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Hindustan Unilever Limited Strategy

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Hindustan Unilever Limited Strategy

  1. 1. Submitted by: 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
  2. 2. 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
  3. 3. Overview 1931 : Unilever sets up Hindustan Vanpasti Manafacturing Company 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 “OurVision 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 theWorld Population) • 9 out of 10 Indians use an HUL product on a daily basis • Ranked No 1 in India on the Forbes list ofThe 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 launchedThe Compass – our strategy for sustainable growth.
  4. 4. Overview • Identified their purpose as making sustainable living a commonplace. • In 2009, HUL launchedThe Compass – our strategy for sustainable growth. • Principles followed by HUL : 1. A better future for children 2. A healthier future 3. A more confident future 4. A better future for the planet 5. A better future for farming and farmers What does the Logo Stand for?
  5. 5. 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
  6. 6. M&A STRATEGY, CORE COMPETENCIES COMPETITIVE ADVANTAGE Network of about 7000 redistribution stockists covering about 1 Million direct retail outlets Total 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
  7. 7. 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
  8. 8. 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
  9. 9. • 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 MappingTechnology’ 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
  10. 10. PESTLE ANALYSIS Political 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
  11. 11. 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
  12. 12. PORTER’S 5 FORCES COMPETITION OR COMPETITIVE RIVALRY BARGAINING POWER OF BUYERS BARGAINING POWER OF SUPPLIERS THREAT OF SUBSTITUTES THREAT OF NEW ENTRANTS
  13. 13. PORTER’S 5 FORCES Competitive Rivalry FACTORS 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
  14. 14. PORTER’S 5 FORCES Bargaining 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
  15. 15. 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
  16. 16. VALUE CHAIN Primary 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
  17. 17. Marketing and Sales • Celebrity endorsement • Kaan KhajuraTesan-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
  18. 18. 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 managers Graduate 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 talent Business Leadership Trainee (BLT) programme Unilever Sustainable Living Plan (USLP) Prabhat: promotes health and hygiene for employees 51% of raw material sustainably sourced Compass: 2x growth in market cap by 2017, while reducing environmental footprint ₹30 Crore investment in R&D
  19. 19. 5 P’S OF STRATEGY
  20. 20. ANSOFF’S GROWTH STRATEGY M A R K E T PRODUCTS Existing New ExistingNew 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
  21. 21. BCG Market Share Analysis
  22. 22. BCG Market Share Analysis
  23. 23. HUL BCG MARIX OF HUL
  24. 24. 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
  25. 25. 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%.
  26. 26. 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.
  27. 27. 27 THANKS! • Any questions?

Notes de l'éditeur

  • Economic – raw material procuring is fist step of supply chaina dn fluctuation in price can be a macro economic factor affecting the business. People are price sensitive to products used in daily lives. Ghari is a major player in UP and beats hul’s wheel in market share

    Political…perger with tata and lakme brought them into food and cosmetic environment. change in taxation landscape in india because of GST…Trade agreements in the distribution channels http://www.business-standard.com/article/economy-policy/gst-impact-hul-slashes-prices-of-detergents-soaps-extends-tax-benefits-117070200372_1.html Environment…4% revenue growth improvement in technology to reduce specific energy consumption. india has 18% of world population and just 4% of freash water available. Manufaturing factori…HUL trie to reduce its consumption of fresh water per unit output of its operations…minimize the discharge of solid waste …http://www.itcportal.com/sustainability/sustainability-report-2006/html/itc-impacts.aspx

    Economic…http://www.cio.in/cio-interview/indian-fmcg-industry-turning-tables-digital-marketing-strategies

  • http://www.marketing91.com/swot-analysis-of-hindustan-unilever/

    We grew strongly in the fast emerging e-commerce channel even as we adopted sophisticated IT solutions to improve our reach and service to millions of small retailers across the length and breadth of India.

    The two new fastest growing channels are modern trade and e-commerce. The likes of Amazon and Flipkart are threatening to change buying habits in a way that could put traditional distribution models at risk. Breadth of products, aggressive pricing and convenient delivery options have made this the retail channel of choice for a new generation of consumers.

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