prabhat dairy: “moo-ving” forward - mbacasecomp.com of south carolina ... indian milk market....
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Prabhat Dairy: “Moo-ving” ForwardUniversity of South CarolinaJessie FarrarBo GilliamRebecca McDonaldMadeline Senior
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January 5, 2017
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Vision
We want to expand our product offerings in B2C market by entering into Tier 2 and
Tier 3 city markets.
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Presentation Overview
Strategic
Tactical
Operational
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Key Deliverables
Recommendation
Implementation
Risks and Mitigation
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Agenda• Key Deliverables• Strategic OptionsStrategic Options• P.I.T.C.H. Framework• Current Financial LandscapeTactical Steps• Decision Grid• Our VisionAlternatives• Budget• TimelineOperational Steps• Additional Consideration• DeliverablesRisks and Mitigation
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Key Issue
How do we expand our B2C offerings
and reach out 50:50 B2B:B2C goal?
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Reality Check: Our B2B is currently
70% of our business
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
What Does Success Look Like
Increased brand recognition by consumer in Tier 2 and Tier 3 cities
Increased liquid milk market share in new markets
Increased optimization of supply chain to promote efficiencies
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Performance Gaps
B2C marketing
Supply Chain
B2C presence
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Strategic Options
Growth Stability Retrenchment
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Alternatives
Continue in current B2B market.
Increase presence in B2C market in Tier 1 city.
Increase presence in B2C market in Tier 2 and Tier 3 cities.
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
McKinsey P.I.T.C.H. Framework12
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
Indian Milk Market13
Indian Milk Market Maturity
Inte
rnal
Strengths Weaknesses
Current B2B business
Strains on cash flows
Steady revenue stream Supply chain
Exte
rnal
Opportunities Threats
Population moving to Tier 2 and Tier 3 cities
Intense competition in major cities
Rising population incomes
Government regulation and involvement
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
Stakeholders14
Stakeholders
Government
Business Customer
Individual CustomerEmployees
Farmers
Government Supported CO-Ops
Quality Control and Safety
Steady Work, Prices, and Help in Output Efficiency
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
Our B2C Customers15
72% rural areas, 28% cities
Many income levels and languages
Live in Tier 2 and Tier 3 cities
•As income grows, purchasing power will rise
Growth opportunity for under 30 (50% of population)
•Highly price sensitive
Spend 50% of income on food
Paisa VasoolLow price for the
highest quality available
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
Our Value Chain16
Inputs
Production
Processing
Distribution
Marketing
Consumption
Prabhat’s Portion of Supply Chain
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
Efficiency17
Between 2012 to 2015,
Inventory days increased from 17 to 23 days.
Receivables increased from 35 to 76 days.
Increased Operations and Supply Chain Expediency to Reduce Time to Market
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
Technology to Consider18
Data Analytics• Low Cost Options for India• Ensure that Technology is used to ensure pasteurization is
up to date• Mitigate Potential Safety Concerns• Wealthy Customers buy from MNCs for this reason
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
The Competition19
WhiteSpace
Price Points
Market Penetration High
Low
HighLowMondelez
Amul
Nestle
Mother Dairy
Prabhat
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Product Infrastructure Technology Competitors Human Capital
Our Employees20
1,200 employees
Headquarters: Mumbai
Farmers• Current pay• Go to coops
Current employees• Organizational structure
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
India’s Current Milk Market• Disposable Income and Milk Prices on the Rise• Rising milk procurement prices have had adverse impact on packaged milk
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Skim Milk Prices in Mumbai (in RS)*
2016 2017 2018 2019
Prabhat 65 69.5 74.4 79.6
Amul 70 74.9 80.4 85.8
Danone 75 80.3 85.9 91.9 Assu
mpt
ions 7-8% increase per
year anticipated
5-6% inflation
* For 500mL bottles
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Customer Purchasing Power on the Rise
By 2030, 24% of the Indian Population will have an
income of > $11,000
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
AlternativesContinue in current
B2B market.
Pro: Stable revenue
Con: Losing out on new market
Increase presence in B2C market in Tier 1
city.
Pro: Large population and low distribution
costs
Con: Heavy competition by MNC
Increase presence in B2C market in Tier 2
and Tier 3 cities.
Pro: Low competition present, increased buying power and
continued urbanization
Con: Relatively higher distribution costs
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Our Vision
Phase 1: Development of Implementation Plan
Phase 2: Marketing and Analytics
Phase 3: Roll-out
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To increase our liquid milk B2C business through the penetration of Tier 2 and Tier 3 markets and optimizing supply chain.
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Phase 1 • Strategize a 1-year plan and implementation plan for expansion into
B2C liquid milk market• Use of data analytics to estimate resources necessary to meet success factors.
• Streamlined supply chain strategy to be implemented by Q3• Plan for possible company reorganization to meet optimization
• Develop detailed operations implementation plan for supply chain strategy
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Phase 2 • Analysis of the use of buffalos for our expansion
• Breakdown o how viable this plan could be, the cost, and possible benefits
• Marketing strategy for Tier 2 and Tier 3 cities that emphasizes our slightly below competitor cost but still high quality product
• List of viable Tier 2 and Tier 3 cities to enter first
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Marketing Plan
We need a strategy that will market to the following stakeholders:•Our farmers•Kiranas•Customers
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Marketing MessageOur farmers: Focus on desired company growth and rising potential income by remaining loyal to Prabhat
Kiranas: Encouraging Kirana owners to bring informed farmers into Prabhat’s network as we expand.
Focus on high quality through our technology while continuing to focus on lower prices.
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Phase 3• Distribution and logistic plan for implementation of liquid milk
products in Tier 2 an Tier 3 cities • With identification of distribution company to hire
• Breakdown of convenience stores and kiranas where our products can be sold
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Timeline
Phase 1: 30 days
Phase 2: 60 days
Phase 3: 90 days
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Budget
Total Budget (in ten million rupees)
2016 RS 117.20
2017 RS 58.6
2018 RS 58.6
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Budget Breakdown per Year
60% to Operations and Supply Chain
29.3% to Marketing
29.3% to Data Analytics
Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Risks in MitigationRisks• Other competitors entering Tier 2 and Tier 3 city markets.• Difficulty finding dairy farmers who are capable of
supplementing our new B2C business.• Distribution channels are unable to handle our supply.
Mitigations• Extensive marketing campaign launched upon entering these
markets.• Slightly raising price floor for our farmers as incentive to
come work for us.• Large distribution company such as FedEx or UPS to
supplement our distribution system.
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Additional Considerations• Once established in new market with milk product, research about
expanding portfolio into the yogurt market • Strategic shift to increase in buffalo milk farming versus cow milk
farming• Research into partnerships between farmers and slaughterhouses for the sale
of buffalo animals after their useful lives
• Explore how to increase milk output per cow by manipulating quality of feed, based on best practices in Europe and the United States
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Deliverables
Increased brand recognition by consumer in
Tier 2 and Tier 3 cities
Increased liquid milk market share in new
markets
Increased optimization of supply chain to
promote efficiencies
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Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation
Slide Index• Vision
• Presentation Overview
• Key Deliverables
• Agenda
• Key Issue
• What Does Success Look Like
• Performance Gaps
• Strategic Options
• Alternatives
• Tactical Steps
• McKinsey P.I.T.C.H. Framework
• Indian Milk Market
• Stakeholders
• Our B2C Customers
• Our Value Chain
• Efficiency
• Technology to Consider
• The Competition
• Our Employees
• India’s Current Milk Market
• Customer Purchasing Power on the Rise
• Alternatives
• Alternatives
• Our Vision
• Operational Steps
• Phase 1
• Phase 2
• Marketing Plan
• Marketing Message
• Phase 3
• Timeline
• Budget
• Risks in Mitigation
• Additional Considerations
• Deliverables
• Thank you!
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