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Essel propack - International Marketing Managment

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This is an International Marketing Assignment prepared on Essel Propack for Indian Institute for Foreign Trade.

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Essel propack - International Marketing Managment

  1. 1. International Marketing Assignment: Essel Propack Case Study Submitted to : Dr. Gautam Dutta Subject: International Marketing Management Indian Institute of Foreign Trade EPGDIB (VSAT) – 2014-2015 Trimester – II (July – October, 2014) Submitted by Group 1 Name Roll No Sanjay Vaid 47 Puneet Diwan 39 Narendra Kumar 31 Komal Grovar 24 Anuj Abrol 10
  2. 2. ` Background About: Is the First Specialty Packing company manufacturing Laminate and seamless or extruded plastic tubes. Chairman: Subhash Chandra Goyal Current market share; 60% in India and 33% globally. Sales revenue: 4.5 billion tubes per year. Sales revenue: INR 1694 crores. Employees: 750 in India and 2200 globally Presence in 12 countries. Production facilities – 23 Sunday, May 10, 2015 Yahoo Case Analysis 2
  3. 3. ` Products EPL – Divided into Tubes : Laminated tubes & co extruded plastic tubes Specialty packaging. 3
  4. 4. ` Partial List of EPL Key customer 4
  5. 5. ` Essel Propack evolution 5 1984: Set up of manufacturing facility in India for production of laminate tubes and laminates. 1993: Essel Propack takes its first step tow ards becoming a global player by setting up its first overseas plant in Egypt. 1997: Opening of a w holly ow ned subsidiary in Guangzhou, China. 1999: Essel Propack set up their joint venture in Dresden, Germany. 2000: Acquisition of Propack w orldw ide laminate tube business. 2002: Entry into the US w ith a greenfield facility in Danville for laminated tubes. 2004: Essel Propack acquired Arista Tubes, UK - leading manufacturer of seamless plastic tubes in UK - now know n as Essel Propack UK. 2005: Commercial operations began in Russia. Essel Propack acquired another laminated tube manufacturing company, Telcon Packaging in UK, now Essel Propack UK. In July 2005, Essel Propack commissioned one more manufacturing plant in Nalagarh, India. 2006: With acquisition of Tacpro Inc., US and Avalon Medical Services, Singapore, both manufacturers of catheters and balloons Essel Propack entered the Medical Devices business. Essel Propack set up a co-extruded plastic tubes plant in Poland under the banner of Arista Tubes, UK w hich 2007: Large-scale production of co-extruded plastic tubes began in Poland under the brand name Arista Tubes. The second plant of Packaging India Pvt. Ltd., located in Uttaranchal, for manufacturing 2008: Acquired Medical Device companies CDT and Med Inc., both based in Minneapolis 2009: Divested Medical Device business unit 2010: Started a new green field plant in Tianjin city of North East China. The facility is located w ithin customer premises.
  6. 6. ` Questions for analysis of the case study  What are the reasons that led Essel Propack Limited to enter international markets?  Find out the key reasons for the success of EPL in international markets.  Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  In view of the intensifying competition among laminated tube manufacturers on one hand and rise in customers’ negotiating power on the other hand, how should EPL tackle these marketing challenges so as to achieve its goal of gaining 50% of world’s market share in laminated tubes in the next few years ?  Test Essel Propack towards its ability for global market participation. 6
  7. 7. ` What are the reasons that led Essel Propack Limited to enter international markets?  Profit and growth goals  Potential of International Market.  Managerial urge  Technology competence  Foreign market opportunities  Economies of scale.  Lower cost.  Higher negotiation power on Sourcing.  Risk Mitigation  Spread R&D cost.  Greater purchasing power among people of the world. 7  Competitive pressure  Proximity to international customer.  Success in Domestic market and best practices and competencies acquired.  Leverage Competitive advantage. Proactive Reason : Reactive Reason:
  8. 8. ` Find out the key reasons for the success of EPL in international markets.  Large scale gave them opportunity to build center of excellence.  The Internalization strategy of Essel Propack is clearly the outcome of an aggressive acquisition led plan backed by the finances of the Essel Group. This suggests that the Internationalization process can be substantially accelerated with readily available funding.  Each market that EPL serves has a manufacturing plant installed that serves the host country as well as others that are its neighbors.  In the Uppsala model Essel Propack is at the 4th Stage where it has the capacity of producing its products abroad. This has been the outcome of its market knowledge gathered since 1984 or over a period of 25 odd years. The clearly shows that Essel Propack has grown by incremental knowledge about the markets it operates in. 8
  9. 9. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you. Benefits for EPL operating in niche market are :  Sizing the Potential for growth: The laminated tubes has been a niche segment of the tube market characterized by high growth and high margins Spread Risk considering global tube market size of 32 billion and only 38% have been so far been converted into laminated tube market being in this niche market has great potential.  Spread R&D Cost: by being in niche market EPL can spread its R&D across the global markets.  Economy of scale: EPL can take full advance by reducing its production cost by specialization and standardization in manufacturing process.  EPL can take advantage of global sourcing and negotiation power it get due to common component procured though vendor. 9
  10. 10. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you. Risk for EPL: Raw material price escalation and the lag effect in passing these on to the customers. Single product dependency Attracting and retaining talent in the context of the business exigencies Currency volatility Economic downturn High debt equity ratio 10
  11. 11. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you. Measures to leverage its strengths and manage the risk identified: Cont …. Raw material price escalation and the lag effect in passing these on to the customers: - Proactively managing its pricing terms to customers in order to minimize the lag in passing through the raw material price increases. - Where possible, the Company should established alternate sources and equivalent materials in order to effectively manage the material cost 11
  12. 12. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you. Measures to leverage its strengths and manage the risk identified: Cont ….  Single product dependency: - Oral care category still accounts for large part of Company’s business. Being an essential consumer product and an item of daily use, tooth paste as a category naturally dominates the Company’s product range. However, it also tends to have a stable demand in an adverse economic environment. - All the same, the Company should rapidly develop Product/customers in the cosmetics, food and pharma categories with a view to maximizing value and tapping the benefits of a diversified portfolio. - Technology, integrated manufacturing process and innovation capability are other factors which further strengthen its competitiveness. 12
  13. 13. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  Diversification: Foraying into the Medical Devices Business: - With the global medical devices market valued at EUR 144 billion and growing at rate of 7 to 10 percent per annum, Essel Propack has availed of the opportunity and forayed into medical devices business. - The company plans to leverage its expertise in polymers and polymer processing in this field. It expects that its medical equipment business will evolve into major business line over the next to three years. This business is expected to account for a 5 per cent growth in its revenue in 2006. After acquiring Tacpro Inc. USA and Avalon Medical Services, Singapore, Essel Propack is looking for acquisitions in the medical devices business in EU. 13
  14. 14. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  Exploring New Business Model: Currently Essel Propack offers empty packaging material to its clients. It now should plan to implement novel delivery models, wherein the client would only focus on product development, brand building and distribution and entrust Essel Propack with entire responsibility of packaging process till the finihed products are ready. 14
  15. 15. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  Focus on the Plastic Tubes Market: - With the European plastic tubes market estimated at 2.5 to 3 billion tubes (in terms of Volume) and plastic tubes earning nearly 1.5 to 2 times more profit than laminate tubes, Essel Propack is now focusing on the UK. It looks forward to garnering a 20 per cent market share in the global market by 2010, therby evolving into a leading manufacturer of plastic tubes 15
  16. 16. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  Attracting and retaining talent in the context of the business exigencies: High demand for talent globally impacts people turnover: - Company should address this to the best possible extent by on going initiatives of career planning, competitive remuneration, culture of empowerment, objective performance management system and variable performance pay. - Annual employee engagement survey further provides the frame-work for improving employee morale and talent retention. 16
  17. 17. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  Currency volatility: The global nature of operations exposes the Company to multiple currencies; fluctuations in exchange rates could affect the Company’s performance. - Appropriate pass through clauses have to be built into customer contracts in order to offset the impact on material cost of exchange rate fluctuations. - The Company should also have the policy of systematically hedging its exposures using forward contracts. 17
  18. 18. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  High debt equity ratio: In a downturn, higher debt could increase financial risk. - EPL should focus on reducing financial leverage through higher capital productivity and improved cash generation. - It should have in place system for regular review of funds flows and a prudent financing policy aimed at optimal mix of short and long term debt. - Measures to conserve cash should be actively pursued. - Try and better operational performance from previous years to help improve the debt service capacity and take steps to improve this even further. 18
  19. 19. ` Identify the benefits and risks for EPL in operating in a niche market segment of laminated tubes. Suggest measures to leverage its strengths and manage the risks identified by you.  Economic downturn: This could impact your Company’s markets, suppliers, customers and finances leading to business slow down, disruptions etc. - EPL products are linked to daily necessities of consumers and should not be much impacted by the downturn. In fact, consumption continues to be strong even in these times - However EPL should be geared to constantly monitoring the emerging trends in consumption and offering relevant solutions so as to stay ahead of the curve. - The Company also is focused on containing costs and improving efficiencies as a means to stay competitive. - Proactive supplier and customer engagement is another way your Company seeks to minimize risk to business continuity 19
  20. 20. ` In view of the intensifying competition among laminated tube manufacturers on one hand and rise in customers’ negotiating power on the other hand, how should EPL tackle these marketing challenges so as to achieve its goal of gaining 50% of world’s market share in laminated tubes in the next few years ?  Increase vault share from their existing top 10 global account and target to get 50% plus of the spend on laminated tube manufacturing like P&G, Uniliver etc by account planning and mapping.  Leverage from its existing establishes supply chain and distribution plus economy of scale thus giving the cost advantage to acquire new customer.  Apply Market pull in developed market where quality sensitivity is high and market push in emerging market by offering discount etc where price sensitivity is high to penetrate in to new accounts/customers.  Adopt a short term, medium term and long term strategy  Short term market push by offering discount.  Medium term of market pull by brand awareness.  Acquisition of regional player.  Focus on profitability by regularly monitoring project, contract and provisioning for currency fluctuations. • Cost Control: Company should continued to focus on cash generation through cost management and capital productivity improvement measures. Capital expenditure is managed carefully through a rigorous evaluation of profitability and risks and regular project review for delivery on time and at budgeted cost. Large capital expenditure should be further backed by long term contracts so as to minimize cash flow risk to the business. Inventory and receivables should be closely managed.  Continue focus on R&D.  Diversification: EPL should plan to diversify in to Cosmetics, food and pharma categories 20
  21. 21. Weakness Threat Opportunity Strength SWOT • Global Presence & relationship large MNC. • Market leadership internationally. • Technical Know how. • Economic Growth. • Development Center in India and other target country. • High Market demand. Test Essel Propack towards its ability for global market participation ANALYSIS • Dependence on Oral Care Business. • Single business model at present • Raw Material Price. • Economics Uncertainty. • Key Competitors. Contn….
  22. 22. ` Test Essel Propack towards its ability for global market participation 22
  23. 23. ` Thank you Source: Case study shared by IIFT - Strategy Management Dr. K. Ranagrajan and research work over internet.

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