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8/12/2019 69280204 Final Ppt of HUL vs ITC
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COMPETATIVE STRATEGY OFHUL V/S ITC
Group IV
Jiten Shah
Rahul Kumar
Alok Birewar
Darshan Patil
Sumit Tomar
Suman Shekhavat
By:
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INTRODUCTION
Competitive Strategy consists of move of
companies in order to attract customers. With stand
competitive pressures and strengthen an
organizations market position. The main objective of Competitive Strategy is to
generate a competitive advantage, increase the
loyalty of customers and to beat competitors.
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FIVE MAIN COMPETITIVE STRATEGIES ARE:
Overall low cost leadership strategy
Best cost providers strategy
Broad differentiation strategy
Focused low cost strategy Focused differentiation strategy
Here competitive strategy varies from sector to sector and
company to company. Thus, it is not easy to predict a single or
tofind a single strategy for the whole sector. When we come on
to
FMCG Sector main strategies lay behind market strategies,
cost,
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WHAT ARE HUL AND ITC LTD.?
HUL (Hindustan Unilever Ltd.) This Company is earlier known as Hindustan
Lever Ltd. This is Indians largest FMCG sector
company with all type of household products
available with it. It has Home & Personal Care
products, and also food and Water Purifier
available with it. According to Brand Equity,
HUL has largest no. of brands in most trustedbrands list.
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ITC LIMITED
This Company was earlier known as Imperial Tobacco
Company of India Ltd.
It is Currently headed by Yogesh Chander
Deveshwar.
Company mainly operates in the industry like
Tobacco, Foods, Hotels, Stationary and Greeting
Cards with the major products constitutes Cigarettes,
packed foods, hotels, and apparels.
For the entire year ending Mar-2011 the turnover of
company is at Rs. 15388 Crore which is 10.3% higher
than previous years Rs. 13947.53 Crore, driven
mainly by robust 20% growth in non cigarette FMCG
business with net profit stood at Rs. 3324 Crore.
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ANALYSIS OF BOTH COMPANIES
HUL & ITC are major companies in FMCG market in India.
When we compare both companies on the basis of their
strategies i.e. , their competitive strategies in the present
market.
When we look at the present segment breakup for both of
the companies then we came to know that their different
products vary too much in the market.
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HUL SEGMENT BREAKUP ITC SEGMENT BREAKUP
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COMPARATIVE ANALYSIS OF BOTH THE
COMPANIES UNDER SOME HEADS:
HUL ITC
Hindustan Unilever (HUL) is
the largest pure-play FMCG
company in the country and
has one of the widest portfolioof products sold via a strong
distribution channel.
It owns and markets some of
the most popular brands in
the country across variouscategories, including soaps,
detergents, shampoos, tea
and face creams.
ITC is not a pure-play
FMCG company, since
cigarettes is its primarybusiness.
It is diversifying into non-
tobacco.
FMCG segments like
foods, personal care, paperproducts, hotels and agri-
business to reduce its
exposure to cigarettes.
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PERFORMANCE
After stagnating between 1999 and 04, thecompany is back on the growth track. In thepast three years, till 2010 HULs net sales
have witnessed a CAGR of 11%, while netprofit has posted a CAGR of 17%.
Despite diversification, ITCs reliance oncigarettes is still huge. The tobacco business
contributes 40% to its revenues, andaccounts for over 80% of its profit. This cash-generating business has enabled it to takeambitious, but expensive bets in newsegments and deliver modest profit growth.
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RISK FOR BOTH THE COMPANIESHUL IT
Being an MNC operating in
India, HUL is moreconservative in its strategiesthan its Indian counterparts.Moreover, given increasingcompetition, it faces the riskof being overtaken by
domestic players in variouscategories. Prolongedinflation may lead to margincontraction, in case HUL isnot able to pass on thisburden to consumers. The
company's large size alsoposes a problem, since itdoes not give HUL the agilityto address the competition itfaces from national andregional players
Increased regulatory clamps
on tobacco, along with risingtax burden, pose a business
risk for ITC. So, it has started
an ambitious diversification
plan, which has its own set of
risks. With its foray into the
conventional FMCG space,
ITC has entered the high-
clutter branded products
market. This will burden its
resources in terms of ad spend
and brand-building. Creatingbrand recall and building
market share in new products
are ITCs key challenges.
Export ban and rising crop
prices pose a threat for its agri-business, taxing its margins.
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OVERALL STRATEGY
HUL IT
HUL always believes in
customer friendly products
with major emphasis on low
cost overall without
compromising on the quality
of the product.
They are leveraging the
capabilities and scale of the
parent company and focusing
on the value of execution.
The entire product portfolio
is also being tweaked to
include premium offerings
such as Ponds Age Miracle
and dove shampoo in skin
and hair care.
ITC is focusing ondelivering value atcompetitive prices. Itstremendous reach throughextensive distribution chain
has been a competitiveadvantage.
Additionally, the company'se-choupal model for directprocurement is well knownunder which ITC partnerswith over 100,000 farmersfor spices and wheatprocurement and an evenlarger number for oilseeds.This kind of rural pedigree
is hard to beat
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GROWTH DRIVERS
HUL IT
The Company has beenlaunching new productsand brand extensions,with investments beingmade towards brand-
building and increasingits market share. HUL isalso streamlining itsvarious businessoperations, in line withthe One Unileverphilosophy adopted bythe Unilever groupworldwide. Introductionof premium products andaddition of new
consumers via marketex ansion will be HULs
ITCs backwardintegration to ensurethat its products passefficiently from the farmsto consumers hashelped it to cut down
supply and procurementcosts. ITCs non-cigarette FMCGbusiness leverages thelarge distributionnetwork the company
has developed by sellingcigarettes over theyears. A rich productmix, along with ramp-upof investments in its newsectors, will be
instrumental in chartingITCs growth path.
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FINDINGS
ITC works in the market with the qualitative style. In the Bhopalcity ITC have 2800 out lets. In these, outlets are cover by theSales man according to his beat. Compare to HUL, ITC has lessdemand but promotional activities of ITC, above the land andbelow the land day by day aware to customer about ITCspersonal care product.
ITC dont have any schemes like HUL (Vijeta, Super Value Soap,Smart Scheme, Beat the heat). ITC should have provided thistype of scheme which is help to increase the sale. Only consumerschemes are not enough.
HUL also give seasonal Schemes to retailers. HUL make scheme
broachers for whole sellers and retailers and provide them. HULorganize Vijeta Meet at the end year and give prizes to winnerand provide certificate for their achievement.
HUL also give the certification to the shop keeper ExcellentAward on the bases of sale performance.
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SUGGESTIONS
We want to suggest few scheme to the ITC for ModernTrade, for wholesaler, for the retailer. This can behelpful to increase the sales of ITC.
For modern trade scheme is ITC ZONE.
Why this scheme? In the market most of the customers are not aware
about to ITC & ITCs entire personal care product andvisibility problem and also customer aware about theconsumer scheme.
ITC ZONE scheme all MTs are included under thescheme select a visible place in the shop and put allITCs personal care product and give shop keeper thequarterly sale target and give him to incentives orprizes or cash prize.
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SUGGESTIONS (CONT)
For wholeseller scheme is Rocket Singh
Why this scheme?
Wholesalers are totally interested in the margin orfull demanded products in market right now ITCs
personal care products are in the growth stage if
we are give margins to sale quantity then sale will
be increased by wholeseller.
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SUGGESTIONS (CONT)
For the retailer scheme is ITCS PARTNERS
Why this scheme?
ITCs personal care products are in good quality butthe ITCs personal care product need a push by the
shop keeper.
ITCS PARTNERS in this we give certificate ofexcellence to the shopkeeper with margin. This
scheme is based on also quantitative sale.
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CONCLUSION
HULs up-and-running business model is a treat forinvestors seeking exposure in the FMCG segment.
The company has delivered in the past and has the
potential to do better in future. In the small and
medium term. ITCs growth story is still evolving.
ITC is eyeing the pie which HUL and other FMCG
players currently enjoy. Though risky, the
companies business model will pay off in the longrun. ITC has proved its expertise in the cigarettes,
hotels, paper and agri-businesses. Investors who
want to bank on its execution ability in FMCG can
consider the stock with a long-term horizon.
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