COMPETAT

IVE
STRATEGY
BY
NYA.G.S OF
SHAR
A
HUL V/S IT
C
 INTRODUCTION
0 Competitive Strategy consists of move of
companies in order to attract customers. With
stand competitive pressures and strengthen
an organizations market position. The main
objective of Competitive Strategy is to
generate a competitive advantage, increase
the loyalty of customers and to beat
competitors. 
 FIVE MAIN COMPETITIVE
STRATEGIES ARE:
· Overall low cost leadership strategy
· Best cost providers strategy
· Broad differentiation strategy
· Focused low cost strategy
· Focused differentiation strategy
Here competitive strategy varies from sector to sector and
company to company. Thus, it is not easy to predict a
single or to find a single strategy for the whole sector.
When we come on to FMCG Sector main strategies lay
behind market strategies, cost, and quality strategies.
 What are HUL and ITC Ltd.?
HUL (Hindustan Unilever Ltd.)

0 This Company is earlier known as Hindustan

Lever Ltd. This is Indians largest FMCG sector
company with all type of household products
available with it. It has Home & Personal Care
products, and also food and Water Purifier
available with it. According to Brand Equity, HUL
has largest no of brands in most trusted brands
list.
0 16 of HULs brands featured in AC-Nielson Brand
Equity list of 100 most trusted brands in 2008 in an
annual survey. For the entire year ending March -
2009 net turnover of company is Rs. 20239.33 Crore
which is 47.99% higher than 31st December 2007s
Rs. 13675.43 Crore driven mainly by domestic FMCGs
with net profit stood at Rs. 2496.45 Crore.

0 Products of HUL are: Annapurna; Ayush; Axe; Breeze;

Bru; Brooke bond; Clinic; Dove; Fair & Lovely;
Hamam; Liril; Lux; Pears; Ponds; Pepsodent; Pureit;
Rexona; Rin; Sunlight; Surf excel; Vaseline; Wheel.
 ITC Limited
0 This Company was earlier known as Imperial Tobacco
Company of India Ltd.
0 It is Currently headed by Yogesh Chander Deveshwar.
0 Company mainly operates in the industry like
Tobacco, Foods, Hotels, Stationary and Greeting Cards
with the major products constitutes Cigarettes,
packed foods, hotels, and apparels.
0 For the entire year ending Mar-2009 the turnover of
company is at Rs. 15388 Crore which is 10.3% higher
than previous years Rs. 13947.53 Crore, driven mainly
by robust 20% growth in non cigarette FMCG business
with net profit stood at Rs. 3324 Crore.
Analysis of Both Companies
0 HUL & ITC are major companies in FMCG market in
India.
0 When we compare both companies on the basis of
their strategies i.e. , their competitive strategies in the
present market.
0 When we look at the present segment breakup for
both of the companies then we came to know that
their different products vary too much in the market.
HUL Segment Breakup ITC Segment Breakup
 COMPARATIVE ANALYSIS OF BOTH THE
COMPANIES UNDER SOME HEADS:
HUL
0Hindustan Unilever (HUL) is
the largest pure-play FMCG
company in the country and
has one of the widest
portfolio of products sold via
a strong distribution channel.
0It owns and markets some of
the most popular brands in
the country across various
categories, including soaps,
detergents, shampoos, tea
and face creams.
ITC
0 ITC is not a pure-play
FMCG company, since
cigarettes is its primary
business.
0 It is diversifying into non-
tobacco.
0 FMCG segments like foods,
personal care, paper
products, hotels and agri-
business to reduce its
exposure to cigarettes.
 PERFORMANCE
0 After stagnating between 1999 and 04, the company
is back on the growth track. In the past three years, till
2008 HULs net sales have witnessed a CAGR of 11%,
while net profit has posted a CAGR of 17%.
0 Despite diversification, ITCs reliance on cigarettes is
still huge. The tobacco business contributes 40% to its
revenues, and accounts for over 80% of its profit. This
cash-generating business has enabled it to take
ambitious, but expensive bets in new segments and
deliver modest profit growth.
 Risk for both the companies
HUL
0 Increased regulatory clamps on
0 Being an MNC operating in India,
HUL is more conservative in its
strategies than its Indian
counterparts. Moreover, given
increasing competition, it faces
the risk of being overtaken by
domestic players in various
categories. Prolonged inflation
may lead to margin contraction,
in case HUL is not able to pass on
this burden to consumers. The
company's large size also poses a
problem, since it does not give
HUL the agility to address the
competition it faces from
national and regional players
ITC
tobacco, along with rising tax
burden, pose a business risk for
ITC. So, it has started an
ambitious diversification plan,
which has its own set of risks.
With its foray into the
conventional FMCG space, ITC
has entered the high-clutter
branded products market. This
will burden its resources in
terms of ad spend and brand-
building. Creating brand recall
and building market share in
new products are ITCs key
challenges. Export ban and rising
crop prices pose a threat for its
agri-business, taxing its margins.
 OVERALL STRATEGY
HUL
0 HUL always believes in
customer friendly products
with major emphasis on low
cost overall without
compromising on the quality of
the product.
0 They are leveraging the
capabilities and scale of the
parent company and focusing
on the value of execution.
0 The entire product portfolio is
also being tweaked to include
premium offerings such as
Ponds Age Miracle and dove
shampoo in skin and hair care.
ITC
0 ITC is focusing on delivering
value at competitive prices. Its
tremendous reach through
extensive distribution chain
has been a competitive
advantage.
0 Additionally, the company's e-
choupal model for direct
procurement is well known
under which ITC partners with
over 100,000 farmers for
spices and wheat procurement
and an even larger number for
oilseeds. This kind of rural
pedigree is hard to beat
 Growth Drivers
HUL
0 The Company has been
launching new products and
brand extensions, with
investments being made
towards brand-building and
increasing its market share.
HUL is also streamlining its
various business operations,
in line with the One Unilever
philosophy adopted by the
Unilever group worldwide.
Introduction of premium
products and addition of
new consumers via market
expansion will be HULs
growth drivers.
ITC
0 ITCs backward integration to
ensure that its products pass
efficiently from the farms to
consumers has helped it to
cut down supply and
procurement costs. ITCs non-
cigarette FMCG business
leverages the large
distribution network the
company has developed by
selling cigarettes over the
years. A rich product mix,
along with ramp-up of
investments in its new
sectors, will be instrumental
in charting ITCs growth path.
 Conclusion
0 HULs up-and-running business model is a treat for
investors seeking exposure in the FMCG segment. The
company has delivered in the past and has the potential
to do better in future. In the small and medium term.
ITCs growth story is still evolving.

0 ITC is eyeing the pie which HUL and other FMCG players
currently enjoy. Though risky, the companies business
model will pay off in the long run. ITC has proved its
expertise in the cigarettes, hotels, paper and agri-
businesses. Investors who want to bank on its execution
ability in FMCG can consider the stock with a long-term
horizon.