Environmental Scanning of HUL

Prepared by :• Guntas Kour

(MBA-4507/10)• Aditi Chopra

(MBA-4556/10)

Introduction of the Organization• Hindustan Unilever Limited (HUL) is India's largest Fast Moving

Consumer Goods Company, touching the lives of two out of three Indians with over 20 distinct categories in Home &Personal Care Products and Foods & Beverages.

• HUL has enjoyed a competitive advantage as a sole provider of personal hygiene care products before the liberalization of India’s economy.

• The company's Turnover is Rs. 17,523 crores (for the financial year 2009 - 2010).

• HUL is a subsidiary of Unilever, one of the world’s leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of about €40 billion in 2009 Unilever has about 52% shareholding in HUL.

Introduction of the Organization• Hindustan Unilever was recently rated among the top four

companies globally in the list of “Global Top Companies for Leaders” by a study sponsored by Hewitt Associates, in partnership with Fortune magazine and the RBL Group. The company was ranked number one in the Asia-Pacific region and in India.

• The mission that inspires HUL's more than 15,000 employees, including over 1,400 managers,is to help people feel good, look good and get more out of life with brands and services that are good for them and good for others. It is a mission HUL shares with its parent company,Unilever, which holds about 52 % of the equity.

Porter’s Five Forces• Porter's Five Forces is a framework for industry analysis and

business strategy development formed by Michael E. Porter of Harvard Business School in 1979.

• It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market.

• Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability

Porter’s Five forces Analysis

Porter’s Five Force Analysis of HUL

Bargaining Power of Customers• High bargaining power due to low cost of

switching.

• Price sensitivity in customers.

• Customers are not reluctant to buy/try new products off the shelf.

• Product Loyalty can be a favourable factor.

Bargaining Power of Suppliers• Suppliers may determine the cost of raw

material and other inputs affecting profitability.

• But their bargaining power is not very high.

• Oligopoly in the supplier side i.e. many suppliers available.

Threat of New Entrants

• Suppliers accessible.

• Distributors accessible.

• Low-cost switching.

• Market Growth.

• Cost effectiveness.

Threats of Substitute Products• Complex and never ending needs of consumers.

• Wide range of choices.

• High expectations of consumers.

• Low-cost switching.

• Beneficial Alternatives.

Competition within Industry

• A large number of players.

• Highly saturated industry therefore scarce customers.

• Intensive Advertisements and low prices.

Environmental Threats & Opportunities Profile ( ETOP )

ETOP Analysis

Why ETOP?

• Helps organization in identifying Opportunities and Threats.

• To consolidate and strengthen organisation's position.

• Helps strategists in appripriate strategy formulation.

• Helps to know the current position.

How is ETOP done?

• Environment is divided in different segments.

• The impact of each segment is analyzed.

• Each segment is sub-divided into sub-segments.

• Impact of each sub-segment on Organization.

ETOP Pros and Cons

Pros• Help to determine the

key factors of threats and opportunities.

• Help In strategy formulation.

Cons• Does not show the

interaction between these factors.

• It can’t reflect the dynamic environment.

ETOPFactors Could Include

Political International Trade, taxation policy

Economic Interest rates, exchange rates, national income , inflation rate, unemployment, stock market

Social Ageing Population, Attitude to work, Income distribution

Technological Innovation, New Product development

Environmental Global warming, environmental issues

Legal Competition laws, corporate laws, employment laws, health and safety

Opportunity Matrix• Market Leaders – Brand

Awareness and Brand Value.• Expansion of horizons - countries

beyond Asia.

• Opportunities in food sectors.

New products and product lines. • New markets may be available due to increase in disposable income and living standards.

Threat Matrix

• Increasing competition from Organizations like ITC which has entered sectors like food,retailing.,etc.

• low priced substitutes and new entrants.

• Low-cost switching over.

• Dis-satisfaction or high quality of products of other organizations.

• Saturation in industry.

• Counter fight between its own products like Lux and Lifebuoy.

Conclusion and Recommendations

HUL is certainly the market leader in FMCG sector but there are a few recommendations:

• HUL lowers the promotion cost so as to save money which is used in promotion more than required and thus increases the profit.• HUL aims at customer satisfaction rather than margins and profits.• HUL keeps a track of new products and promotion schemes of other firms and design policies accordingly.

Conclusion and Recommendations

• HUL Adopts the method Segmentation,Targetting and Positioning so as to get back all the consumers which it lost to other firms.

• HUL comes out of the cocoon and try some new fields and come up with some new products.

• HUL should stop playing the 70s and 80s script of brand extensions and big nationwide ad spend and think beyond that .

Thank You

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