Asian Paints

STRATEGIC MANAGEMENT REPORT

ON

ASIAN PAINTS LIMITE

SUBMITTED SUBMITTED

TO BY

Prof S.Balasubramanyam C.SOWBHAGYA LAKSHMI . M.B.A 1st year,Roll No: 89535

SCHOOL OF MANGEMENT

NATIONAL INSTITUTE OF TECHNOLOGY

WARANGAL-506004

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INDEX

1. ASIAN PAINTS OVERVIEW ........................................ 2

2. BACKGROUND ............................................. 3

3. VISION .............................................. 4

4. MISSION ............................................... 4

5. MAJOR CORPORATE EVENTS ..................................... 5

6. COMPETETIVE ADVANTAGE PROFILE .......................... 7

7. CORPORATE FACTORS ............................................... 9

8. STRATEGIC MANTRAS OF ASIAN PAINTS LTD .............. 10

9. SWOT ANALYSIS ...................................................... 12

10.MARKET SEGMENTATION ............................................ 13

11.ANSOFF MATRIX ........................................... 15

12.FUTURE PLANS ............................................16

13. ANALYSIS & SUGGESTIONS ..........................................17

14.CONCLUSION ................................................ 19

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LEARNING OBJECTIVE

The learning objective for the industry analysis is to determine the opportunities and threats that exist for firms within a competitive environment.

The learning objective for the firm analysis is to determine the strengths and weaknesses of a firm and to determine the core competence that can be built on to establish a competitive advantage.

The final step is to develop a sound business plan to ensure the survival of their chosen firm within its competitive environment.

STRATEGIC MANTRAS OF ASIAN PAINTS LIMITED -

Audacious in vision.

Focus on what know best.

Trim flab to achieve operational excellence.

Good governance made the business sense

Forge stronger partnerships with supplier base.

Pursue quality with zeal.

Innovate to create value for customers.

Good in distribution.

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1. ASIAN PAINTS OVERVIEW

Asian Paints Limited(APL) is the market leader in the Indian paint industry, commanding a market share of 38 per cent in decorative paints and 33 per cent overall in the organised sector. Its annual sales turnover exceeds Rs. 1,300 crore, way ahead of all the competitors in the industry. In profits too, Asian Paints is far ahead. Asian paints market leadership in the decorative paints segments can be grasped correctly when we take note of the relative position of the various players in the industry. Whereas Asian Paints has a market share of 38 per cent, its nearest rival, Goodlass Nerolac, commands a share of just 14 per cent. All others have only less than 10 per cent. Such an achievement by a company that is wholly Indian in capital, management and technology and in an industry historically dominated by multinationals is certainly a commendable feat

Some of the key initiatives undertaken are:

* Initiatives in manufacturing to reduce losses at factory

* Sourcing efficiencies

* Sweat existing assets for better productivity

* Introduction of new technology to drive efficiencies and increase productivity

* Implementation of a new supply chain solution

* Implementation of an ERP solution

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2. Background

Asian Paints Limited was established in 1942 as a partnership firm by four friends Champaklal H. Choksey, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R.Vakil to manufacture paints in a garage in Mumbai (Bombay). From its humble beginnings, the company has moved on to become the largest paints company in India with a market share of 30 per cent.The company with a turnover of US$ 535 million on standalone basis and US$ 640 million on consolidated basis (including turnover of all its subsidiaries) is one of the top ten decorative paints companies in the world. Its reach and dominance in the Indian market can be gauged from the fact that it is more than twice the size of its neares competitor in India and it has been the market leader in paints industry in India since 1968.The company operates in 22 countries and has 29 paint manufacturing plants in the world which service consumers in over 65 countries.The company operates around the world on its own and also through its three subsidiaries Berger International Limited,Apco Coatings and SCIB Chemicals.The company aims to become one of the top five decorative paint companies in the world and has embarked on an aggressive strategy of expanding its global operations. The promoters hold the majority stake in the company (46.8 per cent of the equity stake).The next largest shareholders are the foreign institutional investors (19.5 per cent stake), followed by Indian public (16.5 per cent stake). Domestic banks, financial Institutions, mutual funds and insurance companies hold 13.4 per cent stake. Corporate bodies and non-resident Indians hold the remaining stake.

ASIAN PAINTS PRODUCTS

Asian Paints is engaged in manufacturing of paints. The company offers interior and exterior wall paints, automotive paints, powder coatings, auto refinish paints, and wood finishes. It operates in 22 countries and has 29 paint manufacturing facilities in the world servicing consumers in over 65 countries. It is headquartered in Mumbai, India and employs 3,924 people

1) Interior Wall Paints2) Exterior Wall Paints3) Wood & Metal Paints4) Wood Finishes5) Ancilliaries

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3. VISION

“Asian Paints aims to become one of the top five Decorative coatings companies world-wide by leveraging its expertise in the higher growth emerging markets. Simultaneously, the company intends to build long term value in the Industrial coatings business through alliances with established

global partners . “

4. MISSION

To provide paints as per market demand, ensuring desired level and quality of customer (dealer) service, continued availability of the right product mix of right quality at the right time.

CORE VALUES

• Commitment and Integrity in dealing with internal and external customers

• A strong belief in individual ability and creating an environment in which entrepreneurial spirit is encouraged

• Ownership and Responsibility

• To continuously Rejuvenate every living and working space of people and bring joy to their lives

CORE PURPOSE

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• To continuously rejuvenate every living and working space of people and bring joy to their lives

5.Major corporate events (Milestone)

Year Events

1942 Champaklal H Choksey, Chimanlal N Choksi, Suryakant C Dani and Arvind R Vakil establish a paint manufacturing unit in a garage on Foras Road, Bombay. They name the company The Asian Oil & Paint Company

1945 Asian Paints uses an innovative marketing strategy of using small packs1957 The family-owned company becomes a professionally managed

organisation1967 Asian Paints emerges as India's leading paint company2002 Asian Paints restructures and adopts enterprise resource planning

technology2005 Asian Paints becomes the tenth largest decorative paint company in the

world

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APL’s whole business operation can be divided into two segments i.e. Paints and Chemicals.

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6.COMPETETIVE ADVANTAGE PROFILE :

Marketing Factors

Market leader -38% share in organized sector.

Asian Paints is more than twice the size of its nearest competitor.

>50 yrs -leader

Widest product range -product shades, wide colours ,pack sizes

40 different decorative paints -1000 shades, 8 different sizes in packing, no. of brands -all segments

Brands -quite powerful

high quality MR & MIS , 90% accuracy in forecasting, 100 fastest moving Stock Keeping Units, monitored daily

Countrywide distribution (29 plants in 22 countries) .

Physical distribution far superior to competitors

strong in inventory control (18 processing centres, 350 raw material and intermediate goods suppliers, 140 packing material vendors, 6 regional distribution centres, 72 depots are integrated)

Manufacturing/Operations factors :

Size advantage in relation to competitors.

Finesse in production planning ,scheduling ,matching with marketing requirements

In-house production –outsourcing –high reliability suppliers – superior quality assurance.

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Four production location –spread benefits.

Human Resources :

Asian Paints believes that people are its strongest assets

HIGH calibre

A talent pool of over 4700 employees employed across 23 countries bring in a unique blend of mindsets and skills

Excellent training is provided to develop leaders and re-strengthen competencies from within the organisation

Information Technology :

Asian Paints is the only company in India to have integrated Supply Chain Management (SCM) Solution from i2 Technologies, and Enterprise Resource Planning (ERP) solution from SAP.

Customer Relations Management (CRM) tools are being used in Asian Paints Helpline and Home Solutions initiatives

Improve efficiency in the business as well as increase the transparency and accuracy of information across the country.

Research & Development :

At Asian Paints, R&D plays an important role in developing new products and innovations, and reducing costs by value re-engineering of formulations.

It consists of 140 strong R&D team consisting of 7 doctorates and around 115 qualified scientists, has always backed the company's business plan and demands of the market place.

Asian Paints' R&D team has successfully managed to develop High-end exterior finished and wood finishes in-house.


7. Corporate factors :

AWARDS

Awarded the "Sword of Honour" by the British Safety Council for all the paint plants in India. This award is considered as the pinnacle of achievement in safety across the world.

Forbes Global magazine, USA ranked Asian Paints amongst the 200 'Best Small Companies of the world' in 2002 and 2003 and amongst 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.

The Asset - one of Asia's leading financial magazine ranked Asian Paints amongst the leading Indian companies in Corporate Governance in 2002 and 2005.

Received the Ernst & Young "Entrepreneur of the Year - Manufacturing" award in 2003

ENVIRONMENT AND SAETY :

Asian Paints approaches the environment issue from the perspective of waste minimisation and conservation of resources.

It attempt is to reuse, recycle and eliminate waste, which results in less and less waste being generated. Accordingly, the material losses in manufacturing have been reduced substantially over the last few years.

It has ISO 14001 certification for environment management standards. It has achieved 'zero industrial discharge' capability. This has been

achieved by the installation of upgraded effluent treatment facilities and installation of reverse osmosis plants in conjunction with appropriate recycling and reuse schemes. Our emulsion manufacturing facility has also achieved 'zero waste' status. It has adopted the principles of "green productivity".

Some of its innovative schemes which enhance green productivity are dealer tinting systems which has resulted in large batch sizes ; bulk storage facility for monomers which reduces wastage; Use of natural gas which is a cleaner fuel ; solvent recovery plants have been set up which has resulted in zero reduction of solvent disposal ; Improved incinerating systems and reverse osmosis.

The "Sword of Honour", instituted by the BSC, is recognized the world over as the pinnacle of achievement in safety management systems.


QUALITY POLICY:

We shall provide products and services that meet stated standards on time, every time.

We accept Zero Defect as a quality absolute, and shall design and operate our quality system accordingly.

We will organise our work practices to do a job right the first time, every time.

We are committed to continuous improvement in quality in all business processes and shall track such improvement through measurable indicators.

8. STRATEGIC MANTRAS OF ASIAN PAINTS LIMITED -A WHOLE AND REALISTIC VIEW

Asian Paints sound marketing has earned it strong brand equity. It has been able to do it by focusing on product features that are appreciated by customers. And by ensuring that the products are of high and consistent quality and are widely available b Enviable track record in breaking away the position of MNCs in the Indian paint Industry building a strong distribution system.

The paint industry of India is more then 100 years old. Its beginning can be traced to the setting up of factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II. The industry consisted of just a few foreign companies and some small. Indigenous producers. Foreign companies continued to dominate the industry.

At the time Asian Paints entered the Indian paint business. Distribution was the most crucial task for any new entrant. Both physical distribution and channel management posed formidable challenges. The foreign companies and their wholesale distributors dominated the business. Also they were shutting the doors on any new paint company seeking an entry into the business. They concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development.

Asian Paints sized up the scenario and formulated a unique strategy. It went in for a strategy that differed totally from the existing pattern.


Elements of Asian Paints Marketing Strategy

1. Asian Paints bypassed the bulk buyer segment and went to individual consumers of paints.

2. Asian Paints went slow on urban areas and concentrated on semi urban and rural areas.

3. Asian Paints went retail. While its competitors remained content with a handful of wholesale distributors. AP preferred direct contact with hundreds of retail dealers.

4. Asian Paints went in for an open door policy. It broke the prevailing trend in those days. Of limiting the number of dealers to the barest minimum. And chose to use practically everyone in the trade. Who was willing to function as its dealer?

5. Asian Paints voted for nationwide marketing/distribution. It wanted to have an active presence throughout the country. In all the geographical zones. States and territories.

Main steps in the implementation Process

1. Asian Paints created a large network of dealers.

2. It established a network of company depots to service the dealers

3. It created a marketing organization that matched its distribution

4. It successfully resolved the cost service conflict in distribution with a

A strong commitment to distribution cost control. Without compromising service level.

Effective inventory management Effective control of credit outstandings IT initiatives in distribution cost control

As already mentioned. Asian Paints is India's largest paint company and the market leader in decorative paints. The story of Asian Paints is a story of marketing excellence. It achieved an enviable leadership position by mastering


the distribution function and gained a distinctive and powerful competitive advantage.

9.SWOT ANALYSIS OF ASIAN PAINTS LTD

Strength :

NO.1 Player in decorative paints and 2nd in industrial paint segment.

Wide range of products with around 8500 colors.

Geographically well spread giving the company logistical advantage.

International presence giving opportunity to reap benefit from international growth.

wide distribution network i.e. 19,000 dealers.

Highest manufacturing capacity.

Strong finanacial helps the company to invest in marketing and brand recall activities.

weakness :

Low share from the industrial paint segment.

opportunity :

High growth in both decorative paint and industrial paint.

Potential in overseas markets.


Threats :

Growing industry and low capital intensive nature of business will attract competition.

Setting up Greenfield project and buyout are viable options for international players to enter the domestic market.

Industry growth depends on two factors(a) Repaint activity and(b)Construction. Any slowdown in any of the two will have

direct impact on the company sales.

Aggression from existing players The external environment saw an entry of a lot of multinationals trying to

attack us on various segments

10.Market segmentation :

Asian Paints segment the market based on the usage :

BRAND POSITIONING

It is how the Asian paints enabled people to form a mental image for their products in the customer’s mind. The strategies that they followed where as follows,

Brand Image

The ways in which Asian Paints attempted to meet the customer’s psychological and social needs.Indian paint industry is a low involvement industry. Till 1990s people will just tell their budget for painting their house to their contractors. And few customers will also mention the colour they need. During that period Asian Paints analyzed the customer market and found that people where not brand conscious but their concern was only the price of the paint. To meet this needs of the customer• Asian paints reduced the cost of the raw materials by backward integration in order to reduce the cost of the paints• Established an advertising strategy with created an emotional touch among the customersAll these strategies helped them in creating a “Brand Image” for their products


among people and people started realizing the need for brand conscious in this industry.

Umbrella Brand

In 2004 the company realized that though they have almost 20 brands only few products like Apex emulsion, Royale interior emulsion, Apcolite and Touch wood had high recall among the customers. Therefore they decided to promote the brand as a whole, to create a corporate image and the various products under their Umbrella Brand “Asian Paint”, which became their mother brand. This created a “Brand Awareness” as a whole among the customers.

Brand Portfolio:

It was realized that instead of spending on individual brands and in promoting them it was logical to promote their corporate image and allthe brands under their umbrella brands “...

Asian Paints has embarked on an umbrella branding policy encompassing all its products and services. The project includes a new visual identity that establishes the company name as the dominant reason for purchase. Tractor, Royale, Utsav and Apcolite names are no longer the focus on the can, rather consumers will be buying "Asian Paints." Some key brand names are being retained for the time being--to signal a position in the market rather than a product or surface. For instance, Tractor will represent the "value for money" brands.

The immediate advantage is obvious. Rather than spread resources thinly across brands and sub-brands, a company centric portfolio can synergize communication efforts. To be competitive in a world of fragmentation and rising costs, traditional mass media, such as television, can be prohibitively costly.

With the umbrella-branding move, Asian Paints can also afford to move forward from a mere functional platform for each individual product to the high ground of a mood-based emotional dimension.

An Underlying Theme

At Asian Paints, the underlying theme is "har ghar kuchh kehta hai," or "every home has something to say." The depth and texture visualized by this line goes into the customer's basic psyche of owning a home, and will carry through various messages emanating from the company, which is the leader in the decorative coatings market in India.


11.ANSOFF Matrix

Asian Paint’s value for the customers was build through innovative package (size),distribution , and communication .In 1970’s they decide to computerize and network their 30 depots round the country ,to provide proper feedback of market needs ,resulting in quick response to meet the needs.

They planned a new distribution structure , smaller packages and computerized communication networks. Asian paints differentiation strategy starts from market segment, distribution & packaging .

With increasing volumes in chosen segments Asian Paints achieved economies of scale for cost leadership .With their dominant position they diversified in product range as also market and geographic segment.

1. They diversified into manufacturing raw materials for paints.

2. product diversification also included industrial paints .Now with a large market share ,they have strong distribution network even in metros.

Asian paints strategy of quick response translates into supplying 95% of the order supply in 48 hrs which is a positive competitive advantage .Their R&D has developed new products to later to industrial & scientific segments . The paint industry is in growth stage in India as construction activity has a high priority.

With 27% market share, they enjoyed double the market share than their nearest competitor .In order to maintain this leadership position they have drawn up the following strategy.

Asian Paints went to backward vertical integration by getting into manufacturing raw materials for paints.

With liberalized economy more international brands are likely to enter the Indian markets as entry barriers are low in the Paint Industry.

To keep their dominant position Asian Paints should pursue vigorous R & D for innovative products ,increase the number of depots for covering the entire country advertise separately for each market segment & average continuous market research to enhance their competitive advantage.


12.Future Plans :

The company plans to consolidate its dominant position in India by launching new products in line with the market developments in both decorative paint and industrial coating segments. The company is focusing on further improving the operations of all of its subsidiaries in India and abroad and has already launched E-Strides, an ERP initiative through which all the overseas ventures are being covered for sharing of global knowledge, best practices and better control on operations. The company’s objective is to be among the top three players in each market where it is currently operating or plans to operate in the future

Introducing Water – based Paints Repositioning of existing Brands in Rural Market Broadening of Distribution Network Adding more choices for shades and effects Enhancing Better Quality Demand will be generated through the new constructions coming in housing and industries


13.ANALYZES AND SUGGESTIONS

ADVANTAGES OBSERVED (Good strategies) IN FIRM

If we observe the vision statement

Understood that management involved right from the start. Adequate or correct marketing research is done at each and every level There is no lack of vision on the relationships between processes,

technology and organization.

If we observe the culture of TQM, and Decision Making

There is sufficient company resources to accomplish task. New strategies are well explained to employees. Incentives given to workers to embrace the new strategy. Promoting the new employee and their management skills. There is a good employee commitment. Important strategies like collaboration with lead manufacturing

companies.

If we observe the Human Resource Management

Its observed that Company’s succeed in today's free market economy, only because their employees perform to their fullest potential. The governing theme in the organisation is the well being of their employees strategies.

Alive to this home truth Freedom to experiment Continuous learning and training. Transparency in all aspects. Quality in all aspects of work. Rewards based on performance and potential.


The salary and benefits offered are on par with the best available in Construction Industry.

It is aimed at not only attracting but also retaining talent.

If we observe Financial aspects

Because of this Economic crisis all over the world,the company profit percentage gets reducing.

To control this, There should be a meeting with all familiar construction companies CEO to get their views on financial crisis aspects and financial management.

But, Reduced financial expenses have resulted in substantial increase in the return on net worth as well as the capital invested from them.

If we observe Enivironmental upgradation.

It has ISO 14001 certification for environment management standards It is using more innovative techniques. This augurs well for the country and now there is an imminent need to

introduce green concepts and techniques in this sector. Green concepts and techniques in the construction sector can help address

national issues like handling of consumer waste, water efficiency, reduction in fossil fuel use in commuting, energy efficiency and conserving natural resources.

Most importantly, these concepts can enhance occupant health, happiness and wellbeing.

So automatically enhance the mood of occupant and they feel fresh throughout the day and in the mean time profit also increases.

If we observe the Marketing Strategy :

It has large network of dealers. Wide range of varieties. Rich in product diversification. High Innovation in techonolgy. Given more importance for R &D.


Since the firm has following good strategies ,but it must be careful about MNCs coming for various segments.and there is aggression from existing palyers.

14.CONCLUSION

An independent survey named Asian Paints to be one of the best companies in Asia in paint industry and other.

Business Today showed that the company was one of the most transparent and a leader on the issue of innovative methods.

EXCELLENT MANAGEMENT SYSTEM

EFFECTIVE OPERATIONAL MANGEMENT

GOOD NUMBER OF SUPPLIERS AND DISTRIBUTORS.

LOTS OF AWARDS

No.1 PAINT COMPANY IN PAINT INDUSTRY

PLAYING LEADER ROLE IN PAINT INDUSTRY.

GIVING MORE IMPOTANCE FOR HUMAN POWER.

HIGHLY INNOVATED IN TECHNOLOGY.





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