Dharavi: Developing Asias Largest Slum (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Problem Statement

The major problem in the case is that Rance Hollen is concerned with investment in India and also has concerns that how the project should be approached. He is wondering whether to enter the bid or not because of the political risks, market risk and the foreign risk.

Key Issues

The key issues identified in the case regarding the bidding of Dharavi slump are as follows,

Redevelopment of Dharavi was highly political
Selection of the developers and their responsibilities
Fluctuation in the prices of real estate in Mumbai
How Warwick will successfully address the needs of residents
How to handle pressure from the opposition party
How Warwick will addressthe business interests of the informal businesses

The key issue with the redevelopment of Dharavi project was that Dharavi was a very large vote bank for different political parties. Different political parties had objected the plans in which they were not involved. Moreover, keeping the political interests aligned with the project was not a piece of cake.

In addition to this, the government was involved in the practice of selecting the developers for the redevelopment of Dharavi project on its own. The residents and the NGOs were not consulted before the selection of the project. Whereas, the government had also made it compulsory for the developers to take part in the maintenance of the buildings and facilities that they constructed for 15 years. This was a very tough responsibility for Warwick and could be very costly for the company.

Similarly, another problem Warwick had with the Dharavi redevelopment project was that the company was concerned about the fluctuation in the prices of reals estates in Mumbai and its impact on their investments. The company was worried that whether the project would be profitable for them or not as the project was supposed to take 5 to 7 years in which the prices could have fallen.

In addition to this, it was proposed by DRP that the families living in Dharavi prior to January 1995, were eligible for the free rehabilitation housing, but the issue was that there was no proper system through which the eligibility could be confirmed apart from the distribution of ID cards.Whereas, the renters in Dharavi were exempted from the DRP plan and it was expected that around 30-40% residents could not be rehabilitated.

Therefore, the fear grew in the residents of Dharavi that they were not being considered by the plan. Their rehabilitation was an issue for Warwick. In addition to this, a survey conducted by MASHAL indicated that 59,165 dwelling units were supposed to be rehabilitated rather than 57,000 as estimated by DRP plan. Rehabilitation of these numbers was a huge challenge for the company.

Furthermore, the opposition Shiv Sena party was putting pressure for the additional 100 square feet per unit. So fulfilling to their demands was also a challenge for the Warwick. Another major problem that Warwick had to face was addressing the interests of the residents concerning their informal businesses. This was a major challenge for the company.

The informal enterprises accounted for producing goods of worth $600 million, annually. The rehabilitation of the informal businesses was a major issue as a large number of Dharavi residents were depending on the informal businesses and restructuring the business could have given birth to the unemployment due to an uncertain future. Moreover, the plan discouraged many manufacturing activities that were coming under the skin of pollution.

Recommendation

Hollen had to choose from two options which were whether the company should give a proposal well above the minimum requirement or it should not compete? The better option for Hollen is to give the proposal to the government and qualify for being the developer of the Dharavi Redevelopment Project. This option should be chosen as it will give benefits to the company in the future by eliminating the risks involved in the project.

The risk can be eliminated in a way that the company should initially take steps for educating the residents of Dharavi. They should be given complete knowledge about the project and how it can benefit them. Moreover, the residents should also be involved in the process of the transformation as they have complete knowledge about the slum and hence, their knowledge can be fruitful for the company.......................................

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