Hindustand Lever Limited

SWOT Analysis

Strength (Company and Shakti)

• Well-defined product portfolio spread across many product categories. Strong brand presence.

• Formidable distribution network covering large area of the country. Extensive reach.

• Because of being the first to enter the rural markets, it has greater access and experience in rural markets than the competitors.

• For Shakti, operating as direct-to-home sales force helps extending product reach, creating brand awareness among the lower level of society. By educating consumers on the health and hygiene benefits of HLL brands will stimulate demand and nurture relationships to reinforce the HLL messages to the consumers, and change the lives of people in rural India.

Weaknesses and challenges

• Costs management. For example, the Vani program has not made any contributions to the company. To cover 5,000 villages would cost Rs. 50 million. Another example is the system of Rural Sales Promoters, who were outsourced to manage the entrepreneurs. As the numbers of entrepreneurs grow, the numbers of RSPs have to be proportionately added, thus increasing costs.

• Brand management. No brand managers to responsible for brand building and development.

• Lack of formal training program to inculcate a sales ethic and develop self-confidence and enterprise among the entrepreneurs.

• Shakti could create conflict with the retailers in the village.

• Lack of pricing power in core business.

Opportunities

• Market potential in untapped rural market of about 400-500 million people.

• Gained wide interest from public in terms of improving the standard of life and catalyzing affluence in rural India.

Threat

• High margins attract competition.

• Varying degrees of support from the different state governments and scale of the SHG movement in a number of districts.

• The sheer lack of purchasing power in large parts of the country, or sheer poverty.

• Lack of infrastructure is a big obstacle to the distribution networks in rural communities.

• The different status of women in rural society across states.

Strategy

Concerning low purchasing power of the market, one option is to focus on lowering prices until customers can afford, such as manufacturing low-cost products locally, or increasing their purchasing power, such as boosting local income. Moreover, it still has to improve the incomes of the Shakti entrepreneurs