1. By - PRAMOD T JADHAV
STRATEGIC MANAGEMENT
PTMBA TRIMESTER:V
ROLL NO. A-24
2. 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.
5. India - 2015
2009
227 Mn Households
144
76
7
2015
361 Mn Households
153
15
193
Rich
Aspirers
Strivers
The shape of India is going to change…
from a pyramid to a diamond
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. Quality Policy
Quality 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
12. Code of Business Principles
Standard 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.
13. 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.
14. 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
18. 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.
19. 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.
20. 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
22. PESTEL Analysis
Political (incl. Legal) Economic Social Technological
Technological
factors
Ecological factors
Environmental regulations
and protection
Economic growth
Draught / 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/develop
ment
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 Taxation
Work/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, hypes
Changes 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
23. 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
24. Goal & Strategy
GOAL
Achieve 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
25. 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.
26. 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.
27. 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
28. 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
29. 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.
30. 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.
31. Network
What 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
32. CSR Win-Win Model ….
Micro
Credit
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
33. 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 India
Hindustan 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.
34. CSR Initiatives
The 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.
35. 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.
36. 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
37. 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.
38. 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.
