25-09-2014, 02:22 PM
FAST MOVING CONSUMER GOODS INDUSTRY
FAST MOVING.pptx (Size: 2.19 MB / Downloads: 19)
Introduction
The Indian FMCG sector is the fourth largest sector in the economy.
Intense competition between the organized and unorganized segments.
Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage.
Even during the slowdown of the economy, the FMCG sector has registered a growth rate of 14.5 per cent for the year 2007-08.
The key players in FMCG sector are HUL,ITC, Dabur India Limited, Procter & Gamble Hygiene & Health Care Limited, Nirma Limited, Emami Limited, Colgate Palmolive India Limited, Godrej Consumer Products Limited.
Rivalry among Competing Firms
In the FMCG Industry, rivalry among competitors is very fierce.
There are scarce customers because the industry is highly saturated and the competitors try to snatch their share of market.
Market Players use all sorts of tactics and activities from intensive advertisement campaigns to promotional stuff and price wars etc. Hence the intensity of rivalry is very high.
Potential Development of Substitute Products
There are complex and never ending consumer needs and no firm can satisfy all sorts of needs alone. There are plenty of substitute goods available in the market that can be re-placed if consumers are not satisfied with one.
The wide range of choices and needs give a sufficient room for new product development that can replace existing goods. This leads to higher consumer’s expectation.
Bargaining Power of Suppliers
The bargaining power of suppliers of raw materials and intermediate goods is not very high.
There is ample number of substitute suppliers available and the raw materials are also readily available and most of the raw materials are homogeneous.
There is no monopoly situation in the supplier side because the suppliers are also competing among themselves
VALUE CHAIN
Tool for identifying ways in which value could be created/enhanced by a firm.
Used for competitor analysis -to analyse competitive position within the industry.
Value creation requires performance of each department & coordination of activities within a department.
value chain of a company may be useful in identifying and understanding crucial aspects to achieve competitive strengths and core competencies in the marketplace.
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-2009 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
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.
Conclusion
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. Though risky, the companies business model will pay off in the long run. 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.