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Submitted By: Aakriti Bhatnagar Abhay Chajjed Ashish Narang Sonali Nandrajog Sumit Suneja
We are grateful to our Strategic Management faculty, Mr. Rahul Mishra, for providing us with an opportunity to work on such a practical case which was both comprehensive and intensive. Preparation of this report is a team effort and each member of our group has given their maximum potential.
Besides diversification. their strength will be derived from the Britannia mother brand´ Our interpretation: We believe that this statement means Britannia want to become the market leader in the category of not only biscuits but other food items as well. biscuits. They plan to get into newer food categories while depending on the popularity they have gained via the Britannia brand i.I.e. "Our vision is to become a larger player in the food space. it plans to bring innovation in the category of its existing products. .MISSION STATEMENT This company does not have a defined mission statement but in a recent interview in business today. and as we get into newer products and newer categories. Britannia's vice president and chief operating officer said. it also aims to bring more to the consumers that just biscuits. Neerja Chandra.
The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. Britannia is continuously setting new standards.AN OVERVIEW In 1892. Today. became the first company east of the Suez Canal to use imported gas ovens. Britannia mechanized its operations. In 1975. they used the slogan "Britannia Khao. Their business was flourishing and they acquired a reputation for value and quality. World Cup Jao" for further promotion. Little did they foresee that this small company. the biscuit market continued to grow. and in 1921. Four years later in 1983. a small biscuit company was started in an ordinary house in Calcutta with an initial investment of Rs 295. Today. Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL)."Eat Healthy. The year after this.BRITANNIA.and ventured into the dairy products market. we all know this company as BRITANNIA. more than a century after those initial first steps. the company unveiled its new corporate identity . started in the kitchen of a regular house would become one of India¶s favorite brands. In 1999. Their vision was to make good quality biscuits catering to diverse tastes. and Britannia was growing with it. They have succeeded in garnering the trust of . By 1910. In 1997. Britannia strode into the 21st Century as one of India's biggest brands and the preeminent food brand of the country. With the passage of time. Think Better" . with the introduction of electricity.II. they crossed the Rs. Soon after they set up base in Calcutta. This helped them fortify the affinity their consumers had with the brand Britannia. but their dream and vision was far from it. they concentrated on growing their business. and that miniscule initial investment of Rs 295 has grown by leaps and bounds to crores of rupees for Britannia's shareholders. they took over the distribution of biscuits from Parry's who till now distributed Britannia biscuits in India. the government contracted them to supply large quantities of "service biscuits" to the armed forces. 100 crores revenue mark. Their reputation had become so strong that during World War II. The beginning of BRITANNIA may have been humble.
New Britannia Milk Bikis: It contains 4 vital vitamins. It is also relevant for consumers with sugar related ailments.Juicy Apple. packed with Iron Zor and a distinct taste of banana. which provides the same sweetness as any other biscuit. Rice which is low in fat. NutriChoice SugarOut: This range is available in 3 delicious variants namely Litetime. It is sweetened with "Sucralose. Tiger Banana. One pack of Tiger Banana has as much Iron Zor as one kg of bananas. without the added calories of sugar. PRODUCTS NutriChoice5 Grain: These are made from 5 healthy cereals. Strawberry Surprise. Corn which promotes heart health. which aids mental and physical development in growing kids. Its packaging ensures that the biscuits remain fresh and crisp.almost one-third of India's one billion populations by walking on the path of innovation and quality. Their R&D department spent considerable time developing this nutritional product for children. Chocolate cream. iron and iodine. Ragi which is a good source of Calcium and Fibre. Oats that help reduce bad cholesterol. Treat Fruit Rolls: These come in four fruit flavors . . and come in a unique large oval shape. Tangy Orange and Delicious Dates. NutriChoice Digestive Biscuits: These are made with 50% whole-wheat and packed with added fibre and cover 10% of a person¶s daily dietary needs. and Wheat that provides wholesome energy." derived from sugar. and Orange cream. targeted towards all health sensitive people. They are aimed for school children as a snack in their Tiffin. Britannia launched a new variant of their Tiger brand. These biscuits are delicately sweetened with natural honey. Tiger Banana: Staying true to their aim.
LLC and Oman based Al Sallan Food Industries Co SAOG. the first being USA. India is known to be the second largest manufacturer of biscuits.to help people enjoy life. Creams and Cookies in Sri Lanka. Milk Cream Smileys. through healthy snacking. They entered this market with the same purpose. III. It is one of the largest and the most respected business conglomerates in the Middle East. Britannia Industries Limited formed a Joint Venture with the Khimji Ramdas Group. and make this accessible to all people anywhere.BRITANNIA OVERSEAS Middle East In March 2007. Britannia has managed to spread its wings abroad and create value in the eyes of their customers by linking themselves with reputed names. Sri Lanka On 29th August 2008. It is divided into 2 sectors. The two companies are key regional players in the biscuits. the organized and unorganized. everyday. vision and goal. wafers and cookies segment in the GCC markets and export their products across the world. With such associations and joint ventures.ENVIRONMENTAL ANYLYSIS BISCUIT INDUSTRY OVERVIEW Biscuits Industry in India is the largest among all the food industries and has a turnover of around Rs. They manufacture Milk Bikis. Britannia and its Associates have also acquired a significant stake in Dubai based Strategic Food International Co. The unorganized . The industry consists of two large scale manufacturers. The organized sector contributes to 55% of the total production and the remaining 45% comes from the unorganized sector. around 50 medium scale brands and small scale units ranging up to 2500 units in the country. Britannia began manufacturing and marketing their products in Sri Lanka.3000 crores. Vita Marie Gold.
5% and excise duty of 8% imposed of biscuit manufacturers. . Thailand. hold the maximum amount of consumption of biscuits.sector is estimated to have approximately 30. At the national level. The rural sector consumes around 55 percent of the biscuits in the bakery products. and Uttar Pradesh. As a result of which they cannot lower their costs to increase profit margins. India¶s Biscuits Industry came into the limelight and started gaining a respectable status in the bakery industry in the later part of 20th century. bakeman etc come in. namkeen are exempted completely from excise duty and have VAT of only 4%. the most industrially developed states. Karnataka. and it has been calculated to be growing at the rate of 13% per annum. One of the major reasons for the stagnant growth of the biscuit industry is the tax laws and excise duties. the per capita consumption of biscuits in India is only 1. one can say that they are operating in a duopoly market. These players have to implement different strategies in the different market scenario¶s to face competition and remain dominating players. Therefore. UK and West European countries and above 4. States that have the larger intake of biscuits are Maharashtra. Maharashtra and West Bengal. and Indonesia.000 small & tiny bakeries across the country.9 kg compared to 10 kg in the USA. The growth of the biscuit industry in India has been slow. they have to operate in a perfectly competitive market. Andhra Pradesh.2 kg in the South East Asian countries like Singapore. While commodities like tea. Due to the heavy VAT of 12. This was a result of a demand coming for the urbanized society for ready-made food products at an affordable price. coffee. biscuits have to suffer with higher numbers. West Bengal. where the regional players like Priya Gold. there are only two players Parle and Britannia. Hong Kong. The state markets have their own dynamics in comparison to the national markets. But on the lower levels.
This makes it difficult for biscuit manufacturers to operate at an optimum level. Also. sweets.5% liable for delicacies.5 per cent . Therefore this factor does not have much of an effect on Britannia. The raw material used in the production of biscuits is supplied by the agricultural sector and therefore dependant on it. Whenever the demand for biscuit in the market dip. coffee and other basic food products that are liable to 4% VAT. obstructing larger revenues for the government. FBMI comes in the picture to push up the demand and regulate it. it comes down very heavily on the biscuit industry and restricts its growth. This is restricting the growth of the industry. When this is coupled with the tax lays and excise duty. jellies. and namkeens attract less or no VAT at all. ECONOMICAL FACTORS The biscuit industry is very heavily affected by tax laws and excise duty in India. There exists a Federation of Biscuit Manufacturers of India (FBMI). but biscuits continue to attract an excise duty of 8%.like chocolates. This is a major hindrance in the growth of the industry. Britannia has manufacturing units in many states but there is no disparity in the laws of those states. Any shortage in production of wheat forces the companies to import it. an organization that monitors the growth of the biscuit industry and provides support and existence to the small scale manufacturers. in comparison to 12. Other categories with lesser nutritional value like potato chips. confectionery and ice cream that cater to a much smaller and relatively more affluent consumer base. This is a major help to the biscuit manufacturers. utilization of agricultural produce and therefore. Biscuits attract VAT at 12.PEST ANALYSIS POLITICAL FACTORS Every state in India has different laws for tax and excise duty in them as the government in every state is different. This is the main political factor that can affect the biscuit industry as it plays a vital role in the cost incurred by the companies. jams. other ready-to-eat packed food products are totally exempted from excise duty. which consequently raises their cost of raw material drastically. Biscuits deserve to be at par with tea. .
This adds to the low profitability and high cost situation that the industry is working in. SOCIO-CULTURAL FACTORS Biscuits were assumed as sick-man's diet in earlier days. With time. The CEO of Britannia. Ms. Biscuit manufacturers have had to fight this image and position their product as a healthy snack. was quoted in an interview with Economic Times. they have managed to break that image and made the masses accept it as one of the most loved fast food products. saying.´ The steep increase in crude oil prices and hike in petrol & diesel prices announced by the government leads to a significant increase in the price of packaging materials. Another economic factor affecting the biscuit industry is the presence of multiple food laws and their enforcing agencies in the central and state governments with overlapping functions and implementations. especially targeted at young children. In order to implement better compliance. Vinita Bali. Britannia had a very clear understanding of the demographic and psychographic trends of their customers. freight and production cost.Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass Consumption Goods) sector. This would help in an accelerated growth and development of the industry. The commodity is also price sensitive. the FBMI pressurized the ministry of Food Processing industry to harmonize the multifarious legislations. ³We are operating in an extremely high and unprecedented cost scenario and some irrational competition too. which had very high iron content. the manufacturers are not able hike MRPs as the price would not be accepted by the consumers. The result is a huge pricing pressure with limitations on price hikes for the entire industry and a shrinking profit pool of the industry. as a consequence of which. . even when the Excise Duty and VAT tax is high. One packet of TigerBanana biscuits contained as much iron as 1 kg of bananas. With the introduction of this product. This product attracted mothers and children. They introduced a brand called TigerBanana. The current economic scenario of rising inflation is another factor affecting the industry. they changed the image of biscuits completely and portrayed it as a health product.
only Parle has been able to give Britannia some competition. Their technology is at par with the international standards of safety. dough feeder. Craze. Anupam. The technology supplied to them is not only of premium quality. biscuit mixer. spiral mixer. Britannia is very well established in the market and completely insulated from competition from the others. Some of the technologically advanced machinery used by Britannia is rotary cutting unit. The other major brands of biscuit in India are Parle Bakeman. IV. Cremica.TECHNOLOGICAL FACTORS For the small scale local and state level biscuit manufacturers. Dukes. and Nezone. packing table and magnetic stacker. but that does not rule out the existence of other small scale and large scale manufacturers.COMPETITIVE STRATEGY Britannia is a leading brand in the Biscuit Industry. Priya Gold. who are successful manufacturers. Elite. They can invest modest amount of funds into their R&D and technology to keep up the image of their company in terms of quality products. exporters and suppliers of a wide range of biscuit and bread making machines. but also custom made for their (Britannia) requirements. biscuit oven. They use the most advanced technology available for the manufacture of biscuits. Therefore. the ministry has undertaken the procedure to upgrade and diversify technology with the objective of enabling the food processing industry. quality and design. Amongst these brands. . Horlicks. lack of advanced technology hinders their growth. planetary mixer. rotary molder. Their main suppliers of technology are Prima Engineering Industries. Parle and ITC ltd do not face the problem of outdated technology. cooling conveyor. But the bigger players like Britannia. electric/gas. They are very easy to operate manually and are low maintenance.
promotion and distribution. They believed that more activity in the biscuits market created more opportunities for them. but ITC squeezed its way through and settled in snugly on some part of the market share. but still trails Britannia marginally in value terms. There had been no new energy or wow factor in the market in a long time. With the help of their financial support and massive distribution network. Parle focused primarily on the low-end glucose biscuit segment. Glucose biscuits account for 57 per cent of the Indian biscuit market and Parle G accounts for 50 per cent share of this segment. and their attack on Britannia can be classified as a Frontal Assault. Britannia is the leader in all biscuit categories. They barged straight into the biscuit industry and matched the existing players in price. both these brands managed to coexist in harmony. except glucose. they could keep a better tab on their overheard expenses and therefore keep costs low. ITC decided to launch . no new product or innovations had been made by either of the big players. Parle had a very strong competitive advantage over any other player in the market. Many big players like HLL had tried to enter the biscuit market but failed to establish themselves. Parle is the market leader by volume. Since they were a smaller company.Even with Parle¶s presence in the industry. they had nearly equal shares of more than 80% of the market value. Britannia did not feel very threatened as they maintained that they led the overall market in terms of value. But even then. its Parle G brand being one of the world's best-selling biscuits. Britannia encountered its first threat from a competitor when ITC ltd entered the biscuit industry with an aim to expand in the FMCG segment. they quickly emerged as a third player in the industry and completely shook Britannia and Parle from their comfort zones. Analyzing ITC¶s competitive strategy. due to which no competitor could afford to increase prices by even 25 paise. They entered this turf as part of their diversification strategy in 2003. This was putting pressure on margins and affecting growth. ITC grabbed an 8-10 per cent market share within hardly any time of entering the market. This was possible for them as they intensively researched the market before entering and realized that they could fill the gaps existing at that time. Due to this. where Parle has an edge. and Britannia focused on the premium segment. They had been coexisting peacefully for a long time and did not adapt well to the sudden change. Parle priced its 100 gram pack of glucose biscuits at Rs 4. we found that they used offensive tactics.
completely different from the identity of biscuits currently in the market. they decided to go for a Bypass attack.. At this point of time. high margins in cream variants and volumes from the Marie and Glucose segments. There was a need for them to analyze their company and find competitive advantages which would help them clearly stand above their competitors. Britannia was completely unprepared internally to combat ITC¶s competition.Sunfeast with six ranges. Marie light and butterscotchflavoured cream biscuits. While ITC ltd used their strong brand image and financial back up to collide head on with Britannia on their own turf. While Parle looked at a high volume. i. orange-flavoured Marie.1 brand in the biscuit industry again. they decided to give their product a new identity. They also started facing stiff competition from regional players like Priya Gold in the north and west. Therefore. Market share 4th Qtr 20% ITC 10% Parle 34% Britania 36% .e. Britannia understood that throwing it right back at ITC would not be a wise decision. low margin strategy. Anmol and Bharat in the north and east. Britannia and ITC looked at a two-forked strategy. Instead of marketing their products more aggressively or changing price etc. Britannia soon realized that they need to restructure themselves and bring some changes in their internal environment in order to secure their position as the No. and Duke in the south.
They wanted to shed away the boring image of biscuits while retaining its core of energy and health. They planned on achieving that by improving efficiencies. competing not only with other biscuits but also with savories. They also tried to reposition their product in the minds of the consumers. reducing costs and looking for new customers. They are the first in the biscuit industry to have taken such a step. This was a major competitive advantage over ITC as their food products were not perceived as healthy. and therefore it was hard for them to shake off that image from the minds of customers and portray themselves and producers of healthy biscuits. They have a very strong presence in the tobacco industry. and started work on new recipes for biscuits. . They even fortify their biscuits with vitamins and micronutrients like iron. Britannia recognized that this was the time for them to innovate and introduce new products in the market and move closer to gaining competitive advantage. They invested in their R&D department. They stressed up on the fact that Britannia was not in the "health food" business. making them completely fat-free. They decided to invest in people. Currently. They began to explore new ways to deliver the ³goodness of biscuits in a more interesting and fun way´. their research and development department found a way of removing 8500 tons of trans fat from their biscuits.They began by sharply differentiating their products from its competitors by intensively marketing them as a µhealthier alternative¶. but rather "in the business of delight and enjoyment". chocolates and other snacks. Making their image of providing µhealthier alternative¶ even stronger. brand and infrastructure in light of fighting competition. 50% of their biscuits are fortified. They had not introduced anything new in the market for a long time.
Therefore. Porters came up with 5 forces that may influence the profit potential of the industry. they are a threat to the existing companies. a high force is regarded as a threat and a low force is regarded as an opportunity. These 5 forces are: y y y y y Threat of new entrants Rivalry among existing firms Threat of substitute products or services Bargaining power of buyers Bargaining power of suppliers If all these forces are high. But the entrance of . Threat of New Entrants New entrants in an industry bring to it new capacity and a desire to gain market share.PORTERS FIVE FORCES In order to analyze the competition existing in an industry. according to this model. We will now analyze the biscuit industry in relation to these 5 forces and understand the profitability and attractiveness of this industry. Therefore. then the companies present in the industry are more limited to raise prices and earn greater revenues.
Furthermore. . while commodities like tea and coffee are liable for VAT of 4% and no excise duty. but could not establish themselves successfully. Britannia and Parle hold almost equal market share. companies are mutually dependent on each other. Only one new player. In any industry. it is a constant was between companies. Therefore. but they only give the bigger firms competition in certain geographical areas. i. They depend on the agricultural sector for raw material. they have to import raw material from outside. thereby increasing their cost of production. The government policies regarding tax and excise duty is another barrier for new entrants. This depends on a lot of factors. this industry is extremely price sensitive and therefore does not give much flexibility to the companies to increase prices. Parle. neither can ignore the changes or competitive moves made by the other players. However. due to which they do not have control on the cost incurred for raw material purchase.e. Other regional players like PriyaGold and Bakeman also exist. and bring down the industry attractiveness. it is a slow growing industry. In the biscuit industry. there are three main players. there is not too much threat of new entrants. For the FMCG industry. for the biscuit industry. Also. ITC ltd managed to push its way through and grab a market share of 6-8%.5% and an excise duty of 8%. Rivalry among existing firms In any industry. but the degree of rivalry may vary. A new strategy implemented by one company to gain competitive advantage is always countered by some changes made by the other company to neutralize that competitive advantage. If the cost of wheat goes up or it¶s a bad crop.new players depends on the entry barriers affecting the industry. the biscuit industry is attractive to new players as higher disposable income and the willingness of consumers to try new products gives them an opportunity to make good profit. This force can be rated as medium. These factors make it hard for new companies to enter the industry. it is very hard for a new company to enter as it requires high product differentiation and a strong distribution network. It has been seen in the biscuit industry that many new players like HLL and Cadbury tried to enter with new products. Britannia. and ITC ltd. biscuits are liable for VAT of 12. where as ITC ltd holds a relatively lower market share. with the current growth rate of 13%.
There is very close competition between all three. rivalry among firms can be rated as a high force. but it is an integral part of people¶s life style. Therefore. if prices of biscuits rise. Therefore. then the buyers have the option of shifting to another supplier if their original supplier does not meet their requirements and demands. Biscuits are usually eaten as snacks with tea/coffee. The substitutes of biscuits are namkeens. if tea prices were to rise. One may expect consumers in rural areas to shift to rusks or wafers. Tea manufacturers cannot increase their price as there is a threat that they may lose their market share to the substitute products. they can keep a close watch on the changing strategies of each other. in order to stay in the game. Threat of Substitute Products Existence of substitute products in an industry puts a ceiling on the price the companies can charge for higher profitability. As there are only three firms competing at all levels.but is growing at a fast rate and implementing strategies to pull away part of the market share from the big guys. This does not . Tea and coffee are regarded as substitutes of one another as they solve the same purpose. but it might not be too prominent in the urban areas. chips etc. chips. Therefore. If there are alternate suppliers of the same product. In the biscuit industry. consumers have the option of shifting brands according to their liking of price. Bargaining power of buyers Bargaining power of buyers is the ability of the buyers to force down prices. However. or as a substitute for a meal when there is lack of time. therefore a small increase in price would be acceptable in urban areas but may cause a shift to substitutes in rural areas. rusks etc. It may not be a necessity like bread. there will be a shift from consumption of biscuits to consumption of rusks. potato wafers. and the smallest of changes in policies by one has to countered immediately by some changes in the other. This shows that the price of coffee puts a price ceiling on tea. biscuits are now part of people¶s everyday life. The threat of substitutes can be rated as a medium force for the biscuit industry. Biscuits are a low priced commodity. quality and taste. then tea drinkers might begin to shift towards consuming coffee.
consumers voted brand 'Britannia' among the 'Top 10' most trusted brands across categories for the fifth successive year.INTERNAL ANALYSIS SWOT ANALISIS STRENGTH y Britannia is the market leader in its industry and is among the fastest growing FMCG companies in the last two years y Its net profit increased by 77. Also. from 100 grams to kilograms. In the biscuit industry. this force is high in the biscuit industry. V.5 per cent and operating margin by 307 basis points to 7. Therefore.give much flexibility to the biscuit manufacturers to increase price. biscuit manufacturers have no choice but to purchase wheat at the price quoted by the farmers as wheat does not have a close substitute. or compromise of quality. They provide flavors that the packed biscuits do not and they sell any quantity that the consumer requires.5 per cent in 2007-08. y In a survey conducted by AC Nielsen ORG-Marg. Bargaining power of suppliers Suppliers have the ability to raise their prices and increase cost of production for the manufacturing firms. with bakery stores mushrooming everywhere and providing biscuits for bulk purchases in kilograms. despite inflation in key commodities by 20-25 per cent in the last two years. consumers today have the option of buying from them as well. Therefore the bargaining power of suppliers is high. . Therefore. their raw material is dependent on the agricultural industry. During times of inflation when the price of wheat goes up. the main ingredient required for baking biscuits is wheat. This further increases the bargaining power of the buyers.
besides a 27. y It was rated as the seventh most trusted brand across all categories in 2008. y Its performance in 2007-08 was strong.5 per cent growth in the previous year.seasonal food which is in demand thought-out the year y Diverging into new products and categories like Tiger Pops (smaller version of the Tiger glucose biscuit) and Pepper Chakkar (the 50-50 biscuit sprinkled with pepper to give it a snack-like flavor) y It has doubled its advertising budget in the last 5 yrs.5 per cent.y It was also rated as the second most trusted food brand in 2008 and first in 2007. with a sales growth 17. Approximately 50 per cent of the company's bakery portfolio is now sold fortified with micronutrients y Widely accepted and available and it is a non.617 crore). y It is the only biscuit company to have removed trans-fat from all its recipes. y Strategy to concentrate more on the trade marketing WEAKNESS y Requires a high level of investment in terms of innovation and technology in which Britannia is stagnant y Britannia Industries witnessed a loss in sales momentum for the third consecutive quarter (2005-06) as the company has been feeling the heat of growing competition y Focus only on premium segment y Biscuits is the only thing Britannia is known for even though it deals with dairy products y Processed food is considered unhealthy y Biscuits were assumed as sick-man's diet in earlier days OPPORTUNITY y Demand for a health free product as people are more health conscious . adding Rs 800 crore of incremental revenue during this period (total revenue for 2007-08 was Rs 2.
transportation. coffee and other basic food products that are liable to VAT at 4 per cent instead of being subject to VAT at 12. sugar. oil. packaging material. y Bread and biscuits are the major part of the bakery industry and covers around 80 percent of the total bakery products in India y India is considered as the third largest producer of Biscuits after USA and China.y Improved standard of living y Higher disposable income y The rural sector consumes around 55 percent of the biscuits in the bakery products.5 per cent applicable to delicacies y Commodity inflation continues to have a significant impact on input cost and this inflationary pressure has put industry profits under pressure. And biscuits is a highly penetrated category y Completion form foreign companies y Poor quality for lower prices . has made a dent in the viability of the industry as it is an agro based industry. fuel. etc. y Competitors coming up with similar products at a lower price since this commodity is very price sensitive y Rapid increase in the cost of major inputs such as wheat flour. compared to more than 10 kg in the USA. UK and West European countries THREATS y The Wadias of Bombay Dyeing Group and France's Groupe Danone have separated and Danone plans to use of Britannia Industries Ltd's biscuits brand "Tiger" in several countries. the per capita consumption of biscuits in our country is only 2. y Food is a fickle segment. y Biscuits deserve parity with tea. power..1 Kg.
y Highly penetrated category y Completion form foreign companies y Poor quality for lower prices ST Strategies y Make use of the least input to minimize costs while not distracting from the quality y Expand the product portfolio WT Strategies y Invest more in marketing to position the product properly y Offer lower prices . y Widely accepted .seasonal food y Doubled advertising budget. y Keep an eye on the competitors market y Expand product portfolio EXTERNAL FACTORS (EFAS) Opportunities y People are more health conscious y Improved standard of living y Higher disposable income y Rural India Market y Biscuits covers 80 percent of the total bakery products in India Threats y Price sensitive y Subject to VAT at 12. y Trade marketing SO Strategies y Grow market by horizontal integration.5 per cent y 'Britannia' among the 'Top 10' most trusted brands across categories for 5 successive years. y Fickle segment. y Trans-fat free.available and non.TOWS MATRIX INTERNAL FACTORS (IFAS) Strengths y Market leader y Fastest growing FMCG y Its net profit increased by 77. y Innovation in terms of small packages to be sold in rural markets Weakness y Requires a high level of investment in terms of innovation and technology in which Britannia is stagnant y Showed that it can¶t handle competition y Focus only on premium segment y Product Portfolio y Processed food unhealthy y Sick-man's diet WO Strategies y Invest more in R&D.5 per cent y Use of Britannia Industries Ltd's biscuits brand "Tiger" in other countries y Commodity inflation.
This clearly states that it believes in product uniqueness while having a broad market. . we feel Britannia falls under the diffentiation category as in 2008.According to porter¶s generic model. Britannia divided its product portfolio into two distinct categories: "health and wellness" and "delight and lifestyle´.
Along with this.VALUE CHAIN ANALYSIS A value chain analysis of a company is done in order to bring out its competitive advantages. They also fortified their biscuits . and continue on to outbound logistics. marketing and sales. technology development. One major step they took to enhance quality was to remove 8500 tons on trans-fat from their biscuits. INNOVATION When Britannia started facing stiff competition from new players like IT ltd and Priya Gold. go through an operations process in which a product is manufactured. and finally to service. core competencies and core deficiencies. We will now analyze how Britannia concentrated on each of primary as well as support activities to further increase their profit margins and efficiency. a manufacturing firm¶s primary activities usually begin with inbound logistics. they found that in order to gain a competitive advantage over them. and firm infrastructure ensure that the primary value chain activities operate effectively and efficiently. several support activities such as procurement. According to Porter. human resource management. They began by bringing in new variants of their existing products and enhancing the quality of their products. they needed to invest in their R&D and come up with new innovations. making them completely fat free and becoming the only company to have done that.
They changed it by creating separate teams for general sales. They also segmented their go-to-market strategy wherein earlier they focused on simply increasing the number of outlets covered. It also devised a long-term distributed manufacturing strategy. and soon doubled their business in this category by recognizing that building brand and innovating were the key drivers of growth. an increase of about 60%. and strengthened its supply chain management as well. rusk and cakes. They improved their manufacturing facilities to meet the growing demand. . NutriChoice Digestive. put in place a continuous replenishment supply efficiency system. to provide them with the latest technology for better quality biscuits. the stocks at their distributors were replenished within 24 hours. which were as light as Marie but with a slight chocolate-orange flavor.000 tons. This helped them increase efficiency as they could bake larger batches with advanced technology. Britannia came out with Marie Doubles. Tiger±Banana (fortified with iron). modern trade. NutriChoice SugarOut. Good Day Jumbo. a very reputed supplier of machines used for baking biscuits.000 tons of annual capacity. and they increased the availability of stock-keeping units from 60% to 90% across the country. With the help of these measures. They invested significantly in higher and better quality of human resources both at the front end and at the back end. and semi-urban and rural markets. They invested over Rs 200 crore in capacity expansion. Greetings ± gift packs and a variety of cheese variants.000 tons to 60. They also tied up with Prima Engineering Industries. They invested in their segments of bread. To tap the non-traditional Marie markets. and soon 50% of their products were fortified. OPERATIONS On the infrastructure front. Good Day ± Classic Cookies. Some of the new products & packs introduced included Treat Fruit Rollz. A part of this investment was utilized to hike capacity at its Uttaranchal plant from a level of 45. Britannia added 200.with vitamins and micronutrients like iron. Products are sourced from several manufacturing locations spread across the country and reach their consumers through an efficient and widespread distribution chain. OUTBOUND LOGISTICS AND DISTRIBUTION Investments made in this division also helped Britannia contribute to its profit margin. institutions.
They began by aggressively marketing their products as healthier alternatives in comparison to other biscuits. They added transit point like bus stops and small roadside shops to their distribution network. . Britannia was quick to notice the psychographic changes in their customers. People were becoming conscious of dietary care and its correlation to wellness and good health. they were only interested in producing good quality tasty biscuits and selling them to the masses at large. over and above health and nutrition. There was a shift in the life style of customers and they were becoming more aware of health issues. They also changed their packaging by introducing smaller packages to attract the youth and travelers.e. FUNCTIONAL STRATEGY MARKETING STRATEGY. Britannia needed to bring about significant changes in their marketing and promotional strategies. Think Better¶ which portrayed that Britannia biscuits were of high nutritional value. This step would benefit the retailers and ensure that they marketed Britannia¶s products in comparison to the competitors. they did not have any idea of the heights the company would be touching. This new awareness was making consumers seek foods that complemented their lifestyles and offered convenience and variety. health foods and also made an attempt to increase trade marketing visibility. in light of gaining competitive advantage. Initially. They invested heavily in advertising to promote the new identity of biscuits i.REPOSITIONING When Britannia started. But as time passed. This would also help them in the future to increase their profit margins as an investment in any of the divisions eventually leads to higher efficiency and better profit. They introduced new campaigns like µEat Healthy. They were beginning to change their dietary habits and matching them to the new pace of life. They marketed their products to the retailers and distributors to increase their loyalty towards them.MARKETING AND SALES With competition increasing from the small as well as big players.
The Britannia system has invested over Rs 200 crore in the last two years in capacity expansion. They also plan to make substantial investments in this area for the next couple of years too. OPERATION STRATEGY Products are sourced from several manufacturing locations spread across the country and reach millions of consumers through an efficient and widespread distribution chain. Munching on biscuits was beginning to be seen as an unhealthy habit and another way to add a few extra calories. They saw biscuits as an addon while having their evening tea. each strategic business unit is a group of individual product segments and has the primary responsibility of managing their own functional areas. We will see in the course of this report that they went on to increase the iron content in the biscuits and fortified them with vitamins and micronutrients in order to make them healthier. Each of these units has separate strategies implemented by the management to promote and sell their products. Bakery and Dairy products. They have their own unique mission and identifiable competition. Britannia has three independent business units. which helped them give the new generation a healthy and nutritious alternative that was also delightful and tasty. to provide quality and healthy foods. Britannia realized there was a need to reposition their product in the minds of consumers to make them understand that biscuits could still fit their changing life styles and were actually a healthy choice.. facing stiff .Biscuits had an image of µsnacks¶ in the minds of consumers and they grouped them in the same category as namkeens and samosas.e. As we move ahead in this study on Britannia. BRITANNIA¶S ORGANIZATIONAL STRUCTURE Britannia Industries ltd follows the Strategic Business Unit structure. Biscuits. They have been augmenting our manufacturing facilities to meet the growing demand. In this structure. This helps the company to decentralize on the basis of strategic element. we find that all their innovations and restructuring is done around the same core competence i. They introduced their ³swasth Khao Tan man Jagao´ (eat healthy think better) slogan. The biscuit unit is the most developed unit of them all.
we expect Britannia to get a GDP of 6-6. Think Better" campaign in 1997. brands and infrastructure. we expect Britannia to attain a GDP of 4.000 in FY 09-10 in the most likely scenario. With funds flowing into the economic and banking systems.3% in the most likely scenario. with the introduction of the "Eat Healthy. rates to go down vis-à-vis expansion plans.RECOMMENDATIONS GDP : With respect to GDP. however. In this year. Interest rate: Interest rates have fallen considerably and the government may further cut the rates to infuse liquidity in the markets.COMPETITIVE ADVANTAGES y By marketing itself as a healthier alternative. Britannia focused on building its individual brands. . we expect int. And also with the `Greetings' gift pack during Diwali last year to make the emotional connect both with individuals and institutions VII. y Britannia came out with smaller pack formats and different SKUs to target the travelling segment. The recessionary environment makes for overall growth picture gloomy.5-5% in the FY 20092010. improved efficiencies and cost reduction. it is expected that the global economics would again see the bull rally from FY 2010-11.25. We assume it to stand at 1. However. The dairy unit is also relatively visible in the dairy industry. For instance. such as Tiger glucose biscuits. Good Day cookies and Treat cream biscuits y Advantage through efficiency : Investments in people. Britannia seeks to sharply differentiate itself from other brands -. we expect Britannia to perform on current lines with the National GDP. though it has players like Amul to compete with.competition from other big players. Thus. and new choices for consumers.and that move has paid off. VI.
confectionary and packaged foods. which Britannia entered in 1997 and spun off as a joint venture with New Zealand's Fonterra Group in 2002. People are increasingly becoming conscious of dietary care and its correlation to wellness and matching the new pace to their lives with improved . In addition to growing its core biscuit business.Inflation: The inflation has seen a drastic down in the current times. and alcoholic and non-alcoholic beverages. This could work as a double edges sword for Britannia. it wants to significantly expand its small businesses including dairy. Britannia should invest heavily in agriculture as well to gain the maximum outcome. bread. The dairy business. Cost reduction could be coupled with the reduction in sales . it needs to enter it to include fruits and vegetables. dairy products.S. y It can also enter International market besides Middle East and Srilanka. Therefore. VIII. meat and poultry. y If it plans to become a player in the food industry. the one common thread to emerge in recent times has been the shift in lifestyles and a corresponding awareness of health. breads and bakery. The overall country¶s inflation rate may even go in the red. y But now Britannia wants to broaden its menu. The industry also provides direct employment to approximately 3 lakh people & indirectly impacts employment of about 35 lakh people. y The company needs to do horizontal integration which should include breakfast items and ready-to-cook and ready-to-eat products y The biscuit industry uses indigenously grown agricultural produce thereby adding to the income of farmers. marine and fish.CONCLUSION Britannia -the 'biscuit' leader with a history-has withstood the tests of time. We assume the inflation to stand at 2% in FY 2009-10 and at 5% in FY 2010-11 in the most likely scenario.). With consumer democracy reaching new levels. This is a direct contribution of the industry towards improvement of agricultural sector. has revenues of barely $36 million and has yet to become profitable. Part of the reason for its success has been its ability to resonate with the changes in consumer needs-needs that have varied significantly across its 100+ year epoch. cake and rusk (known as zwieback in the U.
or health. Thus.healthy. Britannia NutriChoice 5 Grain Biscuits are a perfect answer to those looking for healthy eating options without as much making a compromise on taste. Whether it is missing that extra hour of sleep over early morning exercise. nutritious. the new logo was born.that was also delightful and tasty. Britannia saw the writing on the wall. encapsulating the core essence of Britannia . variety and economy. over and above health and nutrition. or convenience.and combining it with a delightful product range to offer variety and choice to consumers Most consumers believe that to in order to stay healthy one needs to make certain compromises on some good things in life. At the same time most of us agree that good nutrition cannot come from one kind of food alone. but from a healthy combination / assortment of several healthy ingredients put together. This new awareness has seen consumers seeking foods that complement their lifestyles while offering convenience. and optimistic .nutritional and dietary habits. or eating unappetizing foods over that extra oildripping samosa. Its "Swasth Khao Tan Man Jagao" (Eat Healthy. . Think Better) re-position directly addressed this new trend by promising the new generation a healthy and nutritious alternative .
Thus. At the same time most of us agree that good nutrition cannot come from one kind of food alone. This new awareness has seen consumers seeking foods that complement their lifestyles while offering convenience. Think Better) re-position directly addressed this new trend by promising the new generation a healthy and nutritious alternative . or health. or convenience. encapsulating the core essence of Britannia healthy. nutritious. variety and economy. over and above health and nutrition. Britannia saw the writing on the wall. Britannia NutriChoice 5 Grain Biscuits are a perfect answer to those looking for healthy eating options without as much making a compromise on taste. the one common thread to emerge in recent times has been the shift in lifestyles and a corresponding awareness of health. With consumer democracy reaching new levels. Its "Swasth Khao Tan Man Jagao" (Eat Healthy.that was also delightful and tasty. the new logo was born.Britannia -the 'biscuit' leader with a history-has withstood the tests of time. or eating unappetizing foods over that extra oildripping samosa.and combining it with a delightful product range to offer variety and choice to consumers Most consumers believe that to in order to stay healthy one needs to make certain compromises on some good things in life. and optimistic . Whether it is missing that extra hour of sleep over early morning exercise. but from a healthy combination / assortment of several healthy ingredients put together. People are increasingly becoming conscious of dietary care and its correlation to wellness and matching the new pace to their lives with improved nutritional and dietary habits. . Part of the reason for its success has been its ability to resonate with the changes in consumer needs-needs that have varied significantly across its 100+ year epoch.
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