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What does it take to win in IndiaCase studies of successful MNCs

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Agenda

• India – the emerging center of gravity

• Must-do’s to win in India

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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 Hindu16 September 2008

India pips China in contract research & manufacturing. Financial Express14 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

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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

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Agenda

• India – the emerging center of gravity

• Must-do’s to win in India

• Learnings for the Pharma Industry

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The paradoxical peculiarities of the Indian market require the consideration of new business models

Source: Accenture Analysis, IBEF, various reports

2007 2008

20%

260m

100k

85k

2007 2008

16

25

Number of people living under USD1 per day in India

No. of dollar millionaires in India

FDI Inflows to India (USD billion)

India US

715

Number of days taken to start a business

Avg. No. ofgraduates per

year

Estd. Talentshortage in 2010

500k425k

Talent Pool availability

% fresh graduates considered “Employable”

9%

50%

The Top and the Bottom of the Pyramid “Open for Business” The Talent Conundrum

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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

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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

Nokia 5.5 7%

Suzuki 3.9 13%

Vodafone 3.4 5%

ITC / BAT 3.1 16%

Unilever 3.0 5%

Holcim 2.8 11%

LG 2.4 6%

MNCs in India

India Revenue

($ Billion)

Share of Global

Revenue

Sony 1.0 1.1%

Toyota 0.8 0.4%

Coke 0.6 2%

GSK 0.4 1%

P&G 0.3 0.5%

Sanofi-Aventis

0.2 0.5%

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%

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Elements of Strategy Sample 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

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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

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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

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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

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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

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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