Professional Documents
Culture Documents
Introduction
ICI Paints Business
ICI is the world’s largest manufacturer of the paints and
industrial coatings. ICI paints is headquartered in Berkshire,
UK and operates 55 manufacturing sites in 25 countries. In
this sector its main strength are in
Decorative paints
Industrial paints
Refinish paints for vehicles.
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This section describes the way the paint chemist blends the
“vehicle” and pigment together to make paint.
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small particle surfaces. This process is known as “pigment
dispersion”, and the following processes must occur:
1) “Wetting” of the pigment surface by the vehicle.
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exposed during grinding are covered by molecules of the
dispersing resin. This process is known as “wetting”.
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Obviously the resins and solvents must be compatible but
problems may arise if components with large differences in
resin solids, viscosity or temperature are mixed - “pigment
shock” - reaggregation of the pigment particles may occur.
For these reasons pigment dispension are usually “second
staged” when dispersion is complete - they are diluted with
resin and solvent to give a recipe which is still more
concentrated than the final paint but much easier to use
than the dispersion recipe. Waterborne millbases and paints
must have the pH adjusted at this stage.
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ICI Vision
The company vision is to compete in the industry by
emphasizing on customer needs and to build and promote
a culture of continuous improvement .
Mission Statement
“The ICI paints team intends to remain market leader in
the paints business. We wish to be recognized for offering
the best products and excellent customer service. We will
run a high quality, profitability and growth oriented
business in an exciting and safe environment.
Goals
1. Total adherence to SHE.
2. Dedicated involvement of every employee at all
levels of the organization to the total quality
management concepts.
3. a complete focus or prevention of non
conformance through cohesive team work.
4. Constant emphasis on “doing it right the first time
and every time”.
5. Improving the quality of every thing we do, to the
complete satisfaction of our internal and external
customers.
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Objectives
To be No. 1 in all its 6 Pakistani businesses
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Situation Analysis
INTERNAL ANALYSIS
SWOT Analysis
After studying the ICI paints strategies, and its
performance we have identified some strengths, weakness
opportunities and threats.
Strengths
1. ICI’s Positive Image
ICI has positive image and reputation in the minds of
customers so far them it’s a great strength because
its helps in the sale of their products.
2. Financial Strength Of The Business
The paints business is financially very strong as
mentioned by present annual report.
3. Established Nation- Wide Infra-Structure
The ICI paints business has established nation-
wide infrastructure. It has network of dealers
in all over the country, which will help in the
sale of company’s products.
4. Committed and enthusiastic staff
5. Up To Date Technology
ICI paints has up to date technology in its
production. ICI paints Pakistan claim that they offer 6134
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colors to the customers out of which customer can
demand any color and then they will make that color for
customer. For that they have latest machinery in which
they just give name of the colour that customer want and
then machinery gave them the formula which will produce
that particular color a then they will produce that color for
the customer.
Weaknesses
1. No Distribution Network
The major weakness of ICI paints business is that they
don’t have their own distribution network. They just have
dealers in different cities which carry their products and
then retailers have to use their own means to get paint
from those dealers and then make it available for sale for
the customer.
Opportunities
1. Increase Quality Awareness Among The
Customers
One of the greatest opportunity for ICI paints is that now a
days people are very much conscious about the quality of
the paints and they are aware of the fact that good quality
paint is long lasting. As ICI is producing high quality paints
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so it will increase the demand of company’s so it is a great
opportunity for ICI paints.
Threats
1. Decrease in Construction Activity
Due to decrease in the construction activity in the country
the company’s sales are decreasing as compared to
previous few years.
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Performance Analysis
The paints business continued its focus on operating
excellence and productivity improvement and in this regard
capital expenditure of Rs. 27 million was undertaken to
upgrade production facilities and to achieve further
operational improvements. Consequently the business was
able to enhance production capacity by 1.5 million litres.
Despite pf recessionary condition, which are prevailing in the
market due to slow trading environment the ICI decorative
paints, was able to increase its market share by 1% through
its strong advertising and promotional campaigns and
increasing effective after sale service.
The industrial business continued to deliver a robust
performance driven by a penetration of new market
segments within the general industry sector. Consequently
despite a decline in the traditional Automobile and projects
segment the industrial business was able to increase its
sales by 10% over last year.
The market for the Refinish business however remained
static with no increase in sales volumes over last year.
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Financial Analysis
Due to very significant decline in the size of the decorative
market the ICI paints business registered an overall
reduction in sales volume of 4% compared to the previous
year. However gross margin increased by 6% through
improvemeNt in product mix and efficiencies in
procurements and manufacturing, which coupled with
stringent control over fixed costs resulted in an operating
profit improvements of 14.4% over last year to Rs. 262.9
million.
99 2000
Sales Rs. 3090.09M 2966.4864 4%
Gross profit Rs. 500.593114 530.6286 6%
Operating profit Rs. 230.22M 262.9 14.4%
Ratios
Gross Profit Margin
Gross Profit Margin = gross profit / net sales
1999 2000
16.2% 17.8%
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1999 2000
7.7% 8.86%
The operating profit margin has also increased as compared
to previous year.
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External Analysis
5 FORCES ANALYSIS
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Threat of substitutes
There are not many substitutes available for the paints. For
past few years there is an increasing trend of use of
designed tiles and coloured bricks.
But ICI do not think that they are under any threat as far as
substitutes are concerned.
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PEST Analysis
Economic analysis
Recessionary conditions continued to prevail as the
government pressed on with its efforts to document the
economy.
The depressed construction industry and the slow trading
industry and the slow trading environment resulted in an
overall market shrinkage in the decorative business by 10%.
Against this back drop the business was however able to
increase its market share by 1% through its strong
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advertising and promotional campaigns and increasingly
effective after sale service. The industrial business continued
to deliver a robust performance driven by penetration of new
market segments within the general industry sector.
Societal Analysis
In recent years ICI has shown a lot of concern for society.
Organization is very conscious about safety and health of its
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employees. The business successfully completed its fourth
year without any reportable injury.
Technological Analysis
ICI paints have got the latest technology with them as
compared to their competitors. Their production process is
highly automated. They can offer any colour as demanded
by the customer. Customers can ask for any of 6134 colours.
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Competitor Analysis
ICI is the largest manufacture of paints in Pakistan. There are
hundreds of competitors competing with ICI. But their market
share is very small as compared to ICI. Mainly there are only
2 major competitors i.e Burger paints and Master paints.
All other companies are having market share less than 1%.
Let us have a look at hot selling brands of above mentioned
paint manufacturers.
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Problem Statement
Due to depression in construction industry and the slow
trading environment in Pakistan the ICI Paints has faced
tremendous market shrinkage.
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Existing Strategies
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The Soda Ash plant of ICI is situated in Khewra, district
Jhelum. Soda Ash is an industrial raw material used in the
manufacturing of glass, glass products, paper and chemicals.
It is also used in the formation of soaps and detergents. The
plant was established in 1994 with the capacity of 18000 tpa
[tons per annum].
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ICI Chemicals
1) Specialty Chemicals
ICI’s specialty chemicals plant was commissioned at Karachi
in 1968 with the capacity of 1500 MT per annum. It was
primarily designed to manufacture a range of Textile
auxiliaries. Today, with the capacity of 3600 metric ton per
annum, it manufactures and formulates over 40 products
used in industrial processing that call for specialty chemicals
applications.
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The general chemicals products offered by ICI chemicals are
used for variety of applications by nearly all industries of
Pakistan including fertilizers, cement, polyester oil and gas,
plastic and paints. Sales of these products are packed by a
technical laboratory services for which sales staff is specially
trained.
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1. Decorative paints
2. Industrial paints
3. Refinished goods
Dulux
Glidden
Burger paints
Master paints
Burger Paints
The share of Berger paints in paint market is 12%. Their hot
selling brand is Berger Robbialac.
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Master Paints
The share of master paints in paint market is 3%.
Their hot selling brand is “Master”
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ICI are market leaders in paints business. Their market share
in paints market is 25%.
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training courses were offered 3 – 4 times per year. But
recently new initiatives taken in this area resulted in a total
of 28 courses being offered inhouse accessed by 879
managers during the year. On average each management
staff in the company was provided approximately 5 days of
training during the year. Special training of high potential
staff was also stepped up and 7 staff was provided with
specialized high quality training opportunities abroad.
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standards and monitoring of all its effluent treatment plants,
resulted in an assurance that the company has met all the
national environmental quality standards (NEQS) applicable
to its manufacturing activities.
Product Development
ICI paints Pakistan has a well-established R & D department
in Lahore at their paints division. There all people are
continuously making tests to develop new products and
that’s the main reason why the company is able to launch its
new products frequently into the market. The top
management has allocated good budgets for this R&D
department. ICI Paints has qualified and competent people in
the field of R&D activity. After about 2-3 months they launch
their new brands in the markets, which will help them to
maintain their competitiveness. Recently they have launched
following brands.
Demand Management
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ICI paints mange its demand by first identifying its customer
needs through market research and then introduce its
products to customers. The media they use for
advertisement are TV, sign boards etc.
Order Fulfillment
ICI paints uses 2 approaches for its order fulfillment process.
For decorative business they have customized brands and
they send their brands to dealers then deliver it to retailers.
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Alternative Strategies
There are several strategic options for ICI paints Pakistan.
They can reduce their competition, and market share by
using any of the following strategies.
These strategies are:
1. Forward integration
ICI at the moment is depending on dealers for the sale of
their products. These dealers store company’s products,
retailers have to get ICI products from these dealers & then
offer customers for sale.
2. Backward integration
Presently ICI Pakistan is purchasing its raw material from
both local as well as foreign suppliers. About 75% material is
purchased from foreign countries and 25% is purchased
locally.
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As such as huge quantity of raw material is purchased from
foreign countries that’s why change in government import
duties have a great impact on prices of raw material and
now a days government is continuously increasing its import
duties so it rents in reverse in prices of raw material which
also increase the prices of finished products.
3. Acquisition
At present ICI is the largest manufacturer of paints in
Pakistan. Its market share is 25%. There are several
companies in paints business having a small portion of over
all market.
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4. Combination
Business strategy of ICI includes differentiation and quick
response. Recently ICI has introduced master palette that
offers plentitude of 6134 colours to match every
environment and mood. ICI offers premium quality product
at premium prices. Although ICI offers brands like Glidden,
Paintex and Maxilite, which are quite economical yet they
are comparatively expensive as far as brands of, competitors
are concerned.
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Recommended Strategies
Backward Integration
Seeking ownership or increasing control over firm suppliers
can be very fruitful strategy.
Acquisition
Acquisition or horizontal integration refers to seeking
ownership or increasing the control over firm’s competitors.
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As mentioned above; there are several competitors of ICI.
But most of them are quite smaller companies having a very
small portion of market.
If ICI acquires a few of those competitors, it would be very
beneficial. It would not only reduce the no of competitors but
there will be a notable increase in market share as well.
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Implementation Plan
For successful implementation of the strategies that we
have recommended, ICI should emphasize on the following
main points to implement those strategies.
Budget
For above 2 strategies, which we have recommended there,
should be separate budget allocated for the implementation
of the recommended strategies.
Human Resources
ICI should believe in their people’s potential and ability. They
should invest in them and consider them as most valuable
assets. Because business goals can be best realized through
people.
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Before bringing any change employees should be
communicated about why the change is necessarily and
what are the objectives and goals that company want to
achieve through those changes. Employees should be given
training so that they can better adapt to those changes.
Employees are vital to the profitability of the company
because they directly contribute to the success of the
organization. Human resource department should strive to
ensure that a professional and caring environment continues
to be fostered so that the creative energies of staff are
released and fully utilized while developing their potential
Sales
As the company will undergo backward integration and
combination strategies therefore it should increase its sale
by exploring new geographical areas and markets which will
result in increase in profitability for the company and the
company will have funds for the new strategies to implement
Production
For selling more definitely the company should also increase
its production so that the product should be readily available
for sale.
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