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Identifying and addressing social problems

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Identifying and addressing social problems that intersect with business by Rahul Gangal

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Identifying and addressing social problems

  1. 1. Closing Remarks Gurgaon, November 2015 Identifying and addressing social problems that intersect with businesses Shared Value Initiative
  2. 2. 2SVII 2.pptx Contents Page This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation. It may not be passed on and/or may not be made available to third parties without prior written consent from . © Roland Berger A. Understanding the environment – Economic, political and social 4 B. India inc. at the intersection of shared value and profitable growth 16
  3. 3. 3SVII 2.pptx Ambition Personal, Institutional, National Environment Economic, Regulatory, Social Social Problems and Business Opportunities : An area where India is showing how to co-exist responsibly and profitably Businesses Households Government SHARED VALUE Creating profitable business opportunities to address real social problems appears to be the sweet spot for share value creation
  4. 4. 4SVII 2.pptx A. Understanding the environment – Economic, political and social
  5. 5. 5SVII 2.pptx The Indian elephant has learned how to dance – India's GDP has incre- ased by about 7.5x since 1980, 3 times faster than global expansion Indexed GDP growth1) [1980 – 2014, 1980 = 1 ] Source: US Department of Agriculture Economic Research service, Real GDP (2010 dollars) Historical, available at http://www.ers.usda.gov/data-products/international-macroeconomic-data-set.aspx 0 1 2 3 4 5 6 7 8 1995 2000 2005 2010 20141980 1985 1990 GDPgrowth,xtimes World India GDP CAGR 1980- 1985 1985- 1990 1990- 1995 1995- 2000 2000- 2005 2005- 2010 2010- 2014 India 5.16 5.95 5.08 6.08 6.72 8.31 5.45 World 2.67 3.54 2.09 3.46 3.05 2.59 2.65 Comments > India’s GDP growth has consistently exceeded 5% over the last 35 years > Since economic reformsof 1991, India has achieved the following: – Four-fold GDPgrowth – Poverty alleviation for ~225 mn Indians – Increase in telecom penetration from 6 mn in 1991 (1% penet- ration) to 915 mn in 2013 (73% penetration) – Construction of 45,466 km of national highways between 1991 and 2013 – four times the length of the totalAutobahn network! > Growth has been achieved despite vagaries of global markets, internal strife, and politics – proof of India’s resilience 1) All GDP numbers used for calculation are in2010US dollars A India’s growth story
  6. 6. 6SVII 2.pptx 278 2,371 88.4% 6.12% China’s GDP in 2001 India’s GDP in 2014 2,097 India’s GDP in 1980 While its GDP growth has been much below that of China, consider- ing the 13 year lag in reforms, the difference does not seem so stark Comments > China’s GDP has not dipped below 8% in the 6-year periods between 1980 and 2014 > Chinese GDP has increased by a factor of 24 since 1980 levels (compared to 7.5x in India over the corresponding period) > Key success factors of the ‘Chinese economic miracle’ has been abundant investment in infrastructure and creation of a strong export-focused manufacturing sector > India’s 2014 GDP was 88.4% of China’s 2001 GDP – China’s economic reforms took place in 1978, 13 years prior to India’s landmark economic reformsand end of the License Raj Indexed GDPgrowth1) [1980 – 2014,1980 = 1 ] Comparison of India’s 2014 GDPwith China’s 2001 GDP, accounting for13-yearlag1) [USD m] Source: USDA, Roland Berger Comparison of GDP growth: India vs. China, 1980 to 2014 [%] 0 5 10 15 20 25 20142010200520001995199019851980 GDPgrowth,xtimes GDP CAGR 1980- 1985 1985- 1990 1990- 1995 1995- 2000 2000- 2005 2005- 2010 2010- 2014 China 9.58 9.80 10.79 9.13 9.76 11.21 7.99 India 5.16 5.95 5.08 6.08 6.72 8.31 5.45 A India’s growth story China India 1) All GDP numbers used for calculation are in2010millionUS dollars time adjusted difference of 12% vs. China & India
  7. 7. 7SVII 2.pptx Contrary to China's manufacturing-led growth model, India's growth has been propelled by services GDP split by sectors1) , India vs. China [%] Source: Planning commission database, ADB Economics working paper "The service sector in India", June 2013 GDP split – India vs. China [2014] Sectoral split in India's GDP Comments 1) Share to total GDP at constant 2004-05 prices > Financing and business services were the fastest growing categories in the Indian services sector in 1980, while growth in Industry, mining and manufacturing remained stagnant > Transport, storage and communication services were the main drivers of growth in the services sector in 2000, while growth in Industry and manufacturing remained stagnant > In 2014, export of software services was the largest contributer to India's services sector, whereasTelecom and software together drive India's global brand image in services > India's export of financial services too witnessed a high growth of 34.4% in 2013-14 43% 48% 26% Agriculture14% Services60% Industry China India 9% 50% 60% 15% 15% 15% 9% 9% 9% 28% 20% 12% 39% 7% 2000 3% 1980 2% 2%4% 2014 3% Agriculture Manufacturing Services Mining & QuarryingAllied services Other Industry A India’s growth story
  8. 8. 8SVII 2.pptx Rising disposable incomes combined with falling interest rates and increasing net domestic savings show a strong consumption story India Net domestic savings [INR bn], Lending rates [%], PDI per capita1) [INR] and Avg. amount of debt per household [INR] Source: RBI, World Bank, NSS reports 0 10 20 30 40 50 60 70 80 90 100 1980 1985 1990 1995 2000 2005 2010 2015 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 INR Percent Personal disposable incomeper caita , INR Net domestic saving, INR bn Lending interest rate, % 1) PDI = Personal DisposableIncome 32,522 7,539 1,906661 84,625 11,771 3,618 1,030 2012200219911981 Urban Rural Averageamountofdebt perhousehold [INR]Select macro-economicindicatorsofIndia A India’s growth story
  9. 9. 9SVII 2.pptx Further, India's labour productivity gains over the period 1999-2007 and 2008-2011 have clearly outpaced increases in salaries Growth in wages and labor productivityin Asia, 1997-2007and 2008-11 (%) Source: Global Wage Report 2012/13, International Labor Organization -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Labour productivity growth(%) Realwagegrowth(%) IRA CDA CHI MAC ISA KOR MYA BAN SNG ITHA IND HK SRI PHL NEP PAK FU -6 -4 -2 0 2 4 6 8 10 12 14 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Realwagegrowth(%) Labour productivity growth(%) CHI MAC VN BAN MON NEP ISAMYA HK IND THA SNG KOR PHL IRA 1) China CHI, Cambodia CDA, Indonesia ISA, Islamic Republic of Iran IRA, Republic of Korea KOR, Malaysia MYA, Singapore SNG, Bangladesh BAN, Thailand THA, India IND, Macau (China) MAC, Hong Kong(China)HK, Sri Lanka SRI, Philippines PHL, Myanmar MYN, Mongolia MON, Nepal NEP, Pakistan PAK, Fiji FIJ 45° 1999-20071) 2008-20111) 45° A India’s growth story
  10. 10. 10SVII 2.pptx India's import and export intensity has also consistently grown over the last 35 years, comparable with China during the last 5 years Import/Export Share [1980 – 2014, % GDP] Source: World Bank database 0 5 10 15 20 25 30 35 40 45 50 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 % of GDP Germany, export India, exportChina, exportIndia, importGermany, importChina, import A India’s growth story
  11. 11. 11SVII 2.pptx FDI as well as FII flows have grown significantly since 1991, with a cumulative inbound FDI /FII of nearly USD 0.5 trillion since 1993 India FDI & FII inflow [1993 – 2014, USD bn] Source: Department of Industrial Policy & Promotion, UNCTAD, SEBI (10) (5) 0 5 10 15 20 25 30 35 40 45 50 55 60 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD bn1) 1) USD billion at current prices and current exchange rates 2) For period Apr 2000 to Jan2015 3) Except fertilizers 4) INR/USD exchange rate = 60has been used FDI inflows by country & Sector, cumulative 2000-20152) Netherlands 23.0% 6.0% 6.0% 7.0% Japan 9.0% UK USA Mauritius Singapore 13.0% 36.0% Others 17.0% 7.0% Construction10.0% 4.0% Automobile 5.0% Drugs & Pharma 5.0% Computer hardware & software 6.0% Telecommunications Services Chemicals3) 45.0%Others FDI inflow in India FII inflow in India4) A India’s growth story
  12. 12. 12SVII 2.pptx Moreover, India’s outward FDI performance has been impressive – and has grown by 30x since the period 1990-99! 37,224 3,3511528732 1980-891970-791961-69 2007-14 102,850 2000-071990-99 0 10,000 20,000 30,000 40,000 50,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Indian OFDI1961-2014 [USD mn] Indian OFDIand IFDI [USD mn] Comments > Outward FDI in India increased significantly post-2004 due to – key policy relaxations, e.g., ceiling on outward FDI was removed, state-owned enterprises were encouraged to invest abroad (e.g., oil and gas companies like GAIL and ONGC) – restructuring activities of large Indian conglomerates in the 1990s had generated large cash reserves, which they used to acquire international companies > Knowledge-intensive industries such as pharmaceuticals, information technology, and automotive dominated outward FDI during the period 2004 to 2010 > Source: UNCTAD, The Rise of Indian multinationals, Roland Berger Overview of India’s Outward FDI (OFDI) and Inward FDI (IFDI) Inflow Outflow A India’s growth story
  13. 13. 13SVII 2.pptx After two challenging years1), the Indian economy now shows signs of recovery – including falling inflation and declining interest rates 7.07.5 6.6 4.74.84.44.84.5 5.35.55.3 6.16.9 7.77.88.2 8.98.88.6 6.0 7.9 6.15.86.1 7.57.8 Q2 153) Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Q1 12 Q4 11 Q3 11 Q2 11 Q1 11 Q4 10 Q3 10 Q2 10 Q1 10 Q4 09 Q3 09 Q2 09 Q1 09 Source: MOSPI; RBI, IMF; Press; Economic Advisor of India; Ministry of Finance, India; DIPP; Roland Berger GDP growth rate2) [%] India industrial production (%YoY growth rate) Bank repo rate [%] 15 10 5 0 -5 Apr- 15 Apr- 14 Apr- 13 Apr- 12 Apr- 11 Apr- 10 Apr- 09 Apr- 08 -4.5 -2.3-1.8 0.5 3.94.85.0 7.37.67.57.77.7 10.09.59.79.49.0 10.310.4 7.1 1.41.6 6.7 10.810.9 Q2 154) Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Q1 12 Q4 11 Q3 11 Q2 11 Q1 11 Q4 10 Q3 10 Q2 10 Q1 10 Q4 09 Q3 09 Q2 09 Q1 09 Inflation – WPI annualchange2) [%] 1) As a result of the global economic crisis and policy paralysis of the previous government; 2) Refers to Financial Year i.e. Q1 (Apr-June), Q2 (July-Sep), Q3 (Oct-Dec) andQ4 (Jan-Mar) 3) Estimated GDP 4) Includes July and Aug. data A India’s growth story India – key macroeconomic indicators (1/2) 5 Apr- 08 Apr- 09 Apr- 13 Apr- 15 Apr- 11 Apr- 10 Apr- 14 Apr- 12
  14. 14. 14SVII 2.pptx Further, the trade deficit is narrowing, fiscal deficit is on the decline, and FDI inflows are on the rise Source: RBI, IMF; Press; DIPP; Roland Berger 150 100 50 0 Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Q1 12 Q4 11 Q3 11 Q2 11 Q1 11 Q4 10 Q3 10 Q2 10 Q1 10 Q4 09 Q3 09 Q2 09 Q1 09 Trade DeficitImportsExports Foreign trade[USD bn] Debt and fiscal deficit [% of GDP] 0 2 4 6 875 70 35 65 FY14FY13FY12FY11FY10FY09 FY152) Fiscal DeficitNational debt INR vs. EUR exchangerate Q1 14 7.2 Q4 13 5.7 Q3 13 2.5 Q2 13 8.9 Q1 13 3.8 Q4 12 12.3 Q3 12 5.1 Q2 12 6.5 Q1 12 13.4 Q4 11 3.4 Q3 11 5.0 Q2 11 5.2 Q1 11 5.8 Q4 10 5.0 Q3 10 5.6 Q2 10 8.3 Q1 10 7.0 Q4 09 5.2 Q3 09 6.0 Q2 09 8.7 Q1 09 7.4 Q3 14 Q2 14 Q4 14 7.5 6.4 9.9 Q1 15 9.5 1) High FDI in Q4 2012 due to US $7.2billion Reliance Industries-British Petroleum (BP) deal andin Q1 2012 dueto investments held upin theprevious year 2) Estimate FDI Inflows1) [USD bn] A India’s growth story India – key macroeconomic indicators (2/2) 55 60 65 70 75 80 85 FY15FY14FY13FY12FY11FY10FY09FY08
  15. 15. 15SVII 2.pptx > Pandit Madan Mohan Malaviya National Mission on Teachers and Teaching: To ensure a coordinated approach so as to holistically address the various shortcomings relating to teachers and teaching > Unnat Bharat Abhiyan: Launched with an aim to connect institutions of higher education, including IITs, NITs and IISERs, etc. with local communities to address development challenges > SWAYAM (Study Webs of Active- Learning for Young Aspiring Minds): Programmed Professors of centrally funded institutions like IITs, IIMs, central universities will offer online courses to citizens of our country The new government has created a positive momentum in the country and is expected to drive the development agenda InfrastructureDevelopment > Revival of Special Economic Zone (SEZ), streamlining the Public Private Partnership (PPP) models and creating Infrastructural Investment Trusts (InvITs).Highlightsinclude ‘100 smart cities’ manifesto and Diamond Quadrilateral rail network > Sardar Patel Urban Housing Mission: Proposed scheme endeavors to build 30 million houses by 2022 for the economically weaker sections > Digital India: Development of relevant infrastructure for National e-governance Small Investment Reforms > Re-introduction of Kisan Vikas Patras: Providing safe and secure investment avenues to the small investors > Sukanya Samriddhi Account: launched with sole objective of financial planning for the marriage of Girl Child > MUDRA Bank Yojana: Bring stability to the microfinance systemthrough regulation and inclusive participation > Pradhan Mantri Jan Dhan Yojana - Rolling out bank accounts for every household Skill Development InsuranceReforms > Pradhan Mantri Suraksha Bima Yojana: Personal accident policy > Pradhan Mantri Jeevan Jyoti Bima Yojana: Provides risk cover in case of an untoward incident > Atal Pension Yojana: The investors will be able to get pension of INR 1,000 to INR 5,000 per month, at the age of 60 years Key reforms undertakenunder newModi-led government A India’s growth story Source: Secondary research, Roland Berger Liberalization > Liberalization of FDI in defence production, railway infrastructure and insurance > Bilateral diplomacy and neighbours first policy - Meetings with South East Asian leaders to lay the groundwork to plan an active role in Asia > FDI in Defence has gone up from 26 to 49%, with more investment allowed on a case to case basis Rationalization of institutions > Creation of Special Investigative Team (SIT) to unearth illegal money stashed in tax havens > Replacing Planning Commission with a new institution ProceduralReforms > Implementation of Goods and Services Tax (GST) set to be implemented towards tax rationalization Manufacturing focus > Make in India- Major new national program designed to transform India into a global manufacturing hub
  16. 16. 16SVII 2.pptx 0 1 2 3 4 5 6 7 8 9 10 11 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 GDP growth [%] Russia US Brazil China India GDP Per capita [USD] Germany The long-term forecast is positive – in terms of real GDP, India is expected to jump to #3 position by 2030 Source: Goldman Sachs BRIC Report; World Bank; Roland Berger Analysis GDP size in real terms GDP 2010 [USD} GDP 2030 [USD] GDP growth and GDP per capita 2010 vs. 2030 A India’s growth story
  17. 17. 17SVII 2.pptxSource: www.moneycontrol.com, Economic Times, Roland Berger 1) Standalone company revenue Whilethe resilienceofthe Indian economy is encouraging,the growth of India's top 50 companies has been nothingshort of spectacular B Innovative India Inc. Consolidated Revenue of India's Top 50 companies in 2014,CAGR 2005-2014 [%] Overall, India’s top 50 companies have grown at a combined CAGR of 21% between 2005 and 2014! Sr No Company Revenue FY05 (INR bn) Revenue FY15 (INR bn) CAGR 1 India Oil Corporation Limited 1,334.07 4,495.09 13% 2 Reliance Industries Limited 665.97 3,754.35 19% 3 TATA Motors 195.33 2,627.96 30% 4 State Bank of India 545.36 2,572.89 17% 5 Bharat Petroleum Corporation* 638.57 2,380.87 14% 6 Hindustan Petroleum Corporation* 652.18 2,066.26 12% 7 Oil and Natural Gas Corporation 597.47 1,608.95 10% 8 Larsen & Toubro 597.47 1,608.95 10% 9 TATA Steel 159.99 1395.04 24% 10 Hindalco Industries 101.05 1,042.81 26% 11 TATA Consultancy Services 97.48 946.48 26% 12 ICICI Bank 169.17 902.16 18% 13 Essar Oil* 6.37 832.06 63% 14 NTPC 235.16 806.22 13% 15 Coal India Ltd 298.87 741.20 12% 16 Adani Enterprises 150.05 645.82 16% 17 Mangalore Refinery and Petrochemicals 206.93 574.77 11% 18 HDFC Bank 37.31 574.66 31% 19 GAIL* 135.91 567.42 15% 20 Bharti Airtel* 79.03 554.96 22% 21 Punjab National Bank 103.88 548.84 18% 22 Infosys Ltd 71.29 533.19 22% 23 Maruti Suzuki 110.33 508.01 16% 24 Housing Development Finance Corporation 36.89 483.16 29% 25 Canara Bank* 91.16 483.00 18% Sr No Company Revenue FY05 (INR bn) Revenue FY15 (INR bn) CAGR 26 Bank of India 71.77 479.63 21% 27 JSW Steel* 70.35 460.87 21% 28 Bank of Baroda 80.44 460.18 (2014) 21% 29 SAIL* 325.69 457.11 3% 30 AXIS Bank 23.28 438.44 34% 31 Chennai Petroleum Corporation 162.96 418.66 10% 32 Wipro* 72.36 416.35 19% 33 Petronet LNG 19.45 395.00 35% 34 Mahindra & Mahindra* 76.96 389.45 18% 35 ITC Ltd 76.39 365.07 17% 36 Union Bank of India 57.36 356.07 20% 37 Motherson Sumi Systems 7.81 350.32 46% 38 TATA Power Company 49.55 343.67 21% 39 Grasim Industries 94.10 328.47 13% 40 Vedanta* 14.09 325.02 37% 41 HCL Technologies 33.51 321.44 (2014) 29% 42 Idea Cellular 27.95 (2007) 312.79 35% 43 Hindustan Unilever 110.61 (Dec 2005) 308.06 11% 44 Bharat Heavy Electricals* 106.86 301.83 11% 45 IDBI Bank 33.59 297.20 (2014) 27% 46 Ruchi Soya Industries 39.08 283.09 22% 47 Central Bank of India 61.44 283.03 17% 48 Hero Motorcorp 100.86 (2006) 275.85 12% 49 Aditya Birla Nuvo Limited 3,1.89 265.16 24% 50 Indian Overseas Bank 47.51 260.77 19%
  18. 18. 18SVII 2.pptx India Inc.'s innovation focus and need to differentiate has come about as a result of its need to compete in higher margin businesses Source: Competitive Advantage of Emerging Market Multinationals, Roland Berger Comparison of China vs. India on competitive advantage Government-specific advantages (GSA) Firm-specific advantages (FSA) China India Country-specific advantages (CSA) (E.g., land, naturalresources, labour, location, climate etc.) (E.g., physical infrastructure, human capital, educational systems, quality of governance reflected in policy making and execution, etc.) (E.g., firm-level assets and capabilities that contribute to competitive advantage) > Strict labour law regulations > Good pool of talent > Poor physical infrastructure > Inconsistent, ineffective government policies > Ranks low on Ease of Doing Business > Historically, Indian companies have not competed on cost alone as weak government and infrastructure impact cost competitiveness negatively > In this environment, a purely operational excellence, low cost manufacturing strategy is insufficient as CSA and GSA prevent Indian companies from achieving the same cost position as their Chinese counterparts > Innovative, higher margin businesses are a must for survival > Successful Indian companies have had to overcome significant challenges in terms of CSA and GSA > Professional management > Clear focus on becoming best-in-class in knowledge- intensive industries A Innovative India Inc.
  19. 19. 19SVII 2.pptx B. India inc. at the intersection of shared value and profitable growth
  20. 20. 20SVII 2.pptx In our belief some of the major themes in this journey evolve around;- Intersectionof social problems and business.What does it imply? B Innovative India Inc. 1. Redoing Products, Services – Making them more relevant to social needs 2. Deriving a new and more relevant definition of productivity – Linking productivity to many more objectives than commercial value add 3. Creating local industrial competence clusters – Building local ecosystems of excellence 4. Creating scaleable impact – Expanding impact at multiplelevels and in a multitude of ways. 5. Linking economics with social progress – setting the context of business and rooting it in overall developmental agenda for the society
  21. 21. 21SVII 2.pptx There are several examples that have done the above well at multiple levels not only domestically but also internationally, across a variety of industries Ge has leveraged technology, innovation and a deep understanding of consumer needs to create the low cost ECG machine for markets like India taking healthcare delivery to millions more in an environment where service delivery is localised, easy, cost effective and maintainance free. Godrej Consumer Products Ltd has championed science and technology to drive innovation and create market-disruptive products; it has adapted products from its global businesses and localized them with the help of consumer insights, local suppliers, and an innovative and dynamic R&D organization With its effortsin extensive ruralmarketing, frugal engineering, building a profitable and efficient supplier base and strong customer relationship management, Maruti Suzuki has maintained its market leadership position in India for 3 decades. Moreover, it has overtaken its parent in termsof valuation; it accounted for 33% of Suzuki’s auto revenue & 55% of EBIT in FY15 A prime example of a successful business built on the principle of shared values via leveraging its strong parentage, understanding of customer priorities, development of local sales force, and customized credit- appraisal and collection mechanisms Customer focussed and asset-lite-no-frills-low-price-hub-based modelfocusing on a core set of specialized services, Vaatsalya's operating modelcan be applied in Western markets where concerns about increasing healthcare costs are growing Source: Secondary reports, Roland Berger GE Medical Devices Godrej Consumer Products Ltd.: FMCG Maruti Suzuki: Automotive Mahindra Rural Finance: Financial Services Vaatsalya: Healthcare Services B Innovative India Inc. 1 2 3 4 5
  22. 22. 22SVII 2.pptx Godrej Consumer Products Ltd has championed science and techn- ology to drive innovation and create market-disruptive products Analysis of testing and validation processes Continuous improve- ment of R&D processes to reduce time to market & increase flexibility Using ingredients afterdetailed understanding The team ensures that the raw materials stack up against the function- al requirementsof the product prior to usage, e.g., reusability, interactions, etc. Focuson Chemistry and science of ingredients Godrej innovations > Godrej’shair color sachet was borrowed from its Argentinean business and localized with the help of local suppliers > Godrej’sGood Knight Fast Card was adopted from its Indonesian business via partnership with suppliers to drive down cost Drive small innovations Focus on continuous and small improvements, so as to become faster and more agile E.g., rather than testing hair color via human hair trials, the team developed multi fabric strip testing that are easy and fast to use and allow reproducible testing and formula optimization across a range of colors Driving R&D to small innovations Technical track of employees Apart from hiring the standard management employees, Godrej hired at higher salary, technical experts such as polymer chemists, flavor & fiber experts, etc who would provide "out of the box" thinking OtherHR efforts Compensation of R&D teams was modified, cross-functional teams were set up, all to drive innovation Hiring technical experts& other HR efforts Create new markets Focus on untapped mark- ets & disruptive ideas – it adopts technologies from its global acquisitions and localizes these to disrupt the market and drive volumes With the help of in-house qualitative R&D, and partnershipswith local suppliers to drive efficiency, Godrejhas successfully adapted international products to suit the Indian consumer Adopting ideasand technologyto suit the Indian consumer& price point Case Study: Godrej Consumer Products has championed science to drive innovations Source: Secondary research, Roland Berger B Innovative India Inc.
  23. 23. 23SVII 2.pptx Mahindra’s Rural Finance business is a prime example of a successful business built on the principle of shared values B Innovative India Inc. Case study: Mahindra Rural Finance is driving prosperity and respect in rural India 1 2 3 4 5 6 Building trust: Leveragesthe good reputation of Mahindra Finance by getting past customers of Mahindra Finance to interact with prospective Mahindra Rural Finance customers Understandingcustomerpriorities: Developsan in-depth understanding of the ruralcustomer’s priorities to redefine product offering – smaller principal amounts, flexible payment terms, etc. Relationship building: Recruitssales force from the local community who become brand ambassadors and reach potential customers through word-of-mouth and concept selling Customized collection processes: Encouragestimely loan repayment via provision of further loans, collects cash & uses technology to minimize pilferage, trains sales & collection manpower to accurately gauge credit worthiness and repayment capacity of customer Creating customerdatabases: Buildscustomer databases leveraging know-how of sales force to know financial situation of customers, reschedule loans, offer attractive loan rewards, etc. Risk assessment: Develops reliable estimates of potential earnings / repayment via income models based on customer profile & farm; further performsformalassessment via proprietarysoftware Mahindra Rural Housing Finance Customer Acquisition Collections Credit appraisal Trust Building trust Relationship building Understanding priorities Income models and Risk Assessment Creating customer databases 1 2 3 5 6 Customized collection 4 Source: Secondary research, Roland Berger
  24. 24. 24SVII 2.pptx Cost-efficient and investment-lite model: > With a network of 15 hospitals Vaatsalya createsvalue by improving price negotiations with vendors and standardizing operating procedures > Capital expenses for land are avoided by leasing the land; moreover, Vaatsalya operates in semi-urban areas such as Hubli, Bijapur etc., where rentals are low > Investment are tailored to keep costslow. In tier IIcities. Without land cost (about 30% of the total) the company invests about INR 0.3 million for instruments etc. Vaatsalya's operating model can be applied in Western markets where concerns about increasing healthcare costs are growing Vaatsalya Business model HR-friendly policies Marketing awareness Focus on cost- efficiency Core set of specialized services Investment-lite model Strong customer focus 1 2 4 5 Core set of specialized services: Focus on time-sensitive, high priority services for which travel is unfeasible,e.g.,intensive care facilities, neonatal care, nephrology, etc. Integrated marketing effort: ATL & direct marketing efforts customized to target customer segments, e.g., radio campaign, telephone helpline, door-to-door visits, referral bonus, tie-ups with government insurance programs, etc. HR-friendly policies: Attractive compensation structure to incentivise doctors to relocate to small cities, provision of greater autonomy and control to doctor staff,rotation of keymedical staff Case Study: Vaatsalya providesquality healthcare to semi-urban areas efficiently Source: Secondary research, Roland Berger Core value proposition: Afor-profit chain of hospitals and clinics in India which strives to provide quality healthcare in semi-urban and ruralareas 3 Strong customerfocus: Focus on customersvia stringent feedback mechanisms and increased operational efficiency,e.g.,use of IVRS1) based booking system,customer satisfaction surveys, detailed KPI tracking, etc. 1) Interactive voice responsesystem B Innovative India Inc.
  25. 25. 25SVII 2.pptx So what does this tell us about the intersection of social needs and business solutions 1. Listening to the customer and appreciation of the gap is critical Local solutionsfor local needs which are relevant2. Innovation in approach, ability to leverage technologyand driving efficient product definitionsis critical 3. Bottom line is both profitabilityas well as social relevance4. Source: Roland Berger Summary

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