strategy analysis on asian paints
DESCRIPTION
The project precisely involved complete and thorough understanding of the strategic evolution of Asian Paints, performing SWOT analysis, analysing the PESTAL factors and Porter’s 5 forces of Indian Paint IndustryTRANSCRIPT
ASIAN PAINTS BUSINESS STRATEGY ANALYSIS
• Champaklal H. Choksey• Chimanlal N. Choksi
• Suryakant C. Dani • Arvind R. Vakil
Founder of Asian Paints
“CLEAR GOALS FOR A CLEAR FUTURE”
GENESIS OF PAINT INDUSTRY
• First paint Industry Shalimar Paints, Colour & Varnish Company,
• The paints was generally imported from the Britain• Due the 2nd world war many company entered in India like
Goodlass Wall(1918), Elephant Oil Mills (1917)• Asian Paints & Kansai Nerolac came into picture after the post
independence• Paints were considered as a luxury item• Low used in Industrial segments• There was a negative growth in industry and price was elastic• Introduction of liberalization policy
• Demand for auto paints shot up suddenly• Rapid industrialization aided by Government’s liberal
policies resulted the growth of the paint industry
NATURE OF INDUSTRY
• Indian Paint industry, estimated to be a Rs.21,000 Cr. industry, growing at a rate of above 15% for the past few years.
• Factors responsible for the growth
– Increasing level of income and education – Increasing Urbanization– Increasing share of organized sector– Development of the Realty, Automobile and
Infrastructure sector– Increasing Penetration in the Rural Markets
Domestic marketDecorative 70% industrial 30%. Globally market Decorative 50% industrial 50%.
Indian Paint Industry
Decorative Paints(7O%)
Premium Range (High end Acrylic
Emulsions)
Metros &
Large Cites
Medium Range (Enamel Paints
Small Cities
Distemper Range( Low end
Paints)
Sub - urban&
Rural Areas
Industrial Paints(30%)
Automobile Sector (about 2/3rd share)
Consumer Durables Marines Paints Other OEM's
GENESIS OF ASIAN PAINTS
1942-1965• Company stated
its business• the mischievous
kid was born• Name was Asian
Paints
1967-1985• India's leading
paint company• Converted into
a public limited company
• Entered into a collaboration agreement
1990- Present• Spreads it
boundary • Completed 70
years • 5th largest
decorative paint company in the world
• Admired companies in India
• Market leader of paint industry
PESTEL ANALYSIS
POLITICAL FACTORS– India, the largest democracy in the world – The government is federal republic – The political situation is more or less stable in nature – Export oriented Economy
ECONOMIC FACTORS – Market based economy – Second fastest growing economy in the world – India is the third largest in term of purchasing power – Inflation rate is 6.62 as on January 2013 – Introduction of FDI in few sectors
SOCIAL FACTORS
– India is the second largest populated economy in the world – Rise in price of raw material – Import of raw material
TECHNOLOGICAL FACTORS– Emerging of IT sector – Modernization of paint like (waterproof paints, Teflon
coating, creating colours shops etc.) – Lead free paints
ENVIRONMENTAL FACTORS– Impact of volatile organic compounds (VOCs)– Lead free paints – Season and climate changes
LEGAL FACTORS – Pollution Control Law – Consumer Law – Health and Safety Law – Environmental Law
PORTER’S 5 FORCES ANALYSIS
BARGAINING POWER OF BUYERS
Household users - – The contractors : Higher bargaining power & more price
sensitive– The end customer : Number of options are available
Decisions are made based many factors
Industrial users -– A low margin high revenue business – The buyers knowledgeable– Price comparison is done effectively by the consumers
BARGAINING POWER OF SUPPLIERS
– Raw material intensive industry– More than 300 products required to manufacture
of the final products– Many Categories • Pigments additives• Solvents• Binder etc.
Pigments constitute about 1/3rd of the total raw material costs. Titanium dioxide is one key pigments which is facing a global shortage supply.
COMPETITIVE RIVALRY
– About 80% of the organized market is catered by the top four players of the industry.
– The current market growth rate provide ample room for all the players of the industry to flourish.
– Competition may increase as the market gets saturated.
– The presence of the unorganized market does provide room for competition
AVAILABILITY OF SUBSTITUTES
– Lime wash is conventionally used substitute for paints.– In decorative paints segments an alternative option is
wallpapers.
THREAT OF NEW ENTRANTS
– The paint industry in India is dominated by few players making difficult for anyone new entering the industry
– Establish foreign players may pose a threat by virtue of the knowledge and expertise
PRODUCT PORTFOLIO
Ancillaries Decorative paints
Industrial Paints
Automobile
BCG MATRIX
QUESTION MARKS• Distemper Range( Low end
Paints)
STARS• Metal/industrial Paints• Wood finishes (varnish,
polish)
CASH COW• Wall Paints(INTERIOR &
EXTERIOR PAINTS)• DECORATIVE PAINTS
DOGS• Marine paints, Automobile
paints & others(back board paints)
SITUATION AUDIT
• India's largest paint company and Asia's third largest paint company
• Operates in 17 countries and has 24 paint manufacturing facilities in the world servicing consumers in over 65 countries.
• Operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans
COMPETITIVE ANALYSIS
71%
11%
10% 7%0%0%
MARKET SHARE
Asian Paints Berger Paints
Kansai Nerolac Akzo Nobel
Shalimar Paints Jenson Nicolso
SWOT ANALYSISSt
reng
ths • Market leader
• Capacity expansion plans
• Pricing power• Wide distribution
network Wea
knes
ses • Industrial
business performing below par
• Hiccups in international business
• International presence restricted to small pockets
Opp
ortu
nitie
s
• Fast growing Indian economy
• Shorter repainting cycles
• Growth in the tier II and III towns
• Steady growth in industry volumes
• Decrease in the use of distemper
CURRENT ISSUES
• Market leader at present. • Overall condition of the company is quite stable.• Requires a lot of raw materials for its production , • European crisis resulting the prices of the raw
materials have increased considerably.
Solution: Company can try to utilize the domestically available materials to cut down on the extra manufacturing cost.
CONCLUSION
Asian Paints, India’s largest paint company and Asia’s third largest paint company, with a turnover of Rs 96.32 billion.
Have an enviable reputation in the corporate world for professionalism, fast track growth, and building shareholder equity.
Over the course of 25 years Asian Paints became a corporate force and India's leading paints company. Driven by its strong consumer-focus and innovative spirit, the company has been the market leader in paints since 1968.