Date post: | 22-Jan-2018 |
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Leadership & Management |
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A028: Ankit Jalan
A029: Harsimrat Kaur
A030: Govind Krishnan
A031: Mayank Kumar
A032: Sahib Lamba
A033: Ashar A Latheef
A035: Aashna Manaktala
A036: Hari Manwani
A037: Omkar Marballi
A038: Kshitij Mundhada
A039:
A040: Prerita Nigam
AGENDA
• Overview• M&A Strategy, Core Competencies,
Competitive Advantage• Strategies for Remote Markets• PESTLE Analysis• SWOT Analysis• Porter’s Five Forces• Value Chain• Mckinsey’s 7s Framework• 5 Ps of Strategy• Ansoff Growth Strategy• BCG Market Share Analysis• Blue Ocean Strategy
Overview
1931 : Unilever sets up Hindustan
Vanpasti ManafacturingCompany
1933: Lever Brothers set up
Indian Subsidiary
1935: United Traders Limited
enter India
1956: Hindustan Lever Ltd(HLL)
is formed following the merger of the three
companies
1982: Government allows 51 per cent Unilever shareholding in HLL
2007: Company name changed to Hindustan
Unilever Ltd (HUL)
2008: Market Leader with sales
of $2.8 Billion
2017: Maintains Market Leader position with 34.7% share
“Our Vision is to earn the love and respect of India by making a real difference to every India”-Nitin Paranjpe,CEO and Managing Director
• Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company with a heritage of over 80 years in India.
• On any given day, two billion people use Unilever products to look good, feel good and get more out of life.(26% of the World Population)
• 9 out of 10 Indians use an HUL product on a daily basis• Ranked No 1 in India on the Forbes list of The World’s Most Innovative Companies 2017.• In India 18,000 people work for Unilever out of which 30% are women• Identified their purpose as making sustainable living a commonplace.• In 2009, HUL launched The Compass – our strategy for sustainable growth.
Overview
• Identified their purpose as making sustainable living a commonplace.• In 2009, HUL launched The Compass – our strategy for sustainable growth. • Principles followed by HUL :1. A better future for children2. A healthier future3. A more confident future4. A better future for the planet5. A better future for farming and farmers
What does the Logo Stand for?
Product Mix
• Product Mix Width : 11
• Product Mix Length : 52
• Unilever has more than 400 brands, 14 of which generate sales in
excess of €1 billion a year.
• 17 Brands of HUL feature in the top 100 ‘Most Trusted Brands’ list for
2016 published by The Economic Times, 4 of which are in the Top 10
Consistency Mix
M&A STRATEGY, CORE COMPETENCIES
COMPETITIVE ADVANTAGE
Network of about 7000 redistribution stockists covering about 1 Million direct retail outletsTotal coverage :~ 7 Million
•2000+ suppliers•7500 distributors
Serving HUL’s 100 decentralized factories
Point of purchase method • Higher level of direct contact through in-store facilitators , sampling, education and experience
•Customer management •Supply chain capabilities for partnering emerging self service stores & supermarkets,
Unify IT solution allowing real time tracking of secondary sales and stocks at the retail outlets
Separate channels identified on the basis of consumer behavior and
buying pattern
CORE COMPETANCY? HUL’s Wide & Versatile Distribution Network
RURAL INDIA’S COMPETITIVE ADVANTAGE
Shakti Programme empowered 72,000 Shakti Entrepreneurs across 16 states by December 2016 supported by 48000 Shaktimaans
In 2010, HUL extended Project Shakti to include ‘Shaktimaans’. Shaktimaans are typically the husbands or brothers of Shakti Ammas
This model has been the growth driver for HUL and presently about 50% of HUL's FMCG sales
come from rural markets
Project Shakti is HUL’s initiative to financially empower rural women and create livelihood opportunities for them
Business strategy:• Volume led growth and improvement in operating margin. •FY 17 saw an Ebitda margin growth of just 90 basis points
•Market slowdown and channel correction were the reasons for lower than expected volumes in the last quarter
M & A Strategy
•Lakme :used its already established distribution network
•Ponds (India) Limited : started a significant economic base in specialty products and personal products
Cosmetics & Personal care
Food & Beverages
•UB group’s Kissan Products: entered food business•Brook Bond Lipton India Ltd
•Considers takeovers as a preferred mode of strategy for rapid expansion
• Monthly report to Board and Chairman during the 15 month pilot project
• Venture Leaders to oversee projects which are potentially viable, scalable & worthy of future investment
Consistently ensuring top leadership participation in the project
• To ensure initiative is continually aligned , design of metrics was the key
• Initially focus was on scalability & sustainability later focus shifted to financial targets and organizational structure
Designing unique metrics and making adjustments to organizational structure
• Difficult to predict customer data for rural Indian population
• Used ‘Density Mapping Technology’ to determine population density and distance between villages
Using technology to design a flexible rural supply chain and sales network
Strategies for success in Remote markets
• 70% of the Indian population lives in rural market
• 65% of HUL’s sales is from rural market only
• HUL grew over 6% in rural market where as its competitors grew at 1-3% only
PESTLE ANALYSISPolitical
LegalEnvironmental
TechnologicalSocial
Economical• Deregulatory environment in 1991• Market regulations, Eg. GST• Rin bar- 17% slashed price• Trade agreements
• Monsoon 2017; 4% revenue growth• Global Warming• Solid waste mangement• Water conservation
• Avenues for women to earn livelihood• Project Shakti a big success• Lifebuoy hand washing program• Pureit provides clean water and reduces
CO2 emission
• Raw material price fluctuation• Price sensitivity of FMCG products• Stiff competition from local players
Eg. Wheel vs Ghadi
• Digitization to engage customers• CRM in modern trade• Predictive analytics and big data• E-com is key driver for industry growth
• Health and safety; Factories Act 1948• Equal opportunities, Eg. MNREGA• Advertising standards• Consumer rights and laws
STRENGTHS• Strong brand equity- Unilever group
• 18000 employees
• Extensive distribution system- reach to 6.4 million retail
outlets
• Innovative FMCG company- Two R&D centres in India in
Mumbai and Bangalore
• Products with presence in over 20 consumer categories
• 700 million Indian consumers using its products
WEAKNESS• Market share is limited due to presence of other strong
FMCG brands
• High advertising and promotion spend- 12-14% of its
sales
• Low growth in food business- Knorr soups, Annapurna
atta etc.
THREATS• Low global growth and geopolitical uncertainties in India
• Increasing no. of local and national players e.g. Patanjali,
Ghari etc.
• Emerging e-commerce channels
• Sluggish rural demand – due to poor monsoons and
demonetization (2016-17)
• GST impact-Increased tax for detergent, shampoo and
skin care products
OPPORTUNITIES• Increase its ‘naturals’ (Ayurvedic / herbal) portfolio
through M&A
• Using big data and analytics for effectively meeting the
objectives of campaigns
• Increasing purchasing power of people in India-demand
for premium products
SWOT ANALYSIS
PORTER’S 5 FORCES
COMPETITION
OR
COMPETITIVE
RIVALRY
BARGAINING
POWER
OF
BUYERS
BARGAINING
POWER
OF
SUPPLIERS
THREAT
OF
SUBSTITUTES
THREAT
OF
NEW
ENTRANTS
PORTER’S 5 FORCES
Competitive RivalryFACTORS DETERMIING
RIVALRY
INTENSITY `
HIGH NUMBER OF FIRMS STRONG FORCE ITC , P&G
AGGRESSIVENESS OF
FIRMS
STRONG FORCE Marketing expense of HUL is
9.9% of revenues, ITC-2.25%,
P&G- 7.1%
LOW SWITCHING COSTS STRONG FORCE Sunsilk (80ml)- 48 Rs
L'Oreal (75 ml) – 51 Rs
Pantene (80 ml) – 50 Rs Bargaining Power of Customers
FACTORS DETERMIING
BARGAINING POWER
INTENSITY
LOW SWITCHING
COSTS
STRONG FORCE
HIGH QUALITY OF
INFORMATION
STRONG FORCE Access to online information
through customer reviews and
other insights
PORTER’S 5 FORCESBargaining Power of Suppliers
FACTORS DETERMIING
RIVALRY INTENSITY
SIZE OF INDIVIDUAL
SUPPLIERS
MODERATE FORCE PAT for Galaxy Surfactants -106
crores. PAT for HUL- 4082
crores
POPULATION OF SUPPLIERS MODERATE FORCE Backward Integration – HUL
owns 19 tea estates. Investment
of 40 crores in skin care factory
at Silvasa
OVERALL SUPPLY MODERATE FORCE Any change in supplier’s
production levels affects overall
industry Threat of Substitutes
FACTORS DETERMIING
RIVALRY INTENSITY
LOW SWITCHING COSTS STRONG FORCE
LOW SUBSTITUTE
AVAILABILITY
WEAK FORCE Substitutes needed by
consumers not readily available.
Close Up of HUL is readily
available at grocery stores
LOW PERFORMANCE TO
PRICE RATIO OF
SUBSTITUTES
WEAK FORCE Vicco Toothpaste (100gm)- 74
Close Up (80 gm) - 45
PORTER’S 5 FORCES
FACTORS DETERMIING RIVALRY INTENSITY
HIGH COST OF BRAND
DEVELOPMENT
WEAK FORCE Himalaya started as a FMCG company in
2009 has a target of 12% market share.
Exception- Patanjali
HIGH ECONOMIES OF SCALE WEAK FORCE Competitive pricing
To achieve better economies of scale,
focus on better structure & Organization
Ex: Axe deodorant launched together in
52 countries
Threat of New Entrants
VALUE CHAINPrimary Activities
Inbound Logistics:• Tie up with Mahindra logistics with farmers and owns
19 tea estates
Operations:• Implements kaizen, TQM and cost optimization• Sumerpur factory won ‘National Energy Conservation
Award’ for saving 567 MWh
Outbound Logistics• Total 35 C&F agents . Partnered with Future Group
logistics• Hindustan Lever Network-Direct selling channel• Covers 50,000 villages. Shakti amma provides
penetration in villages with no roads for trucks• Full-scale sales organisation for supermarkets• RS Net for monitoring
Marketing and Sales• Celebrity endorsement• Kaan Khajura Tesan-50 lakh subscribers
Services• Lakme salons, Dove litmus test and in store sampling.
Support Activities
Firm Infrastructure• 5 whole time Directors and 5 independent non-executive Directors.• Two self-sufficient divisions - Home & Personal Care & Foods - supported by certain central functions
Human Resources Managements• Future Leaders Program• 50 % of management committee and 500+CEOs in India and abroad
Technology Development• HURC in Mumbai and Bangalore• 20,000 registered patents.$5.3 million R&D expense in 2016
Procurement • Follows sustainable sourcing code of conduct
McKinsey’s 7S Framework
STRATEGY
STYLES
SYSTEMS
STRUCTURE
STAFF
SKILLS
In house monitoring of database, reduces costs, dependency and time
On-the-fly demand projections and helps avoid stock-out losses
Zero-based budgeting
Stepping into One programme among shop floor employees for leadership & technical skills In house manufacturing R&D support from Unilever
Attrition rate – 5%FMCG average – 15%36% women managersGraduate Employer of Choice by Nielson
'Connected 4 Growth’: Pruned reporting layers: Agility, Quick decision, Innovations
Winning in Many Indias(WiMi)
Nitin Paranjpe –Youngest CEO, Lever Lifters promote young talentBusiness Leadership Trainee (BLT)
programme
Unilever Sustainable Living Plan (USLP)Prabhat: promotes health and hygiene
for employees51% of raw material sustainably sourced
Compass: 2x growth in market cap by 2017, while reducing environmental footprint₹30 Crore investment in R&D
5 P’S OF STRATEGY
ANSOFF’S GROWTH STRATEGY
MARKET
PRODUCTSExisting New
Existin
gNew
Diversification
New Product: Ayurvedic products under brand Ayush
Market: India
• Why- Behemoth vs Baba• Launch 20 products of toothpaste, skin creams and other
beauty products with mass market positioning• Price range between Rs. 30 and Rs. 130
Product development
New Product: Various new products of Dove
• Shift from soap brand to a beauty brand
• The ads made used real women as opposed to models
• High priced and good quality
• Needed to be differentiated to remain competitive
• Brand extension- Deodorant, Facewash, Lotions etc
Market penetration
Market: India
Product: Lifebuoy
• Re-launched as sales plummeted in 2001 by 15%• Swasthya Chetna Campaign and a new shape of the soap• In 2009, introduced the Lifebuoy Way to reach rural
markets
Market development
Market: India
• Existing product- Citra, skin care brand which is available in Middle east and South East Asia
• Competition to Patanjali, Dabur and Himalaya • Targets women between the age 15-35 yrs• Why-further strengthen HUL’s dominance in skin care
BCG
Market Share Analysis
BCG
Market Share Analysis
HU
LBCG
MARIX OF HUL
BLUE OCEAN STRATEGY
Creation by the company of a new, uncontested market space that makes competitors
irrelevant and that creates new customer value while decreasing costs
• Launched in 1997 in the Indian market; launched almost at the same time as that of Maggi Soups (Nestle).
• Only competitor at the time of launch – Maggi Soups.
• Market leader ever since its launch in the Indian Market.
• Market share as of 2016 – 60% (Source – Euromonitor International), 0.5% rise compared to the previous year
BLUE OCEAN STRATEGY
Creation by the company of a new, uncontested market space that makes competitors
irrelevant and that creates new customer value while decreasing costs
•Launched in 1975 as a safe and effective skin lightening cream; Created a new segment for skin care and fairness.
• Targeted at Asian women who considered fairness as a status symbol.
• Market leader ever since its launch.
• Market share as of 2016 – 53%.• Closest competitor – Emami’s Fairever – Approx. 23%.
BLUE OCEAN STRATEGY
Creation by the company of a new, uncontested market space that makes competitors
irrelevant and that creates new customer value while decreasing costs
• Launched worldwide in 1969, in India in 2008.
• First product in the Fabric conditioner space in the Indian market.
• Used to make the garments gentle and perfumed and also preserves the color of the clothing even after a number of washes.
• Posted global sales of more than Rs. 4500 crores, and is the market leader in the fabric conditioner space.
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THANKS!• Any questions?