4.

0 Financials: In reality, Grameen Danone is still loss-making and the amount of loss has been growing every year so far. However Grameen Danone intends to reach the break even in the year 2013.

'Shokti Doi' (which means 'strength yoghurt') is primarily intended for children. Shokti is a yogurt made with cow's milk, date molasses and sugar. Originally, the price of each 80g cup was set at 5 Taka, (c. Euro 0.05 or US$0.07). Yunus claims that the global food crisis beginning in 2006, made price adjustments necessary. In 2010, a 60g cup sold for 6 Taka in rural markets. An 80g cup sold for 8 Taka in "local city" stores and 15 Taka in Dhaka, Bangladesh's largest city.

4.1 Break-Even Analysis: While further fine-tuning its business model, Grameen Danones management expects to break even in 2012 or 2013. (Reaching the moment in which revenues will cover the companys expenses).

In order to make a cup of Grameen Danone, it requires cow's milk, date molasses and sugar. It takes approximately tk 5.7 per 80gms cup. So the profit margin is very narrow.

Present Product

Yogurt from fresh milk that includes cornstarch, date molasses, sugar and micro nutrients (vitamin, iron. protein, iodine, zinc, calcium, etc.) A single 80-gram cup provides 30% of a childs daily requirements of vitamin, iron, zinc and iodine.

Production Capacity

3,000 kgs yogurt/day and maximum10,000 kgs/day.

Cost of Product

7 Cents/80gms Cup (~5.7tk/80gms Cup)

Break-Even Analysis:

Break-Even Analysis Monthly Units Break-Even Monthly Sales Break-Even 21,00,000 1,32,25,000

Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost Estimated Monthly Variable Cost 7.5 2.0 90,00,000 42,25,000

4.2 Sales Forecast: In the near future Grameen Danone Foods Limited will expand its economic activities via increase in infrastructure, manpower and campaigning (Grameen Danone Foods Limited, 2010). The aim is to achieve profitability by setting up a new manufacturing plant and generating more revenues, so that they can increase their market segment.

2010 Sales in kg 865000

2011 980000 110.2 52,200

2012 1179645 132.24 60,100

2013 1300000 158.7 66,700

2014 1450000 170.5 70,200

91.84 Sales in tk (million) 40,894 Cups sold / day Table: Yearly Sales Forecast

4.3 Expense Forecast:

Actual 2008 New Factory
Land Building Machineries

Actual 2009

Actual 2010 150000 45000 10000 95000

Actual 2011 30000 0 0 30000 4500 1000 3500 10000

Forecast 2012 20000 0 0 20000 3000 0 3500 10000

Forecast 2013 185000 45000 10000 130000 3000 0 5000 10000

Forecast 2014 10000 0 0 10000 0 0 3500 20000

Forecast 2015 0 0 0 0 1500 0 5000 20000

Chilling Center ERP Logistics Factory Machineries Milk Truck Pouch Machine Crates Others Capital Expenditure 67 4 989 Filling Carring 3 017 1 905

1137

1500 0 6000 4995

3000

3000

3000

2000

1300 865 3 302

0 2500 166 995

400 10000 62 400

400 5000 44 900

400 10000 2 16 400

400 5500 39 400

400 0 26 900

Table: Capital expenditure forecast (Taka 000s)

5.0 Controls: Effective advertisement on television and other medias can play a vital role in order to augment the sales revenue. Advertisement and promotional activities can certainly allows the company to grasp the market share and control over sales.

000 taka

2009 8196

2010 14069 72%

2011 62307 343%

2012 79248 27%

2013 88385 12%

2014 109298 24%

2015 140643 29%

A&P % growth

From 2011 onwards, A&P budget enables to cover 4 months of TV advert izing (with approx. 965 GRP / act ive week on BTV+Channel I+NTV+ATN and with a cost / GRP = 1690BDT) and massive promot ional mini-event support.

5.1 Implementation:

Grameen Danone will implement several key actions to further grow and reach break-even in 2013 : Extend its sales network o From 8000 to more than 15000 stores o From 600 to 1500 ladies Fully exploit proven success marketing model o TV advertising with Prof. Yunus o TV advertising with Shakib Al Hasan Mini events in rural areas Innovate by launching Shokti+pocket : a 5tk pouch with same nutrition, longer shelf life with no fridge needed. Partially vegetal recipe ensures lower formula cost and better profitability Focus on developing own chilling centers to secure the price of milk to below 30 BDT/ liter Improve industrial efficiency by going to max. capacity by doubling its maximum capacity from 1600 to 3200T per year. Start the 2nd factory near Dhaka in 2013

5.2 Marketing Organization: The marketing strategy developed for the Grameen Danone project is completely different from the traditional strategies used to market consumer goods. It is modified to the local context, and emphasizes the importance of sending out a global nutritional message. The Grameen Ladies distributing Shoktidoi will carry a visual aid explaining the products health benefits. Since the transportation and communication system of rural areas have been weak, we will supply our product to village shops by van in order to spread the product to remote areas. Educational games will be handed out at schools in the Bogra area. This will provide a fun way for children to learn that a balanced diet goes hand in hand with physical and intellectual development.

5.3 Contingency Planning: Milk is the most important ingredient for Shokti doi. And collecting milk as well as other ingredients is a big challenge, since 90% of the Bangladeshi milk market operates on an informal basis. So they should equip with their own farm, in order to prevent adulteration and unavailability of resources during natural calamity.

Moreover, they are at a growth stage in the product life cycle. So, Grameen Danone has to begun to diversify its product offerings to appeal to even more customers (adults as we all children), and lengthen their product line, so that it boosts the sales volume.

Difficulties and Risks The company needs to be prepared for all kind of difficulties and risks. o Lack of power supply: We know that Electricity is one of the major concerns of Bangladesh. Due to the shortage of Electricity and Gas, they firms productivity is not flourishing. So its been a great threat. o Political instability: Our politics is not stable, frequent strikes of political parties also hamper daily firms production. o Transportation problem: In Bangladesh transportation and communication create serious restricted access.

o Fall in Purchasing Power: Their objective is to bring health through nutrition at very affordable price for poor Bangladeshi children. But this does not mean that Grameen Danone must be a loss-making company, but rather that the profits it makes will be reinvested to develop new businesses. Its is difficult to make profit out of a consumer group whose purchasing power deteriorate quite frequently.

Worst-Case Risks

In Bangladesh, when nature produces a extreme version of the seasonal rainfalls, farms and villages are swept away, causing terrible hardship homelessness and many deaths. Its a problem that made the situation much worse by the growing impact of global warming and the rising ocean level it is producing. For Grameen Danone, all these trends combined to create a serious challenge to its business models. Along with the price of rice and meat; the price of milk - the most important ingredient in yogurt doubled.