STRATEGIC ANALYSIS OF BISLERI

PHASE 2

SUBMITTED TO

MRS. AMRITA S.

SUBMITTED BY

PETHE SARANG S. 10189157MADAN LAL 10189167

VIPIN Y. 10189121KRATI S. 10189171

ABHILASH N. 10189036

EXECUTIVE SUMMARY

The bottled water industry in India is currently valued at more than $ 1.5 billion. The bottled

water industry is growing at rate of 18% CAGR and has attracted many players including Pepsi

and Coca Cola. The pioneer of the industry Parle Bisleri has grown over the years and

maintained its top position.

The bottled water industry consists of organized and unorganized players. There are about 2000

unorganized players which operate locally. The industry is dynamic and the companies operates

in hypercompetitive environment. The strategic analysis of company like Parle Bisleri becomes

very important in this situation. In the present report we have done strategic analysis of Parle

Bisleri. We have used different models for analysis purpose. We tried to analyze the different

strategies adopted over the years, the strategy development and have evaluated those strategies

considering the external environment and core competencies. We have found that the company

has gained sustainable competitive advantage through its brand, logistics and marketing. The

company however faces threat from its competitors as it is single product company. The

company has adopted expansion strategy to increase the reach and achieve operational

efficiencies. We have made certain recommendation based on this analysis. We recommend that

the company should strengthen its distribution network, form alliances and joint venture, acquire

small players and adopt related diversification.

ContentsINTRODUCTION...........................................................................................................................4

PESTLE Analysis........................................................................................................................4

Porters model...............................................................................................................................5

Core Competency.........................................................................................................................6

MARKET SIZE & SHARE.........................................................................................................6

COMPETITOR ANALYSIS...........................................................................................................7

STRATEGIC DIRECTIONS...........................................................................................................8

EXTENDED VALUE CHAIN ANALYSIS...................................................................................9

Primary activities:......................................................................................................................10

Supporting activities:.................................................................................................................12

CORPORATE LEVEL STRATEGY............................................................................................13

CURRENT BUSINESS STRATEGY...........................................................................................15

Year 1969 to 2000:.....................................................................................................................16

Year 2001 to 2010:.....................................................................................................................16

STRATEGIC DEVELOPMENT AT BISLERI............................................................................18

FUNCTIONAL STRATEGIES.....................................................................................................20

Organizational structure.............................................................................................................20

Marketing strategy.....................................................................................................................21

Funding strategy.........................................................................................................................22

EVALUATION OF STRATEGY ADOPTED..............................................................................23

Suitability...................................................................................................................................23

Feasibility...................................................................................................................................24

RECOMMENDATION.................................................................................................................25

CONCLUSION..............................................................................................................................26

REFERENCES..............................................................................................................................27

APPENDIX....................................................................................................................................29

INTRODUCTIONThe global bottled water industry consists of selling of flavored as well as unflavored water.

With regards to Indian context there is sale of only unflavored water. The bottled water segment

is rapidly growing which has a total market size of more than $ 1.5 billion. The market is mainly

controlled by the organized sector with over 500 brands existing in the market. A growth in the

sector has been viewed mainly because of the health conscious people, improper water supply

and the unpredictable municipal water supply. With a high growth rate and low entry barriers has

attracted many players in this segment. The market operates in lower margins, the price increases

when the cost of packaging and transportation increases the major players in the market are

trying to establish themselves in bulk water business through brand equity, whereas the

unorganized players are resisting them by using differentiation strategy.

Parle acquired Bisleri from an Italian entrepreneur Mr. Felice Bisleri in 1967. The company

established its first plant in Mumbai in the same year. The company was the first player in the

bottled water industry and so it has gained first mover advantage. The company has undergone

changes over the years. There was a strategic shift in the direction of the company over the years.

We have selected Parle Bisleri for the analysis purpose mainly because, it is important to study

how a company with a single product brand has maintained its market position? We have gained

insights about the strategic decisions taken by the company over the years, which have enabled it

to gain sustainable competitive advantage.

PESTLE AnalysisThere are various factors affecting the Indian bottled water industry, the government policies

regarding the quality of packaged water are very stringent and all the companies have to adhere

to the BIS standards. The low cost in set up and the availability of cheap players has exerted a

pull of many small and big players in the market. There is a constant pressure on the bottled

water companies on the quality of product and the packaging. The technological advances in

purification processes help in enhancing and maintaining quality of water. There is no industrial

licensing policy present currently which attracts many players to enter in this industry. The low

entry barrier in this segment affects the major players of the market. There has been a price

ceiling imposed by the government in this market segment due to which price war is not possible

in this industry. The scarcity of safe drinking water in many areas creates opportunity for the

players to cater to this growing demand. There have been instances of protest against the bottled

water companies against the pricing strategy and over the depletion of scarce resources. The

industry has considerable growth prospect in newer areas and the macro environmental factors

present attract new players.

Porters modelThe bottled water industry is a part of beverage industry which comes under the fast moving

consumer goods. When taking about the porter’s five forces model with respect to the bottled

industry in India.

Threat of Entry: since the entry barrier is low, making it easy to enter the bottled water market.

As per the product differentiation the threat of new entrants is high. But in a broader prospective

it is moderate.

Bargaining Power of Suppliers: the bargaining power is low here as the municipal water system,

bottles and plastic cap, label printer filtration and deionization equipment, plastic grains and etc.

The large availability of suppliers leads to less bargaining power.

Bargaining power of Buyer: the bottled water industry is categorized as an oligopoly. The

number of producers is less due to which the bargaining power of the buyer becomes less. The

bargaining power depends on the price, availability and the product.

Substitute products: since bottled water is categorized under the beverage industry hence, the

degree of substitutability is medium as the coffee, tea, juice and soft drinks acts as a substitute to

water. The availability of substitute affects the price and the market. The availability of substitute

provides the option to customer and hence he can switch from one product to other.

Rivalry: the degree of rivalry affects the price, quality, profit and revenue in an industry. The

market is almost on saturation state, and the industry refers the oligopoly competition so there is

a high competition to increase the market share. The intensity of rivalry is low as there is limited

player and the product is not price sensitive.

Core CompetencyThe brand of Bisleri itself is the core competency for Bisleri. The seal of Bisleri bottles help the

consumers clear their doubts on the purity of water. The company maintains the physical and

financial resources very efficiently and effectively. These resources when combined helps in

maintain and retaining customer’s expectations to achieve the targets of the company. The

intellectual capital of the brand plays a major role as the bottle seal of Bisleri is patented. Bisleri

has a very strong distribution network, which makes it reach out to almost all the region in the

country, company has about 350000 outlets across the country. The company worked on its dual-

distribution strategy to gain competitive advantage.

MARKET SIZE & SHAREThe bottled water industry is expected to grow at 18% CAGR in the year 2010. The sale of

bottled water industry is expected to reach at 6466.8 million liters translating to market worth of

more than $ 1.5 billion. The off trade value of the sales has increased by 25% in 2009. There

were no significant products launched during last year. The average price per unit has increased

by 4% in the off-trade business in 2009 ("Bottled water- India," 2009).

The market consists of organized as well as unorganized players. The organized players consist

of brands like Bisleri, Kinley, Aquafina, Oxyrich, Himalaya, etc. Parle Bisleri has continued to

be the market leader with a market share of 38.5%. The bottled water industry in India still

consists of still bottled water. The carbonated and flavored water has very niche segment and

there were negligible sales in 2009. There are large numbers of unorganized players and most of

them are involved in selling by means of tampering with seals of organized player’s product. The

market share of different companies in bottled water industry is shown in appendix

COMPETITOR ANALYSISThe parameters are taken to differentiate Bisleri from its competitors. Bisleri acquires 38.5% of

market share whereas Kinley has a market share of 21% only and Aquafina covers only 14% of

the total market share of the bottling water. Kinley has a cost price of manufacturing a bottle up

to Rs 12.25 and it sells the bottles for Rs. 14/15 which gives it a profit margin of Rs 1.75/2.75.

Whereas, Bisleri has a profit margin of Rs 2 as its cost price is Rs 10 and the selling price is Rs

12. Aquafina on the other hand earns a profit margin of Rs 2 with cost price as Rs 8 and selling

price as Rs 10. Bisleri focuses a lot on the advertisement of its brand and keeps on differentiating

itself by making variances in the brand or packaging of the bottles. As it uses green color

packaging whereas the other bottling companies use blue color to pack their bottles ("Parle

Bisleri Ltd- Soft drinks- India," 2009). The advertisement commits that it provides safe and pure

drinking water whereas Kinley is going to launch its advertisement as ‘Vishwaas Karo’.

Aquafina does not concentrate on advertising; it has a very low advertising in selected places like

cinema halls.

The distribution network of all the three companies varies. The distribution network helps in

making the product available to its customers whenever they need it. The distribution network of

Bisleri is such that from the manufacturing plant the bottles reach company warehouse from their

through the trucks it reach to its retailers or through distributors it reach to the retailers and then

from retailers finally to the customers. Through distributors it also goes to the institutional

buyers or orders over internet.

Aquafina’s distribution system is different. From the company’s manufacturing unit the bottles

reach to distributors and from there to institutional buyers or retailers and then finally to

customers.

Kinley has different distribution network it does not include a big network. From the

manufacturing unit the bottles are sent to the sales and distribution department from there the

bottles are sent to the distributors and outlets directly and the bottles from distributors are also

sent to the outlets. A very small network is there. This makes the product less available in the

market.

STRATEGIC DIRECTIONSWe have used Ansoff matrix to find out the strategic options which are available with Parle

Bisleri, in terms of its product and market.

Figure 1: Ansoff Matrix

From the analysis we have found that the company can use market penetration and product

development strategy. The company has used the penetration strategy by making available

products in different sizes. The company uses innovative concepts like 1.2 liter bottle which

helps to offer consumers more content at lower price. The company is also penetrating the

market by shifting its focus from retail market to the bulk water segment. The company uses its

own distribution network to cater the bulk water segment. The company thus penetrates the

market bypassing the competition present in the retail segment.

We can also observe that the company is using product development strategy. The company is

planning to introduce new products like fruit juices under the brand name ‘Alfa’. We propose

that the company should focus more on market development and introduce new products thus

increasing its product portfolio (Bureau, 2005). This will not only decrease the risk of operating

with single product but also enables to make use of its competences to develop new products.

EXTENDED VALUE CHAIN ANALYSISWhen we see the value chain analysis of Bisleri we can easily analysis that the Bisleri is good

enough in logistic system to operate the business smoothly. The value that the customer

perceived in Bisleri is its operation its cap or packaging. The Bisleri add a lot of value at its each

operation. Bisleri also have the first mover advantage over its competitor. Its brand image or

brand name is helps to attract a pool of customer. Let us see how Bisleri add the value at each

steps of value chain and how Bisleri gain the competitive advantages through various operation

and activities.

Porter Value chain

We can divide the Bisleri’s activities in two parts on the basis of value chain model

1. Primary activities

2. Supportive activities

Primary activities:

Bisleri is a leading organization in packaged bottled water. Bisleri’s primary activities are

Inbound logistics:

The raw material for Bisleri drinking water is water, plastic grain for bottle, packaging

equipment, minerals, bottle cap and labels. Bisleri has good inventory system and transportation

system. It’s inbound logistic is good enough to supply the Bisleri water regular. This helps to

available the product at everywhere. The product availability adds the value to the customer.

BISLERI manages all the semi finished, finished goods and raw material in stores department. In

store department they all keep the stock of rejected bottles or cap to reuse it. Every day 5o tones

of stock dispatch from the store house. So this increases the availability of product to consumer.

The models are made from polymers like HDPE, LLDPE, PET grains.

Operation:

Bisleri manages its seven department of different operation where hygiene and safety concern is

primary focused. Different departments are:

1. Filter department

2. Caps department.

3. Water treatment plant

4. Water blowing department

5. Water testing laboratory

6. HORAI department(grinding plant)

7. Stores department.

Filter department is responsible for the filling and packaging of bottles under the rigid control of

the hygiene and safety. In the caps department the PET material is used to make the cap and

plastic bottles by using 6 Ekou injection modeling machine of 180 and 330 as per the

requirement of market. Caps are made from a mixture of HDPE and LLDPE using 4 Cincinnati

Milacron and 2 Windsor injection-moulding machines. Water treatment plant where the water is

make pure and safe. Water laboratory taste checks the quality before and after packaging. The

scraps or used bottle again send to HORAI department for the recycle of bottles. Stores

department manages the all raw material and scraps. Bisleri add value at each steps of its

operation. Customer perceived Bisleri as pure and safe water with cap security.

Outbound logistics:

The outbound logistic of Bisleri is very strong. To increase the capacity and to cover the

maximum market Bisleri increased its transportation by increasing the number of trucks from

1000 to 2000 trucks. Bisleri uses the route mapping method, in this method the route of

transportation and operation is designed in such a way that it takes minimum time to transport

the stuffs. Bisleri makes route sheet along with the scheduled to make sure the things happen in

an effective manner. Current Bisleri manages 16 plants at 14 locations in different part of India

to increase the availability of product. Bisleri plan to open the 25 new plants till 2010 to increase

the growth of 40%. So it will decrease the supply time and make the product easily available.

Bisleri decide to increase its distribution network by 30%.

Marketing and sales:

Bisleri uses competitor price strategy to get the market. As Bisleri has the first mover advantage

and the market is full of competition so they decide to increase the advertising expenses for ad

campaign. Bisleri itself is known as mineral and pure water. The branding and segmentation of

Bisleri is very strong as it cover household to big hotels. To target the customer Bisleri launched

different product line with different prices and different size of bottles. The Bisleri uses three

level of distribution channel as it consists of wholesalers, dealers and retail shop.

Services:

Bisleri has a vast distribution channel so the service and delivery quality of Bisleri distinct it

from others.

Supporting activities:

Firm infrastructure:

Bisleri manage its network by establishing it unit near by the resources where the availability of

water is enough to run the business. Bisleri has the vast and strong distribution channel.

Technology and development:

As the competition in the market is increasing Bisleri’s main focus in on to develop new brands

and new technology to increase the customer satisfaction. Bisleri’s unique bottling packaging

and temper seal cap technique distinct itself from others. There unique and safe production

process also helps to attract the large pool of customer. Bisleri has a good inventory management

that helps Bisleri in continuous supply of water.

VRHN analysis

The company has a motive always to beat its competitors and gain competitive

advantage. VRHN analysis will help in assessing all that a company gives which

differentiates it from its competitors.

Valuable- The purification process of Bisleri is a valuable resource for it. Ozonization

and micron filtration is included in its process to purify the water. The transport facility

of Bisleri is regarded as a valuable resource. It has large fleet of trucks to supply the

bottles and make the product available. More than 75 vans are there in Mumbai to carry

the bottles from the manufacturing plant to its distributor.

Rare- Bisleri is launching water in fruity flavor which is rare. The peach and green apple

flavor water will be available to its customers. This rare combination makes it unique.

Natural mountain water which is also launched by Bisleri is rare. The green packaging of

Bisleri is also rare. The distribution network of Bisleri is also rare as its bottles are

available in all its stores.

Hard to imitate- The bottle of Bisleri have a seal which has a patent, which is hard to

imitate.

Non substitutable- There are substitutes for water but water is the sole agent for thirst

quenching. So we can say that for the company the product itself is non substitutable.

CORPORATE LEVEL STRATEGYParle Bisleri which had initially a varied product portfolio constrained itself to the bottled water

sector. The corporate level strategy adopted by the company is expansion and related

diversification. The expansion strategy is indicated by the decision to increase the capacity of

present plants and establish 25 new plants ("Bisleri plans 25 plants in 2010 to retain market

leadership,"). The company is using related diversification to introduce new products like the

mineral water and has also planned to enter the fruit juice segment. The directional policy matrix

is generally used for companies which have strategic business units. However we have applied

the matrix to this company. The matrix is drawn below,

Figure 2: Directional policy matrix

If we apply the above matrix for bottled water industry, we can see that the industry

attractiveness is high and also the business strength is high. So the company should adopt

investment and growth strategy. We have found that the company is using this strategy. This is

evident from the company’s plan to strengthen its distribution network, establish new plants,

extension of product length and product line extension. The present strategy adopted by the

company will help it to stay ahead of the competitors and hedge the business risk. The company

is currently eying the bulk water segment and investing to penetrate that segment. The

emergence of many competitors in the organized sector has increased the pressure. The strategy

adopted by the company will help the company to sustain its growth in terms of profitability, as

it is targeting the segment which does not have presence of organized players.

CURRENT BUSINESS STRATEGYThe next part in our analysis is to find out the present business strategy adopted by Bisleri and

the way in which it has implemented. We will then evaluate the strategy adopted, considering the

external environment and its core competences. The Porters generic strategy states that the

organization can achieve competitive advantage through three ways,

Overall cost leadership.

Differentiation and

Focus.

We have however used Bowman’s strategic clock for analysis of present and past strategies

adopted by Parle Bisleri. We have divided our analysis in two parts, one from the year 1969 to

2000 and other from 2001 to 2010. The strategic clock is drawn below,

Figure 2: Bowman’s Strategic Clock

Year 1969 to 2000: In 1969, Parle acquired Bisleri with an aim to increase its product

portfolio. Parle introduced Bisleri soda in carbonated and non carbonated types to get a hold in

soda market. The product was initially packed in glass bottles. Initially the perceived value of the

product was low as well as the price was low. The product was basic and thus we can say that

company used No-frills strategy. As the company saw potential in bottled water segment, the

company used differentiation in the form of packaging. In 1980, the company changed the

packaging from glass bottles to PVC (Polyvinyl chloride) to PET (Polyethylene terephthalate).

There was a shift in paradigm for Bisleri when it sold its soft drinks brand to Coca Cola in 1993.

The company removed soda water from market and now focused its attention to packaged

drinking water. The initial consumers of packaged water were foreigners and NRIs (Non-resident

Indians). There were no competitors in the market, so Bisleri adopted low price strategy. The aim

of using this strategy was to penetrate the market and establish a significant market share. The

price of the product was as low as Rs 5 for 500ml bottle. The company achieved low price by

reducing its operational costs. The company had initially 15 plants and the product was sold

through over 50000 outlets. So we can see that in period 1969 to 2000 the company used no frills

and low cost strategy. The company shifted the position from point 1 to point 2. Now let us

analyze the strategies adopted by Parle Bisleri from 2001 to 2010 (Anonymous, 2007).

Year 2001 to 2010: In August 2000, Coca Cola saw potential in bottled water industry and

entered this market by introducing its brand Kinley. The market saw entry of big players like

Pepsi through its brand Aquafina and Nestle through its brand Pure Life. The other players in the

market include the Tata’s through its brand Himalaya, Manikchand through brand Oxyrich and

Parle Agro through its brand Bailey. The organized bottled water segment which was initially

dominated by Parle Bisleri saw entry of many players. Currently there are about 8-10 players in

the organized sector. In the response to the growing competition Bisleri started using hybrid

strategy. According to this strategy differentiation was based on quality; however with number of

competitors the differentiation based on quality became difficult. Bisleri has now used

differentiation in the form of packaging, price and distribution. The company differentiates

through distribution by targeting new channels like chemists and stationery shops which were

not used earlier. The company has used its own fleet of about 2000 trucks to manage the

distribution network (Iyer, 2010). The company differentiated in the terms of packaging by

making available the products in different shapes and size. The company has used tamper proof

seal to assure good quality. The company has patented the tamper proof seal technology and has

created barriers for its competitors. The packaged water industry has bifurcated in two segments,

retail and bulk water segment. The company has in response to entry of new players have used

refocusing strategy. The present strategy of Bisleri involves targeting the bulk water segment,

pricing competitively, strengthen distribution, innovate on packaging and product line extension.

The company by passes the competition and reduces operational cost by targeting the bulk

bottled water segment. The company has shown innovation in packaging by changing the shape

and color of pack from blue to aqua green. The company operates in hypercompetitive

environment, so it is necessary that company changes its strategies according to the dynamic

environment. We have found that the company can be located on position 3 on the strategic

clock. However, the company can switch between hybrid and differentiation strategy in

accordance with changing environment. The company however presently uses hybrid strategy

wherein it has differentiated its offering from its competitive and at the same time making it

available at cost lower than its competitors.

STRATEGIC DEVELOPMENT AT BISLERIParle Bisleri Pvt Ltd has owned one of the top-three packaged brands in the country, has

formulated plans for a diversification into the fruit juice business. The company has already

established a fruit juice concentrate plant in Chittor, Andhra Pradesh. Plans are going on to

identify a place for the company’s offered second plant that is likely to be established in the

eastern or northern part of India. Company has decided to make an investment of Rs 100 crores

in the fruit juice projects in the next three years. This amount will be generated through internal

accumulation and institutional loans. The company is going to begin with mango and guava juice

to begin with will be marketed under the Alfa umbrella brand. Company has realized that fruit

juices have come out as a fancy drink after water. It is a logical business series for the bottled

water producing company to adapt to the fruit juice segment. Bisleri has to establish its market in

the region through a restore marketing strategy and a focus on enhanced and innovative

packaging. The idea is to be raised by hundred percent in the next one year and 250 percent in

the next three years. The company is planning to increase its presence in the eastern part of India.

It has assigned Orient Beverages Ltd as its only franchisee in West Bengal, Jharkhand and

Orissa. Company has firmed up expansion plans for Sikkim. The company has also prepared to

explore for business opportunities in adjacent countries like Nepal and Bhutan in the future.

Bisleri is facing severe challenges from both family and outside competitors. There is a big threat

to the leadership of Bisleri in the mineral-water market. The company is in the process of

developing a market strategy for its next innovation that is enhanced water. The company is

planning to launch mineral and protein-added, packaged water in various essences. There are

three major brands in the bottled water market Aquafina, Bisleri and Kinley.

Dual market penetration strategy

Bisleri has announced to establish twenty-five bottling plants across country to fulfill the

customer requirements. The company has formulated strategies for market penetration,

expansion and growth for this fiscal. Bisleri had achieved the growth of 36 percent growth and

high customer loyalty in the year 2008-2009. Now Bisleri is aiming to achieve 40 percent growth

by this year and sketched a powerful penetration strategy that consist of a dual distribution plan-

entering newer markets including towns and rural areas which includes smaller and interiors

markets and curiously looking forward to enter newer territories and augmenting shelf existence

in the metros and present markets. The company is also establishing dedicated channels for its 20

Liters jars to certify that every corporate and household receives service at their door step.

Market strategy development and implementation

Market strategy includes the analysis, strategy development and implementation. First, company

has developed a vision about the market of interest to the company and then selected market

target strategies, establishing objectives and developing and implementing the strategies. It

includes managing and marketing program positioning strategies formulated to fulfill the value

needs of the customers in every market target. Strategic marketing is a process of market-driven

strategy development, taking into consideration a consistent varying business environment and

the requirement to bring excellent customer value. Bisleri has developed strategic marketing to

concentrate on organizational performance instead of focusing on increasing sales. The

marketing strategy of Bisleri tries to bring excellent customer value by integrating the customer-

influencing strategies of the business into an organized set of market- driven activities. The

company has connected its strategic marketing with the organizational environment and views

marketing as a liability of the whole business instead of a specialized purpose. There is

marketing’s boundary orientation between the organization and its customers, competition and

channel members. The marketing processes are centralized to business strategy planning process.

Strategic marketing supplies the knowledge for environmental screening, for choosing what

customer group to serve, for directing product specifications and for selecting competitors for

position against. Bisleri has successfully integrated cross-functional strategies which are decisive

for offering excellent customer value.

FUNCTIONAL STRATEGIES

Organizational structureIn this part we are going to discuss about the organization structure and marketing strategies of

Parle Bisleri. We have taken Mintzberg’s organizational configuration as reference. Mintzberg

suggests that there can be six organizational structures depending upon the environment. We can

observe that the company operates in a dynamic environment and has simple processes. So the

company is more suited to have a CEO controlled structure. The company follows the CEO

controlled structure. The Chairman and founder of the company Mr. Ramesh Chauhan controls

and directs all the organizational processes. The company follows a centralized decision making

and all strategic decisions are taken by the Chairman. The company has grown over the year

under the leadership and vision of Mr. Ramesh Chauhan. The present organization structure is

suitable as the company has single product and the centralized decision making enables

flexibility to changing conditions which is necessary for the success of the organization.

Configurati

on

Environment Internal Typical

Structure

Key

processes

Typical

relationships

Simple Simple/

Dynamic

Small/

Young/

Simple Task

CEO control Direct

supervision

Centralized

Machine

Bureaucracy

Simple/ Static Old/ Large/

Regulated

tasks

Functional Planning

systems

Centralized

strategic

planning

Professional

Bureaucracy

Complex/

static

Simple

systems/

Professional

control

Functional Cultural

processes/

Self control

Devolved

Divisionalised Simple/static

diversity

Old/ very

large/divisib

le tasks

Multidivision

al

Performanc

e/ target/

markets

Devolved/

financial or

strategic control

Adhocracy Complex/

dynamic

Complex

tasks/

Projects Cultural

processes/

Devolved/

network and

Expert

control

Self control alliances

Missionary Simple/static Middle age/

Ideological

control

Teams Cultural

processes

Networks

Figure 3: Mintzberg’s organizational configuration

Marketing strategyThe strategic situation analysis considers competitor and market analysis, market segmentation

and incessant erudition of markets. Formulating marketing strategy checks customer targeting

and positioning strategies, market relationship strategies and planning for latest products.

Marketing program development includes product, price, distribution and promotion strategies

formulated and applied to fulfill the value needs of target buyers. Strategy execution and

management considers marketing strategy implementation, control and organizational design.

The marketing strategy adopted by the company has also changed over the years. In the initial

years when it was the sole player in the bottled water market it positioned itself as luxury item.

The punch line was ‘Veri very extraordinari’. The entry of players like Pepsi and Coca Cola

made it to change the strategy. Now the company positioned itself as quality product to gain the

trust of the consumers. The catch line now said ‘Pure and safe’. In the recent years there were

cases where insecticide contents were found in bottled waters of some major players including

Bisleri. This strongly affected the sales of Bisleri which decreases about 15%. The company

carried out a rebranding exercise to recover from the dent created by this incident. The company

has changed its packaging and the color has been changed from blue to aqua green. The

company is now positioning itself as best product. The present catch line says ‘Play safe’. The

company uses medium such as television, hoardings, magazines and company trucks for

advertising purpose.

Funding strategyThe financial strategies will change according to the phase in which the business is operating.

We can find that Parle Bisleri is in maturity phase. The business risk is medium to high. So if we

use growth/share matrix, we can find that the company can use debt and equity for funding

purpose. The company currently uses only debts as source of finance. However, we would like to

propose that the company should use a mix of debt as well as equity. The company should come

up with an Initial Public Offering (IPO). The money raised through the IPO can be used to

finance its expansion plans and developing new products. The use of equity as source of finance

will reduce the financial risk for the company.

Figure 4: Growth/ share matrix

EVALUATION OF STRATEGY ADOPTEDThe strategic evaluation can be based on quantitative and qualitative criteria. The quantitative

analysis requires use of financial ratios like return on investment, profit margin, earnings per

share, return on equity, etc. Parle Bisleri is a Private Limited company, so the financial data is

not readily available. So, to evaluate the strategy we adopt the following procedure,

Compare the performance of the firm over the different time line.

Compare the company’s performance with the competitors.

Compare performance of the company with the industry averages.

The company has maintained its position over the years and still remains a market leader with a

market share of 38.5%. The company industry is growing at rate of 17% whereas the company is

growing at rate of 36%. The company is targeting a growth rate of 40% in the year 2010. Thus

the company’s growth rate is well above the industry growth rate. The company has plans to

increase the number of plants. With the establishment of new plants, the company will have total

55 plants, with its competitors Kinley having 16 plants and Aquafina with 11 plants.

While evaluating the strategies adopted by the company we have considered suitability,

acceptability and feasibility.

SuitabilityThe company has adopted market penetration strategy. From the PESTLE analysis we can find

that the external environment is favorable for the growth of industry. There has been growth in

IT and other allied industries in tier 1 and tier 2 cities. So there is increase bulk water

consumption. The bulk water consumption is untapped by the organized players. The strategy

adopted by Bisleri is suitable in this context. The company has its own fleet of 2000 trucks also

company has enabled online ordering of bulk water. This facilitates the penetration in this

segment. Also the core competencies of Bisleri include its Brand name and distribution channel.

The company can use these competencies to introduce more products in the market and thus

product development strategy is also suitable them. The company uses its capabilities like

control over distribution network and tamper proof to reinforce the quality perception in the

minds of the consumer. The company plans to adopt expansion by increasing the capacity of

current plants and establish new plants thus facilitating the penetration. The company uses

Hybrid strategy. This strategy is suitable for the company because the company is the market

leader. The company has been present since 1969 and hence has achieved learning curve. This

enables the company to provide differentiated product at lower price.

FeasibilityThe feasibility of the strategy adopted by company depends upon the resources and

competencies. We do not have financial data of the company however we can infer from

company analysis that the company has sufficient financial resources to support the expansion

strategies. The company also has internal resources and sufficient reach to support the expansion

strategies. From the value chain analysis, we can infer that the strength lies in its human

resource, logistics and marketing. These capabilities will help the company to set up new plants,

increase the number of distributors and cater to demand of the market. The expansion plans will

help to reduce the per crate cost. Presently the company spends Rs. 35 per crate. The expansion

will help to bring this cost to Rs. 5 per crate. The company can use the savings in promotional

activities and to increase the logistics. This will also help to reduce the cost of production and

thus the company will be able to supply the product at lower prices as compared to the

competitors. Thus, we can conclude that the expansion and hybrid strategies adopted by the

company are feasible. These strategies are well supported by the financial capabilities and the

resources of the organization.

RECOMMENDATIONOn the basis of the analysis done, we would like to suggest following recommendations,

The brand recall of Bisleri is stronger as compared to its competitors. However, problem

arises when the brand is not available and customer ends up buying the brand of

competitor. The company should therefore invest heavily on logistics. The company can

acquire smaller unorganized players to extend the reach or can tie up with major local

players.

In Indian villages, even today there is shortage of safe drinking water sources and there is

spread of water borne diseases due to contaminated water. The company should therefore

focus on ‘rural’ market penetration.

The company is a single product portfolio company. The company should try to introduce

more product more beverage products in the market. The company will require funds for

the expansion and other projects. The company should fund these projects and plans by

coming up with an IPO. Introducing equity in the capital structure will reduce the interest

burden on the company.

The company should form a joint venture with some companies who have greater rural

distribution network to introduce products catering to rural market.

CONCLUSIONThe analysis of Parle Bisleri has helped us to understand the different strategies adopted by it to

sustain and grow in the hypercompetitive market. From the analysis we have found that the

strength lies in its brand, packaging, logistics and marketing. However, the company is subjected

to higher risk, as it is a single product company. The bottled water industry which is dominated

by Bisleri is facing problems due to arrival of bigger players like Pepsi and Coca Cola. The

company has bypassed the competition by shifting the focus towards bulk water segment.

However we feel that the company needs to strengthen its present business and diversify in

related business. The company can typically form alliances and joint ventures. We feel that tough

time for Bisleri is about to come and the company will be severely affected if it does take proper

strategic decisions in the present scenario.

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APPENDIXAppendix 1

Appendix 2

Parameters Bisleri Kinley Aquafina

Market Share 60% 20-25% 10%

Selling Price Rs 12 Rs 14/15 Rs 10

Profit margin Rs 2 Rs 1.75/2.75 Rs 2

Marketing Mass media

advertisements,

hoardings, etc are

used for promotional

campaign. Change in

packaging to

reposition its brand.

Already having

credence attributed

and positioned itself

as ‘safe’ in the minds

of consumers. Has

become generic brand

for mineral water and

creating PULL

entirely.

With aggressive

promotional

campaign, point of

purchase promotion

and encasing on the

brand value of other

power brands of CCI,

Kinley is creating a

PULL in the market.

Minimal advertising,

restricted to only

cinema halls and few

local television

without any hoarding

or bill board. Not

much reinvention in

packaging too over

the years. Only the

price is kept lower

than their national and

international

competitors. Hence no

PULL creation in the

market.

Appendix 3: Distribution network of Bisleri

Manufacturing Unit

Company warehouse

Distributors

Retailers

Customers

TrucksInstitutional Buyers/ Seasonal Party Orders

Appendix 4: Distribution network of Kinley

Outlets

OutletsDistributors

Sales and distribution operations

Manufacturing Plant

Appendix 5: Distribution network of Aquafina

Appendix 6

SALES OF BOTTLED WATER TO INSTITUTIONAL CHANNELS IN MILLION LITRES

YEAR 2004 2005 2006 2007 2008 2009 SALES 1354.5 1652.2 1983 2350 2820 3440 % GROWTH 22 20 18.5 20 22

Appendix 7

FORECAST OFF-TRADE SALES OF BOTTLED WATER IN RS. MILLION YEAR 2009 2010 2011 2012 2013 2014 BOTTLED WATER

35628.1

43555.4

52083.5

61310.7

70977.5

80508.3

Company

Distributor

Retailer

consumer

Institutional Buyers(hotels, corporates, offices of

varios companies)

consumer

Appendix 8

2009 2010 2011 2012 2013 20140

10000

20000

30000

40000

50000

60000

70000

80000

90000

BOTTLED WATER

BOTTLED WATER

Appendix 9

BRAND SHARES OF BOTTLED WATER BY OFF TRADE VALUE   BRAND 2006 2007 2008 2009 Bisleri 31 37 38 38.5 Kinley 22 20.5 20 21 Aquafina 14.5 14.5 14.5 14.5 Oxyrich 9.5 9.5 9.5 9.5 Bailey 2 1.5 1.4 1.4