Hindustan Unilever Limited, India

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 tap this market the company needs to develop economically viable and efficient distribution channels

* Poor connectivity in the villages and widely scattered customers are the main problem

* HLL launched 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 NGO's

* 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 entreprenuers

* HLL has also introduced Shakti Vani to create awareness in the villages about personal health and community hygiene

Problem Indentification

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

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

* Building confidence and self sufficiency among Shakti entrepreneurs

* To achieve the objective of contributing 15-20% of HLL revenue by 1 Lakh 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 of population

* Scaling involves high process costs

* More human resources 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 revenue belonged to HR costs, a major concern

* Lack of confidence of entrepreneurs to invest because of past failures

* Not many SHG's to collaborate

Advantages

* New markets can be tapped

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

* A more personalized service

* Preference to entrepreneurs

o Credit was also given to regulars

o iShakti and Shakti Vani created a loyal customer base and improved market penetration as visibility of HLL's products increased