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Project Shakti Bottom Line Calculaiton With Other Answers
Project Shakti Bottom Line Calculaiton With Other Answers
Submitted by:
Group No: 9
Aparna Johari - Roll No: PGP/17/197
S. Akshaya - Roll No: PGP/17/233
Nishtha Jain- Roll No: PGP/17/221
Sunando Das- Roll No: PGP/17/245
Himanshu Singh- Roll No: PGP/17/209
1. What are the key features of Shakti? What are its positive aspects and what are its
drawbacks?
Positive aspects:
Individual as entrepreneur – responsibility was not shared by many
Incomes generated were significant to these entrepreneurs as it was not shared by a
group
Providing opportunities for underprivileged women
Credible, one-to-one endorsers
Improved supply-chain efficiency, exit from non-core businesses
Drawbacks:
The amount that the Shakti entrepreneur could make was limited as she sold at local
outlets, and had to sell at a price that would enable the outlet to earn a decent retail
margin when they in turn sold to the customer
These women were first timers to any kind of independent economic activity and did
not have a clear idea as to what was expected of them
Difficult to get the brand managers to invest in Project Shakti
Cost incurred on human resources were ballooning with scale
Formal training programs for skill development – Difficulty in getting the women to
a central classroom location for the training programs
2. What was the motivation for the Shakti initiative? Was it a CSR initiative?
Project Shakti was a rural marketing initiative of Hindustan Lever Limited (HLL). It
identified rural India as a key source of growth and competitive advantage in the future.
The motivation behind this initiative was that it would provide access to rural markets
which would be a big differentiator among competing FMCG companies. This was
because growth rates in urban markets would slow down as competition heated up and
the number of competitors continued to grow while rural markets and their wealth
remained largely untapped.
It was a sales and distribution initiative that delivered growth, a communication initiative
that built brands, a micro-enterprise initiative that created livelihoods, a social initiative
that improved the standard of life and catalyzed affluence in rural India.
Shakti was not a CSR initiative. The sponsoring agency would offer micro-credit to one
or more members of the self-help groups in rural India and HLL would partner with
these recipients by offering them opportunities for micro-enterprise. Even iShakti which
was a new Project Shakti initiative had its cost coming upto 3-5% of sales of Project
Shakti.
Growth of Shakti turnover was a result of the expansion into new markets and
appointment of new entrepreneurs along with the growth of the existing entrepreneurs.
This is evident from the fact that Project Shakti Turnover in 2004 was 4.5 times the
turnover in 2003. This implies that Project Shakti was growing at a steady rate.
Project Shakti broke even in 2004. Sales through Project Shakti contribute 15% of HLL’s
rural sales where it operated in the districts in 2004. The rural sales contribute to 50% of
the total revenue of the HLL and the importance of the tapping into the Inaccessible
Markets having low business potential becomes important in this context. There is a huge
potential of growth of Shakti Programme. From the current figures of 12,000
entrepreneurs across 12 states and 50,000 villages, the Shakti Project must double its
reach to 100,000 villages by the end of 2006. For Shakti to account for 15 – 20 % of the
company revenues, it should be able to reach 250 million additional consumers through
10000 entrepreneurs by 2010.
4. What is the Economic Value created by Shakti? What is the social value?
Shakti increased the monthly income of rural families from Rs. 1,000 to Rs. 15,000.
Also, to address the needs of the consumers HLL introduced low unit price packs or
LPUs. LPUs were small, low priced SKUs of the brands. The consumers can now afford
the products in smaller units.
The social objective was to provide sustainable growth and livelihood opportunities for
underprivileged women. Also, in rural India, entrepreneurs face difficulties in funding
their business. They also face investment opportunities. HLL provided a medium to fund
these micro enterprises which had a deep social impact.
They introduced a project ‘iShakti’ where people of the villagers could access the
information related to education, career opportunities, agriculture, health, through
desktop computer.
They also initiated a project ‘Shakti Vani’ which communicated villagers the best
practices in society related to community hygiene and organizing school contact
programs.
5. What are the critical challenges facing HLL in making Shakti work? What should
Shakti's managers do?
2. Costs incurred
The costs incurred on human resources (10%-15% of revenues) increased with
scale-up of Shakti. Currently, it had 500 RSPs for 12,000 entrepreneurs. So, Shakti
has to find some way of doubling the number of entrepreneurs without significant
increase in number of people.
4. Cultural issues
Status of women: At some places, society allowed women to be independent but in
some districts, it was imposible for women to go out of their homes and sell products
to other homes or mail retailers.
Language barrier: The same field force found it difficult to work across different
states that had different local languages
5. Lack of confidence among women
Many of the rural women have never handled any economic activity independently.
So, they easily get demotivated by a few rejections in the first few calls and have a
tendency to drop the business.
1. For branding the project, the brand managers can utilize the position of the rural
sales promoters who influence the Shakti entrepreneurs and help them create viable
business.
The statistics of present network must be taken from RSPs to know the current
market of HLL in these rural areas.
2. Also, RSP team should have one person belonging to the same region where the sales
are being promoted to narrow down the cultural and linguistic problems.
3. The women can be given assistance about the economic activity. They should be
taught strategies to sale a product. Example- Network creation must be stressed
among women for better results.
6. If Shakti cannot become profitable, should HLL continue the program? Why?
In all other markets where HLL tapped into, it is facing challenges due to presence
of competitors and its sales and profits have decreased.
In the districts under Project Shakti, there are no competitors. Also, it has first mover
advantage in this market.
Shakti is already contributing 15 % of turnover in the districts in which it is
opersating. With expansion of the project, the revenue generated will increase in
future. In this segment, HLL has: