STRATEGIC ANALYSIS HINDUSTAN UNILEVER LTD.

Group Members: Akash Sharma Divya Taneja Mayank Dixit Monica C. Bhadoriya Sneha Shrivastava

OVERVIEW & HISTORY

OVERVIEW India's largest consumer goods company and products include foods, beverages, cleaning agents and personal care products. HISTORY It is owned by the British-Dutch company Unilever which controls 52% majority stake in HUL. HUL was formed in 1933 as Lever Brothers India Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and has an employee strength of over 16,500 employees and contributes to indirect employment of over 65,000 people. The company was renamed in June 2007 as Hindustan Unilever Limited. Lever Brothers started its actual operations in India in the summer of 1888, when crates full of Sunlight soap bars, embossed with the words "Made in England by Lever Brothers" were shipped to the Kolkata harbour and it began an era of marketing branded Fast Moving Consumer Goods (FMCG). Hindustan Unilever's distribution covers over 2 million retail outlets across India directly and its products are available in over 6.4 million outlets in the country. As per Nielsen market research data, two out of three Indians use HUL products.

MISSION & VISION

MISSION

Overall , Indian operations should double turnover every 4 years and profits every 3 years. Compounded annual growth rate of 20% in turnover and 25% in net profit.

VISION

The four pillars of the vision set out the long term direction for the company where we want to go and how we are going to get there: We work to create a better future every day. We 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. We will inspire people to take small everyday actions that can add up to a big difference for the world. We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact.

Source HUL Annual Report 2011-12

GOAL & SCOPE

GOAL

HUL aimed at increasing the corporate growth in emerging market through expansion,
pre-empting competition, tapping the synergy among business, consolidation of ownership and control, unification of group companies into a single mega firm.

SCOPE
Products: Food and beverages, personal care products, soaps and detergents. Target Markets: upper and middle class segment . Market penetration in rural markets. Distribution Channels: through retail outlets, nationwide distribution channels. Geographic Coverage:. Emerging markets like China, India, Southeast Asia, Latin America and Central/Eastern Europe.

SWOT ANALYSIS
STRENGTHS Soaps & detergents - largest business of HUL - accounts 70% of company's sales Detergents- largest product line in terms of turnover and profits- 40% Strong brand portfolio and variety Solid base of the company Innovative aspects- ranked 6th Strong distribution network Major equity stake in all businesses Global market leader

WEAKNESSES High advertising costs

OPPORTUNITIES New industrial policy (1991) Relaxation in FERA and MRTP provisions Measures facilitating mergers and acquisitions Liberalisation on the imports and foreign investment fronts Gradual shift towards Globalisation of Indian economy Untapped rural market Lies amongst the top 10 companies for market capitalization Aligned goals with core competencies

THREATS Competitive FMCG sector in India New innovation by the competitor Government industrial policies Mimic of brands Competition from local products

STRATEGIES TAKEN BY THE COMPANY

EXPANSION Takeover of TOMCO & merging with HLL - position in soaps & detergents improved Brooke Bonds takeover of Kissan Products & Dipys; of KGFs coffee unit & Pepsis tomato paste plant; Merryweather, Herbertsons flying start in food & beverages business JV with Lakme followed by its takeover - access to a readymade, dedicated, nationwide distribution chain in personal care products Takeover of Helene Curtis - big thrust in hair colouring products and colour cosmetics Strategic alliance with Kwality overcame potential competition Strategic Alliance with Cadburys Dollops ice cream - Route for expansion in ice-cream business Start up route: Brooke Bonds putting up projects for frozen foods and vegetables processing ;HLLs s establishing skincare products factory at Silvasa

STRATEGIES TAKEN BY THE COMPANY

REGROUPING & INTEGRATION

Merger of Doom Dooma India, Tea Estates India, Kissan & KGF into Brooke Bond acquired major equity
Merger of Brooke Bond & Lipton into BBLIL; Tomco with HLL; BBLIL with HUL Merger of QIL with Ponds India expertise in fine fragrance, launch of many perfumes Divestment of fertilizer-cum-chemical business to Stepan Chemicals, a subsidiary acquired its Wheel Merger of Ponds into HLL CONSOLIDATION OF OWNERSHIP & CONTROL Under one parent, HUL, major companies- HLL, PIL, BBIL and Lipton- became subsidiaries

COMPETITIVE ADVANTAGE
Strong brand image

Pre-empting competition for success

Gaining higher market share by acquiring other successful brands Eg. Lakme , Kissan etc. Strong Product Portfolio

Eg. From food to personal care product

Strong distribution network Aimed at First and Faster Approach Eg. Takeover Kissan , beat Nestle

- Beat Heinz, in the race for the Pepsi tomato paste plant
Meticulous planning of strategy. High skilled human resource

Expanding businesses in the area of their core competencies. Eg. TOMCO , Lakme & Kissan Right selection and execution of strategies.

Strong R&D
Company also focussed on product innovation

Eg. -

LOGIC
INTERNAL LOGIC
Expansion in the area of their core competencies merged and took over companies basically in three fields of their core expertise to best harness its globally acquired expertise and its local capabilities. Better balance among the businesses. Take over route rather than Start up route as it would reduce gestation caused during initial setups and would save time and help in faster business expansion. Merged two companies of the group to exploit synergy. Advantageous to operate through one mega company with clearly demarcated streams of businesses/SBUs. Acquiring 51% or more equity in each of its companies so that ownership and control was made easy.

LOGIC
EXTERNAL LOGIC
Market saturation in developed countries. Globalization of Indian economy which helped in fast merger and takeovers. Reduce competition in the FMCG sector in India. Joint venture with Lakme provided a ready made distribution network and marketing facilities. Present market size and the likely growth in the next few years in the Indian market. Better spread in the business and quantum leap in market shares.

Better to be a market leader than being a market follower.