By - PRAMOD T JADHAV

STRATEGIC MANAGEMENT

PTMBA TRIMESTER:V

ROLL NO. A-24

HUL - India’s Largest FMCG Company

► 15,000+ employees

► 1,100+ managers► 2,000+ suppliers & associates► 71 company factories► 35 C&FAs, 2,700 Stockists► Direct Coverage - 1 Mn outlets

► India

► Population 1091 Mn

► 3,800 Towns 0.9 Mn outlets

► 6,27,000 Villages 3.3 Mn outlets

Hindustan Unilever Ltd is a part of the €40 billion Unilever Group. The Group has more than 400 brands spanning 14 categories of home, personal care and food products. It has presence in over 100 countries and employs more than 174,000 people worldwide.

Leadership

Leadership across categories

India - 2015

2009227 Mn Households

144

76

7

2015361 Mn Households

153

15

193

Rich

Aspirers

Strivers

The shape of India is going to change… from a pyramid to a diamond

History•In 1888, visitors to the Kolkata noticed crates Sunlight soap bars, embossed with the words "Made in England by Lever Brothers". With it, began an era of marketing branded FMCG.

•Soon after followed Lifebuoy in 1895 & other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the market in 1937.

•In 1931, HUL set up its first Indian subsidiary, Hindustan Vanaspati Mfg. Co. followed by Lever Brothers India Ltd (1933) and United Traders Ltd (1935).

•In 1912, Brooke Bond & Co. was formed.

•Pond's (India) had been present in India since 1947. It joined the HUL fold through an international acquisition of Chesebrough Pond's USA in 1986.

History•The liberalisation of the Indian economy, started in 1991, clearly marked an inflexion in HUL's and the Group's growth curve. Removal of the regulatory framework allowed the company to explore every single product and opportunity segment, without any constraints on production capacity

•Tata Oil Mills Company (TOMCO) merged with HUL, effective from April 1, 1993.

•The internal restructuring culminated in the merger of Pond's India Limited with HUL in 1998.

•In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports.

History•Hindustan Unilever Limited (HUL) is India's largest FMCG Company, touching the lives of 2 out of 3 Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages.

•The company’s Turnover is Rs. 20, 239 crores (for the 15 month period – January 2008 to March 31, 2009) .

•HUL is a subsidiary of HUL, one of the world’s leading suppliers of FMCG with strong local roots in more than 100 countries across the globe with annual sales of €40.5 billion in 2008. HUL has about 52% shareholding in HUL.

•HUL was recently rated among the top 4 companies globally in the list of “Global Top Companies for Leaders” by a study sponsored by Hewitt Associates & Fortune magazine. The company was ranked No.1 in the Asia-Pacific region & in India.

Brands

HUL’s brands -- like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Sunsilk, Clinic, Close-up, Pepsodent, Lakme, Brooke Bond, Kissan, Knorr, Annapurna, Kwality-Walls - are household names across the country and span many categories - soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products.

Manufactured in over 71 factories, several of them in backward areas of the country. The operations involve over 2,000 suppliers & associates. HUL's distribution network covers 6.3Mn retail outlets including direct reach to over 1Mn.

Corporate Purpose

HUL's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life.

Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are the foundation for our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers - a truly multi-local multinational.

Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously.

To succeed also requires, we believe, the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact.

This is our road to sustainable, profitable growth, creating long-term value for our shareholders, our people, and our business partners.

Quality PolicyQuality is fundamental to our Business Success

Unilever’s mission is to meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. And a key requirement is building in the quality expectations of our consumers into our products.

To win consumers’ confidence and loyalty, we need to consistently deliver branded products of excellent quality. We understand the different needs of our consumers and customers and strive to develop and deliver superior brands to ensure that they’re the preferred choice.

Our Quality Policy describes the principles that everyone in Unilever follows, wherever they are in the world, to ensure that we are recognised and trusted for our integrity, the quality of our brands and products, and the high standards we set.

Principles of the Quality Policy • Putting the safety of our products and our consumers first.

• Putting consumers and customers at the heart of our business

• Quality is a shared responsibility

• Building and maintaining excellent systems to ensure the

quality and safety of our products

Code of Business PrinciplesStandard of Conduct -We conduct our operations with honesty, integrity and openness, and with respect for the human rights and interests of our employees.

Obeying the Law - Unilever companies and our employees are required to comply with the laws and regulations of the countries in which we operate.

Employees - Unilever is committed to diversity in a working environment where there is mutual trust and respect and where everyone feels responsible for the performance and reputation of our company.

Consumers -Unilever is committed to providing branded products and services which consistently offer value in terms of price and quality, and which are safe for their intended use. Products and services will be accurately and properly labelled, advertised and communicated.

Shareholders -Unilever will conduct its operations in accordance with internationally accepted principles of good corporate governance.

Business Partners -Unilever is committed to establishing mutually beneficial relations with our suppliers, customers and business partners.

Community Involvement -Unilever strives to be a trusted corporate citizen and, as an integral part of society, to fulfil our responsibilities to the societies and communities in which we operate.

Mission

HUL's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

Management Team

             Mr. Nitin Paranjpe – Chief Executive Officer and Managing Director

             Mr. R. Sridhar – Chief Financial Officer

             Mr. Shreejit Mishra – Executive Director Foods

             Mr. Gopal Vittal – Executive Director Home & Personal Care

Ms Leena Nair –Executive Director HR.

             Mr. Hemant Bakshi – Executive Director Sales and Customer Development

            Mr. Dhaval Buch – Executive Director Supply Chain

             Mr. Ashok Gupta –Executive Director Legal

            

Delivering year on year………

Financial Performance

Financial Performance

Porter 5 Forces Analysis

The threat of entry: Low Main barriers to entry are economies of scale, Advertising necessary for band awareness (the leaders jointly spend Rs. 4,000 Crores p.a.), Access to distribution channels: concentrated retail supermarket; Cost advantages independent of size; Experience in production and distribution of major operators.

Threat of substitutes: Moderate/high

- Growth in light food snacks, introduces possibilities: healthier snacks; fun fruit packaging; savory snacks.

Supplier power: Moderate- Milk, sugar subject to Govt. control;

- Cocoa subject to price fluctuations, but larger manufacturers can hedge against this by backward integration.

Porter 5 Forces Analysis cont…..

Buyer Power: Potentially high- As there is a concentration of buyers (the six largest retailers account for 60% of total India’s food);

- Competition for shelf space in high;

- There is a threat of backward integration, especially with brand only products being introduced BUT; - Only 30% of confectionery is sold through supermarkets; other outlets include petrol stations, off-licenses, vending machines, and so on, so the effect is offset a little.

Competitive rivalry: High- Substitutes threaten, competitors are in balance:

-There is slow market growth; There are high exit barriers (Capital intensive); Major spending on advertising.

Ansoff Model

Market Penetration:Company strategies based on market penetration normally focus on changing incidental clients to regular clients, and regular client into heavy clients. Typical systems are volume discounts, bonus cards and customer relationship management. - Lux

Market Development:Company strategies based on market development often try to lure clients away from competitors or introduce existing products in foreign markets or introduce new brand names in a market.- Rural Market

Product Development:Company strategies based on product development often try to sell other products to regular clients. This can be accessories, add-ons, or completely new products. Often existing communication channels are leveraged. – Lux, Lifebuoy

Diversification:Company strategies based on diversification are the most risky type of strategies. Often there is a credibility focus in the communication to explain why the company enters new markets with new products. Kisan

BCG Matrix

Food

Pureit

Personal Products

Coffee

Soap & Detergent

Tea

PESTEL AnalysisPolitical (incl. Legal) Economic Social Technological Technological

factorsEcological

factors

Environmental regulations and protection

Economic growthDraught / Natural calamity

Income distribution Govt research spending

Govt. spending on research Protection laws,

Tax policies Interest rates & monetary policies

Demographics, Population growth rates, Age distribution

Industry focus on technological effort

New discoveries/development

Energy consumption issues

International trade regulations and restrictions

Government spending

Labour / social mobility

New inventions and development

Rates of obsolescence Waste disposal

Contract enforcement law Unemployment

policy Lifestyle changes Rate of technology transfer    

Consumer protection

Employment laws TaxationWork/career and leisure attitudes, Entrepreneurial spirit

Life cycle and speed of technological obsolescence

   

Govt organization / attitude Exchange rates Education Energy use and costs    

Competition regulation Inflation rates Fashion, hypesChanges in Information Technology

   

Political Stability Stage of the business cycle

Health consciousness & welfare, feelings on safety

Changes in Mobile Technology    

Safety regulations Consumer confidence Living conditions    

Growth Strategies

Strategic intent to sustain market leadership and grow market positions

across brands and categories.

Invest behind brands & deliver consumer value.

Drive topline growth with profitable and sustainable margins.

Focus on innovations, quality & competitiveness of distribution system.

Achieve cost leadership across the extended supply chain; margin

improvements to come by winning in market place, judicious price increases.

Build brand image leadership & strong consumer relationship through effective communication; secure ongoing sale of consumables

Goal & Strategy

GOALAchieve sustainable, competitive and profitable growth across our portfolio

STRATEGY Leverage brand portfolio and consumer understanding by

Straddling the pyramid

Driving consumption and penetration opportunity

Build segments & markets for the future where

Unilever has strong expertise such as, Foods, Top End and Deodorants

Leverage positive impact of growing Indian economy on consumer spending

Actively drive Portfolio Mix improvement through Innovation, Technology and R&D leading to

better margins

Leverage Unilever scale to generate buying efficiencies and cost savings

Integrate our economic, environment and social objectives with strong commitment to

sustainable development

Customer Management Strategies

Consolidating strong position with customers & channels in general trade.

A pilot project in Mumbai Metro on customer consolidation was successfully

executed.

The concept of a ‘zero inventory model’ introduced.

Investment in state-of-the-art IT application in Sales & Distribution to improve

speed of information, service quality & productivity of human resources.

Distributors’ salesmen equipped with Hand Held Terminals to simplify the

processes of order taking, billing & order delivery.

Supply Chain Strategies

Deployment of advanced IT solutions on the back of a strong suite of SAP application.

The manufacturing teams focussed on increasing operational flexibility & improving

reliability to deliver better service with lesser assets.

These initiatives resulted in improved customer service levels measured as ‘Customer

Case Filled On Time’ (CCFOT) through the year.

Multifunctional teams worked together to drive cost reduction programmes.

Principles of Total Productive Maintenance were applied. This resulted in increase in

asset productivity levels.

Capability building Initiatives

New sales organisation is functioning effectively; ‘One HLL’ Customer

development organisation in place for 2009

Segmented approach to general trade, modern trade and top-end channels

Modern trade structure being strengthened to leverage market opportunities

Consolidation of customers

Improved customer service

Continuous replenishment operational

Lower trade stock

Improved stock freshness

Front-end IT capabilities being enhanced-Uniform IT system across Customers

For effectiveness in decision support, harmonization and collaboration

Capability building Few examples

Key customer measures improve by 35%

Distributor stocks reduction achieved - 15%

Continuous Replenishment System (CRS) cover 100% of our business

In Beverages, Household Care, Popular Detergents categories, over 85% of customer orders serviced within 1day

Target - To achieve > 90% of orders for the entire portfolio within 1 day

Consolidation leading to 20% reduction of distributors

Uniform billing package implemented at 50% of our distributors

Project Shakti – A Rural Initiative

Project Shakti is a rural initiative of your Company that targets small villages typically

with a population of less than 5000. It empowers women in rural markets, while

contributing well as a sales channel and is a great example of ‘Doing Well by Doing Good’.

Objectives of Shakti:

Reach new consumers in small rural villages

Develop/grow markets through consumer education programs.

Empower women through creation of employment opportunities for them

Build a sustainable business Model

Project Shakti benefits the business by significantly enhancing its direct rural reach, and

by helping the Company’s brands to touch the lives of people hitherto untouched.

Network

Started in 2003, Hindustan Unilever Network (HUN) is HUL's Direct Selling arm. It is a multi-category direct selling business offering a wide range of high-quality, high-performance products for its consumers and also exciting business and personal development opportunities for its consultants. It already has about 7 lakh consultants - all independent entrepreneurs, trained and guided by HUN's expert managers and trainers.

HUN’s mission is to a create millionaire club in India. There are many consultants who are earning at over a rate of Rs.1,00,000 p.a. Several consultants earn over Rs.50,000 p.m. What is encouraging is that they all started their business with earnings of less than Rs.500 p.m.

HUN offers you to build a business with different categories of Home & Personal Care (HPC) and Food products. They are all essential household needs. And they are all exclusive to HUN, specifically developed for the Direct Selling channel, and not available in the retail channel.

HUN has already spread to 1500 towns and cities, backed by 28 offices and over 130 service centres across the country.

HUN's vision is to earn the love and respect of India by making a real difference to the lives of million Indians.

NetworkWhat Makes HUN's Promise Unique And Competitive• Reputation of Hindustan Unilever

• HUN requires one of the lowest investments for entry (Rs.2450 only to register as a consultant)

• A richly rewarding Compensation Plan

• Widest reach amongst Direct Selling companies in India (over 130 servicing points)

• Widest range of top quality Home Care, Personal Care and Food products

• Highly affordable prices & Focussed training system and tools to aid self development

Explore HUN's Range Of Star Products • Lever Home – Detergents & Home cleaning

• Aviance - Personal care & cosmetics for Men & Women

• Ayush Spa range, Aviance and DYI - Soaps

• Mentadent - Oral Care

• Ayush Therapy - Health Care

• DIY - Male Grooming

• Ayush Poshak Rasayana - Children's Nutrition

• Ayush Rakshak Rasayana - Adult Nutrition

CSR Win-Win Model ….

MicroCredit Model

* Income / Investment opportunity* Education / Awareness* Access to urban markets and information

* Faster turnaround of money* Better repayment* Social fulfillment

SHG

* Income generating activities* Efficiency and Productivity* Less dependence on grants

NGO

Bank

* Better product reach* Category penetration* Social fulfillment

HUL

CSR Initiatives

Water Conservation and Harvesting In association with an NGO, Vanarai, HUL's Silvassa manufacturing hub (in the Union Territory of Dadra & Nagar Haveli) embarked on a long-term project of water harvesting.

HUL’s Khamgaon factory is located in a dry and arid region of Maharashtra. Around 12 years ago the factory started a pilot on ‘Watershed Management’ on a 5-hectare plot to prevent soil degradation and conserve water. The efforts have resulted in the creation of a green belt, which is now a veritable forest of about 6300 trees.

Project Shakti: Changing lives in rural IndiaHindustan Unilever's Project Shakti is a rural initiative that targets small villages populated by less than 2000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it benefits business.

Lifebuoy Swathya Chetana: Lifebuoy Swastya Chetna (LBSC) is a rural health and hygiene initiative which was started in 2002. LBSC was initiated in media dark villages with the objective of spreading awareness about the importance of washing hands with soap.

CSR InitiativesThe Fair & Lovely (FAL) Foundation The Fair & Lovely (FAL) Foundation aims at economic empowerment of women across India by providing information, resources and support in the areas of education, career and enterprise.

Fair & Lovely Foundation has awarded over 600 deserving girls since 2003.

To date, over 6,00,000 students have benefited from Career Fairs conducted in all over cities in India.

Fair & Lovely Shikhar, an initiative by Fair & Lovely, aimed to explore the inspiring stories of women achievers who have overcome all obstacles with their strong will and positive attitude and “changed their destinies”.

Project Suvarna is an identification and training activity aimed at harnessing available talent in selected events in Women Athletics in the age groups of under 12, 14, under 16 and under 18.

Project Swayam - Initiative in the area of education & enterprise for women in association with VRDC (Vanasthali Rural Development Centre), wherein women were trained to become Pre-school teachers.

SWOT Analysis

Strengths

• Provided creative strategies, which could achieve the company’s goal - sales growth & cost saving.

• Strong marketing and good image creation.

• Wide distribution channels.

• The power of decision-making was decentralised to country managers to set their own priorities and to adapt products to local tastes.

• Strong reputation as being one of the world’s 5 largest food and household products and being brand marketing group.

• Acquisitions increased the diversified product brands & resulted in high market share.

• Strong management teams including competent managers & innovative chairman.

• The obviously effective HUL’s HRM resulted in recruitment and new incentive system, which could motivate employees to increase work efficiency.

• Provided ‘global innovation centers’ to connect R&D and the company’s brand innovation organizations.

• Hiring local managers benefits the company in terms of understanding local culture & different people’s lifestyles in order to produce the products that can meet customers’ needs.

SWOT Analysis cont…..

Opportunities

• Changing consumer preferences.• Consumers are getting health cautious. Increasing need for healthy products.• It is believed that India’s GDP will continue to grow robustly in the future, not withstanding the current and short term blips.• FMCG categories have good potential to grow, as the current per capita consumption levels are still low, compared to some other Developing & Emerging economies like China, Indonesia, Thailand, etc. • Increased per capita income will also provide opportunities to consumers for brand experiences & up trading.• Big opportunity to grow Penetration & Consumption.• Gained wide interest from public in terms of improving the standard of life and catalyzing affluence in rural India.•Growing ‘Out of Home’ Opportunity

SWOT Analysis cont…..

Weaknesses• High number of product brands by not focusing on particular brands caused high expenses and were difficult to control.

• Dual co-chair approach and dual company structure could cause inefficient coordination and communication problems.

• Conservative and bureaucratic management caused slow-moving HUL’s operating.

• Company had slow sales growth compared with the competitors.

• Paid too much attention to the acquisitions, which caused high expenses and led to low cash flow.

• Acquisition strategy produced larger management levels, which were hard to manage & control.

• High cost of restructuring caused limited finances to operate and improve other parts of the businesses such as promotions.

SWOT Analysis cont…..

Threats

• Retail grocery chains become significant competitors with regard to producing and selling their own name brands with the cheaper prices and providing their own shelf space for their products.

• The high competition for market share increases rapidly between branded food manufacturers and private-label manufacturers. HUL has to find the new strategy to enhance these competitors.

• The changes of people’s lifestyle would cause adverse impact on product designs, which cannot meet customers’ needs.

• Increasing social awareness in society would result in increasing high expenses of product innovation and marketing and increasing high concerns with the legislation.

• The anti-big business feeling of some customers, employees, and shareholders would destroy the company’s image.

• The business partners such as Ice cream partners would entail the unfavorable conditions to HUL about receiving price through distributed products.

• The acquisition could be the wrong decision, if the acquired companies do not succeed in the business market or do not make profits for HUL.

• The fluctuation of currency exchange could impact on the company’s financial statement.

• People could turn to buying products, which are produced by private labels manufacturers or supermarket chains rather than buying products of HUL, which are more expensive.

THANK YOU