Question

What is the potential for profit generation across business cycles in India? Provide a specific example from industry of a multinational company who has had financial success or failure in India? What were the key success/failure drivers and how do they relate to the supply chain?

Answer 1

The potential for profit generation in India lies in its huge population. An example of an MNC having financial success in India creating this profit generation could be cited from the FMCG (Fast-moving consumer goods) industry. Most of the popular MNCs in India have a vast variety of product line in the FMCG sector ranging from detergents, shampoo, hair care, cosmetics, beauty products, health drinks and the products used by the people on a daily basis

The supply chain of the FMCG sector lies in manufacturing these products and distributing the products to the end consumer involving intermediaries like wholesalers, discounters and retailers. The FMCG supply chain is highly dependent on the end consumers consuming the products on a daily basis. The bargaining power of consumers is high in the FMCG supply chain with alternative products readily available in the market. The consumer choices are ample with intense competition from rivals and local brands making brand switching frequently in the FMCG sector. The buying trend is dynamic with the tastes and preferences of the consumers changing to an informative, healthy and environmental protection customer base

The key success factors in the supply chain lie in the network of providers in the supply chain. The population of India is the major strength or success factor as the bargaining power of consumers is critical to the success of the MNC in the FMCG. Market segmentation plays a critical role in achieving this success factor for generating profits in the FMCG supply chain by categorizing the consumers or Indian population based on income. This categorization of consumers helps the MNC to develop products based on the customer segments and market the products at different prices, sachets and packets. Hence the end consumer segmentation remains the key success factor in the FMCG supply chain to generate profits with huge potential lying in the population of India