Harvard Case - Unilever Ethiopia's Shakti Initiative: Building a Rural Sales Channel
"Unilever Ethiopia's Shakti Initiative: Building a Rural Sales Channel" Harvard business case study is written by Ted London. It deals with the challenges in the field of International Business. The case study is 26 page(s) long and it was first published on : Apr 19, 2022
At Fern Fort University, we recommend that Unilever Ethiopia continue to invest in and expand the Shakti program, leveraging its proven success as a model for rural market penetration and social impact. This recommendation is based on a comprehensive analysis of the program's strengths, opportunities, and challenges, considering its alignment with Unilever's global strategy, its impact on the Ethiopian market, and its potential for further growth and sustainability.
2. Background
Unilever Ethiopia, a subsidiary of the multinational consumer goods giant Unilever, faced a significant challenge in reaching the vast rural population of Ethiopia. The existing distribution channels were inadequate, and the company recognized the need for a more effective and sustainable approach. The Shakti program, launched in 2008, addressed this challenge by empowering women entrepreneurs in rural areas to become micro-distributors of Unilever products. This innovative approach not only expanded Unilever's market reach but also created economic opportunities for women, contributing to social development.
The main protagonists of the case study are:
- Unilever Ethiopia: The company seeking to expand its market reach and impact in Ethiopia.
- Shakti Entrepreneurs: The rural women empowered by the program to become micro-distributors.
- Unilever Global: The parent company providing support and guidance for the program's implementation and expansion.
3. Analysis of the Case Study
The Shakti program can be analyzed through the lens of various frameworks, highlighting its strengths and areas for improvement:
Strategic Framework:
- Porter's Five Forces: The program addresses the competitive forces in the Ethiopian market by:
- Reducing the threat of new entrants: Shakti entrepreneurs create a strong distribution network, making it difficult for new players to enter the market.
- Lowering the bargaining power of buyers: By reaching rural consumers directly, Unilever reduces dependence on traditional retailers and strengthens its customer relationships.
- Mitigating the threat of substitutes: By offering a wide range of essential products, the program caters to diverse needs, reducing the appeal of substitutes.
- Competitive Advantage: The program provides a unique competitive advantage by:
- Building a strong brand presence: The program builds trust and loyalty among rural consumers, enhancing Unilever's brand image.
- Creating a sustainable business model: The program fosters economic empowerment and social impact, aligning with Unilever's corporate social responsibility goals.
- Leveraging a strong network: The program builds a network of empowered women entrepreneurs, creating a powerful distribution channel.
Marketing Framework:
- Marketing Mix: The program effectively utilizes the marketing mix:
- Product: Unilever offers a range of essential products tailored to rural needs.
- Price: The program utilizes a pricing strategy that is affordable for rural consumers.
- Place: The Shakti entrepreneurs create a robust distribution network, reaching remote areas effectively.
- Promotion: The program utilizes word-of-mouth marketing and community engagement to build brand awareness.
- Segmentation, Targeting, and Positioning: The program effectively targets rural consumers by:
- Segmenting: Identifying specific needs and preferences of rural consumers.
- Targeting: Focusing on empowering women entrepreneurs to reach these consumers.
- Positioning: Positioning Unilever products as essential and affordable solutions for rural households.
Operational Framework:
- Supply Chain Management: The program effectively manages the supply chain by:
- Developing a robust logistics network: Ensuring efficient product delivery to rural areas.
- Training entrepreneurs: Providing training on product knowledge, sales techniques, and inventory management.
- Building strong partnerships: Collaborating with local NGOs and government agencies to enhance program effectiveness.
- Innovation: The program demonstrates innovative thinking by:
- Empowering women entrepreneurs: Creating a unique and effective distribution channel.
- Developing a sustainable business model: Balancing economic growth with social impact.
- Adapting to local context: Customizing the program to meet the specific needs of the Ethiopian market.
4. Recommendations
To further enhance the Shakti program's success and impact, Unilever Ethiopia should consider the following recommendations:
- Expand the program's reach: Increase the number of Shakti entrepreneurs, targeting new regions and expanding into untapped markets.
- Diversify product offerings: Introduce new product lines that cater to the evolving needs of rural consumers, including products related to health, hygiene, and agriculture.
- Develop a comprehensive training program: Enhance the training program for Shakti entrepreneurs, focusing on financial literacy, business management, and leadership skills.
- Strengthen partnerships: Build stronger partnerships with local NGOs, government agencies, and microfinance institutions to provide support and resources to Shakti entrepreneurs.
- Leverage technology: Utilize mobile technology to improve communication, inventory management, and financial transactions within the program.
- Promote sustainability: Integrate environmental sustainability practices into the program, encouraging eco-friendly packaging and promoting responsible consumption.
- Measure and track impact: Implement robust monitoring and evaluation systems to track the program's social and economic impact, ensuring accountability and transparency.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with Unilever's core competencies in product development, marketing, and distribution, while also supporting its mission of improving lives and creating a sustainable future.
- External customers and internal clients: The recommendations focus on meeting the needs of rural consumers while empowering Shakti entrepreneurs, ensuring a win-win situation for all stakeholders.
- Competitors: The recommendations aim to maintain and strengthen Unilever's competitive advantage by expanding its reach, diversifying its offerings, and enhancing its operational efficiency.
- Attractiveness ' quantitative measures if applicable: Expanding the program is expected to generate significant returns on investment (ROI) through increased market share, brand loyalty, and positive social impact.
6. Conclusion
The Shakti program represents a remarkable success story, demonstrating the power of innovation, empowerment, and sustainable business practices. By continuing to invest in and expand the program, Unilever Ethiopia can further solidify its position as a leading player in the Ethiopian market, while simultaneously contributing to social development and economic empowerment.
7. Discussion
Other alternatives not selected include:
- Traditional distribution channels: This approach would be less effective in reaching rural consumers and would not create the same social impact as the Shakti program.
- Mergers and acquisitions: While this could provide access to existing distribution networks, it might not be as cost-effective or socially responsible as the Shakti program.
Key assumptions of the recommendations include:
- Government support: Continued government support for the program is crucial for its success.
- Market demand: There is a continued demand for Unilever products in rural areas.
- Financial sustainability: The program can be financially sustainable through revenue generation and partnerships.
8. Next Steps
To implement the recommendations, Unilever Ethiopia should follow a phased approach:
- Phase 1 (Year 1): Expand the program to new regions, diversify product offerings, and enhance training for Shakti entrepreneurs.
- Phase 2 (Year 2): Strengthen partnerships with local stakeholders, leverage technology, and implement sustainability initiatives.
- Phase 3 (Year 3): Evaluate the program's impact, refine strategies, and explore opportunities for further expansion.
By taking these steps, Unilever Ethiopia can ensure the continued success of the Shakti program, creating a lasting legacy of social impact and business growth.
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Case Description
In 2017, Tim Kleinebenne, managing director of Unilever Ethiopia, and Buks Akinseye, senior global sustainability manager in Unilever's Rotterdam headquarters, had collaborated to develop and launch a Shakti initiative, creating a last-mile distribution channel that targeted rural Ethiopia. While serving rural Ethiopia presented Unilever with a substantial market opportunity and the promise of achieving greater diversity, equity, and inclusion in its business strategy, the rollout had proved challenging. To facilitate the initiative, Unilever Ethiopia's search for a partner had led to Kidame Mart, a local social enterprise founded by Shani Senbetta. With funding from Unilever, Senbetta and her team recruited economically vulnerable women in rural Ethiopia to be Shakti entrepreneurs and provided them a basket of goods to sell locally. This basket included mainly Unilever products, along with a few non-competing items from other companies. But, creating demand for Unilever products and in rural markets was difficult.
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