Strategic Management

Study of Asian Paints Strategy

Submitted By: PGDM – D Shruti Mittal

Sonakshi Govil

Sreevatsan Natarajan

Tarun Mangal

Udit Jain

Vanshika Gupta

13DM180

13DM186

13DM190

13DM204

13DM206

13DM212

Submitted To: Prof R.J. Masilamani

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Table of Contents

INDIAN PAINT INDUSTRY.....................................................................................................................1

ABOUT ASIAN PAINTS .........................................................................................................................2

VISION ...............................................................................................................................................3

MISSION ............................................................................................................................................3

CORE VALUES .....................................................................................................................................3

OWNERSHIP & RESPONSBILITY ............................................................................................................3

CORE PURPOSE...................................................................................................................................3

ASIAN PAINTS – PRODUCTS PORTFOLIO ...............................................................................................4

PORTERS 5 FORCES ANALYSIS ..............................................................................................................4

COMPETITIVE ADVANTAGE PORTFOLIO FOR ASIAN PAINTS ...................................................................6

STRATEGIC MANTRAS OF ASIAN PAINTS...............................................................................................6

Customer Asset ...........................................................................................................................7

Technology Asset ........................................................................................................................7

Employee Asset ...........................................................................................................................7

Dealer Vendor Relationship .........................................................................................................7

Brand Asset.................................................................................................................................7

DIVISIONAL OBJECTIVE:.......................................................................................................................7

Decorative segment ........................................................................................................................8

Objective for decorative segment.................................................................................................8

Industrial segment ..........................................................................................................................8

Objective for Industrial segment ..................................................................................................8

Automotive segment.......................................................................................................................8

Objective of automotive segment.................................................................................................8

MARKETING OBJECTIVE.......................................................................................................................9

FUTURE PLANS ...................................................................................................................................9

UNIVERSAL GROWTH PLAN ............................................................................................................... 10

Global Foraying............................................................................................................................. 10

Growth Strategy ........................................................................................................................... 10

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INDIAN PAINT INDUSTRY

The first set of Paint Industry in the country includes Color & Vanish Manufacturers. It was that time in

India when Paint was considered a luxury. Paints were then generally imported from Britain. It was

during the Second World War that many companies entered the Indian Market. Asian Paints and Kansai

Nerolac were formed post-independence. The general demand in India grew over years to where it is

now. But in the initial phases it was mostly only for industrial purposes and companies targeted the

industrial segment alone. Moreover there was negative growth in the industry and the price of paints

was highly elastic. Post Liberalization, The government’s Liberal policies resulted in the growth of the

Paint Industry.

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ABOUT ASIAN PAINTS

Asian Paints was founded founded by Champaklal H Choksey, Chimanlal N Choksey, Suryakant C Dani,

Arvind R Vakil in 1942. The company has come a long way since its small beginning in 1942. It was set up

as a partnership firm by four friends who were willing to take on the world’s biggest, most famous paint

companies operating in India at that time. 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 1967. Today, it is double the size of any other paint

company in India. Asian Paints manufactures a wide range of paints for decorative and industrial use.

Asian Paints has come a long way in

becoming India’s largest and Asia’s

third largest paint company, with a

turnover of ₹ 10418.78 Crores. Asian

Paints operates in 17 countries and

has 23 paint manufacturing facilities in

the world servicing consumers in over

65 countries. Asian Paints has always

been a leader in the paint industry,

pushing new concepts in India like

Color Worlds, Home Solutions, Color Next, and Kids’ World.

Asian paints established signature stores, operating under the brand name of ‘colour with Asian Paints’,

there are 3 stores, one each in Delhi, Mumbai and Kolkata with the objective of helping customers

through the painting cycle by giving them inspiration and expert advice. There is no sales being

conducted through these stores. Consisting of large size display panels, experts for guiding the customer

through the painting process, the stores provide a perfect environment to showcase the flagship finishes

of paints.

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VISION

To be one of the top five Decorative coatings companies’ world-wide by leveraging its expertise in the

higher growth emerging markets. Simultaneously, the company intends to build long term value in the

Industrial coatings business through alliances with established global partners.

MISSION

To provide paints as per market demand, ensuring desired level and quality of customer (dealer) service,

continued availability of the right product mix of right quality at the right time.

CORE VALUES

Commitment and Integrity on dealing with internal and external customers. A strong belief in individual

ability and creating an environment in which entrepreneurial spirit is encouraged

OWNERSHIP & RESPONSBILITY

To continuously Rejuvenate every living and working space of people and bring joy to their lives

CORE PURPOSE

To continuously rejuvenate every living and working space of people and bring joy to their lives

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ASIAN PAINTS – PRODUCTS PORTFOLIO

PORTERS 5 FORCES ANALYSIS

Bargaining Power of Buyers

Personal Users

o Higher Bargaining power, more price sensitive.

o A Number of options are available.

Industrial Users

o Buyers are knowledgeable.

o Bulk buying, so they have high bargaining power.

Interior Paints

Royale

Royale Play

Apcolite Emulions

Tractor Emusion

Distempers

Exterior Paints

Apex Ultra

Apex Exterior Emulsion

Apex Duracast

Ace Emulsion

Apex Tile Gaurd

Wood Finishes

Interior

Exterior

Italian

Water Proofing

Damp Block

Damp Proof

Crack Seal

Vitalia

Unyverseal

Akrylmax

Metal Finishes

Premium Semi-Gloss

Enamel

Apcolite Premium

Satin Enamel

Apcolite Premium

Gloss Enamel

Utsav Enamel

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Bargaining Power of Suppliers

o Raw material Intensive industry

o More than 300 products required to manufacture the final product.

o Raw Materials used:-

Pigments additives

Solvents

Binder, Etc.

o Pigments constitute the majority of the raw material expense

Titanium Dioxide is one key pigment which is facing a global shortage in supply.

Competitive Rivalry

o About 80% of the organized retail is catered by top four players of the industry (Asian Paints,

Nerolac, Berger, Akso Nobel(Dulux)).

o The market growth provides ample room for all players to flourish.

o The presence of unorganized market does provide room for competition.

Availability of Substitutes

o Lime wash used as a substitute for paints at many places.

o In place of decorative walls/decorative paints an alternative can be wallpapers and tiles.

Threat of New Entrants

o Paint industry already dominated by few players so it is difficult for anyone new to enter the

market.

o Established foreign players may pose a threat by virtue of knowledge and expertise.

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COMPETITIVE ADVANTAGE PORTFOLIO FOR ASIAN PAINTS

Asian Paints being the market leader have approximately 38% market share in the organized market.

There are definitely leaks in the supply chain for which the accounted could also add on to the net sales

of the firm

Comparing the size of the next best competition in the market Asian Paints is nearly twice the size of the

competition. The huge installed capacity in hand will keep the threat of entrants as low as possible.

Asian Paints has an opportunity to push their products and fill the shelves making it more visible.

The wide product range in the market of Home and Industrial segments with many shades, colors, and

pack sizes. Approximately 40 different decorative paints with thousands of shades and variable

packaging.

The forecasting systems MIS and MR are advanced and help in reducing costs and ensuring product

availability at almost all the time. The SKUs of the fastest moving stocks are being tracked on a daily

basis to avoid any such stock out. They are also strong in inventory control.

Physical distribution of the products is far superior to the competitors. They have 29 plants and serve in

more than 22 countries.

STRATEGIC MANTRAS OF ASIAN PAINTS

Pioneers in distribution with respect to competition. Aims strongly to achieve goals.

Focus on competitive advantage.

Maintaining a lean system to achieve operational excellence. Creating Value by product innovation.

Forge stronger partnerships with supplier base.

Pursue quality with zeal.

Asian Paints aims to become one of the top five Decorative coatings companies world-wide by

leveraging its core competency in the higher growth markets. At the same time, the company intends to

build long term relationships in the Industrial coatings business through alliances with global partners.

With Economies of Scales as an objective, the organization has to develop short-term goals to reach the

overall objective. These Goals are usually functional target such as production, Sales, new market

development, new product development and technology up gradation. First the goals are determined

and then the strategies are made to meet the goals.

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Customer Asset

The setting up of Asian paints color world is a chain of state of art paint shops, which gives the customer

a feel of the environment prior purchasing the color of paint. At the same time company is focusing

more in rural areas than urban areas. The rural hearts and urban rich experience adds on to the

Customer Asset.

Technology Asset

Asian paint is one of first Indian company to go hi-tech. Asian paint has always kept its competitor at bay

by constantly re-innovating its business process and system.

Employee Asset

Asian paints keep employee satisfaction first by rewarding them for sales achievements. Employees are

considered the biggest assets for Asian Paints.

Dealer Vendor Relationship

Asian paint always maintains a close relationship with its dealers because the

company thinks that they play a major role in Asian paint recent success.

Brand Asset

Although it is operating in the commodity market but still Asian paint is investing heavily in branding.

Gattu- Asian paint official mascot is very popular in India.

DIVISIONAL OBJECTIVE:

Divisions

Decorative

Industrial

Automotive

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Decorative segment Asian paint is the leader in this segment. It is ahead that its competitor Nerolac and Berger in Decorative

Segment Company still have certain objective for this sector that to increase its sales and to acquire

maximum position in the market share in Indian paint market.

Objective for decorative segment

To expand its range in the economy segment.

To strengthen its position in the emulsion segment in both exterior and interior emulsion.

To continue its strategy of pricing aggression.

To increase its Net Sales.

To gain the market share along with a good operating margin.

To focus on the rural market as company believes as it as been its objective since the beginning.

To focus more on ad campaign for enhancement of their sales in urban as well as rural market.

Industrial segment Asian paint second line of production deals with the industrial coating. The constraint in this segment is

that it is not as successful as the decorative segment. In this sector it has to face a stiff competition from

its nearest competitor Nerolac and Berger Paints who are primarily into industrial paints.

Objective for Industrial segment

To build new infrastructure in the country for Industrial coating.

To develop the quality of the product with improved technology.

To improve sales of the Industrial paints through proper marketing & competitive pricing.

Automotive segment Automotive is the third segment of the Asian paint Product Portfolio. This targets automotive both in

India and abroad.

Objective of automotive segment

To emphasize on continuous improvement in quality and productivity.

To emphasize on defect prevention

To reduce variation and wastage in the supply chain

Mitigate stiff competition from DuPont Paints.

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MARKETING OBJECTIVE Asian paint has a very strong marketing division. With more than 38% market share Asian paints is still

growing exponentially to achieve higher targets. It is changing fundamentally with two objectives in

mind, a huge ramp in the market share and better growth over the next three years. Previously

company used to function as an undifferentiated organization. But now they have divided it into three

sections. Each section has its own independent support system, targets and performance parameter.

Asian paint is highly accepted in the urban sector and now the company is trying to penetrate the rural

market with low price product like Utsav targeting every customer of all income level. Asian paint is

following unique strategy of marketing in the rural areas by using their official mascot. The company

feels that people relate more to the mascot than the name. To increase its sales in the urban sector

Asian paints today have 30+ color world located in different cities of India where anybody can

experience the colors before selecting it.

Online marketing has become an integrated part of the company ’s marketing strategy. Asian paints

international unit has a dedicated marketing team is also targeting for a rapid growth in overseas

market. Asian paint website provides information regarding the product for customers and dealers.

FUTURE PLANS Asian paints primarily plans to consolidate its dominant position in India by launching new products in

line with the market developments in both decorative paint as well as industrial coating segments. As far

as product innovation is concerned, it is looking at water based paints. The company aims to be in the

list of top five decorative paints company in the world. With this aim, the company is constantly looking

for both organic as well as inorganic growth opportunities in existing and new markets. The rural sector

also needs to be penetrated more with products suiting their needs. They may need to reposition

certain brands in the rural market to achieve maximum impact.

The company is focusing on further improving the operations of all of its subsidiaries in India and abroad

and has already launched E-Strides, an ERP initiative through which all the overseas ventures are being

covered for sharing of global knowledge, best practices and better control on operations. Introducing

water based Paints, broadening of distribution network, adding more choices for shades and effects,

enhancing quality are some broad aspects Asian Paints is working on. Demand will be grow

proportionally with the growth in real estate and industrial growth.

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UNIVERSAL GROWTH PLAN

Global Foraying To be amongst the top three, it needs to look into their global foray very carefully. Many factors, which

have made Asian Paints a household name in India, have also contributed immensely in its global

expansion. The company is known to be an innovator and has introduced thousands of color shades for

its customers to choose from. Also, it has been a market creator like in the case of exterior paints at a

time when exterior paints used to be mostly cement paints. It has been following an aggressive

marketing strategy in India and this has helped it in entering and competing with multinational

companies in global markets.

The company has continuously followed its vision - “Think Global, Synergize Regional and Act Local” to

drive its performance. In 1999, the company embarked on an ambitious plan to emerge as one of the

top 10 decorative paint companies in the world. Once this goal was achieved, the company set for itself

a much steeper target which was to become one of the top five decorative paint companies in the

world. The company explored opportunities of building long term value in the Industrial coatings

business through alliances with established global partners. All the strategies and policies of the

company have been designed to achieve these goals. To capture the global markets, it has been

following the strategy of entering fast growing markets with robust demand and low per capita

consumption of paints. Asian Paints has especially targeted companies in emerging markets of Africa,

Southeast Asia and South Asia, Middle East and Pacific region. In order to increase the pace of

globalization, the company has also focused on acquiring international companies which have a

widespread presence in the global markets.

Growth Strategy In decorative paints business, Asian Paints prefers to ensure growth by spreading its distribution

network, installation of more color world machines and innovative retailing initiatives. The company

plans to use its customers and find the needs that would be the future path of Asi an Paints. Focus on

R&D to provide new or upgraded products, providing shopping ambience and a more effective

complaint redress mechanism. The company is investing towards environmental friendly paints by R&D

on lead free paints. The demand in tier II and III towns is volatile and likely to be a good opportunity for

the company. Asian Paints also has an eye on capacity building both in India and overseas and is

incurring CAPEX (Capital Expenditure) towards expanding its manufacturing capacities. On the flip side,

since the company's industrial and automotive paints segment had suffered a serious impact in FY ’09,

the growth in this segment is going to be challenging. Asian Paint's international business portfolio is

under continuous review by the management.