06-12-2012, 01:15 PM
Hindustan Unilever Ltd.
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HUL
India’s largest F.M.C.G. company with turnover of over Rs.20,000 cr. per annum.
80 factories across India
HUL has 15,000 employees
HLL is organized into two self-sufficient divisions - Home & Personal Care & Foods
Has 35 power brands, HUL’s Power Brands, which account for 80-85 per cent of the company's domestic consumer business .
HUL’s brands are present in more than three million retail outlets in India.
HLL's distribution network in rural India directly covers about 50,000 villages, reaching about 250 million consumers, through 6000 sub- stockists.
HISTORY
Sunlight soap bars in 1888
Lifebuoy in 1895
Pears, Lux , Vanaspati in 1918
Dalda brand came to the market in 1937
In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HLL in November 1956
HLL offered 10% of its equity to the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds 51.55% equity in the company. The rest of the shareholding is distributed among about 380,000 individual shareholders and financial institutions.
Brooke Bond joined the Unilever fold in 1984 through an international acquisition.
Unilever acquired Lipton in 1972, and in 1977 Lipton Tea (India) Limited was incorporated.
Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold through an international acquisition of Chesebrough Pond's USA in 1986.
IT Infrastructure
An IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis.
Stockists connected with the company through an Internet-based network, called RSNet, facilitating
online interaction on orders
Dispatches
information sharing
Monitoring
RS Net covers about 80% of the company's turnover.
RSNet is part of Project Leap, HLL's end-to-end supply chain, which also includes a back-end system connecting suppliers, all company sites and stretching right upto stockist.
HLL vs. Nirma
For more than 50 years, HLL had served India’s small elite who could afford to buy MNC products
Nirma created a new business system that included a new product formulation, low-cost manufacturing process, wide distribution network, special packaging for daily purchasing, and value pricing.
Initial Response of HLL was to dismiss Nirma’s strategy, however , after the latter’s growth started affecting the share of the former, HLL saw its vulnerability and its opportunity
Reasons for Nirma’s Success
Targeting disruptive products at non-consumers: By targeting non-consumers of existing laundry detergents, Nirma was able to stay 'below the radar' of Hindustan Lever, giving them time to experiment with their sales strategy, refine their business model and then grow rapidly - all while avoiding competition.
Creating a compelling solution by considering Gives and Gets relative to existing solutions: Nirma offered a compelling solution allowing consumers to make a simple trade-off relative to existing products. Get a far cheaper alternative to Surf, but Give up a fraction of the cleaning power, which was already more than sufficient for most laundry occasions.
Thinking expansively about defining your market. Rather than categorizing it along traditional dimensions, consider definitions using a jobs-based segmentation. Had HLL thought of their market in this way, it would have been far clearer that Nirma was a disruptive threat at an earlier point in time.
SWOT Analysis
Weaknesses
Increased consumer spends on education, consumer durable, entertainment, travel etc. resulting in lower share of wallet for FMCG.
Limited success in changing eating habits of people.
Complex supply chain configuration, unwieldy number of SKU’s with dispersed manufacturing locations.
Price positioning in some categories allows for low price competition, like Amul captured Kwality’s market.
High Social costs (housing, food grains & firewood, health and other welfare measures) in the Plantation business