Published on March 13, 2014
STRATEGIC MANAGEMENT Strategy for Mother Earth Deepak Sharma Harbinder Singh Pavan S K Praveen P. Pushkar Choudhary Siddhardha Pendyala Snigdha Smitahasini Vikas Sharma Presenting Team
VISION, MISSION & GOALS VISION: Connecting rural livelihood skills to urban markets in an equitable way. MISSION: To enhance and create rural artisanal livelihoods through marketing of contemporary designed artisanal produce, such as food, apparel and home products, for urban markets, wherein producers own equity, in the production and retail brands. CORE VALUES: Transform the lives of rural producer communities, by integrating them sustainably into the larger consumption economy through a for profit institutional model of ownership integrated with design, production and marketing
FOUNDATION A social brand, Mother Earth offers consumers the best of the Indian natural hand crafted products while simultaneously providing livelihoods to the rural artisans and laborers of India. Mother Earth is a brand with a deeper essence. To the customer it is not just about merchandise, but a promise that the brand offerings are natural and healthy and hence safe and good for customer, society as well as for the planet Earth. Under the personal mentorship of Future Group Chairperson, Kishore Biyani, the brand saw its true potential, which in-turn reflected in customer appreciation.
EXPANSION & SUCCESS Mother Earth is an organization which is responsible for the design, production and sales of products. Products including furniture, gift items ,garments (woven, embellished or stitched by rural artisans), food (organic and natural), natural fiber products, handicraft decor. Currently we have 7 stores which are company owned.
IDEA BEHIND MOTHER EARTH India has a big institution of traditional occupation, expert in the production of everyday use products. It is only natural that this talent base needs to be explored further to produce modern day products such as food, fashion and home. Mother Earth creates an ecosystem to make this possible
MARKET PLACE TODAY…
MARKET FOCUS Markets Mainstream High Volume Mostly global players Tourism sector High Value Designer / High fashion market Fair Trade Western concept FOCU S AREA S
PLANET, PEOPLE AND PROFIT The franchisee route - is the best medium to reach out to a wider customer base which is why we wish to take it up for expansion. We need a business partner who shares the same vision and passion for retail and social cause like we do. And who also believes in triple bottom-line concept ‘Planet, People and Profit’, not just profit alone. Our USP is that we have a right amalgamation of „social retailing‟ and „main stream retailing‟. Target Market - our presence was mainly in metros; with a store in Mysore, we are entering Tier II cities. With franchising, we expect to expand our reach in Tier II towns. Mother Earth is planning for expansion in India
FRANCHISEE MODEL Start-up investment cost varies between ₹30-45 lakhs Store size would be preferably around 1,500-2,000 sq. ft (carpet), either in a mall or in main market places Break even period is between 2.5 to 3 years and expected ROI is between 30 to 35 per Profitability with Sustainability
ORGANIZATION STRUCTURE The organization consists of three entities Industree Crafts foundation • Which supports artisans in rural areas with design and skill development Industree Crafts Pvt. Ltd. • They handle all commercial activities and have their own production centers. Industree transform Pvt. Ltd. • This entity takes care of all back end functions such as sourcing, procurement, sorting, ware housing etc.
BUSINESS OVERVIEW Home Décor Personal accessories Natural Fiber Furniture Organic Food Clothing
INDUSTREE TODAY Mother Earth – retail brand of Industree (2009) Future Group investments (2010) close to USD 1.5M (43%) Grown to 10,000 artisans , 15 states, 8 stores, 16 Cr revenue Augment income through market linkages Industree BIG‟s (Business Interest Groups) Provide support (arrange loans @ 13-18% interest, PO, skill trainings) 30% merchandise from BIG‟s, aim to grow to 50-60% USD 1M – Grassroots Business Fund (initiative of World Bank & IMF) Distribution through e-commerce (myntra.com), plans to enter wholesale market Handicrafts contribute only 2% of global creative industry Make craftsman part of the value chain Net profit margins close to only 2% - To promote high quality products at lower prices. SOURCE: MONEYCONTROL.COM,
SWOT ANALYSIS Strengths • Favourable trends - Approx. 85% of the consumers willing to switch their brands. Also, 55% of the consumers are also willing promote its product, if it supports a good cause. • Successful in getting foreign investments • Tie-up with government agencies – NSDC, JCI • Strong backing of existing BIG‟s • Apt positioning of brand in consumers • Export of creative goods Weaknesses • Interruption in supply • Quality control – meeting international specifications • Geographical hassles – lack of coordination • Organic farmers, higher costs for organic foods • Capacity and skills • Poor technological upgrade Opportunities • Tap the „conscious customers‟ • Scale up stores, growth in volume (organic food) • Stringent government regulations – environment • International markets – enhance greater share • New products – diversification, bring more BIG‟s under the umbrella Threats • Labor migration – losing skill • Certification cost for organic farms very high • Natural calamities • Cheap duplicates from China • Import of natural fiber goods from SEA • Competition - FabIndia / Anokhi / Craftsville / In The Pink
‘PLAN-DO-CHECK-ACT’ CYCLE Consumer feedback – VOC Build trends to project future demand areas Strategize to create a roadmap Invest & develop into the profitable segments PLAN DO CHEC K ACT
CUSTOMER PREFERENCE & PERCEPTION Survey with 1000 customers through mail, 28 responses received 75% feedback at store & 25% by email A formal internal monitoring system to gather information - needed “For a change feel proud after shopping and not guilty” – customer comment Natural fibre products Craft products Organic food Apparel 54% 50% 46% 50% Natural fibre products Craft products Organic food Apparel 15% 58% 27% Exceptional Satisfactory Could be better Train staff on products Visual merchandising Media coverage Reduce prices Better customer service Reach to middle class 23% 8% 15% 31% 8% 15% 9% 20% 7% 15% 8%
PROPOSED STRUCTURAL CHANGES More autonomy at the operating level Leadership can focus on broader issues of setting up retail stores, support producers, enhance market links etc Performance unit model can be adopted – key growth areas (clothing, crafts, food)
CRAFTS AND ACCESSORIES Development of strategy: Upgradation – Product, Process, Function, New markets • Short term (< 3 yrs) – • Strengthen „earth home‟- existing product line (jute products) • Medium term (3 – 5 yrs.) – • Product variety - connect more artisans to market – glass ware, stone sculptors, brass works, gemstone, pottery etc • Long term (> 5 yrs) – • Interior decoration, office space design, eco living etc
CRAFTS AND ACCESSORIES Implementation of Strategy Short term (< 3 yrs.) – • Raw material de-bottlenecking – post harvest facilities, increased availability of quality seeds, financial support • North-east Development Finance Corporation (NEDFi) • Jute Enterprise Development Scheme (soft loans-25% @ 1%, cost < 10lacs) • Scheme for North east Handloom & Handicrafts (soft loans-25% @ 1%, cost < 20lacs) • New source (1.87 Cr): NEDFi – Haat, participants with no marketing outlet • Oju Craft Centre, Arunachal Pradesh (experts in weaving) • Mishing Weave, Assam • Industree contribution – 20 day training @ R&D centre, Khetri on water hyacinth development program, support mechanization projects, • Strengthen exports – Pier Europe, Ikea, Crate & Barrel • Quality control • Ownership by producrers
CRAFTS AND ACCESSORIES Implementation of Strategy • Medium term (3 – 5 yrs.) • Social workshops - awareness, motivation • Reduce dependence on captive market, move up the value chain, producer owned brand (shop-in-shop) • E.g. Glassware: • Focused funding - micro credit • Set up collection center, logistics - Firozabad, UP • ID cards, toll free numbers, insurance, basic training (packing, designs) • Long term (> 5 yrs.) – • Collaborate with National Skill Development Corporation to set up skill development company – 2 lac producers to benefit in 10 years • Grow to 25 stores, target Rs 160 Cr through expanded product offering • Concept of eco-sensitive living – help build self-sustaining homes (solar, ventilation, water conservation), resorts
ORGANIC FOODS Development of strategy: Short term (< 3 yrs.) – • Mother earth brand for organic foods, organic dairy products • Help increasing awareness about organic food, organic dairy products Medium term (3 – 5 yrs.) – • Independent organic food stores • Help increasing the production of organic foods, organic dairy products Long term (> 5 yrs.) – • Supply organic food to restaurants • Grow organic food consumption beyond the Metro cities • Help the transition from non-organic to organic foods for masses
ORGANIC FOODS Implementation of Strategy Short term (< 3 yrs.) – • Contract farming • Sell organic food with the Mother Earth brand • Tie-up with big retailers (e.g. HyperCity) to sell organic food • Tie-up with Future Supply Chains for logistics. Medium term (3 – 5 yrs.) – • Work with OFAI to raise awareness about organic food • Contract / Co-operative farming • Help farmers in the certification process for organic farms • Set up independent organic food stores (own stores)
ORGANIC FOODS Implementation of Strategy Long term (> 5 yrs.) – • Set up air-conditioned warehouses, boost up own logistics • About 20 per cent of all foods produced in India (₹ 500 B) are wasted due to the lack of cold chain infrastructure. • Government of India allows foreign equity participation of 51% for cold chain projects • More organic food stores through franchisee model • Open organic food stores in Tier-II cities • Help increasing production of organic dairy products • Demand for milk expected to rise to 180M tonnes by 2021-22 • Tie-up with restaurants to supply them organic food • Increasing exports (with APEDA) • Indian Organic Food exports grew by 33% YoY (2010 to 2011) to USD 157M • Global Organic Food market expected to be worth USD 105 B by 2015
FURNITURE PRODUCTS Solid Wood furniture products are preferred by home buyers in India. 85% of all furniture production in India is in unorganized sector No clear records of the number of artisans – reports vary from 100,000 registered wood ware units and more than 200,000 artisans India is net importer of timber, typically from East Asia / Africa and organized sector also imports finished furniture products from West.
FURNITURE PRODUCTS Implementation of Strategy • Set up the Short term (< 3 yrs.) – • Create a Mother earth „Green‟ Brand for furniture • Ensure immediate supply by creation of SHG‟s in tribal areas. • Medium term (3 – 5 yrs.) – • Ensuring supply – promoting local agro forestry plantations. • Introduction of non-traditional wood sources to artisans – e.g. Rubber wood • Tie up with Tourism resorts promoting „ethnic‟ experiences • Long term (> 5 yrs.) – • Scale up supply , possible expansion of Indus Tree Craft foundation model to countries where timber is available. • Training workshops for new designs – office / corporate furniture products
NEW VENTURE ORGANIC BEAUTY PRODUCTS
ORGANIC BEAUTY PRODUCTS NEW VENTURE……. Strengths • Visible shift in universal trend from synthetic to herbal Products • Nature has bestowed our country with an enormous wealth of medicinal plants • India has often been referred to as the Medicinal Garden of the world. • Increasing realization of the side effects of allopathic medicines Weakness • Get the raw material • Funding from multiple source • Strong back end support
ORGANIC BEAUTY PRODUCTS NEW VENTURE……. Opportunities • India has a vast and rich resource of herbal raw materials and it can create a niche for itself in the global herbal market if the domestic industry produced quality products of international standards • Annual turnover of the Indian herbal industry about Rs. 7,500 cr. • Current Growth rate is more than 15% • Small-scale players in the sector are likely to witness brighter times ahead Threats • Existing Players in the Industry like Shahnaz Husain , VLCC, Himalayan , Lotus etc • Customer Acceptance to a new brand • Natural Calamity may hamper production & Transportation
ORGANIC BEAUTY PRODUCTS Development of strategy: • Short term (< 3 yrs.) – • Skin care products • Hair care products • Medium term (3 – 5 yrs.) – • Health care Products • Long term (> 5 yrs.) – • Beauty Salons • Spa
PERSONAL CARE Development of strategy: • Short term (< 3 yrs.) – • Skin care products • Hair care products • Medium term (3 – 5 yrs.) – • Health care Products • Long term (> 5 yrs.) – • Beauty Salons • Spa
PERSONAL CARE Implementation of Strategy • Short term (< 3 yrs.) – • Get a team of experts to prepare the formulas from natural resources • Blend natural ingredients with the science of dermaceuticals for clean, non-toxic products that offer visible results. • Get the raw materials from multiple sources • Set up the workshop for production • Medium term (3 – 5 yrs.) – • Tie up with suppliers for health care material • Set up production plant • Long term (> 5 yrs.) – • Set up for beauty Salons & Spa • Tie up with suppliers, strengthen the production capacity • Funding from bank & foreign investors
PRODUCT LINE Aloevera Gel and Powder Herbal Natural Essential Oil (Super Critical Liquid Carbon Dioxide Process) Essential Oil from Rose Flowers Herbal Cosmetics Herbal Extracts Sennosides from Senna Leaf
DETAILED PROJECT PLAN Product Plant capacity Plant & Machinary Working Capital T C I Aloe Vera Gel and Powder 50 Kg/day Rs 55 Lakhs Rs 17 Lakhs Rs 120 Lakhs Herbal Natural Essential Oil (Super Critical Liquid Carbon Dioxide Process) 52 Kg/day Rs 76 Lakhs Rs 67 Lakhs Rs 190 Lakhs Essential Oil from Rose Flowers 400 ml/Day Rs 8 Lakhs Rs 4 Lakhs Rs 29 Lakhs Herbal Cosmetics 1.83 Tonnes/Day Rs 11 Lakhs Rs 10 Lakhs Rs 26 Lakhs Herbal Extracts 1000 Kgs/Day Rs 45 Lakhs Rs 93 Lakhs Rs 186 Lakhs Sennosides from Senna Leaf 1500 Kgs/Annum Rs 7.2 Lakhs Rs 5 Lakhs Rs 35 Lakhs Rs 202.2 Lakhs Rs 196 Lakhs Rs 586 Lakhs Total Capital Investment of Rs 5.86 Cr. Break even in 2 years
STRATEGIC CONTROL Monitor fund utilization – social audit – volunteers – grass root level Incremental analysis – surveillance, ROI, market demand – fund managers, cost accounting Trial of new initiatives with pilot projects Alter plans – unexpected events – change in socio political conditions, natural calamities
SOCIAL AUDIT The artisan gets ₹58 (US$ 1.38) of every ₹100 (US$ 2.37) from the sales. The median monthly income per producer has increased by ₹1000 (US$ 23.78) Since its inception the number of artisans that the organization has been involved in have tripled. Profits increased 4 times since inception A large proportion of these profits are ploughed back into the business as capital advances to artisans. A conscious effort to have a broad based and geographical diverse producer base that is economically viable. SOURCE: MONEYCONTROL.COM,
EVALUATION OF STRATEGY Surveys Pilot project evaluation Customer connect Channel partner evaluation
INDUSTREE CRAFTS / MOTHER EARTH Introduce 20 shops in next 3 years. Currently there are 4 shops of 10,000 Sq. ft. each Need to expand to 12 similar stores and 25 stores of 1000 Sq. ft. size. Current revenue per square feet is Rs. 800 Revenue split up in order is Big shops (60%), Small shops (20%) , SIS (10%) , Rest (export etc.) (10%) Total Cost split up – Mother earth( 70% retail stores (rent etc.) , 8% head office) , Transform ( 6.5% head office , production center (machines etc.) 7.5% , Foundation ( 2.5% group enterprise, 3.5% consultancy firm expenditure) Sales target currently Rs. 5 crores. Future plans for Rs. 160 crores SOURCE: MONEYCONTROL.COM,
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