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Company overview: HUL (HUL) is India’s largest fast moving consumer goods company, with leadership in Home &Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinctconsumer categories, touch the lives of two out of three Indians. They endow the companywith a scale of combined volumes of about 4 million tonnes and sales of Rs.13,718 crores. The mission that inspires HUL's over 15,000 employees is to "add vitality tolife". With 35 Power Brands, HUL meets every day needs for nutrition, hygiene, and personal carewith brands that help people feel good, look good and get more out of life. It is a mission HULs h a r e s wi t h i t s p a r e n t c o mp a n y, H U L , wh i c h h o l d s 5 2 .1 0 % o f t h e e q u i t y. A F o r t u n e 500transnational, HUL sells Foods and Home and Personal Care brands in about 100 countries worldwide.

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We meet everyday needs for nutrition.  Considering buyer power retailers it is very high since they are able to negotiate the price with the companies.  Suppliers that do a large amount of business with these companies are also beholden to their customers. the highest standards of corporatebehavior towards everyone we work with. and theenvironment on which we have an impact.Mission: HUL's mission is to add Vitality to life. Our long-term success requires a total commitment toe x c e p t i o n a l s t a n d a r d s o f p e r f o r ma n c e a n d p r o d u c t i v i t y.atruly multi-local multinational. t o wo r k i n g t o g e t h e r effectively. . Strategic position II. look good and get more out of life. We will bringour wealth of knowledge and international expertise to the service of local consumers . Environment: a) Porter’s five forces Buyer power:  Consumer faces weak buying power because customers are fragmented and have little influence on price or product. the communities we touch. To succeed also requires. Corporate Purpose: O u r d e e p r o o t s i n l o c a l c u l t u r e s a n d ma r k e t s a r o u n d t h e wo r l d g i v e u s o u r s t r o ng relationship with consumers and are the foundation for our future growth.  Verdict: strong buyer power from retailers. Supplier power:  Consumer product faces some amount of supplier power simply because of the cost they incur when switching suppliers. hygiene. and to a willingness to embrace new ideas and learncontinuously. we believe. andpersonal care with brands that help people feel good.

Hll has been continuously able to grow at a rate more than growth rate for FMCG sector. Hll has come up with a unique and successful initiative wherein the women from the rural sector market Hll products. Apart from product reach. fill the shelves of most outlets.  Verdict: low threat of new entrants. Verdict: limited supply power Threat of new entrants:  Given the amount of capital investment needed to enter certain segment in house hold consumer products. but even the pricing power of the brands can be eroded. brand succeeds in helping to build a competitive advantage.  Verdict: high threat of substitutes. b) SWOT Strengths HUL enjoys a formidable distribution network covering over 3400 distributors and 16 million Outlets. The new sales organization named 'one hll' brings "household and personal care" and fo ods distribution networks together.000 villages and possesses a serious Distribution challenge for FMCG cos. the initiative also Creates brand awareness amongst the lower strata of society. and hence. Degree of rivalry:  Consumer in this category enjoy multitude of choices. Threat of substitutes:  Within the consumer product industry. thereby reaffirming its future stronghold in Indian market.Rural India is spread across 627. thereby aligning all the units towards the common goal of achieving success. making the industry quite competitive. This has brought about phenomenal results. This helps them maintain heavy volumes. and hence.  It does not cost anything for a consumer to buy one brand of shampoo instead of another. the threat of new entrant is fairly low.  Whether the new entrant can get its products on the shelves of the same retailers as its much larger rivals. . Project Shakti . are able to reach the s ame wavelength as of the common man in village.

 Ability to manage diverse business  Having Unilever as parent company gives it a global presence.  Good returns by way of dividend per share every year.  Good reputation & goodwill in the market for its products.  Very high market price per share compared to the face value. .  Highly professional management. Last year 5/.  Continuous increase in earning per share (EPS)  Good cash reserves.  Excellent past performances for a number of years.  Continuous efforts to reduce cost & pass on benefit to consumers. uses & price &also have a lasting impression by catchy ads.  Wealth of local knowledge & international expertise helps it to be globally competitive.  Good advertisements so as to make the consumers aware of its products.  New innovative ideas & products.rs dividend per share. Deep roots in local culture & markets & great understanding of consumer needs.  Excellent distribution network & good relationship with the wholesalers & retailers. It has 110 brands out of which 30 are power brands(ie. leader in market share with high growth potential)  Ability to provide good quality goods to middle class at reasonable rates & also cater tothe premium segment for the upper class.  Excellent brand making capability.  Excellent research & development.  Steady increase in the return on capital employed.  Exceptional high quality standard products.

p l a c e d t o t a k e a d v a n t a g e o f f u t u r e f mc g g r o wt h . It was not left with any other option but to try cutting down the costs in order to protect volumes. toothpaste (48%) and processed foods continue to remain low offerings but great growth opportunities products. But higher ma r g i n s a t t r a c t e d c o mp e t i t i o n i n a r e a s o f o p e r a t i o n s . Hll's risk aversion and market myopia led to stagnation of business. Hence. Especially the rural areas. if not increase it. the key differentiators for an fmcg player are ability to call shots and p r i c i n g p o we r . the margins grew. Penetration levels for some major categories like skin-cream (22%). They continued with the same old strategy which helped them gain profits but was not genuine in this changed environment. Hl l ' s w e a k n e s s wa s i t s inability to transform its strategies at the right time. Use of rsnet a web enabled customer management s y s t e m t o e s t a b l i s h t w o w a y connectivity with stockist. a n d h l l h a s s h o wn w e a k n e s s o v e r b o t h t h e s e f a c t o r s .  Using information technology to connect supply chain  Excellent financial support from banks & financial institutions. H U L ' s s t r a t e g y r e ma i n e d f o c u s e d o n creating power brands and earning higher margins. It has a very well-defined product portfolio Spread across many product categories. As shown in above figure.  Good export earnings Weakness H U L ' s ma r k e t d o mi n a n c e . o r i g i n a t i n g f r o m i t s e x t e n s i v e r e a c h a n d s t r o n g b r a n d p r e s e n c e . and ferocity of competition forced it into a defensive mode.h l l r e a c h o u t 8 0 % o f 2 0 7 mi l l i o n Households in the country through various brands. shampoo (38%). allowed it to raise the prices even as raw materials were getting cheaper.  Good financial liquidity & also ability to complete projects on time. We l l . .  Growth potential is high for the power brands. and company was able to earn more profits.  Big untapped market available. though the volumes decreased. Lack of pricing power in core business and absence of growth drivers have put HUL on a deflationary mode.

ice-cream segment & beverage segment are facing reduction in sales &hence innovation required to meet threats of competitors. and hence. P & G )  Competition from unbranded products. hotels."  High competition from established brands.breeze.liril) (pepsodent & close up)  Poor monsoon leads to poor growth due to lack of purchasing power by the rural areas. retailing.  Due to good reputation it may experiment & introduce new innovative products in the market.  Its competitors don’t have the financial banking like it so it can take advantage of this. while our under performer call on HUL remains unaltered (price target of rs. 160). .  Competition from its own brands.contribution of the core business in revenues has come down from 87% in fy99 to 70% in fy05. Over a period of five years.  Negative working capital turnover may lead to short term instability. culinary & ice-cream category have a lot of growth potential available Threats ITC has reduced its dependence on the cigarettes business . "we maintain out performer on itc with a price target of rs. the Greatest threat to HUL's business. culinary.( lux. paper.  The food. These are businesses that can give it growth impetus in the long run.  Its food. ski india has gone on to say. greetings. ITC has extended its presence into areas like foods. 2200.(Nirma. Good source of revenue & foreign exchange available by way of exports of its products. it is turning into a consumer monolith. Colgate. With ITC gaining momentum in each of these businesses. agri. etc.

Even though the unit price was higher. Unilever's Indian subsidiary Hindustan Lever Limited(HLL) has been the leader in recognizing the tremendous opportunity lying at the bottom of thepyramid customer base that aspires to consume products but in smaller quantities and at lesser prices. It is no wonder then. A brief look at the Indian landscape would prove why . coconut oil and toothpaste in sachets.000 (adjusted for PPP) and more than 70% of the population below the age of 36. rural consumers were able to afford topurchase the smaller quantity at their convenience .small plastic packets of shampoo for as lessas INR 1 (USD0. coffee and tea powder. Added to this is a g r o wi n g n u mb e r o f Indian brands that offer superior quality at affordable prices.an estimated 1.000 to US$45. Indian consumers are very cautious and clear in their priorities.c) Market segments and strategic customers: STP India offers tremendous opportunities to global companies. This became such a rage among the rural consumers that many other brands started offering products such as detergent.000 adjusted for PPP)g r o wi n g a t 1 0 % a ye a r . global brands can win only if they attune themselves to the local conditions. HLL literally invented the shampoo sachets . Consumers are still not ready to splurge on branded goods at premium prices. In s u c h a scenario. 5 0 0 t o US$20. I n s p i t e o f t h e b o o mi n g e c o n o my a n d t h e increasing disposable income.Unilever is a classic example of a global brand which has pioneered serving the locals withproducts that address the local sensitivities. mo r e t h a n 1 1 0 mi l l i o n h o u s e h o l d s wi t h e a r n i n g s o f US $ 7 . This alluring face of the Indian business landscape has another facet to it and that is the presence o f h i g h l y d i s c e r n i n g a n d d e ma n d i n g c u s t o me r s .022).2 million affluent households that is expanding at 20% a year. that global brands are making a bee line to the Indian market to grab a share of the growing pie.40 million middle income households (earnings of US$20.