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Business Administration
management
Case study 1
Hindustan Unilever Strategically.
Uniliever
is one of the worlds oldest multinational companies. Its origin goes back to
the 19th century when a group of companies operating independently, produced
soaps & margarine. In 1930, the companies merged to form Unilever that
diversified in to food products in 1940s. Through the next 5 decades, it
emerged as a major fast-moving consumer goods multinational operating in
several business. In 2004, the unilever 2010 strategic plan was put in to
action with the mission to bring vitality to life & to meet everyday needs
for nutrition, hygiene & personal care with brands that help people feel
good, look good & get more out of life. The corporate strategy is of
focusing on core businesses of food, home care & personal care Unliver operates
in more than 100 countries, has a turnovers of $ 39.6 billion & net profit
of $3.685 billion in 2006 & derives 41 percent of its income from the
developing & emerging economies around the world. It has 179,000 employees
& is a culturally-diverse organization with its top management coming from
24 nations, internationalization is based on the principle of local roots with
global scale aimed at becoming a multi-local multinational.
The
genesis of Hindustan Unliver in india, goes back to 1888. When unliver exported
sunlight soap to India. Three Indian Subsidiaries came in to existence in the
period 1931-1935 that merged to form Hindustan Lever in 1956. Mergers &
acquisitions of Lipton (1972), Brooke Bond (1984) , Ponds (1986) , TOMCO
(1993), Lakme (1998) & modern Foods (2002) have resulted in an organization
that is a conglomerate of several businesses that have been continually
restructured over the years.
HUL
is one of the largest FMCG company in India with total sales of RS 12,295 crore
& net profit of 1855 crore in 2006.There are over 15000 employees,
including more than 1300 managers.The present corporate strategy of HUL is to
focus on core businesses.These core businesses are in home & personal care
& food.There are 20 different consumer categories in these two businesses.
For instance, home & personal care is made up of personal wash, laundry ,
skin care, hair care, oral care, odorants, color cosmetics & ayurvedic
personal & health care, while food businesses have tea, coffee, ice –creams
& processed food brands. A part from the two product divisions, there are
separate departments for specialty exports & new ventures.
Strategic
management at HUL is the responsibility of the board of directors headed by a
chair-man. There are five independent & five whole-time directors. The
operational management is looked after by a management committee comprising the
vice chairman, CEO & managing director & executive directors of the 2
business divisions & functional areas.The divisions have a lot of autonomy
with dedicated assets & resources. A divisional committee having the
excutive director & heads of functions of sales, commercial &
manufacturing looks after the business level decision making .The functional-
level management is the responsibility of the functional head. For instance, a
marketing manager has a tem of brand managers looking after the individual
brands. Besides the decentralized divisional structure, HUL has centralized
some functions such as finance, human resource management, research, technology,
information technology & corporate & legal affairs.
Unliver
globally & HUL nationally , operate in the highly competitive FMCG
markets.The consumer markets for FMCG products are finicky, its difficult to
create customers & much more difficult to retain them. Price is often the
central concern in a consumer purchase decision requiring producers to be on
continual guard against cost increases. Sales & distribution are critical
functions organizationally. HUL operates in such a milieu.It has strong competitors
such as the multinationals proctor & gamble, Nivea or L’Oreal &
formidable local companies such as Amul. Nirma or the Tata FMCG companies to
contend with. Rivals have copied HULS strategies & tactics, especially in
the area of marketing & distribution. Its innovation such as new style
packaging or distribution through women entrepreneurs are much valued but also
copied relentlessely, hurting its competitive advantage.
HUL
is identified closely with India.There is a ring truth to its vision statement,
to earn the love & respect of India to its vision statement, to earn the
love & respect of India by making a real difference to every Indian , it
has an impeccable record in corporate social responsibility. There is an
element of nostaligia associated with brands like lifebuoy & Dalda (1937)
for senior citizens in india. Consequently , Indians have always perceived HUL
as an Indian company rather than a multinational.HUl has attempted to align its
strategies in the past to the special needs of the Indian business environment.
Be it marketing or human resource management, HUL has experienced with new
ideas suited to the local context. For instance HUL is known for a capabilities
in rural marketing, effective distribution systems & human resource
development. But this focus on India seems to be changing. This might indicate
a change in the strategic posture as well as a recogination that Indian markets
have matured to the extent that they can be dealt with by the gobal strategies
of Unliver . At the corporate level, it could also be an attempt to the
corporate level, it could also be an attempt to leverage global scale while
retaining local responsiveness to some extent.
In
the line with the shift in corporate strategy, the locus of strategic
decision-making seems to have moved from the subsidiary to the headquarters.
Unliver has formulated a new global realignment under which it will develop
brands & streamline product offerings across the world & the
subsidiaries will sell products.Other subtle indications of the shift of
decision making authority could
be
the appointment of a british CEO after nearly forty years during which there
were Indians CEOS, the changes focus on a limited number of international
brands rather than alarge range of local brands developed over the years &
the name-change from Hindustan Liver to Hindustan Unilever.
The
shift in the strategic decision –making power from the subsidiary to head
quarters could how ever, prove to be double- edged sword. An example could be
of HUL adopting Unlivers gobal strategy of focusing on a limited number of
products, called the 30 power brands in 2002. That seemed a perfectly sensible
strategic decision aimed at focusing managerial attention to a limited set of
high-potential products. But one consequence of that was the HULs strong
position in the niche soap & detergent markets suffering owing to neglect
& the competitors were quick to take advantage of the opportunity. Then
there are the statistics to deal with HUL has nearly 80 % of sales & 85 %
of net profits from the home & personal care businesses. Globally Unliver
derives half its revenues from food business. HUL does not have a strong
position in the food processing industry remains quite attractive both in terms
of local consumption as well as export markets. HULs own strategy of offering
low- price, competitive products may also suffer at the cost of Unlivers
emphasis on premium priced, high end products sold through modern retail
out-lets.
There
are some dark clouds on the horizon. HULs latest financials are not
satisfactory.Net profit is down, sales are sluggish, input costs, have been
rising & new food products introduced in the market have yet to pick up.
All the while, inone market segment after another, a competitor pushes ahead.
In a company of such a big size & over- powering presence , these might
still be minor events or developments in along history that needs to be taken
in stride. But pessimistically, they colud also be pointers to what may come.
Questions.
Q1)
Define historical back ground of HUL?
Q2) Define the corporate strategy of HUL?
Q3) Explain the financial status of HUL in the
year 2006?
Q4) What is the core business of HUL? Explain
in detail?
CONTACT: PRAKASH
Mob:
+919741410271
Case Study: 2
Dabur India Limited.
Cholera,
malaria and plague have been killer diseases in India. In 1884, Dr. S.K. Burman
embarked on a mission to provide nature-based, effective and affordable
treatment for these killer diseases for ordinary people in far-flung villages
of Bengal. He adopted ayurveda, the traditional Indian system of medicine. Dr.
Burman established a pharmacy that set up a manufacturing plant in 1896 and
research laboratories in 1919, becoming a full-fledged private company in 1936
that 50 years later, in 1986, became a public limited company. He came to be
known as Daktar (Indian pronunciation of
doctor’)
Burman. The organization he founded came to be known as Dabur.
Dabur
is a leading consumer goods company in India, having three subsidiary companies
and 13 manufacturing plants. It operates in nearly 50 countries, making it an
Indian multinational company. Within the company, there are two strategic
business units (SBUS): Consumer Care Division (CCD) and Consumer Health
Division (CHD). CCD deals with consumer products in personal care and health
care. CHD deals with classical ayurvedic medicines. It markets its products
through an extensive wholesale and retail network of 47 agents, 5000
distributors and 1.5 million retail outlets. The vision of Dabur is stated as:
‘Dedicated to the health and well being of every household.’
There
is no specifically-stated mission statement but a statement of strategic intent
having several elements such as:
·
Developing a platform to become a global
ayurvedic leader
·
Synthesizing knowledge of ayurveda and
herbs with modern science to develop natural solutions for meeting the health
and personal care needs
·
Providing superior returns to shareholders
relative to rivals in industry
·
Being a responsible corporate citizen
committed to environmental protection
·
Nurturing core brands across categories
within India and outside
·
Being a professionally managed employer
attracting, developing and retaining quality personnel
·
Improving operational efficiency by
leveraging technology
There
are six core values that Dabur practices:
ownership,
passion for winning, people development, consumer focus, team work and
innovation. Its corporate positioning statement is ‘celebrate life’ that goes
with its bright green and brown coloured logo depicting a banyan tree.
The
brand name ‘Dabur’ is claimed to mean different things to different people. It
operates at three distinct levels: as the company’s corporate brand identity,
the mother brand for a whole range of products and it also percolates down to
individual product names.
Dabur
has tried to alter the product concept of ayurveda medicines as consumer
products sold over the counter. For instance, it has the distinction of
changing the product concept of chyavanprash from being a traditional compound
of herbs and plant extracts having anti-oxidant properties, to a branded
consumer product sold over the counter for general health upkeep of the whole
family. Dabur follows a four-year time horizon strategic planning. The
2002-2006 strategic plan envisaged Dabur becoming a Rs. 2000 core-company by
the period 2006-2007. It has been successful in realizing that objective. In
the next four-year strategic plan, its objectives are to continue the growth
momentum at a similar pace. It aspires to be a global FMCG company where more
revenues come from outside India. In the next strategic plan, it aims to raise
the revenue share from International Operations from the present 12 percent to
20 percent.
The
business model of dabur is based on pushing through high growth parameters, in
the range of 10 to 15 % annually in the core domestic FMCG business I the
consumer care division & even higher growth rates of 25 to 30 % annually
from businesses outside consumer care.
The
strategies adopted are a combination of internal growth & external growth
through acquisition that it terms as organic & inorganic growth
respectively.
Generally
, Dabur has performed well except in cases where it had to deal with tough
competition in the intensely competitive consumer goods in india. Analysts say
that the company has perhaps been eyeing too many divergent new product
categories over the years.
Dadurs
strategy for the next few years seems to be growth through domestic &
international acquisitions, launching new products & penetrating deeper in
to rural Indian markets.
In
the near future , dabur wiil have to decisde whether it wishes to be pure
herbal brand or a leading FMCG player neither of which it can claim to be with
conviction today.
Question:
Q1)
Discuss the history of dabur?
Q2)
Explain the various SBUs of dabur in detail?
Q 3) Define the mission statement of the dabur?
Q
4) Explain the business model of dabur?
CONTACT: PRAKASH
Mob:
+919741410271
Case Study 3
Environmental issues in the food
processing Industry of India.
The
food processing industry is one of the sunrise industries in India whose
potential has been well-recognized, but not satisfactorily realized. It could
easily be described as one of India’s higher-potential but under-exploited
industry. India’s food processing sector covers a wide range of raw,
intermediate and finished products. These include cereals, fish and other sea
foods, fruits and vegetables, processed grains, meat and poultry, milk and milk
derivatives, plantation and consumer products such as Confectionery, chocolates
and cocoa products, soya-based products, mineral water, etc.
The
Ministry of Food Processing Industries, set up in 1988, i.e. the nodal agency
in India responsible for developing the food processing industry. For the
Government of India, the food processing industry is a priority sector thus
ensuring that policies support investment and attract more foreign direct
investment.
Little
reliable statistics related to the food processing industry in India are
available. The size of the food processing industry in India in 2006 was
estimated to be Rs 6300 billion (US$
140
billion), likely to grow at over 10%, on the basis of an expected GDP growth
rate of 6-S% per annum. Annual food exports by India, are around US$ 6 billion
where as the world total is about US$ 700 billion. This dismal situation exists
even while the industry in India is one of the largest in terms of production.
Consumption, exports and growth prospects. India is the third largest producer
of food in the world, having the largest livestock population and is the
largest milk producer in the world. Yet, the value addition to food processed
in India is a meagre 7% and India’s share in international food trade is
insignificant at less than 1%.
A
‘Vision 2015’ study, carried out by Rabo Bank, an international consultant,
envisages an investment of Rs 1,10,000crore over ten years to enhance farmers’
income, generate employment opportunities, provide wider choice to consumer at
affordable prices and contribute to overall national growth.
The
major market players in Indian food processing industry include local companies
such as Agro Tech Foods, Dabur, Gits, Godrej, Haldiram, Milkfood, MTR and Parle
and formidable foreign companies such as Cadbury, Nestle, Pepsico and Unilever.
The
business environment in which the food processing industry exists could be
explained in terms of the opportunities and threats.
Opportunities
are supported by factors like:
·
High demand potential: average Indian
spends 52 per cent of his income on food.
·
Low output from organized sector: less
than 2 per cent of the total production of fruits and vegetables is processed.
·
Exports of agricultural and processed
food have been rising steadily. APEDA figures put exports at 14184 crore
(2003-4), 16828 crore (2004-5) and 17918 crore (2005-6).
·
Low cost Indian labour can be used to
set up large, cost-effective manufacturing units for domestic and export
markets.
-.
Diverse agro-climatic conditions in India provide a wide-ranging and large raw
material base suitable for the food processing industry. Great potential for
semi-processed and read-to-eat packaged food segments.
·
Surplus food production
·
Younger population, increasing
urbanization, changing lifestyles, emergence of nuclear
·
families, increasing personal incomes,
improving standards of living, rising number of working women, convenience
needs of dual income families.
·
Deep inroads by the spread of television
as an advertising medium and emergence of retailing culture
·
Projected shift in Indian eating habits
to mass-based basic foods like atta (wheat flour), chicken, milk,
·
Increasing preference for Indian foods
abroad
·
Government has been developing agrizones
and mega food parks to promote the food processing industry in India
·
a The advent of the WTO regime and the
possibility of reduced subsidies in developed countries can add to India’s
strengths in food production arid processing industry
·
Threats arise owing to factors like:
·
Conservative government policies:
·
reservation of several items for the
small- scale sector and overregulation with multifarious legislations governing
the industry. There are a number of licensing and regulatory authorities
overseeing agro food processing units in the country. Till 2006, there were 16
separate central laws and 9 ministries dealing with the food processing
industry. Sought to be replaced by a single act, Food Safety and Standards bill
2006.
·
Inadequate infrastructure for
distribution and preservation: long and fragmented supply-chain retail
structure, inadequate infrastructure, including cold chain storage refrigerated
vehicles for logistics & transportation, special handling facilities at
airports and inadequate post harvest management.
·
Limited access to appropriate technology
for processing and packaging, low investment
·
in research and development by industry
and high cost of production.
·
Losses of Rs. 50,000 crore from the
wastage of fruits and vegetables for want of processing and value addition
·
High taxation on packaged items
·
Lack of private initiative
·
Resistance from civil right groups
besides
these threats, there are some interesting myths related to processed food and
the industry in India. For instance, it is perceived that Indians are largely
vegetarian; white the fact is that 75 percent are non-vegetarians. Or that the
food processing industry is a high-risk industry dominated by the MNCs. The
reality is that it is not a high-risk industry and worldwide, it is dominated
by local companies.
Question:
Q1)
Explain the features of ministry of food processing in India ?
Q 2) What is the vision 2015 ? Explain its
features ?
Q
3) Explain the features of food processing industry ?
Q
4) Explain opportunities & threats of food processing in India
CONTACT: PRAKASH
Mob:
+919741410271
Case Study 4
State bank Of India on its
capabilities.
State
Bank of India (SBI) is India’s largest bank, faster transfer of funds are in
place to protect its with an extensive network of more than 9000 dominant
position in the government business. branches and 6000 ATMs. Its Organizational
capability profile offers an interesting study in to the strengths &
weakness, competencies & capabilities of India’s prime public sector bank.
Financial
capability factors: SBI enjoys a comfortable capital position as it is
adequately capitalized, designed to deal with asset side risks and support the
business growth. Its funding profile is strong, underpinned by its strong
retail deposit base. SBI’s strong franchise gives it access to a steady source
of stable retail funds. Its cost of deposits is Optimum.
The
bank maintains a healthy liquidity position owing to a continual accretion to
deposits, large limits in the call market & significant surplus statutory
liquidity ratio-related investments. SBI is estimated to have a good earnings
profile with diverse income streams. The banks core fee income bolsters its
revenue profile though there is likelihood of a slow down owing to the opening
of government business like tax collection to other banks & increased
competition.
The
banks cost structure is rigid as the fixed employee cost accounted for 74 % of
the operating expenditure in 2004-05. The banks operating costs will remain
high in the medium term.
Marketing
capability factors: SBI has been losing market share over decades. There is a
consistent gap between deposit & credit growth. As a leading public sector
bank, it is obliged to shoulder social responsibilities such as investing in
priority sectors. SBI has been trying to unlock its brand equity though
unsuccessfully. It has a strong retail base & wide geographical reach. The
bank fund based & fee income earnings are diversified across industries,
regions, asset classes & customer segments.
Marketing
initiatives such as on – line tax returns filling & faster transfer of
funds are in place to protect its dominant position in the government business.
The bank has entered the market of term lending to the corporate sector &
infrastructure financing, traditionally the domain of financial institutions.
It has increased its thrust in retail assets & has built a strong market
position in housing loans.
Operations
capability factors: SBI, through its non-banking subsidiaries, offers a host of
financial services, Viz, Merchant banking, fund management, factoring, primary
dealership, broking, investment banking & credit cards. SBI has commenced
its life insurance business by setting up a subsidiary, SBI life insurance
business by setting up a subsidiary, SBI life Insurance company Ltd. SBI along
with its associate banks, offers a wide range of banking products &
services across its different client markets.
The
asset quality of the bank, a vital performance indicator, in the banking
industry is of average level. It has a high level of gross non-performance
assets, a bane of the banking industry any where
it
faces challenges to develop effective credit appraisal & collection systems
in order to contain the non-performing assets in retail finance.
The
bank also has a clear technology strategy that will enable it to compete with
the new generation private sector banks in customer service & operational
efficiency. The increasing focus on upgrading the technology back-bone of the
bank will enable it to leverage its reach better, improve service levels,
provide new delivery platforms & improve operating efficiency to counter
the threat of competition effectively.
Personal
capability factors: Being the largest bank in the country has its downsides. It
faces the dual problems of overstaffing & understaffing in certain other
critical areas. There is a need to reduce and redeploy the workforce but this
is a sensitive industrial relations issue in a country where bank unions are
strong.
Information
management capability factors The SBI commissioned Tata Consultancy Services,
the global software solutions and consulting services company, to supply, customize
and implement the centralized core banking system. The project is claimed to be
one of the largest projects of its kind in the world in terms of the number of
branches. Customers and transaction volume when completed. The information
management capabilities, which SRI Group will seek to develop using the core
banking solution, include personalized customer service, 24X7 banking through
diverse types of delivery channels, fast product launch and customer
relationship management.
General
management capability factors: The general management of the bank is quite
competent. It has leveraged its corporate relationships pursued business growth
selectively and ties judiciously not competed on the basis of interest rate.
The
performance indicators used by the SRI are: capital adequacy ratio, business
per employee, profit per employee, return on assets, net NPA ratio and deposits
and advances. The banking industry in India is currently under an intense phase
of change. The public sector
banks
are trying to consolidate on the basis of their large network and customer
base. The private sector banks are adopting mergers and acquisitions to
increase their size. The trend is towards consolidation around well-identified
core competencies.
Questions:
Q1)
Define financial capabilities factors of SBI ?
Q2
) Explain Marketing of capabilities factors of SBI ?
Q3)
Explain operations of capabilities factors of SBI ?
Q4)
Define performance indicators of SBI?
CONTACT: PRAKASH
Mob:
+919741410271
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