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Transcript of GROUP A - vpmthanevpmthane.org/Winter_School/Session_2_Hindustan_Unilever-2.pdf · HUL WANTS TO BE...
DR VN BRIMS
GROUP A
It’s all in
7/14/2014
DR VN BRIMS
Corporate Purpose
Our purpose is to meet the everyday needs of
people everywhere - to anticipate the aspirations
of our customers and consumers and to respond
creatively and competitively with branded
products and services which raises the quality of
life
HUL WANTS TO BE IN EVERYONE'S LIFE EVERY
TIME…. WITH THEIR QUALITY PRODUCTS
Sustain ITC’s position as one of India’s most
valuable corporations through world class
performance, creating growing value for the Indian
economy and the Company’s stakeholders
DR VN BRIMS
KEY VARIABLE 1991 2000 2005
Population(millions) 846 1000 1087
Population < 20 yrs 400 471 480
Urbanisation % 26 32 33
Literacy Level % 52 58 65
Emerging Face of India
DR VN BRIMS
Growing disposable income
Young age profile - 35 % population below 14
years- Increased media reach (urban 80 %, rural
40%) growing rapidly
Changing approach and ambitions
Changing Consumer
DR VN BRIMS
Large scale strong local competitors with, low cost
structures
Major multinationals
(P&G, Colgate, L'Oreal, Nestle) present
Market open to innovation, and requiring value
Active, Polarized Competition
Cigarettes 24%
Hotels 4%
Paper 8%
Agri 14%
Others 50%Food
Personal CareLifestyle Retail
EducationMatches, Incense
sticksIT
ITC
DR VN BRIMS
Pre 1990 Post 1990
Foods Tata Tea Kellogg's
Nestle Heinz
Personal Products Colgate L'Oreal
Balsara Oriflame
Avon
Amway
Detergents TOMCO P&G
Nirma Henkel
Godrej
Competitive Scenario
DR VN BRIMS
Oral (36%)
Hair Oils (15%)
Instant Coffee (32%)
Market Position(2001)
MARKET LEADER
Jams & squashes – 74%
Household care – 65%
Hair Care - 64%
Talcum Powder – 62%
STRONG NUMBER TWO
0 10 20 30 40 50 60 70 80
Personal Wash ( 59%)
Fabric wash (39%)
Household Care (65%)
Skin Care (55%)
Hair Care (64%)
Talcum Powders (62%)
Deodorants (New)
Colour Cosmetics (New)
Branded Tea (36%)
Ice Creams (25%)
Jams & Squashes (74%)
R & G Coffee (54%)
Branded Staples (18%)
Branded Salt (16.8%)
Cooking Fats & Oils (27%)
Ketchup (40.6)
DR VN BRIMS
Focus on Power Brands
Explore growth opportunities in new Channels
Reduce total system cost
A pro-active, flexible, fast moving organisation culture
Strategic Thrusts
DR VN BRIMS
0 20 40 60 80
Agricluture
Industry
Services
GDP
Population
Indian Economy Snapshot
Oct.30,2002, J P Morgan Investor Conference, Goa
GDP 2002-03 estimated
at USD 500 bln.
Predominance of
population in Agriculture
Services share – rising
Per capita Income
growing @ 9% CAGR
Fiscal Deficit Concern
Infra Constraints –
Road, Telecom, Power
FMCG market depressed
DR VN BRIMS
Growth thru
Focus on
Power
Brands
Improving
Foods
Profitability
Securing
Future of
Non-FMCG
Businesses
KEY STRATEGIC OBJECTIVES
Sustained profitable “quality’ growth
Strategy Recap
DR VN BRIMS
Focus on Power Brands
63 Brands110 Variants
30 Power Brands 10 Regional
Jewels
Focus resources
on 30 power
brands to deliver
sustainable profitable growth
Consumer insight, tech development
guiding innovation
Great attention to brands
Focused spend
Dedicated resources
Supply chain efficiency
Effective market establishment
Opportunity in Home and Personal Care(HPC) product category –
Detergents, shampoo, skincare, toothpaste
Redefining potential of foods – Tea and Ice-cream
Consumer relevant innovation in Lifebuoy, Knorr, Liril, Lipton Ice Tea, Kissan
Cross category extensions in Fair & lovely, Max, Lakme
Leveraging channel opportunities – wholesale, key account, e-tailing
Promoting out-of-home(OOH) consumption thru Tea, Softy vending machines
DR VN BRIMS
Improving Foods profitability Beverages, Foods, Ice-creams
Portfolio rationalization
Value added innovation
Reengineering supply chain
Margin Improvement on traditional
Portfolio – Tea and oils
Reasonable scale of operation
DR VN BRIMS
Non-FMCG…… non core
Divested
AFS - Agro
Quest Int’l
Adhesives
Nickel Catalyst
Seeds
Transfer
Leather
Mushrooms
Transferred
to
subsidiaries
for potential
JV /
Disposal
Generating
excellent value
for share holders
Non-FMCG Business
DR VN BRIMS
FMCG, 68%
Branded Exports, 6%
Others, 26%
FMCG, 84%
Branded Exports, 8
%
Others, 8%
Focused Portfolio
1999 2003%age of Sales Contribution
DR VN BRIMS
Increasing Accessibility : Lower Price Points
Driving Affordability : Strategic Price Reductions
S
DR VN BRIMS
World Class Advertising
S
DR VN BRIMS
Alternative Media
Visual Demonstration of Product Superiority
On the Streets
S
DR VN BRIMS
S
DR VN BRIMS
Creating New Channels
Direct Selling : HLL network
Project Shakti
45,000 Shakti ammas,
30,000 Shakti maans
100,000 Villages
S
DR VN BRIMS
Direct Selling : HLL network
Product Range
Lever Home range
Male Grooming
Home care
Ayurveda
Personal wash
Reach 1400 home towns
236000 consultants
S
DR VN BRIMS
Rural Selling through SHGs
Extended into 4 major states
Over 14000 villages covered
Touching 20Mn rural lives
S
DR VN BRIMS
Supply Chain For Competitive Advantage
New units to leverage fiscal incentives
Manufacturing flexibility enhanced
Project LEAP: end to end connectivity
Connectivity with HLL stockiest
DR VN BRIMS
New Business Opportunities
Herbal Health and Beauty
Lever Ayush
Cough Naashak Syrup,
Headache Naashak
Hair Poshak Oil
Dandruff Naashak Shampoo,
Body Rakshak Soap
Confectionary
Choco Max
Max Magic
Water
Pureit
DR VN BRIMS
Strategic intent to sustain market leadership and grow market
positions across brands and categories
Invest behind brands and deliver consumer value
Drive top-line growth with profitable and sustainable margins
Focus on innovations, product quality and competitiveness of
distribution system
Achieve cost leadership across the extended supply chain;
Strategy Recap
DR VN BRIMS
Financial Overview 2008
Post Recession
DR VN BRIMS
Consumer spending in FMCG continues
4th consecutive year of accelerated growth
Strong Portfolio performance
Goals – Profitable sustainable, competitive growth
2008 2009
DR VN BRIMS
STRATEGY
Leverage brand portfolio and consumer understanding by
Straddle the pyramid
Driving consumption & penetration opportunity
Leverage Unilever scale and know how
Build segments & markets for the future
Cost efficiencies
Build capabilities for the future
Integrate economic, environment & social objectives with
business agenda
Execution as critical as strategy
Goal 2009: Sustainable, competitive &
profitable growth
DR VN BRIMS
Affluent
Aspiring
Striving
Portfolio straddling the pyramid
Particulars Laundry Soap Shampoo Tea
HUL Share 38.1% 51.6% 46.3% 23.0%
Nearest Competitor 12.2% 9.4% 23.7% 21.1%
Source: AC Nielsen
S
DR VN BRIMS
11
124
96
3
46
131
Changing Income Pattern
Rich Class
Top End Business
Changing Attitudes
Aspiring Class
Trebling
Credit Culture
Striving Class
Opportunity
2003
181 mn households2013
231 mn households
Changing Shape of India … from a pyramid to a diamond
S
DR VN BRIMS
SAP
R/3
Primary Secondary
Masters Down Load
From Central UNIFY
Invoicing & Collections
Closing stock sync for
Replenishment
Loading & Delivery
Memo
MIS & RS
Infrastructure
MOC ClosureCentral
Promotion Norms
Merchandising
MIS
Regional
Server(RS)
Outlet
Mass
Outlet
Product Info
Outlet wise Order
Masters- Product
Price, Promotion
Norms
Daily Sales
Stock
Using Technology for better execution
IT ENABLING FEET ON STREET
Front Line of Execution,
Enabled by smart device
Strong IT backbone
DR VN BRIMS
2013 Trends shaping India,
Doing well by Doing Good
Changing customers Emerging Urban-Poor Different Rural India
S
DR VN BRIMS
Land of many India's
Pressure on Infra
S
DR VN BRIMS
Winning with brands and Innovations
Driving Preference with Consumers
Straddling the Pyramid Accessible packs and formats
Affluent
Aspiring
Striving
S
DR VN BRIMS
Building winning brands by integrating business and social priorities S
DR VN BRIMS
END TO END COST FOCUS TO FUEL GROWTH
DR VN BRIMS
Continuous improvement across value chain
30 HUL factories = 0 effluent discharge
Waste Water Usage CO2 emissions
30+ projects
~4000 Tonnes of Packaging Material usage reduced
Lower packaging use lower cost
DR VN BRIMS
CONTINUOUS IMPROVEMENT ACROSS VALUE CHAIN: SUSTAINABLE SOURCING
Win-win partnership lower cost of sourcing
DR VN BRIMS
A TALENT POWERHOUSE WITH A STRONG SET OF VALUES
Employer Brand
Best Employer
Best Employer Brand Asia
INTEGRITY
RESPECT
RESPONSIBILITY
PIONEERING
DR VN BRIMS
ANNUAL
REPORT
ANALYSIS
T
DR VN BRIMS
Remuneration Policy
Aims at attracting & retaining High Caliber talent
Report of the Director
On Talent Management front , company has implemented
& continuously refines sharply focused initiatives
encompassing recruitment, training & retention
HRD
‘Employer of choice’ anchored in its ethos – Building
winning business , leaders & creating value for India
Culture : Rewards Performance, continuous
learning, collaboration & capability building across the
organization.
T
DR VN BRIMS
HRM
Winning With People : Talent Pipeline ready to match our
growth ambitions.
The ‘2006 HLL Performance Share Scheme’ was introduced
as a measure to reward and motivate employees as also to
attract talent and retain key employees
Research , Development & Innovation
HR – Strengthening 4 Key Areas:
Building a robust and diverse talent pipeline,
Enhancing individual and organizational capabilities for
future readiness,
Driving greater employee engagement and
Strengthening employee relations further through
progressive people practices at the shop floor.
T
DR VN BRIMS
The company's believes that a 'fair day's work deserves a fair day's
wages’
36,000 employees, including about 1,400 managers, are all sharply
focused on the common goal, which is to "add vitality to life".
200,000 indirect jobs in those sectors of the economy connected with
the company's operations
On an average, HUL creates five indirect jobs for every single
permanent employee
Environment for Empowering the people
Attracting, Motivating and Retaining the Best Talent
HR STRATEGIES
T
DR VN BRIMS
The manager works in different functions across villages and
international locations
Progress is based on:
Merit
Ability and Performance
Adhering to the Company's Code of Business Principles
The values of Truth, Courage, Action and Caring form the
bedrock of these business principles
Creating a new generation of Industrial Workmen
HR STRATEGIES
T
DR VN BRIMS
Succession Planning at HUL
Two-horse race
Back-up candidate
Talent-rich organisation
Never very obvious as to who will land the job
For CEO-level appointment, any time there are at least three
people in the race
ST
DR VN BRIMS
Career By Choice
A programme which allows women who have fallen off the
career ladder to rejoin the workforce.
ST
DR VN BRIMS
Key Jobs Key People
Unique nine-box tool called
the LDT – Leadership
Differential Tool
Plots a person based on his
performance
‘Hot People’
Rewarded Disproportionately
ST
DR VN BRIMS
HUL 70-20-10 Model
HUL uses a 70-20-10 model for
capability building
70 percent of the person’s capability is
built on the job
20 percent is through formal coaching
10 percent of capability building
through formal training programs
ST
DR VN BRIMS
Summary
HULs up-and-running business model is a treat for investors 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. 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.
DR VN BRIMS