Professional Documents
Culture Documents
FM 1996 CHP 1 - 5
FM 1996 CHP 1 - 5
FM 1996 CHP 1 - 5
COMPANY PROFILE
1.1-BRIEF HISTORY OF HINDUSTAN UNILEVER LIMITED
The history of Hindustan Unilever Limited was chased back in the year of 1888, when
the visitors to Kolkata harbor noticed crates full of Sunlight soap bars which are
embossed with the word “Made in England by Lever Brothers, with that there marked
the beginning of India’s largest fast-moving consumer goods company. Soon after
followed Lifebuoy in 1895 and other famous brands like Pears, Lux, and Vin. Vanaspati
was launched in 1918 and the famous Dalda brand came to market in 1973. In 1931
Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing
Company, followed by Lever Brothers India Limited in 1933 and United Traders Limited
in 1935. Later on, these three companies merged to form Hindustan Unilever Limited in
November 1956. Through international acquisitions, the company acquired Brooke
Bond in 1984, Lipton in 1972, Chesebrough Pond’s USA in 1986. Since the very early
years, HUL has vigorously responded to the stimulus of economic growth. The growth
process has been accompanied by judicious diversification, always in line with Indian
opinions and aspirations. The liberalization of the Indian economy started in 1991,
which marked inflection in HUL’s and the go=roups growth curve. Later on, In the
1990s the company also witnessed a string of major mergers, acquisitions, and alliances
on the food and beverage front which include Kothari General Foods, Kissan business
from UB group, and Dollops Ice-cream business from Cadbury India in 1993. In January
2000, in a historic step, the government decided to award 74 percent equity in Modern
Foods to HUL, thereby beginning the divestment of government equity in public sector
undertakings to private sector partners. In 2002, HUL acquired the government's
remaining stake in Modern Foods. In 2007 the company name was formally changed to
Hindustan Unilever Limited. On 17th October 2008, HUL completed 75 years of
corporate existence in India. In January 2010, the HUL head office shifted to Mumbai.
Unilever’s corporate vision is “to make sustainable living commonplace. They believe that
this is the strongest way to grow a business”. This vision statement puts emphasis on
sustainability, especially among customers. Commonplace sustainable living is a core
component. This component shows the companies effort in changing its product t suit
the current market conditions. Unilever’s mission statement is “to add validity to life.
They meet everyday needs for nutrition, hygiene and personal care with brands which
help people feel good, look good and get more out of life”. This mission statement
emphasizes how the company satisfies customers in various aspects of their lives.
● HUL received the Award for Excellence in HR in 2010 from the Confederation of
Indian Industry (CII). This is a rigorous fact-based assessment that is conducted
by a team of external assessors. HUL has won this award for the third
consecutive year.
● Five of HUL's leading brands – Lux, Dove, Pears, Clinic Plus, and Sunsilk – won
the Reader's Digest Trusted Brand 2008 Awards.
● Four HUL brands featured in the top 10 list of the Economic Times Brand
Equity's Most Trusted Brands 2008 survey
● HUL was awarded the Bombay Chamber Civic Award 2007 in the category of
Sustainable Environmental Initiatives.
● HUL was selected as the top Indian company in the FMCG sector for the Dun &
Bradstreet – American Express Corporate Awards 2007.
● HUL is also one of the country's largest exporters; it has been recognized as a
Golden Super Star Trading House by the Government of India.
1.2-BUSINESS PROCESS
Products
1. Food and beverages: Within the F&B division, the company markets ice creams.
As the Indian branch of Unilever, the largest ice cream manufacturer in the
world, a number of its brands are available in more than 90 countries.
International brands include Carted’ Or, Cornetto, Magnum, Solero and Vienetta.
● The division also sells tea, of which it markets under seven brands: Red Label,
Taaza, Al, 3 Roses, Super Dust, Top Star and Ruby Dust. The company also
markets Yellow Label and Green Label teas and has also launched New Lipton
Taaza and FX Tazgi Dust Tea. The division’s coffee business, comprising Bru
Instant Coffee and Deluxe Green Label Roast & Ground Coffee, is the market
leader in India.
● The F&B division also includes the Kissan range of culinary products, which
comprises jams, squashes, tomato ketchups, purees, and cooking pastes. The
company has also launched sachet packs for jams and squashes to target new
users. The business is backed by contract farming in Punjab and Karnataka.
2. Home and Personal Care Division: In the HPC Division, HUL’s hair care brands
include Clinic, Sunsilk, Lux and Organics shampoos and Clinic Plus, Clinic All
Clear, Cococare and Nihar hair oils. In the oral care sector of the division, its
portfolio comprises Close- up and Pepsodent toothpastes, toothbrushes and
toothpowders. Close-up Oxy Fresh was launched in 1999.
3. Another sector of the division is skincare. Hindustan Lever markets Fair &
Lovely skin cream and lotion, the largest selling skincare product in India. The
other major skincare franchises are Pond’s, Vaseline, Lakme and Pears.
Additional ranges in the division include colour cosmetics, for which the
company markets the Lakme, Orchids and Elle-18 ranges; and deodorants and
fragrances, including brands such as Rexona, Ivana, Shie, Elle-18 and Axe.
Nine out of ten Indian household uses HUL brands to feel good, look good and use well.
The customers of HUL range from newborn babies to senior citizens. The company
engages in the manufacture of consumer goods. It operates through the following
segments: Home Care, Beauty and Personal Care, Foods and Refreshments, and Others.
The Home Care segment includes detergent bars, detergent powders, detergent liquids,
scourers, and water businesses. The Beauty and Personal Care segment comprises of
categories of oral care, skincare, hair care, deodorants, talcum powder, color cosmetics,
and salon services. The Foods and Refreshments segment offers branded staples,
culinary products, tea, coffee, and frozen desserts. The Others segment relates to
exports and infant care products.
They use a mixture of various demographic, geographic, and psychographic
segmentation variables to address the changing needs of the customer. HUL is a leading
fast-moving consumer goods manufacturer with a huge number of household brands
under each product category. The company is operating in length and breadth of the
country with large stock keeping units to serve every consumer needs. The company is
focusing on building a global enterprise as they are expanding their footprint globally
and aims to build a truly world-class enterprise. Unilever is a classic example of a global
brand that has pioneered serving the locals with products that address the local
sensitivities. Unilever’s Indian subsidiary Hindustan Lever Limited(HLL) has been the
leader in recognizing the tremendous opportunity lying at the bottom of the pyramid - a
customer base that aspires to consume products but in smaller quantities and at lesser
prices. HUL invented the shampoo sachets - small plastic packets of shampoo for INR 1.
This became such a rage among the rural consumers that many other brands started
offering products such as detergent, coffee, and tea powder, coconut oil, and toothpaste
in sachets. Even though the unit price was higher, rural consumers were able to afford
to purchase the smaller quantity at their convenience. The company’s endeavor to serve
the many ‘Indias’ embedded in the one India, has enabled HUL to build its portfolio of
products. From premium brands to the affluent, from value-for-money brands to
middle-income consumers, and from affordably priced brands to low-income
consumers.
An estimated 1.2 million affluent households are expanding at 20% a year,40 million
middle-income households growing at 10% a year, more than 110 million households,
and more than 70% of the population below the age of 36. It is no wonder then, that
global brands are making a beeline to the Indian market to grab a share of the growing
pie. Despite the booming economy and the increasing disposable income, Indian
consumers are very cautious and clear in their priorities. Unilever is a classic example of
a global brand that has pioneered serving the locals with products that address the local
sensitivities. Unilever’s Indian subsidiary Hindustan Lever Limited(HLL) has been the
leader in recognizing the tremendous opportunity lying at the bottom of the pyramid - a
customer base that aspires to consume products but in smaller quantities and at lesser
prices.
As HUL is having a large number of brands with a deep assortment the company
managed in achieving a high share of the wallet of customers, the differently-abled
through its robust and innovative distribution model in the FMCG market, they compete
with local and MNC players including ITC Limited, P&G, Nestle, etc. Hindustan Unilever
has a reach of 6.4 million retail outlets which includes direct reach to over 1.5 million
retail outlets, which is much more compared to competitors. Nestle India is a leading
player in the FMCG industry with an established market position of its product
categories.
The major competitors of HUL are
P&G Hygiene: P&G Hygiene and Healthcare (PGHH) is a 69 per cent subsidiary
of the FMCG major P&G, USA. The company dominates both hygiene and
healthcare segments backed by strong brands, Vicks in the anti- cold segment
and Whisper in the feminine care segment (40 per cent market share). The
company’s parent has two other 100 per cent subsidiaries in India which have
well-known brands in the shampoos (Head & Shoulders, Pantene, Rejoice) and
detergents space (Ariel, Tide).
HUL focuses on sustainable growth. HUL’s growth strategy focuses on strengthening the
core and creating categories of the future and drive premiumization. HUL’s strategy also
includes creating a long-term value for the stakeholders. Customer management is one
of the main strategies used by the company. There are separate channels identified
based on consumer behavior and buying pattern. They have initiated many projects to
empower rural India’s competitive advantage. HUL focuses on using technology to
design a flexible rural supply chain and sales network.
HUL mainly believes in the product they are producing so they decided to keep a simple
pricing policy of low-cost products so that the product will reach to wide market
without compromising the quality of the products. They also have a competitive pricing
policy for some of their products. The price of a product may vary as soon as if there is
an increase or decrease in the competition. HUL adopted pricing strategy which is
suitable to all income group of people which include high income, low- and a medium-
income group of people.
1.6-CSR ACTIVITIES
The company is committed to operate and grow its business in a socially responsible
way. The company embraced Unilever’s Sustainable Living Plan. This plan has namely
three global goals namely
● To help more than a billion people to take actions to improve their health and
wellbeing
● Reduce the environmental footprint of the product
● Enhance the livelihood of people.
Corporate Social Responsibility Principles:
● Project Shakthi
The budget allocated for this program is INR 53. 40Cr.It is to promote
education including special education and employment enhancing vocation skills
especially among children, women, the elderly, and the differently-abled and
livelihood enhancement projects. It is an initiative to financially empower rural
women and create livelihood opportunities for them.
● FAL Foundation
Promotes education, including special education and employment
enhancing vocational skills especially among children, women, elderly, and the
differently-abled and livelihood enhancement projects
● Project Ankhur
The budget allocated for this program is INR 0.37 Cr. This was set up in
1993 as a center for special education children with disabilities at Doom Dooma
in Assam. They have provided educational and vocational training to 359
children with disabilities.
● Project Sanjeevani
The budget allocated for this project is INR 0.66 Cr. The company runs a
free mobile medical service camp for the local community near the Doom Dooma
factory in Assam. There are two mobile vans dedicated to this project. More than
3,42,000 patients have been treated in these service camps since their inception
in 2003.
1.7-EXPORTS/IMPORTS
EXPORTS
Unilever Exports limited is a 100% subsidiary of the company and is engaged in FMCG
exports. The focus of the FMCG exports operation is two-fold; to develop overseas
markets by driving distribution of brands, such as Vaseline, Dove, Pears, BRU, Red Label,
Lakmé and to effectively provide cross-border sourcing of FMCG products to other
Unilever companies across the world. The export turnover of HUL ethnic brands like
Kissan, Bru, Lakme, Brooke Bond, and Peras has crossed Rs 1,000 crore. HUL’s wholly-
owned subsidiary Unilever India Exports are distributed and marketed among the
Indian diaspora in international markets. Unilever India Exports is engaged in FMCG
exports business with a clear focus to develop the overseas market by driving
distribution of ethnic brands and to effectively provide cross-border sourcing of FMCG
products to the Unilever companies across the world.
IMPORTS
HUL has imports from China worth INR 429 crores. The import items include raw
materials and part packing materials. The company is a leading importer of lauric acid
and microcrystalline wax. HUL mainly imports products to India from Malaysia and
mainly receives the consignment at Madras sea. The other major importers of HUL are
Brazil, Mexico, the Philippines, Vietnam, Chile, Ukraine, and so on.
▪ Brand visibility – From soap to mineral water, HUL is shaping the life of 1.3
billion people daily. Being in the consumer goods market with its 20 consumer
categories such as soap, tea, detergents, shampoo, etc. & each having large
assortments, helped HUL in occupying the large shelf space of Grocery
/departmental stores which itself explains the acceptance/demand of
their products in the market.
Weaknesses
Opportunities
▪ Expanding market: By penetrating more in the rural markets through its project
Shakti AMMA and transition of the unorganized business to organized one will
lead to further expansion of the consumer goods market.
▪ Awareness in usage rate of consumer goods: People getting more aware and
conscious about the usage may be through advertising /word of mouth /doctor
prescription, is increasing usage rate of these products.
Threats
▪ Competition in the market: With an increasing number of local & national
players it’s becoming very hard for the companies to differentiate themselves
from others. There is also a threat from counterfeit products destroying
its brand image in the market.
During the Second Industrial Revolution in the mid-19th century, goods began to be
manufactured on a large scale. Machines helped make goods, particularly those targeted
at individuals and households, available in large numbers at affordable prices.
Gradually, the “consumer goods industry” became well-established, first in the
industrialized world and later in all parts of the world.
The consumer goods industry divides 45 years into four eras:
The largest market for the consumer goods industry in the US, followed by China. India,
Indonesia, Brazil, Mexico, and other developing countries are expected to be the new
growth engines for the sector. In 2014, the global FMCG sector was worth $8 trillion,
which is nearly the GDP of Japan and Germany combined (India’s GDP is $2.05 trillion).
The global consumer durables goods industry, on the other hand, was estimated to be
worth $13 trillion in 2013.
Between 1980 and 1990, people wanted more variety of products which encouraged
FMCG companies to increase the availability of products. FMCG Industry started getting
traction and other companies started entering the industry. The media industry in India
also boomed during the same time which gave new companies even more incentive to
make their business profitable. Before 1991, when globalization and liberalization
occurred in India, western apparel and foreign food products were not available to local
customers. Common people weren’t very aware of brand recognition. After 1991, the
FMCG industry was inspired by international companies which also allowed
government intervention to incentivize foreign FMCG companies to operate in India.
The Indian FMCG industry generates massive employment opportunities and currently
employs more than 3 million people. Departmental stores, grocery stores, and
supermarkets are the places where consumers buy the necessary products for daily
consumption
FMCG sector
India’s FMCG sector is worth $35 billion and is the fourth largest of its economy. India
continues to top Nielsen’s global consumer confidence index. FMCGs were sold through
8.5 million outlets all over the country. Among the top companies are ITC, Hindustan
Unilever and Godrej, Amul, etc.
Food and beverages have a more than 50 percent share of the FMCG market in India.
Personal care products (20 percent), tobacco products (15 percent), and household care
products (10 percent) come next. FMCG companies reach their customers through retail
stores, department stores, malls, and franchisee outlets. Among the biggest names in the
retail business are Shoppers Stop, Reliance Retail, ITC-LRBD, Westside, Pantaloons
Retail, Big Bazaar, and Aditya Birla Retail.
The other drivers of the FMCG market are changing lifestyles, advertising, and foreign
investment. The government’s decision to relax licensing rules and allow 100 percent
foreign direct investment (FDI) in single-brand retail and 51 percent FDI in multi-brand
retain have helped the sector to no small extent.
The Indian consumer durables sector was worth about $10 billion in financial year and
is expected to grow to $12.5 billion. The sector is seeing tough competition, as a result
of which prices are coming down. Among the top brands are Sony, Samsung, Whirlpool,
LG, Godrej, Sony, Hitachi, Haier, Blue Star, etc. Urban areas account for 65 percent of the
consumer durables market. In cities, the demand for LED TVs split ACs, and laptops are
increasing, whereas, in rural areas, more households are purchasing refrigerators and
mobile phones.
The government’s initiatives, such as the National Electronics Mission and digitization
of television broadcasting, and the setting up of electronic hardware technology parks,
are likely to facilitate the growth of the sector.
The consumer goods industry creates, manufactures, and market everything from food,
beverages, toiletries, and small application. The manufacturers in this industry deal
with the acquisition of raw materials from suppliers to end products for the consumer
and marketing the products to the end customers, distributors, retailers, and
wholesalers. The consumer goods industry is the foundation of the modern consumer
economy. Understanding the essential operational procedures and work process of the
consumer goods industry the operation flow can be explained into
▪ Unilever
Unilever owns more than 300 brands worldwide spread across various product
segments, which makes it one of the top FMCG companies in the world. The company
was founded in 1930 as a result of the merger of Margarine Uni and Lever Brothers.
Soap and margarine producers collaborated and created a multinational company
catering to the thousands of daily needs. The product portfolio of the company includes
food and beverages, cleaning agents, personal care, home care, refreshments, etc. One of
the oldest multinational companies is present in around 190 countries. The company
owns 15 billion-dollar brands. All the iconic brands of Unilever make up to 58% of the
total turnover.
PARAMETERS:
Revenue: $ 56 billion
Procter & Gamble was founded in 1837 by British American William Procter and Irish
American James Gamble making it one of the oldest Fortune 500 companies. Earlier the
company’s product portfolio included foods, snacks, and beverages, and all these
various popular brands make P&G among the top FMCG companies in the world. In
2014, the company took a big step to streamline its business by selling off almost 100
brands and focus on the remaining 65 brands. The company is headquartered in
Cincinnati, Ohio, United States of America. Some of the famous brands of the company
include Vicks, Whisper, Old Spice, etc.
PARAMETERS:
Revenue: $ 67 billion
▪ Pepsi Co
PepsiCo is the proud owner of highly reputed brands like Lays, Pepsi, Tropicana,
Quaker, etc. The corporate rivalry of PepsiCo with Coca-Cola has been amusing for
people and, indeed, a loyalist of Pepsi won’t buy Coke and vice versa. PepsiCo Inc is an
American multinational food and beverage company that is among the top FMCG
companies worldwide. The company has launched successful products like Diet Pepsi,
Pepsi, Lays chips, etc. The brand equity of these brands has always been sky-high.
PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay
Inc.
PARAMETERS:
Revenue: $ 67 billion
Number of Brands: 22
Johnson & Johnson’s products are divided into main three categories: Consumer
Healthcare, Medical Devices, and Pharmaceuticals. The company has almost 250
subsidiaries in almost 60 countries worldwide. Johnson & Johnson has mainly captured
the premium segment for all of its products and its wide global distribution makes it a
leading FMCG brand. Johnson & Johnson’s baby products, Clean & Clear face wash,
Tylenol medications, Band-Aid brand line for bandages, etc. have been some of the
famous brands in the portfolio of Johnson & Johnson.
PARAMETERS:
Revenue: $ 82 billion
Number of Brands: 90
▪ Nestle AG
Being the largest food company in the world, it is on top of the revenue in 2017 and is
ranked among the top on the Fortune 500 list of 2017. The company has whopping
2000 total brands worldwide which make it one of the top FMCG companies in the
world. Nestle manufactures and distributes baby food, medical food items, bottled
water, cereals, coffee, tea, confectionery, frozen food, etc. in its international market. It
has 22 billion-dollar brands with an international presence in 194 countries.
PARAMETERS:
Consumer Goods sales make up for more than half of all consumer spending. Meaning,
that more than 50% of what consumers spend goes on FMCG goods. According to the
Bureau of Economic Analysis, the amount of money going to Consumer goods
organizations was $13 trillion in the second quarter of 2020.
Future prospectus
▪ Changing the face of the consumer: As the income of the middle class has gone
up, their spending on their lifestyle has also risen. Indian household saving rates
have also leaped. In the eight years from 2005, they virtually tripled as more
were lifted out of poverty and found themselves with disposable income for the
first time.
▪ Millennials taking over: Many experts predicted that by 2020 millennials
would become the target consumer to go after, with this generation spending an
estimated USD 600 billion each year. The brands and retailers are connecting
with millennials. Millennials are forcing brands to start thinking differently about
the ways they market to and communicate with this generation.
▪ Shrinking household size: Shrinking household means rising living standards.
The way we live, shop, eat, store and cook food all has changed.
▪ Focus on health and wellness: The consumer good industry has a huge
opportunity to enrich consumer lives by supporting the health needs that
influence their in-store purchasing. Many retailers across all channels have
already seized the opportunity by using health and wellness as a growth
strategy, focusing on initiatives like offering healthy foods in the center of the
store and opening in-store retail clinics.
▪ Demand for customization: As the demand for customization in consumer
products is growing, the simple fact is that we’re no longer forced to buy an off-
the-shelf product that isn’t quite right. Add to that the rise in e-commerce
competition and peer-to-peer portals offering authentic, tailor-made
experiences, and the future of retail is evolving.
▪ Focus on shopping experience: The customer’s shopping experience has
become quite pivotal. It is an area that needs constant nurturing and care and,
with a greater focus on customer experience strategy, companies will realize a
positive impact on customer loyalty, higher retention, and increased revenue
growth.
▪ Direct-to-consumer models: This new trend in sales will offer significant
opportunities for DTC retailers and wholesale brands to better control their
supply chain operations by cutting out the middleman, or retailer.
Challenges
Demand tends to fluctuate rapidly. For example, consumer preferences have altered
greatly in recent years as demand shifts toward healthier and sustainable options.
Consequently, manufacturing success is closely related to time to market and new
product introduction capabilities. Additionally, demand can fluctuate cyclically and with
economic volatility. The success and profitability of any organization in this industry are
heavily dependent on how effective these companies are at addressing the changing
demands of consumers. Those changes in consumer behavior had a huge impact on
the food & beverage (F&B), transportation, local and international retail trade.
The global regulatory environment is dynamic. Companies are faced with the challenges
of mitigating operational risk and managing non-conformance. Creating additional
pressures, as manufacturers rely on the global supplier network to battle shrinking
operating margins, meeting international compliance and regulations becomes a factor.
▪ Globalizing Economy
Leveraging the global supplier network is a means for reducing costs, however, it does
come with numerous risks in terms of compliance, product safety, and other areas.
With compliance and regulations becoming stricter, traceability functionalities are more
pertinent and requisite than in the past. Consumer products companies need strong
data granularity to reduce operational risk, properly respond to an adverse event with a
targeted recall, provide high quality and compliant products.
I. Shifting of Economic Power: The emerging markets are the ticket to major
growth. From 2010 to 2020, they will account for about 70 percent of the
worldwide growth in consumer spending and about 50 percent of total
consumer spending. Shifting of Economic Power to emerging countries like
China and India will cause trade areas to evolve and a new generation of
globally competitive companies from these developing markets to emerge. As
the power shift occurs, a volatile global economy will remain the norm for the
coming decade. Trade areas will evolve and a new generation of globally
competitive companies from developing markets will emerge, helping to further
solidify their position in the global marketplace.
II. Demographic Transition: This has been a key growth driver of the industry.
Rising incomes, growing middle class, and growing youth population, etc are
increasing the interest of multinationals in the Indian emerging market. Rising
income Incomes have risen at a brisk pace in India. The Indian government has
been supporting the rural population with higher MSPs, loan waivers, and other
Government initiatives like Pradhan Mantri Jan Dan Yojana These schemes have
empowered the rural masses and increased their purchasing power, thus
boosting consumption during FY07-16, rural India and have thus propped up
rural purchasing power. The number of middle-class households is estimated to
increase by 2030. The Increasing Spread of Wealth will lead to a growing middle
class in India, impacting consumption and growth of the FMCG sector. Increase
in Consumption of tier 2, 3 & 4 cities Tier 2,3and 4 cities that is cities which
have a population below 1 million would battle next drivers of growth. There is
a total of 93 tier 2 cities and 494 tier 3 and tier 4 cities. According to the CII
research report, these cities account for 36% of total spending on FMCG USD 23
billion.
III. Urbanization and Nuclearization: Urbanisation is taking place at a faster rate
in India. By 2020, roughly 35 %of the Indian population will live in an urban
areas and nuclearization will further boost the consumer sector in India. Rural
India is estimated to account for more than 700 million consumers or 70
percent of the Indian population and 40 percent of the total FMCG market. This
market has immense potential, enticing growth.
IV. Changing Lifestyle: It is difficult to ignore lifestyle trends that are today
impacting consumer purchasing decisions. For the consumer goods industries,
these trends are positive and encouraging innovation. Consumer lifestyle is
continuously evolving. Companies are tailoring their product with features that
suit the lifestyle of their target segment. On the other hand, consumers are
buying products that match up with their living standard, class and which are
acceptable in the culture. The growing market for healthy and nutritious food is
proving to be an opportunity for several food and beverage manufacturers,
which are aligning their strategies in line with the changing consumer
preferences. Several foods and beverage companies are responding to this trend
through new product launches that have the same taste but reduced levels of
salts/ sugars.
V. Availability and Accessibility: It is the biggest driver of industry sales.
Availability of products has become way easier as the internet and different
channels of sales have made the accessibility of the desired product to
customers more convenient at the required time and place online grocery stores
and online retail stores like Grofers, Flipkart, Amazon making the FMCG product
s more readily available. Availability of products and their brands on the shelves
of a retail shop is inducing customers to add those products into their
consideration set and then make a purchase decision
I. ITC LIMITED
● Revenue: Rs 51,321 Cr
● Employees:
● Market Cap: 320,094 Cr.
The Company was incorporated on August 24, 1910, under the name Imperial Tobacco
Company of India Limited. It is the second largest in the list of the top 5 FMCG
companies in India.
As the Company’s ownership progressively Indianised, the name of the Company was
changed to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974.
In recognition of the ITC’s multi-business portfolio encompassing a wide range of
businesses, the full stops in the Company’s name were removed effective September 18,
2001.
Nestlé is the world’s largest food and beverage company. The company has more than
2000 brands ranging from global icons to local favorites and is present in 191 countries
around the world. After more than a century-old association with the country, today,
NESTLÉ India has a presence across India with 8 manufacturing facilities and 4 branch
offices. It is the third Largest in Top FMCG Companies in India
● Revenue: 12,117 Cr
● Employees:
● Market Cap: 139,532 Cr.
4. Britannia Industries Ltd
Britannia Industries is one of India’s leading Top FMCG Companies with a 100-year
legacy. Britannia is among the most trusted food brands and manufactures India’s
favorite brands like Good Day, Tiger, NutriChoice, Milk Bikis and Marie Gold which are
household names in India. Britannia’s product portfolio includes Biscuits, Bread, Cakes,
Rusk, and Dairy products including Cheese, Beverages, Milk, and Yoghurt.
● Revenue: 11,211 Cr
● Employees:
● Market Cap: 75,893 Cr.
Britannia is a brand which many generations of Indians have grown up with and our
brands are cherished and loved in India and the world over. Britannia products are
available across the country in close to 5 million retail outlets and reach over 50% of
Indian homes.
● Revenue: 10,156 Cr
● Market Cap: 75,089 Cr.
Rank among the largest household insecticide and hair care players in emerging
markets. In household insecticides, the leader in India and Indonesia and are expanding
footprint in Africa. Ranked number two in soaps in India, the number one player in air
fresheners in India and Indonesia, and a leader in wet tissues in Indonesia.
CHAPTER-3
INDUSTRY ANALYSIS
3.1- PORTER’S FIVE FORCES ANALYSIS
1. Competition in the industry- Competitors are one of the major forces in HUL.
The strong force of rivalry against Unilever is based on the following external
factors and their intensities
Unilever's business and industry climate rely upon the reaction of buyers to its
items. The impact of purchasers on business execution is considered in this
segment of the Five Forces examination. Unilever should address the
accompanying outside factors that lead to the solid power of the haggling force of
clients:
The low exchanging costs make it simple for customers to move from Unilever's
items to other organizations' items. This outside factor adds to the solid force of
the dealing force of purchasers. Likewise, purchasers’ approach top caliber of
data about buyer products, making it considerably simpler for them to choose
while moving from Unilever to different suppliers. For instance, purchasers can
look at items dependent on online data. The little size of an individual shopper's
buys negligibly affects Unilever's benefits. Notwithstanding, the low exchanging
expenses and top-caliber of data exceed this third outside factor in the business
climate. In light of this part of the Five Forces investigation, the dealing force of
clients is perhaps the most grounded power influencing Unilever's customer
products business.
While Unilever has huge providers like unfamiliar firms that supply paper and
oil, the normal provider is moderate in size. This outer factor forces a moderate
power on the purchaser products industry climate. What's more, the moderate
populace of providers empowers them to force critical yet restricted impact on
firms like Unilever. Likewise, the moderate level of the general stock adds to
such critical however restricted impact of providers. For instance, any provider's
adjustment of creation level prompts a critical yet restricted change in the
accessibility of crude materials utilized in Unilever's business. Different firms in
the business are also influenced. As demonstrated in this segment of the Five
Forces investigation of Unilever, the dealing force of providers is a critical yet
moderate thought in the customer products industry climate.
4. Threat of Substitutes
Substitutes can reduce Unilever’s revenues and the strength of firms in the
consumer goods industry environment. In Unilever’s case, the following external
factors are responsible for the weak force of the threat of substitution
▪ Low switching costs
▪ Low substitute availability
▪ Low performance to price ratio of substitutes
The low switching costs enable consumers to easily use substitutes for Unilever’s
products. This external factor imposes a strong force on the company and the
consumer goods industry environment. However, the overall impact of
substitution is weakened because of the low availability of substitutes. For
example, it is easier to access Unilever’s Close-Up toothpaste from grocery stores
than to obtain substitutes like homemade organic dentifrice. In relation, most
substitutes have low performance with minimal or insignificant cost difference
when compared to consumer goods readily available in the market. This
condition makes Unilever’s products more attractive than substitutes, thereby
further weakening the intensity of the threat of substitution. This section of
Unilever’s Five Forces analysis shows that the threat of substitutes is a minor
issue in the business.
Unilever competes with established firms as well as new firms in the consumer
goods market. This section of the Five Forces analysis considers the influence of
new firms on the industry environment. The following external factors create the
weak force of the threat of new entrants against Unilever:
▪ Low switching costs
▪ High cost of brand development
▪ High economies of scale
The low switching costs enable new entrants to impose a strong force against
Unilever. For example, consumers can easily decide to try new products from
new firms. However, it is costly to build strong brands like Unilever’s. This
external factor weakens the intensity of the threat of new entrants against the
company. Also, Unilever takes advantage of high economies of scale, which
support competitive pricing and high organizational efficiencies that new firms
typically lack. As a result, the company remains strong despite new entrants.
Based on this section of the Five Forces analysis, the threat of new entry is a
minor concern in Unilever’s industry environment.
POLITICAL FACTORS
The political elements in the HUL (Hindustan Unilever Limited) PESTLE Analysis can be
clarified as the Convergence of HUL with Tata Oil Mills Company and Lakme assisted
Hindustan Unilever with wandering into new regions like beautifiers and food oil with
the assistance of guidelines of India, in the end, assisting them with venturing into item
and administrations. Hindustan Unilever, later on, converged with Kimberly Clark
Corporation assisting them with entering Huggies diapers and Kotex Sanitary cushions.
Being delicate to everything in India, Hindustan Unilever doesn't uphold any ideological
group or government.
ECONOMIC FACTORS
The entire world got hit with a monetary emergency in 2009 yet the Asian nations were
the ones that were least hit as their dependence was less founded on revenue ventures.
At the point when HUL was losing benefits in the greater part of the nation abroad, it
was all the while procuring benefits in India. Since Hindustan Unilever has a steady
value change since it sells the results of the regular market, it is consistently under
tension. Oils and cleansers which mark the baseliner are produced using crude
materials like oils and synthetics entire costs continue to change each day. HUL likewise
faces direct rivalry as a result of the neighborhood makers, additionally by MNCs to a
degree that keeping up dedication and piece of the pie connected at the hip is practically
unthinkable
SOCIAL FACTORS
Social projects have been a path through which Hindustan Unilever has extended its
client base. Hindustan Unilever acknowledges that an affiliation's worth is furthermore
in the organization it renders to the local area. Neatness, sustenance, the overhaul of
occupation, a decline of ozone-draining substances, and water impression have been
HUL's concentration since the start. Preparing and recuperating oppressed young
people, care for the discouraged and HIV-positive, and country improvement have
likewise been HUL's groundwork regions to zero in on. Lifebuoy Swasthya Chetana is
another program that Hindustan Unilever runs. This program centers around getting
individuals freed of looseness of the bowels. HUL's Project Shakti is an action through
which it centers around little towns. Through it, Hindustan Unilever is taking provincial
ladies and their requirements into thought, assisting them with living a superior and
significantly more sterile life. This program likewise gives them tidiness and well-being
schooling through Shakti Vani.
TECHNOLOGICAL FACTORS
E-Commerce has been the new way for all companies, and so it has been the same for
HUL as well. Hindustan Unilever has been finding new ways to engage customers and
through its technological advancement, it has overcome this problem of engagement by
digitalization. HUL is utilizing the most recent IT innovation; industry center around a
mechanical exertion by utilizing innovation foundations, for example, the web, intranet,
and other data trade frameworks including phone and innovation equipment, for
example, cell phones, workstations, work areas, Bluetooth gadgets, printers and fax
machines which transmit and record data. Hindustan Unilever has started selling its
products online and this has only been possible through digitalization. Through its
technology, HUL has been able to analyze the big data of customers and their wants,
what product sells more and by how much, thus making a breakthrough. Technology
has also helped HUL understand customer relations and apply them in the modern
trade.
This is how technological factors and their rising usage have helped in its revenue
generation.
CHAPTER – 4
DISCUSSION
4.1-OBJECTIVE ASSESSMENT
● HUL does not support any political party or government by funding its
operations since the business entity wants to restrict the operations to that field
only.
● The company took advantage of the merger with Tata Oil Mills Company and
Lakme ltd enabling HUL to enter new markets of cosmetics and food oil of which
was not part before.
● Unilever’s market environment is becoming highly competitive especially in
Western Europe. Procter & Gamble (P&G) is one of the major competitors in the
market. More so, there are so many discounters in the market. This has harmed
regularlyregularlyregularly Unilever’s profit potentials.
● In the developing countries and the emerging economies, where there is political
instability, Unilever has adopted its company strategy to ensure that its
profitability drive is sustained.
● Some Products are packaged in small sizes for low- or regular-income earners,
for affordability.
● The company has launched many projects to empower women and uplift
society.
● HUL also uses initiatives to increase social awareness in rural areas relating to
cleanliness, hygiene, etc.…
● Unilever is focused on building an exclusive culture and embracing difference,
which resulted in the high demand for its products in developing and emerging
markets.
● The business continues to boom in the 1950s with new technology being
invented to boost production and enhance quality products for consumers,
competitors improving their products using new inventions.
● Unilever has been spending on IT to improve its business especially in the area
of e-business to improve brand communication and market through the
internet, making the transaction simple along the chain.
Based on the Observation of PORTER’S FIVE FORCE MODEL of the Organization
● The switching costs for the customers are very low in this sector as the product
differentiation is moderately low, which intensifies the competition.
HUL is now leveraging technology to develop smarter market feedback mechanisms, cut
regularlytime to market, and increase product availability to stay a chosen partner for
consumers, which is a competitive advantage for the corporate giant. Another area of
concentration has been digital investment in all elements of the business, which is
supporting HUL in its transition from mass marketing to vast customization, reinforcing
its "obsession" with consumers. Indeed, the headroom in India's per capita
consumption, the predicted rise in rural India, and the impact of GST, which should kick
in investment-led growth, have all aided HUL's optimistic prognosis. Forbes rated it the
world's eighth "Most Innovative Company." Its incremental turnover of roughly Rs
11,735 crore over the last five years is larger than most of its competitors' absolute
turnover. Except for the demonetization quarter, it has continuously grown profit
margins in 19 of the last 20 quarters. In the last four years, its market capitalization has
increased by more than Rs 2,50,000 crore, or more than $40 billion.
It was named the ‘No. 1 Employer of Choice' for the sixth year in a row by Nielsen
earlier this year. It was named the third greatest organization in the world for
developing leaders by Aon Hewitt. HUL has reorganized to empower its frontlines,
which was once a typical illustration of hierarchy and social control. All factual and
circumstantial evidence goes to the same conclusion: HUL is still on top of its game, but
now with everyone on board. A shaky economy, a turbulent marketplace, fierce
competition, and a rapidly changing generation of customers and staff have compelled
all businesses to reconsider what will keep them relevant. In this context, India's largest
consumer packaged goods company is transforming. It is embracing the potential of a
fast-changing world while being entrenched in century-old beliefs. It has shifted its
focus to growth while lowering its environmental effect and increasing its social impact.
The VRIN analysis is a strategic technique for examining and evaluating a company's
resources, as well as defining the company's strategic advantage and competitiveness.
The strategic tool aids in the identification of a company's long-term competitive
advantage by examining the firm's internal resources and capabilities, and thereby
assisting the company in identifying its core competencies to establish a sustainable
long-term competitive advantage. The VRIN analysis assesses resources and skills based
on the following characteristics:
B. Rare: - Only a few companies in the business possess and create unusual
competencies, which help generate competitive advantage for Hindustan
Unilever Limited Missed Call Mobile Marketing in Rural India.
● In Rural India, Hindustan Unilever Limited's Missed Call Mobile Marketing
A is a multinational company with operations in a variety of nations and
locations.
● Hindustan Unilever Limited Missed Call Mobile Marketing in Rural India A
has been able to increase its consumer base and generate money across
numerous locations because of its global presence.
● In Rural India, Hindustan Unilever Limited's Missed Call Mobile Marketing
The company promotes a problem-solving culture among its staff and
management.
● This enables more collaboration, creativity, and innovation in the
workplace.
● In the short and long run, innovation leads to increased competitiveness,
which leads to competitive advantage and benefits for the company in the
marketplace.
● In Rural India, Hindustan Unilever Limited's Missed Call Mobile Marketing
A has a strong proclivity for taking deliberate and directed risks.
● This competence is critical for a company's ability to grow and expand,
particularly in uncharted territories and countries.
● In Rural India, Hindustan Unilever Limited's Missed Call Mobile Marketing
A has a robust risk assessment function that allows it to identify
prospective possibilities and take guided activities and processes to
maximize on them.
● In Rural India, Hindustan Unilever Limited's Missed Call Mobile Marketing
A is a global company with a global presence.
● As a result, the company gets a lot of exposure to other cultures and
societal norms and beliefs.
● As a global conglomerate and behemoth, the corporation has
demonstrated a high level of flexibility to many cultures by engaging in
localization initiatives, marketing communication, and various managerial
duties.
● This localization is necessary for the company to acquire a foothold in
various local markets.
● On the other hand, localization is frequently directed by a defined
worldwide strategy to assist various managerial tasks in performing at
their best.
FINDINGS
Hindustan Unilever is the largest player in the FMCG sector. The company is having one
of the widest portfolios including household and personal care products through the
strong distribution channel. It owns and markets some of the most popular brands in
the country across various categories including soaps, detergent, shampoo, tea, face
creams, and water purifier. It is the country’s biggest consumer goods company and the
company builds a great reputation among the competitors in the market. For the past
five years, the company has been actively involved in setting standards for social and
environmental behaviour and conduct. HUL is having a wide and diverse set of
competitors in the consumer goods business. Through competition, the company aims
at developing new and improved products. They are sharing innovations and concepts
with businesses all around the world. The company believes that there is a need for
consumer centricity, speed and agility, digital connectivity, and being global.
HUL is the largest subsidiary of consumer goods. HUL is already the largest market
share in terms of volume for Unilever, with 98 percent of households in India using one
or more HUL brands. About 45 billion units are produced annually at the company's
factories across the country. HUL enters the list of top 15 global consumer staple stocks
by market capitalization. In fiscal year 2020, Hindustan Unilever Limited reported a
market capitalization value of almost five trillion Indian rupees, up from about 3.7
trillion Indian rupees in the previous fiscal year. HUL being so large and so extensive in
brands it has allocated equal importance to each of its product and services. Moreover,
being so evident in each of its segment which is widely used by Indian as well as world
wide customers; HUL is not only focusing in major brands but also on those brands
which are not performing well and new products are brought into market by viewing
the importance of Innovation in this changing environment. As bees are treated as social
insects, committed to prioritising the colony’s needs and working together. Such team
work and a passionate commitment to achieve a shared goal is what helps HUL create
milestones.
The net revenue is Rupees 45,996 crores, The Comparable Domestic consumer
business grew by 6%, underlying volume growth 3%
Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) increased by
18% vs last year.
Rupees11,000 crores Cash from operations was up Rupees 1,554 crores over the
previous year
The Non-Financial Performance in the FY 2020-2021
Suggestions
In the FMCG business, the company needs to decide focus on all the
resources on thirty Power Brands. These were identified for their size, brand
strength, uniqueness and growth potential. In addition, they span all the
relevant benefit and price positions in the market.
There is a need for liberating brands from their existing category mindset.
Historically, brands originated and stayed within a category product format.
however, HUL see their Power Brands as being able to occupy a unique
position in the consumer’s mind and therefore being able to stretch into
other product formats or categories.
The company needs to invest in technology, both to make the products
better as well as to secure cost advantage.
HUL need firm track on its digital transformation strategy, much ahead of its
peers
Current slowdown in consumption could mean muted demand and this may
weigh on volume growth.
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