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 eficient 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.

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 with
80% penetration rate. The greatest challenges that Shakti face are costs and management
control to make it profitable.

Education level of Indian women and cultural diferences in diferent regions

Not many microfnance companies are interested in rural areas

because of low income level of population.

Scaling and streamline initiative made them involves high process

costs and fnally 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 manage
25,000 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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