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Copyright © 2008 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. What does it take to win in India Case studies of successful MNCs
2 Copyright © 2008 Accenture All Rights Reserved. Agenda India – the emerging center of gravity Must-do’s to win in India
3 Copyright © 2008 Accenture All Rights Reserved. The Global Economic Order is changing – India is an emerging center of gravity in a multi polar world. Indian healthcare segment to fetch PE funding worth US$ 500 million in three years IBEF September 15, 2008 Govt puts clinical research approvals on fast lane The Hindu 16 September 2008 India pips China in contract research & manufacturing. Financial Express 14 September 2008 Philips India to up production to meet global demand Business Standard September 10, 2008 Indian auto industry to lead globally by 2020 IBEF September 08, 2008 Daikin India AC factory to be Asia export hub The Economic Times September 06, 2008 MS India centre to focus on emerging markets Hindu Business Line August 13 2008
4 Copyright © 2008 Accenture All Rights Reserved. India’s rapid growth continues to provide tremendous opportunities. Emergence of new businesses and sectors Opportunities What new offerings should one invest in and when ? A growing domestic market - emerging consumers at the top and bottom of the pyramid A hub for doing business globally India is still a relatively difficult place to do business - ranks 120 in World Bank’s ease of doing business Choosing the right business models Challenges
5 Copyright © 2008 Accenture All Rights Reserved. Agenda India – the emerging center of gravity Must-do’s to win in India Learnings for the Pharma Industry
6 Copyright © 2008 Accenture All Rights Reserved. The paradoxical peculiarities of the Indian market require the consideration of new business models Source: Accenture Analysis, IBEF, various reports 20% 260m 100k 85k 16 25 Number of people living under USD1 per day in India No. of dollar millionaires in India FDI Inflows to India (USD billion) 71 5 Number of days taken to start a business 500k 425k Talent Pool availability % fresh graduates considered “Employable” 9% 50% The Top and the Bottom of the Pyramid “Open for Business” The Talent Conundrum
7 Copyright © 2008 Accenture All Rights Reserved. McDonald’s expects its Indian operations to be profitable the next fiscal, twelve years after it set shop in India Business Line Coca Cola getting its footing right after years of missteps in India Business Week Many examples show that successful global templates do not necessarily work in India. Daewoo Motors used the same plan for investment as used in China, except for minute modifications made for the Indian market. The disastrous result was the introduction of the wrong kinds of vehicles which led to Daewoo's failure in India Business Week Hollywood’s first big foray into Bollywood has been branded a flop. Sony Pictures’ Saawariya premiered in direct competition with locally produced Om Shanti Om, and grossed little more than a third of its counterpart in its first two weeks Financial Times All trademarks and logos are the property of the respective companies
8 Copyright © 2008 Accenture All Rights Reserved. Some MNCs however have already proven that India can add substantially to their global revenues and profits. MNCs in India India Revenue ($ Billion) Share of Global Revenue Nokia5.57% Suzuki3.913% Vodafone3.45% ITC / BAT3.116% Unilever3.05% Holcim2.811% LG2.46% MNCs in India India Revenue ($ Billion) Share of Global Revenue Sony1.01.1% Toyota0.80.4% Coke0.62% GSK0.41% P&G0.30.5% Sanofi- Aventis 0.20.5% Have achieved size and scale Still to achieve relevant scale Source: Accenture Analysis, IBEF, various reports All figures are either for Dec 2007 or Mar 2008 India GDP as a percentage of World GDP = 1.85% All trademarks and logos are the property of the respective companies
9 Copyright © 2008 Accenture All Rights Reserved. Elements of StrategySample Case Studies Explore new business models Innovate to differentiate Price it right Explore Inorganic growth (but with caution!) We believe that there are four must-do’s to win in the Indian market. Source: Accenture Analysis All trademarks and logos are the property of the respective companies
10 Copyright © 2008 Accenture All Rights Reserved. Successful MNCs have built unique business models to fully realise the Indian potential. Sample Case Studies Key learnings Wide distribution network covering 6.3 million retail outlets Project Shakti covering 100,000 villages Work backwards from customer segments rather than stick to global models Become part of the fabric of society Importance of rural penetration Using technology to target the bottom of the pyramid 90,000 distribution points in contrast to global operator driven model (40K in China) Nokia Concept Stores ‘Lab to land’: shared best practices with Indian Tobacco Farmers ITC’s eChoupal sources directly from farmers All trademarks and logos are the property of the respective companies
11 Copyright © 2008 Accenture All Rights Reserved. Product and service innovations are key to winning in the Indian marketplace. Sample Case Studies Key learnings Top 6 brands that contribute 53% of sales are Indian Customized global products and services Developing products / services specifically for Indian tastes Attention to cultural aspects Phones launched with Indian ring tones, Indian language menu / SMS Low-price made-for-India Nokia 1100 model - dust resistant with flash light Added bass and large speakers on TVs to cater to Indian preferences Committed response times for after sales service All trademarks and logos are the property of the respective companies
12 Copyright © 2008 Accenture All Rights Reserved. Strategic pricing needs to address all customer segments of the Indian market. Sample Case Studies Key learnings ‘Low unit pack’ strategy in shampoos constitute 70% of the shampoo market Introduced low priced detergent Wheel Customized pricing and pack sizes Price Innovations for target audience in urban, semi urban and rural areas. Pricing as a tool to counter competition – no white spaces Has cars at every price point – from the least cost in the market to expensive SUVs Market leader in most segments Low-priced product under different brand ‘Sampoorna’ for rural markets All trademarks and logos are the property of the respective companies
13 Copyright © 2008 Accenture All Rights Reserved. Inorganic route can be a good way to jumpstart; however a well defined business case needs to be in place. Sample Case Studies Key learnings Acquired Hutch Essar - 4th largest cellular operator in India. Immediately gained access to India’s 40 Mn subscribers - now Vodafone’s largest business by customer numbers Broaden reach with a strong distribution network & customer base Add popular local brands Open up new market segments Lower operating costs Acquired ACC & Gujarat Ambuja - became market leader with 25% market share and 15% of its global capacity Ambuja factory is one of least cost production units worldwide All trademarks and logos are the property of the respective companies
14 Copyright © 2008 Accenture All Rights Reserved. Business models in emerging markets need to define different metrics for success. High Margins Labor Productivity Mass Media Rapid Innovation High Volume Capital Efficiency Multiple Channels Durability ‘Developed’ Market Model‘Emerging’ Market Model
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