Description
This is a case study (Asian Paint) under strategic management, Strategic Analysis of Asian Paint.
Leadership strategy
Har Ghar Khuch Kehta Hai …
ARTI OMAR
Vision
? ? ? ? Identifying needs of customers Delivering customers value for money Contribution to society Maximum long term value for stake holders
Mission
“To provide paints as per market demand, ensuring desired level and quality of customer service, continued availability of the right product mix of right quality at the right time”
Objective:
?
To bring the best variety of decorative and industrial paint product mix in rural and semi-urban paint market with lower cost in small container by applying innovation of spot production of different color of paints through mixing.
Company Profile
? ? ? ? ?
In 1942, a partnership was started by four entrepreneurs In 1945, turn into a company touches a turnover of Rs. 3,50,000 with a innovative marketing strategy “To reach the consumers in the outmost corners of the country with small packs” 1957-66, plant setup at Bhandup, Mumbai. It embarks on an ambitious mass marketing campaign, pertaining with thousand of dealers in small towns all over the India In 1973, Asian Paints became a public limited company 2002, Asian paint was a market leader of Indian Decorative Paints with market share of 44%
Today
? ? ?
10th largest paint company in India and twice the size of its nearest competitors Present in 22 countries with 27 manufacturing locations It?s aims to become 5th largest decorative paint company in the world.
Brands
?
Asian Paints (Bhandpur, Kasna), Berger International (Singapore, China, Hong kong, Jamaica), SCIB Paints (Egypt) and Apco Coating (South Pacific Ocean, Australia, Fiji, Tonga)
Asian Paints Product Gallery
FINANCIAL RESULTS OF ASIAN PAINTS
Sales Figure
160 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 34.83 36.91 37.64 37.74 42.29 98 110 135 125 142 Paint Industry Asian Paints
INDUSTRY ANALYSIS
Market Share (%) 6 10
Asian Paints Good Lass Nerolac ICI
Company APL Good lass Berger ICI J&N
Market Share (%) (approx.) Decorative 40 15 11 8 6 Industrial 14 43 14 8 8
4
10
20
50
Johnson & Nicholson Shalimar Others
Shalimar
Others
6
14 Country Japan Japan S. Korea Japan S. Korea India Japan
8
5 Rank 1 2 3 4 5 6 7
Region wise share of International Business of Asian Paints
9%
Company Nippon Kansai
37%
25% 17%
Daihan DNT Korean Chem
12%
Caribbean
Asian Paints Rock
INDUSTRY ANALYSIS PORTER’S FIVE FORCES
Industry: Indian Paint Industry (Organized Sector) Industry Characteristics: fragmented market (Premium, Semi-urban, and Rural Market), cyclical, synergies and network effects, trends towards diversification of products and services, intensely competitive, driven by low cost, and low capital-intensive business
-
Supplier power low bargaining power due to in house production
Threat of Entry unlimited because of No Entry Barriers e.g. -required reputation and short PLC, Low capital Investment
Rivalry Good lass Nerolac Berger ICI Johnson & Nicholson Shalimar
Substitutes
• No substitute
Substitutes No substitute for 2000 distinct items in paints
Buyer power
- Lower switching costs for products Some bargaining power due to consumer demand for sophisticated, compact, well-designed and rightlypriced products
ASIAN PAINT BUSINESS MODEL
Operations/Value Chain
1. 2.
Asian Paint business model is designed on postponement strategy to drastically reduce inventory. All they carry base solution and tinkered as desired by customer Completely bypassed the wholesale trade and went directly to customers
Backward Integration Paint Manufacturing Plant Direct Retailers Customers.
Scope
•
Products: Decorative and Industrial paints along side huge product line in both
•
Services: Both Color Worlds and Asian Paints Home Solutions provides customized services and help company?s dealers stock limited colorants and bases and manage inventory efficiently.
Target Markets: Rural and semi-urban market instead of concentrating on the cities. Distribution Channels: Bypassed wholesale trade and went directly to the retailers also bypassed the bulk order segment and went to the individual at lower price and package. Asian Paint?s Color World, a chain of state-of-the-art paint shops has automatic tinting machine. Geographic Coverage: As of now they have 15000 retail outlets. 7000 color worlds across the county including even small towns with population up to 10,000. Highlighted business reasonsSouth Pacific (12%), South East Asia(17%), South Asia(9%), Middle East(37%), Caribbean(25%). Logic: They wanted to tap semi-urban & rural market through cost leadership
• •
•
•
STRATEGY WITH COMPETITIVE ADVANTAGE
Management Strategies
Investment in HR through enterprise grade collaboration platform Installation of ERP Customer Relationship Management Creation & Retention of Knowledge by Implementing state-of-the-art product life cycle management system Investment in R&D Investment in Internal audit Investment in Corporate Governance.
Competitive Advantages
Increased Employee Productivity Improved Efficiency Increased Customer Satisfaction shorten product development time
new product development Timely risk assessment & Control To take prudent strategic decisions at right time.
Marketing Strategies
Sale Promotion, personal selling, direct marketing, online marketing and public relationship
Competitive Advantage
fiscal year 2010 sales increased to 50 billions and in percentage it is around17% Shift coloring process to Point of Sales No middle man cost, direct access to customers
85 crore spent on the ad campaign
Wiped off wholesalers in distribution network
STRATEGY WITH COMPETITIVE ADVANTAGE
Business Strategy
Fragmented Market Backward Integration & Mass production Concentric Diversification *GLOCAL strategy Under Multi-domestic market strategy (International Strategy) Postponement Strategy in SCM Turnaround Strategy
Competitive Advantage
Less competition Price leadership & Enjoying economies of scale Easy to access local market of that country leading in the other global markets, contribution of IB to TR is 20% Drastically reduced in inventory carrying cost To avoid potential loss
International Business Strategy is based on assumption that every country or market is unique, and, therefore local adoption of product is essential.
Strategic Alliances
Egypt (2002) U.S (1997) *England (2002) Australia SCIB chemical Pittsburgh Paints and Glass Industries Berger paints(Most Glaring Example) gave access of 11 countries APCO Acquisition mode (Rs 24cr) 50:50 joint venture Acquisition mode (Rs. 58cr.) Acquisition
In international Level basic criteria of market identification was, the market should offer more than 6 to 8% growth and be relatively competition free and there should be opportunity to become one of the top three brands with in 5 years of entering that market.
SWOT ANALYSIS
Strength
? ?
Weakness
?
? ?
?
? ?
In-house production of Product-mix Market leader with 35% market share in the organized sector, the closest competitor does not have even half of APL shares. Strong in inventory control Comprehensive nation wide coverage of the market urban, semi-urban and rural areas Brands in different price slots like Utsav for rural lower end markets and Apcolite for high end markets. Comprehensive nation wide coverage of market. reducing cost by re-engineering formulation
Customized production and distribution increases cost and workload for the company
Meanwhile high inventory requirement. Inherent weakness in the product such as exterior Seasonal demand and hence in off season it can lead to cash flow problems Innovation in developing new product inadequate Weakness on the technology front in industrial paints In industrial paints, AP has only 15% market share
? ?
?
?
?
?
Opportunity
?
?
Threats
?
? ? ? ? ?
?
?
Strategic alliance to tap global market shares Stable monsoon to tap rural market opportunity and growth for rural economy. Consumer becoming conscious in terms of aesthetic and lifestyle Boom to industrial coating due to increase investment in core infrastructure, increasing industrialization and consumer durables and automobile industry accounted for 50% of industrial markets.
?
?
Advance technological development Continuous innovation by competitors Rising Raw Material prices Increased customer different color coating rage demand Being a global operator difficult to have external control Challenging factors like inflation and global financial turmoil being key concern Due to down turns in automobile sector industrial paints may feel slow down
4 P’S OF MARKETING
?
?
Product: Product mix Strategy (Decorative & Industrial) ? Decorative: Interior walls, Exterior walls, enamels and wood finishes ? Industrial: Industrial paints, Powder Coating, Road marking. More than 40 different decorative paints, 150 shades in each and 8 different package size.
Brand Royal Apcolite Gattu, Tractor, Utsav
Place Premium segment Middle segment Lower segment
?
?
Price: Due to backward integration & mass production they have maintained price leadership in Indian and International market place and enjoying economies of scale. People: Mainly Middle income and rural customers along side high income customers
Rewards & Recognition
?
Forbes global magazine, USA ranked Asian Paints against the 200 „Best Small Companies of the world? in 2002 and 2003 and against the top 200 „Under a billion Firms? of Asia in 2005.
?
Ranked 24th amongst the top paint companies in the world by coatings world-Top Companies Report 2006
?
?
Ernst & Young “Entrepreneur of the year-Manufacturing” award in 2003
Award “Sword of Honor” by the British safety council for all the paints plants Responsibilities
? ? ?
Environment & Safety
Total Water Management Tsunami relief
SUMMARY
? ?
Company is evaluating risk attached with the business continuous basis Business continuity planning exercise has also been initiated to put infrastructure & process in place reduce potential loss
? ? ? ? ? ? ?
Company is evaluating its international business risk ongoing basis. Turnaround strategy for loss-making units To exit from the market which are unviable in the long term Taking advantage of price leadership Adopted code of conduct for its board of directors and senior management personnel Multi-domestic strategy for its international business operation. They believe to acquire capacity rather then put in fresh investment. So that they can build on readymade distribution, brands and factories, and control the cost of acquisition. Examples are strategic alliances in other countries
THANK YOU
doc_865544149.pptx
This is a case study (Asian Paint) under strategic management, Strategic Analysis of Asian Paint.
Leadership strategy
Har Ghar Khuch Kehta Hai …
ARTI OMAR
Vision
? ? ? ? Identifying needs of customers Delivering customers value for money Contribution to society Maximum long term value for stake holders
Mission
“To provide paints as per market demand, ensuring desired level and quality of customer service, continued availability of the right product mix of right quality at the right time”
Objective:
?
To bring the best variety of decorative and industrial paint product mix in rural and semi-urban paint market with lower cost in small container by applying innovation of spot production of different color of paints through mixing.
Company Profile
? ? ? ? ?
In 1942, a partnership was started by four entrepreneurs In 1945, turn into a company touches a turnover of Rs. 3,50,000 with a innovative marketing strategy “To reach the consumers in the outmost corners of the country with small packs” 1957-66, plant setup at Bhandup, Mumbai. It embarks on an ambitious mass marketing campaign, pertaining with thousand of dealers in small towns all over the India In 1973, Asian Paints became a public limited company 2002, Asian paint was a market leader of Indian Decorative Paints with market share of 44%
Today
? ? ?
10th largest paint company in India and twice the size of its nearest competitors Present in 22 countries with 27 manufacturing locations It?s aims to become 5th largest decorative paint company in the world.
Brands
?
Asian Paints (Bhandpur, Kasna), Berger International (Singapore, China, Hong kong, Jamaica), SCIB Paints (Egypt) and Apco Coating (South Pacific Ocean, Australia, Fiji, Tonga)
Asian Paints Product Gallery
FINANCIAL RESULTS OF ASIAN PAINTS
Sales Figure
160 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 34.83 36.91 37.64 37.74 42.29 98 110 135 125 142 Paint Industry Asian Paints
INDUSTRY ANALYSIS
Market Share (%) 6 10
Asian Paints Good Lass Nerolac ICI
Company APL Good lass Berger ICI J&N
Market Share (%) (approx.) Decorative 40 15 11 8 6 Industrial 14 43 14 8 8
4
10
20
50
Johnson & Nicholson Shalimar Others
Shalimar
Others
6
14 Country Japan Japan S. Korea Japan S. Korea India Japan
8
5 Rank 1 2 3 4 5 6 7
Region wise share of International Business of Asian Paints
9%
Company Nippon Kansai
37%
25% 17%
Daihan DNT Korean Chem
12%
Caribbean
Asian Paints Rock
INDUSTRY ANALYSIS PORTER’S FIVE FORCES
Industry: Indian Paint Industry (Organized Sector) Industry Characteristics: fragmented market (Premium, Semi-urban, and Rural Market), cyclical, synergies and network effects, trends towards diversification of products and services, intensely competitive, driven by low cost, and low capital-intensive business
-
Supplier power low bargaining power due to in house production
Threat of Entry unlimited because of No Entry Barriers e.g. -required reputation and short PLC, Low capital Investment
Rivalry Good lass Nerolac Berger ICI Johnson & Nicholson Shalimar
Substitutes
• No substitute
Substitutes No substitute for 2000 distinct items in paints
Buyer power
- Lower switching costs for products Some bargaining power due to consumer demand for sophisticated, compact, well-designed and rightlypriced products
ASIAN PAINT BUSINESS MODEL
Operations/Value Chain
1. 2.
Asian Paint business model is designed on postponement strategy to drastically reduce inventory. All they carry base solution and tinkered as desired by customer Completely bypassed the wholesale trade and went directly to customers
Backward Integration Paint Manufacturing Plant Direct Retailers Customers.
Scope
•
Products: Decorative and Industrial paints along side huge product line in both
•
Services: Both Color Worlds and Asian Paints Home Solutions provides customized services and help company?s dealers stock limited colorants and bases and manage inventory efficiently.
Target Markets: Rural and semi-urban market instead of concentrating on the cities. Distribution Channels: Bypassed wholesale trade and went directly to the retailers also bypassed the bulk order segment and went to the individual at lower price and package. Asian Paint?s Color World, a chain of state-of-the-art paint shops has automatic tinting machine. Geographic Coverage: As of now they have 15000 retail outlets. 7000 color worlds across the county including even small towns with population up to 10,000. Highlighted business reasonsSouth Pacific (12%), South East Asia(17%), South Asia(9%), Middle East(37%), Caribbean(25%). Logic: They wanted to tap semi-urban & rural market through cost leadership
• •
•
•
STRATEGY WITH COMPETITIVE ADVANTAGE
Management Strategies
Investment in HR through enterprise grade collaboration platform Installation of ERP Customer Relationship Management Creation & Retention of Knowledge by Implementing state-of-the-art product life cycle management system Investment in R&D Investment in Internal audit Investment in Corporate Governance.
Competitive Advantages
Increased Employee Productivity Improved Efficiency Increased Customer Satisfaction shorten product development time
new product development Timely risk assessment & Control To take prudent strategic decisions at right time.
Marketing Strategies
Sale Promotion, personal selling, direct marketing, online marketing and public relationship
Competitive Advantage
fiscal year 2010 sales increased to 50 billions and in percentage it is around17% Shift coloring process to Point of Sales No middle man cost, direct access to customers
85 crore spent on the ad campaign
Wiped off wholesalers in distribution network
STRATEGY WITH COMPETITIVE ADVANTAGE
Business Strategy
Fragmented Market Backward Integration & Mass production Concentric Diversification *GLOCAL strategy Under Multi-domestic market strategy (International Strategy) Postponement Strategy in SCM Turnaround Strategy
Competitive Advantage
Less competition Price leadership & Enjoying economies of scale Easy to access local market of that country leading in the other global markets, contribution of IB to TR is 20% Drastically reduced in inventory carrying cost To avoid potential loss
International Business Strategy is based on assumption that every country or market is unique, and, therefore local adoption of product is essential.
Strategic Alliances
Egypt (2002) U.S (1997) *England (2002) Australia SCIB chemical Pittsburgh Paints and Glass Industries Berger paints(Most Glaring Example) gave access of 11 countries APCO Acquisition mode (Rs 24cr) 50:50 joint venture Acquisition mode (Rs. 58cr.) Acquisition
In international Level basic criteria of market identification was, the market should offer more than 6 to 8% growth and be relatively competition free and there should be opportunity to become one of the top three brands with in 5 years of entering that market.
SWOT ANALYSIS
Strength
? ?
Weakness
?
? ?
?
? ?
In-house production of Product-mix Market leader with 35% market share in the organized sector, the closest competitor does not have even half of APL shares. Strong in inventory control Comprehensive nation wide coverage of the market urban, semi-urban and rural areas Brands in different price slots like Utsav for rural lower end markets and Apcolite for high end markets. Comprehensive nation wide coverage of market. reducing cost by re-engineering formulation
Customized production and distribution increases cost and workload for the company
Meanwhile high inventory requirement. Inherent weakness in the product such as exterior Seasonal demand and hence in off season it can lead to cash flow problems Innovation in developing new product inadequate Weakness on the technology front in industrial paints In industrial paints, AP has only 15% market share
? ?
?
?
?
?
Opportunity
?
?
Threats
?
? ? ? ? ?
?
?
Strategic alliance to tap global market shares Stable monsoon to tap rural market opportunity and growth for rural economy. Consumer becoming conscious in terms of aesthetic and lifestyle Boom to industrial coating due to increase investment in core infrastructure, increasing industrialization and consumer durables and automobile industry accounted for 50% of industrial markets.
?
?
Advance technological development Continuous innovation by competitors Rising Raw Material prices Increased customer different color coating rage demand Being a global operator difficult to have external control Challenging factors like inflation and global financial turmoil being key concern Due to down turns in automobile sector industrial paints may feel slow down
4 P’S OF MARKETING
?
?
Product: Product mix Strategy (Decorative & Industrial) ? Decorative: Interior walls, Exterior walls, enamels and wood finishes ? Industrial: Industrial paints, Powder Coating, Road marking. More than 40 different decorative paints, 150 shades in each and 8 different package size.
Brand Royal Apcolite Gattu, Tractor, Utsav
Place Premium segment Middle segment Lower segment
?
?
Price: Due to backward integration & mass production they have maintained price leadership in Indian and International market place and enjoying economies of scale. People: Mainly Middle income and rural customers along side high income customers
Rewards & Recognition
?
Forbes global magazine, USA ranked Asian Paints against the 200 „Best Small Companies of the world? in 2002 and 2003 and against the top 200 „Under a billion Firms? of Asia in 2005.
?
Ranked 24th amongst the top paint companies in the world by coatings world-Top Companies Report 2006
?
?
Ernst & Young “Entrepreneur of the year-Manufacturing” award in 2003
Award “Sword of Honor” by the British safety council for all the paints plants Responsibilities
? ? ?
Environment & Safety
Total Water Management Tsunami relief
SUMMARY
? ?
Company is evaluating risk attached with the business continuous basis Business continuity planning exercise has also been initiated to put infrastructure & process in place reduce potential loss
? ? ? ? ? ? ?
Company is evaluating its international business risk ongoing basis. Turnaround strategy for loss-making units To exit from the market which are unviable in the long term Taking advantage of price leadership Adopted code of conduct for its board of directors and senior management personnel Multi-domestic strategy for its international business operation. They believe to acquire capacity rather then put in fresh investment. So that they can build on readymade distribution, brands and factories, and control the cost of acquisition. Examples are strategic alliances in other countries
THANK YOU
doc_865544149.pptx