Description
document is about porter five forces model applied to dabur.
qwertyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopasdfgh jklzxcvbnmqwertyuiopasdfghjklzxcvb nmqwertyuiopasdfghjklzxcvbnmqwer Strategic Management Assignment Porter’s Five Forces Model tyuiopasdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdfghjklzx cvbnmqwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqwertyuio pasdfghjklzxcvbnmqwertyuiopasdfghj klzxcvbnmqwertyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnmqwerty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmrty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc
DABUR INDIA LTD
Company Profile Dabur India Limited is a leading Indian consumer goods company with interests in health care, Personal care and foods. Over more than 100 years we have been dedicated to providing nature-based solutions for a healthy and holistic lifestyle. ? Leading consumer goods company in India with a turnover of Rs.2889.71 Crore (FY10) Dabur foods Ltd Consumer care Consumer health ? 3 major strategic business units (SBU) (de-merged division Care division ? 3 Subsidiary Group companies With DIL, 07) Dabur Foods, Dabur Nepal and Dabur International and 3 step down subsidiaries of Dabur International - Asian Consumer Care in Bangladesh, African Consumer Care in Nigeria and Dabur Egypt. ? 13 ultra-modern manufacturing units spread around the globe ? Products marketed in over 50 countries ? Wide and deep market penetration with 47 C&F agents, more than 5000 distributors and over 1.5 million retail outlets all over India Strategic Intent of Dabur India Ltd ? Focus is on growing their core brands across categories, reaching out to new geographies, within and outside India, and improve operational efficiencies by leveraging technology ? To be the preferred company to meet the health and personal grooming needs of their target consumers with safe, efficacious, natural solutions by synthesizing their deep knowledge of Ayurveda and herbs with modern science ? Provide the consumers with innovative products within easy reach ? Build a platform to enable Dabur to become a global Ayurvedic leader ? Be a professionally managed employer of choice, attracting, developingand retaining quality personnel ? Be responsible citizens with a commitment to environmental protection Porter’s five force model Analysis of Dabur India Ltd Porter's five forces analysis is a framework for the industry analysis and business strategy development. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. This framework consists of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. 1) The threat of substitute products: The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand).
Dabur Business category
2
? Brand loyalty of customers: The pricing of the Dabur products is very competitive without compromising on the quality hence the relative price performance of substitutes is low as compared to Dabur. For instance Dabur Amla hair oil has been the largest selling hair oil brand in India for more than 2 decades. ? Perceived level of product differentiation: Dabur products have generally strong Herbal and Natural profile, also second by a more than 100 years of experience in Ayurveda which leads to a high product differentiation. ? Dabur has an esteemed performance in the Herbal digestives sector acquiring a market share of 95% ? The new range of Uveda product has reached a high sales volume since its launch in Aug 2009. Another factor where Dabur scores over its substitutes is the high switching costs for customers provided by its pricing strategy. The pricing of Dabur products is low, when compared to most of the personal care and health products of other highly prevalent multinational FMCGs due to the Natural and Herbal ingredients. Dabur has been a major brand in India for more than hundred years now, thus maintaining very close customer relations. It also gives high importance to regional branding for its products which provides it with an edge over other companies. In case of Dabur since it is in major areas of FMCG and health care products so it need not fear threat of substitute products in the recent future. But it has to constantly reinvent its existing product lines in order to cope up with the innovations of its competitors. 2) The threat of the entry of new competitors: Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition). ? Ayush , the Ayurvedic Association of India has recently declared strict adherence to ayurvedic norms; the body asked many companies to change the formulation of Chyawanprash. Any such changes in future could dampen the sales, especially during the change of formulation, when the product is taken off the shelf. ? Brand equity of Dabur can be judged by the model BRAND ASSET VALUATOR. The four key components are: Differentiation, Relevance, Esteem and Knowledge. As Dabur is a well-established brand all the four components are high. Herbal has been Dabur’s brand equity since centuries ? A slowdown in rural demand due to lower government spending could impact dabur revenues significantly. The company’s products such as Dabur Chyawanprash and Dabur Lal tail are prominently sold in the rural areas, and hence, depend on growth in rural demand. ? It has a network of 1.5 million retail outlets in urban and semi-urban areas. The various product lines into which Dabur India is operating are: ? Personal care through Ayurveda: Dabur Amla Hair Oil (largest selling hair oil brand in India). ? Launched Dabur Chyawanprash in tin pack:The first branded Chyawanprash in India.
3
? Entered Oral Care & Digestives segment: LalDantManjan (available at affordable costs to the masses), Hajmola tablet (Ayurvedic medicine used as a digestive aid). ? Care with fun: Hajmola Candy (children's fun product). ? Leadership in health care: Intaxel (Paclitaxel)(anti-cancer drug). ? Real blitzkrieg: Real Fruit Juices (fastest growing and largest selling brand in the country). Dabur India is in business for more than 100 years. Dabur India Ltd. made its beginnings with a small pharmacy, but has continued to learn and grow to a commanding status in the industry. The Company has gone a long way in popularizing and making easily available a whole range of products based on the traditional science of Ayurveda. And it has set very high standards in developing products and processes that meet stringent quality norms. So all the advantages of first mover, learning curve, brand loyalty, patents and economies of scale exist with Dabur India. 3) The intensity of competitive rivalry: For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. ? The Rs. 86000cr. FMCG industry is expected to witness a lot of action in2010. With the economy showing signs of revival, the industry is expected to register a 15% growth in 2010. ? Intermittent industry overcapacity ? The competitors of Dabur are a highly diversifies business ( say HUL currently in personal care, hail care, toiletries, food, perfumes and deodorants, Soaps and detergents) hence it leads its competitors to a less risky profile. ? Dabur spends around 13 to 15%(390.03cr in FY10) of its sales in advertising, they have tie ups with many serials and movies and adopt for celebrity endorsements, like Mr. Amitabh Bachan as it is easy for them to cater to the lower segments of the market. ? It achieves a sustainable competitive advantage through improvisation Key players and competitors of Dabur India currently are Hindustan Unilever Ltd., Tata Tea, Nestle India Ltd., Britannia Industries Ltd., Colgate Palmolive Ltd., Marico Ltd., GalaxoSmithkline consumer, Cadbury India ltd., Reckitt Benckiser Ltd., Procter & Gamble. Since the industry is growing at a very rapid pace and so is the number of players. So Dabur India has to constantly relook at its strategy in order to increase its global dominance. 4) The bargaining power of customers: It is also described as the market of outputs. The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes. ? Due to high consciousness of consumers in for health, the Ayurvedic and Natural products have gained more requirements, but it has a strong dependency on its existing channels of distribution which makes it easy for penetration in the rural market. ? Buyers Switching cost relative to firm switching costs
4
? Buyer information availability ? The substitute products are kept right next to the Dabur products depending upon the strategies that the category captain decides for a particular segment. Since market share of Dabur is high in hair care and herbal digestives hence it a strong bargaining power Bargaining powers of buyers have increased dramatically with the advent of Globalization. With increased presence of other players in the market as mentioned previously, suppliers have got wide range of choices. So Dabur India has to formulate strategy in such a manner to keep abreast with the increasing competition by improving the quality and reducing the prices over the period. 5) The bargaining power of suppliers: It is also described as market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. Supplier relationships are strong at Dabur India, which can only be seen as strength in their overall performance. With over 300 diverse products the FMCG health care and Ayurveda segments, Dabur has a huge global network of suppliers and vendors, purchasing roughly 7000 items with an annual procurement bill of over Rs. 500cr. The Central Planning and Procurement Division (CPPD) is responsible for purchase operations at Dabur, acting in coordination with the production and marketing divisions. In this huge operation Dabur has maintained an environment of total transparency and better governance so that we get the best product at optimum costs. They constantly gear themselves to challenges through quality checks and cost reduction tools. ? ? ? ? ? ? Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Presence of substitute inputs Supplier concentration to firm concentration ratio Employee solidarity (e.g. labor unions) Threat of forward integration by suppliers relative to the threat of backward integration by firms has been taken care of. Production facilities to increase in-house production and to get maximum benefits.The company believe in cost and quality leadership through technology. ? Cost of inputs relative to selling price of the product. Due to its over 100 years presence Dabur does have a very strong bond with the suppliers. Also Dabur does follow the policy of having good relations with all the peoples with which it deals. This helps in having a good relation with the suppliers. Also the policy of being accountable to stakeholders be it customers, without whom it will not be in business, shareholders, who have an important stake in our business and the employees, suppliers who have a vested interest in making it all happen- are their stakeholders.
5
doc_799570408.docx
document is about porter five forces model applied to dabur.
qwertyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopasdfgh jklzxcvbnmqwertyuiopasdfghjklzxcvb nmqwertyuiopasdfghjklzxcvbnmqwer Strategic Management Assignment Porter’s Five Forces Model tyuiopasdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdfghjklzx cvbnmqwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqwertyuio pasdfghjklzxcvbnmqwertyuiopasdfghj klzxcvbnmqwertyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnmqwerty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmrty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc
DABUR INDIA LTD
Company Profile Dabur India Limited is a leading Indian consumer goods company with interests in health care, Personal care and foods. Over more than 100 years we have been dedicated to providing nature-based solutions for a healthy and holistic lifestyle. ? Leading consumer goods company in India with a turnover of Rs.2889.71 Crore (FY10) Dabur foods Ltd Consumer care Consumer health ? 3 major strategic business units (SBU) (de-merged division Care division ? 3 Subsidiary Group companies With DIL, 07) Dabur Foods, Dabur Nepal and Dabur International and 3 step down subsidiaries of Dabur International - Asian Consumer Care in Bangladesh, African Consumer Care in Nigeria and Dabur Egypt. ? 13 ultra-modern manufacturing units spread around the globe ? Products marketed in over 50 countries ? Wide and deep market penetration with 47 C&F agents, more than 5000 distributors and over 1.5 million retail outlets all over India Strategic Intent of Dabur India Ltd ? Focus is on growing their core brands across categories, reaching out to new geographies, within and outside India, and improve operational efficiencies by leveraging technology ? To be the preferred company to meet the health and personal grooming needs of their target consumers with safe, efficacious, natural solutions by synthesizing their deep knowledge of Ayurveda and herbs with modern science ? Provide the consumers with innovative products within easy reach ? Build a platform to enable Dabur to become a global Ayurvedic leader ? Be a professionally managed employer of choice, attracting, developingand retaining quality personnel ? Be responsible citizens with a commitment to environmental protection Porter’s five force model Analysis of Dabur India Ltd Porter's five forces analysis is a framework for the industry analysis and business strategy development. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. This framework consists of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. 1) The threat of substitute products: The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand).
Dabur Business category
2
? Brand loyalty of customers: The pricing of the Dabur products is very competitive without compromising on the quality hence the relative price performance of substitutes is low as compared to Dabur. For instance Dabur Amla hair oil has been the largest selling hair oil brand in India for more than 2 decades. ? Perceived level of product differentiation: Dabur products have generally strong Herbal and Natural profile, also second by a more than 100 years of experience in Ayurveda which leads to a high product differentiation. ? Dabur has an esteemed performance in the Herbal digestives sector acquiring a market share of 95% ? The new range of Uveda product has reached a high sales volume since its launch in Aug 2009. Another factor where Dabur scores over its substitutes is the high switching costs for customers provided by its pricing strategy. The pricing of Dabur products is low, when compared to most of the personal care and health products of other highly prevalent multinational FMCGs due to the Natural and Herbal ingredients. Dabur has been a major brand in India for more than hundred years now, thus maintaining very close customer relations. It also gives high importance to regional branding for its products which provides it with an edge over other companies. In case of Dabur since it is in major areas of FMCG and health care products so it need not fear threat of substitute products in the recent future. But it has to constantly reinvent its existing product lines in order to cope up with the innovations of its competitors. 2) The threat of the entry of new competitors: Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition). ? Ayush , the Ayurvedic Association of India has recently declared strict adherence to ayurvedic norms; the body asked many companies to change the formulation of Chyawanprash. Any such changes in future could dampen the sales, especially during the change of formulation, when the product is taken off the shelf. ? Brand equity of Dabur can be judged by the model BRAND ASSET VALUATOR. The four key components are: Differentiation, Relevance, Esteem and Knowledge. As Dabur is a well-established brand all the four components are high. Herbal has been Dabur’s brand equity since centuries ? A slowdown in rural demand due to lower government spending could impact dabur revenues significantly. The company’s products such as Dabur Chyawanprash and Dabur Lal tail are prominently sold in the rural areas, and hence, depend on growth in rural demand. ? It has a network of 1.5 million retail outlets in urban and semi-urban areas. The various product lines into which Dabur India is operating are: ? Personal care through Ayurveda: Dabur Amla Hair Oil (largest selling hair oil brand in India). ? Launched Dabur Chyawanprash in tin pack:The first branded Chyawanprash in India.
3
? Entered Oral Care & Digestives segment: LalDantManjan (available at affordable costs to the masses), Hajmola tablet (Ayurvedic medicine used as a digestive aid). ? Care with fun: Hajmola Candy (children's fun product). ? Leadership in health care: Intaxel (Paclitaxel)(anti-cancer drug). ? Real blitzkrieg: Real Fruit Juices (fastest growing and largest selling brand in the country). Dabur India is in business for more than 100 years. Dabur India Ltd. made its beginnings with a small pharmacy, but has continued to learn and grow to a commanding status in the industry. The Company has gone a long way in popularizing and making easily available a whole range of products based on the traditional science of Ayurveda. And it has set very high standards in developing products and processes that meet stringent quality norms. So all the advantages of first mover, learning curve, brand loyalty, patents and economies of scale exist with Dabur India. 3) The intensity of competitive rivalry: For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. ? The Rs. 86000cr. FMCG industry is expected to witness a lot of action in2010. With the economy showing signs of revival, the industry is expected to register a 15% growth in 2010. ? Intermittent industry overcapacity ? The competitors of Dabur are a highly diversifies business ( say HUL currently in personal care, hail care, toiletries, food, perfumes and deodorants, Soaps and detergents) hence it leads its competitors to a less risky profile. ? Dabur spends around 13 to 15%(390.03cr in FY10) of its sales in advertising, they have tie ups with many serials and movies and adopt for celebrity endorsements, like Mr. Amitabh Bachan as it is easy for them to cater to the lower segments of the market. ? It achieves a sustainable competitive advantage through improvisation Key players and competitors of Dabur India currently are Hindustan Unilever Ltd., Tata Tea, Nestle India Ltd., Britannia Industries Ltd., Colgate Palmolive Ltd., Marico Ltd., GalaxoSmithkline consumer, Cadbury India ltd., Reckitt Benckiser Ltd., Procter & Gamble. Since the industry is growing at a very rapid pace and so is the number of players. So Dabur India has to constantly relook at its strategy in order to increase its global dominance. 4) The bargaining power of customers: It is also described as the market of outputs. The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes. ? Due to high consciousness of consumers in for health, the Ayurvedic and Natural products have gained more requirements, but it has a strong dependency on its existing channels of distribution which makes it easy for penetration in the rural market. ? Buyers Switching cost relative to firm switching costs
4
? Buyer information availability ? The substitute products are kept right next to the Dabur products depending upon the strategies that the category captain decides for a particular segment. Since market share of Dabur is high in hair care and herbal digestives hence it a strong bargaining power Bargaining powers of buyers have increased dramatically with the advent of Globalization. With increased presence of other players in the market as mentioned previously, suppliers have got wide range of choices. So Dabur India has to formulate strategy in such a manner to keep abreast with the increasing competition by improving the quality and reducing the prices over the period. 5) The bargaining power of suppliers: It is also described as market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. Supplier relationships are strong at Dabur India, which can only be seen as strength in their overall performance. With over 300 diverse products the FMCG health care and Ayurveda segments, Dabur has a huge global network of suppliers and vendors, purchasing roughly 7000 items with an annual procurement bill of over Rs. 500cr. The Central Planning and Procurement Division (CPPD) is responsible for purchase operations at Dabur, acting in coordination with the production and marketing divisions. In this huge operation Dabur has maintained an environment of total transparency and better governance so that we get the best product at optimum costs. They constantly gear themselves to challenges through quality checks and cost reduction tools. ? ? ? ? ? ? Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Presence of substitute inputs Supplier concentration to firm concentration ratio Employee solidarity (e.g. labor unions) Threat of forward integration by suppliers relative to the threat of backward integration by firms has been taken care of. Production facilities to increase in-house production and to get maximum benefits.The company believe in cost and quality leadership through technology. ? Cost of inputs relative to selling price of the product. Due to its over 100 years presence Dabur does have a very strong bond with the suppliers. Also Dabur does follow the policy of having good relations with all the peoples with which it deals. This helps in having a good relation with the suppliers. Also the policy of being accountable to stakeholders be it customers, without whom it will not be in business, shareholders, who have an important stake in our business and the employees, suppliers who have a vested interest in making it all happen- are their stakeholders.
5
doc_799570408.docx