................................................................................................................... 11
Process Benefits ................................................................................................................................ 11Relationship Benefits ........................................................................................................................ 12
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Friends of Womens World Banking, India was promoted in 1982 by SEWA Bank,
as an affiliate of Womens World Banking, a global network created to focus on the
need for womens direct access to financial services.
Vision
A society based on equity and social justice where women are active partners in
holistic development.
Mission
The organizations mission is to provide financial and capacity building services to
organizations promoting livelihoods and self-reliance of poor women.
Objectives
1. To promote the livelihoods of the end clients by expanding its outreach to
more and more institutions.
2. Making the target clients sustainable through institutional capacity building
and working capital loans.3. Making the target clients bankable.
With respect to the target clients the organization has following objectives in hand
that it tries to follow throughout.
To study a non-profit organisation, it is critical that we understand belief and
values embedded in the culture of the organisation. The Vision and Mission
reflect the principles the organisation was founded upon and gives directionto the people associated with it.
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Target Clients
The organisation defines its clients as follows:
The organizations aims at establishing community owned enterprises
These community based organizations should be such that profits are shared
among the different members of the community
The members of the community wherein profits are shared are primarily
women
Excludes Private Limited companies and partnerships, and mostly focuses on
cooperatives.
Product
It is a package of both the below but the latter is not a necessary part of the package:
Working Capital Loans
Institution and Capacity Building (ICB) support (technical assistance, business
development, market linkages)
Value Proposition
The following value proposition is provided by the product
Credit for traditionally unbankable clients
Customized: The loan product along with ICB support is customized for each
client (with regards to the amount and timeliness of credit and other support to
be extended)
Cheap Credit: Loans are provided at very low interest rates.
Performance Criteria
We identified the following parameters as the ones that can be used to measure the
performance of a non-profit organization like FWWB.
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Turnaround time this is one of the most crucial parameters as lower the
turnaround time greater is the efficiency. This is because speedy sanction of
loans reduces the overall turnaround time and also helps in timely action in
case of defaults from the end-consumer.
Ability to attract clients if it is able to attract many clients then it can be said
to have a better performance. The number of clients matter but the quality of
bankable clients also matter.
Performance of clients The clients performance is the organizations
performance. So if the client is disbursing loans effectively and also taking
care of timely supervision and recovery then this also in effect improves the
efficacy of FWWB.
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Analysis of the Organisational Functions
Our intention while studying the organization was to look at Operations, human
resources as well as the marketing aspect of the organization.
Operations
Process of Credit Delivery
As the turnaround time for delivering credit is one of the key criteria for performance,
we decided to analyze the operations of FWWB in order to seek improvements in
this area.
# Activity Time Manpowe
r
1 Appraisal
a. Receipt of Application - -
b. Prelim Application Check for
approval
2 days 3
c. Send detailed application If approved - 1
d. Receive Detailed Application 15-30 days -
e. Desk Appraisal 7-8 days 3
f. Travel Planning and Approval If approved 0-10 days 3
g. Appraisal Visit 3-7 days 2
2 Approval
a. Prepare and Present Report of
Credit Committee
5-30 days 2
b. Modifications in Report If required 2-3 days 1
c. Sent for approval to ProgramCommittee
Amt >10lacs
10-15 days
3 Disbursement
a. Send Agreement and Sanction
Letter
If approved 1 day
b. Agreement Received with
documents
7-10 days
c. Transfer of Money 2-3 days
Total 45-120
days
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We identified the following bottlenecks in the operations:
Appraisal Process
The appraisal stage at present can last up to over 50 days. Although there is
a shortage of manpower, the appraisal process can be shortened by adopting
a more aggressive approach. We recommend combining the Desk Appraisal
and the Appraisal visit. After a preliminary check, the team can visit the client
organization to access detailed reports and perform the appraisal. This also
reduces the time taken in communication between FWWB and the partner
organization.
Presentation of Report to the Credit Committee
As the Credit Committee consists of the high level officers in the organization
and a lot of the work involves travelling outside Ahmedabad, it is difficult for
them to find a convenient time to have such a meeting, FWWB conducts a
meeting once a month and reviews all reports in the previous month. However,
this means that a report may lie idle for approval for up to a period of a month.
It is recommended that meetings be scheduled at least once a fortnight unless
there are no reports pending.
Human Resources
We are also putting the organization under the HR scanner and try to analyze whatall problems are faced by the organization. The following emerged as critical:
Employee Recruitment
The organization currently takes fresh recruits from entrepreneurship, rural
development and agriculture institutes. Many a time, there seems to be a lack
of professionalism in these young recruits.
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This seems to be a problem with no quick fix. However, the organization may
tie up with various management institutes to offer limited period job offers
where the institute can pay the difference amount between the expected
salary and that offered by FWWB.
Employee Capacity Building
At present, there is no policy for capacity building of employees. This is one of
the loopholes that we found in the organization.
It is highly recommended that FWWB creates a policy for such capacity
building (in various areas: management, communication, finance) throughvarious institutes
Employee Engagement
The work involved and the culture of the organization leads to a high level of
employee engagement. Additionally, it may allow its employees to represent
FWWB in various forums (local conferences, events at educational institutes).
This may further help in boosting their morale.
Marketing
We decided to evaluate FWWBs marketing tactics through the 4P framework,
namely - Product, Pricing, Place and Promotion.
Out of these, we will examine Pricing separately as it forms a primary function
provided by FWWB and is not just an instrument of strategy.
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Product
The loan product offered by FWWB is usually funder-specified. That implies
that FWWB is limited in the customization of loans to meet demand from
potential consumers. This is both because of regulatory structures and
guidelines, as well as standards adopted by its parent donors, investors and
organizations.
Thus, there is not much scope to innovate in this category.
Our recommendation is for FWWB to explore the option of combining term
loans with working capital loans as a new product for potential clients who
have greater expansion plans.
From the funder aspect, FWWB will have to identify and market itself to
potential new funders with adequate risk appetites and flexibility in investment
time periods to allocate funds for term loan disbursement. These could
potentially be venture capitalists, hedge funds with a Fund-of-funds structure,
and even sovereign wealth funds of different countries. We dont feel that
FWWB should explore the option of a crowdsourcing model of funding as
done by Kiva. This is because uptil now, this model has mainly worked for
micro-loans, and hasnt worked for aggregated loans (larger loans created by
combining multiple smaller sources of funds). Also, the amount of funds and
loans pledged under such models has gone down post the recessionary
environment in the developed world.
Place
FWWB has been able to build significant geographical coverage so far in
India. However, the brand recognition is low among target consumers. FWWB
should consider focusing on fewer states, with higher concentration of aware
consumers, and use a potential ink-blot strategy to cover most districts in
these states. These states could be Gujarat and neighboring states. Also,
FWWB could potentially partner with the Bihar government in reaching out to
potential entrepreneurs interested in starting up ventures in that state. This
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could be a win-win situation if the Bihar government, agrees to provide risk
mitigation and underwrite any bad/defaulting loans.
Promotion
Currently, FWWB has no defined promotion activities in place. They rely
mostly on word-of-mouth publicity about their activities among the
academician/NGO networks. Additionally they depend upon eminent
personalities to promote their clients. While this approach has low costs, it
does serve to limit the reach and awareness about FWWB among the target
consumers.
Our recommendation is for FWWB to adopt a lead farmer approach. This
works by identifying a lead farmer in each geographical unit, who is then given
training and incentives to carry out promotion activities. This farmer could also
be the beneficiary of our funding.
Another recommendation is to approach Corporate channels with wider rural
distribution networks. This could be marketed to them as a way to provide a
value added service (of finance and ICB) that can be bundled with theirexisting product offerings.
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Marketing Strategy Evaluation
To analyze the efficacy of FWWBs overall marketing strategy, we decided to follow
the framework given in the Marketing in 3-D article in The Mckinsey Quarterly,
1999.
In this article, the authors- Court, French, Mcguire and Partington, argue that
contemporary marketing needs to incorporate functional, process and
relationship benefits for customers to value a brand as well as build a differentiated
offering.
Let us evaluate FWWB on these three dimensions.
Functional benefits
The main functional benefits provided by FWWB are in terms of providing
access to cheap credit, at rates much lesser than commercial rates.
Additionally, there is a much higher rate of customization offered by FWWB
vis--vis other institutional credit providers. Finally, FWWB often provides
credit where credit facilities are either non-existent or potential customers are
not eligible to be considered for traditional credit offerings (because of poor
credit history, quality of collateral, etc.)
Process Benefits
Currently, FWWB provides a personalized form of interaction with each
consumer. There is a continuous process of communication with loanees, and
application and appraisal-related support from organization employees is
provided through telephone and e-mail.
The proposed benefits should be oriented towards increasing ease of
transactions and reducing transaction time. Thus, FWWB should look at
providing all application forms online, for easy download by consumers. Also,
standardized forms for appraisal and review processes could also be provided
online. In addition, sample completed forms should be provided along with
checklists.
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Relationship Benefits
FWWB has a very powerful brand name and reputation among the investment
and donor community and networks. Thus, FWWB funded enterprises often
find it easier to raise additional rounds of funding from these sources.
Investment providers will often consider an FWWB investment in an
enterprise as an indicator of quality. Thus, FWWB provides an important
element of trust and credibility to its funded enterprises, which it can then
leverage into greater financing to scale up and grow rapidly. Additionally, their
brand name also helps in creating easier market linkages for the partner
organization, which can help them achieve faster disbursal, economies of
scale, and lower costs of operations.
We propose that FWWB should also provide customized credit referrals for
organizations who reach self-sufficiency. These would help them get credit
from formal financial institutions as well.
Based on the Marketing Toolkit given in the reading, we recommend the following-
1) Creating an opportunity mindset- Dedicate human and financial resources to
develop and implement marketing strategies
2) Multiply consumer contacts by encouraging increased feedback from
customers from formal and informal channels
3) Customer data should be mined to the maximum extent possible for insights
on customer behaviour and preferences. For this purpose, client intractions
should be recorded and tracked as far as possible.4) Alliances should be explored with new, innovative partners in terms of
financial, technological and distributive flexibility.
5) Systems and processes should be increasingly upgraded and automated for
increasing efficiency, bringing down costs, and providing innovative solutions
to consumers.
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Thus, to conclude, we can use the 3 Rules for Marketers to suggest the following:
1) Building a 3D opportunity portfolio by emphasizing functional, process and
relationship benefits
2) Delivering portfolio on technology backbone by increasing online interactions
between FWWB and clients, as well as regular updation of the MIS software
and systems.
3) Spending Funds where they work hardest Here, we have identified that the
main bottleneck for FWWB is human resources and lack of adequate talent.
Thus FWWB might want to allocate greater financial resources to recruiting
quality talent as well as increase compensation budgets.
Conclusion
The organisation is involved in a sector where competition does not provide the
greatest threat. It is the need of the product which drives the market. However, we
would like to emphasize that it is here that the importance of marketing as a tool to
bridge the gap between demand and supply is most felt.
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References
Annual Report, FWWB India
3D Marketing, the McKinsey Quarterly 1999
We would like to thank the following for their encouragement and willingness to be
part of this project:
Ms. Anshu Bhartia, Chief Executive Officer of FWWB, India
Mr. Sridhar Reddy, Senior Program Manager, FWWB, India
Ms. Suhani Avarani, Employee, FWWB, India