INTRODUCTION

Asian Paints Limited is an Indian chemicals company headquartered in Mumbai, India. Asian Paints was established on February 1, 1942 by Champaklal H. Choksey, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R. Vakil. They name their company 'The Asian Oil & Paint Company', a name that picked randomly from a telephone directory 1945 Asian Paints touches a turnover of Rs. 3, 50,000 1957 66 The family-owned company makes the change to a professionally managed organisation. It manufactures paints for decorative and industrial use. Asian Paints is India's largest paint company and Asia's third largest paint company, with a turnover of Rs 96.32 billion. Besides Asian Paints, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans. The company's key products and brands include the following: a) Decorative paints: Interior wall paints, Exterior wall paints, Wood surface paints, Metals surface paints.[4] b) Industrial coatings: Protective coatings, Floor coatings, Road markings.[5] c) Ancillaries: Wall primer, Acrylic Wall Putty, Exterior Wall Putty, Wood Primer. [6] Asian paints made a foray in automotive paints in the year 1997 with a joint venture with PPG Industries. The joint venture is called PPG Asian paints.[7] The company manufactures body coatings and plastic coatings. Paint brands owned by the company are: Ace & Apex, Apcolite, Apex, Apex Ultima, Asian Paints, Colour Next, Premium Gloss Enamel, Royale, Royale Play, Touchwood, Tractor Emulsion, Utsav.

Question -1: Organization name ASIAN PAINTS Question -2: Visions, mission and objectives VISION ASIAN PAINTS aims to become one of the top 5 Decorative Coatings Companies worldwide 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 goal partners. MISSION Its mission is to be the largest decorative paint company worldwide and to be the 5th largest paint manufacturing company worldwide. GOALS AND OBJECTIEVES The main objective is to provide business strategy for the company and to compare the same with competitors for the India centric business. NEW VISION The company wants to become one of the leading 5 decorative companies worldwide by leveraging its expertise in higher growth emerging markets along with building long term value in industrial coating business. NEW MISION Mission is to provide paints as per market demand ensuring desired level and quality of customer service. Asian paints aim to rank among the top 5 paint manufacturing companies of the world.

 NEW GOALS AND OBJECTIEVES 1. analyse the competitors strategy and environment Form owns strategy competitive enough to withstand the competitions. 2. Market Penetration, Market Development Similarly Product Development and diversification.

3. Production

of environment friendly paints meeting the quality requirements.

4. Innovating techniques for production of paints in more efficient and effective manner.

5. To make products at a reasonable price to the satisfaction

of customers having well identified their requirements. Criteria for evaluating vision mission and goals Criteria 1. Customers 2. Specification about Product and services 3. Market 4. Technology 5. Concern for survival, growth and profitability 6. Philosophy 7. Self concept 8. Concern for Public image 9. Concern for employee. Vision Yes No Yes No Yes No Yes No No Mission objectives Yes yes no Yes yes no no no yes no No no Yes Yes Yes Yes No No

Question -3 Identification of various General and specific environmental factors affecting the performance of ASIAN PAINTS and impact of these factors on ASIAN PAINTS.

GENERAL ENVIRONMENTAL FACTORS This environment includes the indirect actions of environment which generally affects the whole business of a country or an industry. 1) Natural factors a. Availability of natural raw materials is the major issue for PAINT industry and it affects all the firms in the industry. b. Apart from it VOCs used in paints impact indoor air quality in
different ways primarily as an irritant or as a contributor to greenhouse gas emission. The expectation is that lowering VOCs in paints will reduce harmful emissions. Recent estimates show that architectural coatings contribute roughly 4% of Total North American greenhouse gas emission. c. As the paint dries, the solvent in the formulation evaporate it is these evaporating compounds that we refer to as VOCs. With environmental awareness at an all time high, formulators and suppliers alike are working feverishly to reduce the remaining VOCs in water based paints.

d. Manufacturing guidelines has been prepared for work to help support a healthier painting experience: manufacturers must identify ingredients used in paint formulation manufacturers and suppliers must develop MSDS (Material Safety Data Sheets)

2) Economical factors Economic conditions prevailing in India will affect the entire firm in the industry. Instead, users of paints and coatings are generally regulated according to
the manufacturing sector characterizing their finished products. The National Emissions Standards for Hazardous Air Pollutants, or NESHAPs, is the class of regulations that directly affects surface coating operations.

Apart from it various economic policies of Indian government like high tax rate, environmental friendly product development norms will also affect the paint industry. 3) Political- legal factors Political environment in different countries producing buying paint regarding policies on import, export and manufacture of paints. This will also include policies on allowing setting up of manufacturing plants by foreign companies. It also includes the various norms regarding environment friendly products and raw materials to be used. Stability of governments. This may affect the future conditions in a country. Industrial policy, tariff policy will also determine the strategy of each firm in industry. Taxation policies will also affect all the firms. Political and legal environment could be understood as pre liberalization and post liberalization of economy. a. Pre-liberalization period i. Government protection by use of license ii. Heavy excise duty on cars iii. Price discrimination by government iv. High import duty

v. Adversely,

Liberal policy on foreign participation

b. post-liberalization period i. foreign direct investment ii. reduction on import duty So with liberalization price discrimination of government, import duty and high excise got reduced after liberalization. 4) Technological factors i. Innovation a. Industry gets continuously affected by the innovations in technology as they need to adopt latest one so as to compete in the market. Some innovations can be: Water based paints which are developed taking into account the environment and health of persons. Any one company coming up with innovation forces others in the industry to come up with new to overcome the innovation or to adopt competitors innovation. ii. Greater emphasis on research and development

Increasing role of innovations and improved technology is important and this can be gained through research and development and it will affect most firms in the industry. iii. Increased regulation of technological change

Users of paints and coatings are generally regulated according to the manufacturing sector characterizing their finished products. The National Emissions Standards for Hazardous Air Pollutants, or NESHAPs, is the class of regulations that directly affects paint industry.

5) Socio cultural factors

Increasing Urbanization: Urbanization is leading to a shift from temporary houses to permanent houses. Urban houses are well-designed in its interior as well as exterior aspect. This calls for more houses being painted using medium and premium paints leading to increase consumption of paints. . Changing demand habits and fashion also leads to changes in demand for paint.

6) Demographic environment
Increasing level of income and education The increasing proportion of young population along with increasing disposable incomes is leading to a change in consumer habits. With more income at their disposal, people are now ready to pay for better products and paint is no exception. Educated consumers are more brand conscious and seek value in what they consume. Thus, paint companies offering value-added features like non-toxicity, weather protection, texture, eco-friendly production, etc. will attract more demand. These value-added products enable the manufacturers to earn a better premium as compared to the regular paints, thus offering higher margins.

Increasing Urbanization: Urban houses are well-designed in its interior as well as exterior aspect. This calls for more houses being painted using medium and premium paints. For urban houses, interior design is becoming a fashion statement and a lot of paint is used to decorate the interiors. This will lead to an increase in the per capita consumption of paint which will increase the overall demand of paint. Urbanization also brings

 SPECIFIC ENVIRONMENTAL FACTORS These factors are task, operating, micro or direct-action environment which affects differently to Asian paints and other paint company.Which are as following. a. Customer/clients: Customer and client of an organisation refer to those individual and organisation that purchase its products and services. organisation exist to meet the needs of customers through which they earn large sum of profit .But these organisation posses potential uncertainty to an organisation success because of their changing taste and preferences, etc, so here Asian Paint tries to keep the pain quality high so as to satisfy the customers and also have created outlets for easy reach to customers. b. Supplier: Organisation needs different resources such as raw materials, goods and services, etc to conduct their operations. Therefore they purchase from various individual or organisation known as supplier, The term supplier also includes providers of financial inputs, and labour inputs. Supplier affect the production of an organisation, firm should have more than one supplier so as to get non delayed supply of goods. The price of product and its delivery depends on the price at which company purchase its raw materials and time taken by supplier to supply the materials. c. Intermediaries Intermediaries include distributors of Asian paints who provide services and delivers paint to final customers. Attitude, viability, reliability, trusts worthiness of distributors is most important for the Asian paint company

because company deal with customers via these distributors only An Asian paint has around 15000 dealers who are catered to by the sales executives Competitor: There are various competitors to Asian paints like godless, nerolac etc.

The company facing cost pressures from increasing

input prices and given the rising competition, it would be financially difficult for the company to pass on this increased cost to the consumers.

For dealing with competitions company has increased

the advertisement expenditures

Question 4 porters five forces analysis for ASIAN PAINT

1. 2. 3. 4. 5.

The threat of new entrants. The bargaining power of buyers/customers. The threat of substitute products. The amount of bargaining power suppliers have. The amount of rivalry existing among competitors

The threat of new entrants There is no perceptible threat of entry of new firms within India as paint market is shrinking. However all major firms have foreign collaborations mostly in the form of product specific technology transfer arrangements. Result: favourable

The bargaining power of buyers/customers In commodity business, which the paint industry is increasingly tending to become, volume matters more then value. Firms are finding it increasingly difficult to pass cost increase to customers. In the industrial paint segment of paint industry 65% of the share of product goes to the general engineering and the balance 35% to the automobile industry ,both these industries are experiencing sluggish growth and so there is an increase in buyers bargaining power. Result: Unfavourable The threat of substitute products There does not seem any threat of substitute so major in both segments of paint decorative and industrial paint. Result: favourable The amount of bargaining power suppliers have Raw materials( solvents,resins,pigments and additives) constitute around 50% of total production cost and hence have significant impact on margins in an industry that is increasingly becoming a commodity business in decorative segment, and so there is moderate bargaining power of suppliers. Result: Unfavourable The amount of rivalry among competitors there are existing rivals of Asian paint company which are Nerolac, Goodlas, ,Berger, ICI etc.

 Due to increased rivalry there is cost pressure upon companies and moreover weaker companies are forced to leave the market. Asian paint increased its advertisement expenditure along with research and development to compete this.

Result: Unfavourable 5 FORCE ANALYSIS

Entry Barriers High initial capital costs, and moderate continuing R&D costs Thin operating margins require low cost capital structure Wave of consolidation and rationalization in industry MOD ..

Supplier Power Volatile rawmaterial prices Low switching costs from one supplier to another mod Volatile energy prices Move towards supplier consolidation and integration

EXISTING RIVALS 1 Berger 2 goodlass nerolac 3 ICI 4 Jenson & low NicholsonOeral rivalry: moderate
L0W HIGH

Buyer Power Competitive pressures force

enhancement of distribution structure Large buyers such as Auto OEMs, Govt., DIY home centers, etc Fragmented coating industry Demanding end consumer

Threat of Substitutes

R&D efforts help improve the product offering and one paint/ coating is substituted with another improved paint/ coating Dependency on a few large customers

Question 5 Identification of Category of the paint industry of Asian Paint. (Industrial setting)

Asian paints is the global industry operating in 17 countries across

the world.

It has manufacturing facilities in each of these countries and is the largest paint company in eleven of these markets. Asian Paints operates in five regions across the world viz. South Asia, Southeast Asia, South Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. The countries that Asian Paints has presence are as follows: 1.Asian Paints in South Asia (India, Bangladesh, Nepal and Sri Lanka). 2.SCIB Paints in Egypt. 3.Berger in South East Asia (Singapore), Middle East (UAE, Bahrain and Oman), Caribbean (Jamaica, Barbados, Trinidad & Tobago). 4.Apco Coatings in South Pacific (Fiji, Tonga, Solomon Islands and Vanuatu). 5.Taubmans in South Pacific (Fiji and Samoa). The company has a dedicated Group R&D Centre in India and has been one of the pioneering companies in India for effectively harnessing Information Technology solutions to maximize efficiency in operations.

Question 6 Identification structure of the paint industry under which Asian Paint falls.(Industrial structure)

Industry structure essentially deals with underlying economic

and technical forces operating in an industry. It consists of the nature of competition based on number of competitors and their roles and product differentiation Differentiated Oligopoly Is the Most Prevalent Form of Market Structure for Asian paints.

Question 7 : comment about overall attractiveness of paint industry

Industry attractiveness consists of factors prevailing in the industry affecting the profitability of an organization favourably and unfavourably. Attractiveness of automobile industry i. Nature of Demand Here the demand analysis is done for paint industry. India is attractive for paint industry because: a. Population is increasing in India and also there income level b. With increase in income level people are shifting to urbanisation becoming conscious to interior wall paints and house paints which leads to more demand for decorative paint. c. Apart from income and urbanisation, education and low substitutes also provide attractive demand for product. ii. Industry potential It deals with scope of business that it offers at present and in future. This is mainly concerned with the total auto paint industry sale potential. As India is a large market and having more potential of sales in the industry, it will attract more and more car companies in India. Profit potential Profit potential is concerned with the degree to which differentiation or standardization is there in industry.

iii.

 In paint industry a firm can earn substantial profit by

innovating its product with better quality and eco friendly product. In paint industry profit potential is substantially moderate because through technological changes and research and development one can have differentiated paint for some time and can earn more profit. iv. Entry and exit barriers There are entry barriers to the new entrants because of High initial capital costs, and moderate continuing R&D costs.

Asian

Paint's innovative marketing and advertising have helped the company build a brand that also acts a strong entry barrier in the oligopoly market.

In

paint industry entry barriers are in the form of investment requirement, degree of product differentiation, cost disadvantage etc. However, given India's incredible growth forecasts, infrastructure progress (especially new and better roads), and everexpanding financing options to rural residents, the market is attractive.

It is difficult for new entrants to compete with

already established brand, cost benefit etc. And

hence automobile industry has many entry and exit barriers which reduce the attractiveness.

Question 8: comment about performance of paint industry(industry performance)

Industry performance is measured in terms of following factors: i. Profitability In paint industry profitability is measured through either sales or investment done. But as paint industry is a highly capital intensive industry sales may be very high which creates difficulty to evaluate performance and hence investment should be taken for consideration. ii. Operational efficiency This part operational efficiency is dependent on input-output relations, inputs like availability of raw materials like steel, fuel, machinery components etc, huge infrastructure facilities like huge production plant, distribution outlets and service stations, large number of manpower and so on. And in paint industry operational efficiency is very high because output with respect to input is very high. iii. Innovations Innovation refers to any product or idea that is perceived by someone as new. In paint industry paint innovations are high that is addition of quality in terms of eco friendly, new paint or different marketing channel innovations etc are possible. And through innovations differentiation is possible in paint industry. iv. Technological advancement In paint industry technological advancement refers to new ways and technologies for developing new cost effective paint

adoption of new technology creates entry barriers to entry of new firms. Adoption of Technological advancement creates competitive advantage in pain industry to a firm in the form of cost benefits and differentiation of features.
Question 9: strategic group analysis

A strategic group is in a country consists of those firms which has similar combination of strategies to compete. Strategic Group is likely to be in auto paint industries where there is a difference between product lines of firms, especially in terms of pricing. There is great rivalry among different firms. On the customers part, there can be a shift from one group to another, especially with increase in income level n fashion trend; the firms effectively compete for customers in different market segments on their parts. In paint industry following strategic groups can be formed. i. Strategic groups based on price competition. Here mainly competition in same market segment takes place where customers are more prices sensitive. For example, Asian paint competing with godless nerolc, jhenson&Nichols and Berger because their target customers in the Indian market are broadly similar and they focus mainly upon the pricing strategy. ii. Strategic group based on quality and health affecting factor: Here competition in same market is based on superiority of quality and its affect in positive terms ,to compete this

Asian paints does regular research and development and is trying to make complete water based paints.
Question 10: competitor approach analysis

Asian Paints Parent Company Category Sector Tagline/ Slogan USP Asian Paints Paint Industry Industrial Products and Chemicals Merawala blue; Har ghar kuch kehta hai ki ;Ask Aparna Indias biggest brand with widest reach. STP

Caters to all segments with brand Royale aimed at premium segme Segment and rest at mass market. Home-owners, industries-hotels, education, healthcare, agro & Target Group Positioning buildings A complete array of products to cater to everyone. SWOT Analysis 1. The largest paint company in India and third largest company in Asia Strength 2. They have over 50% of market share and are clear leaders

manufacturing equipment and automobile etc. infrastructure, govt.

decorative paints and are strong competitors to Kansai Nerolac to b leaders in Industrial paints and coatings. providing service to 65 countries all over the world. 4. Asian paints has strong international presence with its four 4 and Taubmans. 5. Most renowned brand in Indian Paint Industry & its strong 1968.

3. They operate in 17 countries and have 24 manufacturing facilitie

subsidiaries; Berger International Limited, Apco Coatings, SCIB Pain

customer focus and innovative-spirit has made it market leader sinc

6. Superior technologies deployed to achieve maintain the competit regional distribution centers, outside processing centers etc. hence they have strongest supply chain system with by unique ways of advertising and roping in celebrities like Saif Ali Khan. 8. The company has strong financials. 1. Limited market share in industrial paints segment with Kansai Nerolac and Akzonobel giving stiff competition. 2.In decorative paints Industry Customer tastes and perceptions Weakness trends, hence production planning and inventory problem.

edge for eg. Supply chain management system that integrates plan

7. They have maintained their brand name and increased awarenes

change very fast and products may become obsolete with change in

1. Big an international standard paint company it should look for m opportunities abroad 2. There is a good scope for growth especially in industrial paints category 3. Needs to have more focus on Automobile industry in industrial paints segment 4. Competitors are going for Hi-tech process and Asian paints with Opportunity good financial and intellectual capital can go for hi-tech.

1. Growth prone to slowdown effects products and manufacturing facilities as Environment policies are given more emphasis Threats 3.Raw material scarcity and volatlility in prices. Competition 1.Jenson & Nicolson India Limited. 2. Kansai Nerolac 3.Akzonobel 4. Sherwin-Williams Co. 5. Nippon Paints Co. Competitors 6. PPG Industries Inc.

2.Stringent Government rules and regulations regarding the quality

Question 11: ETOP for Asian Paints: Environmental threats and opportunity profile of Asian Paints Factors analyzed Degree of Degree of strength Degree of Total importance for Asian paint (+) weakness for (out of 5) Asian paint ()
5 4 2 1 3 3 3 2 3 4 -15 12 4 3 12 16 16 15 20 51 4 3 3 3 5 3 -12 9 15 12 4 4 3 3 2 4 -15 -8 12 -11

Political and legal environment 1. Taxation 2. industrial policy 3. import duty 4. export promotion measures 5. stability of government Total Demographic environment 1. urbanization 2. Income of family 3. Population increase in India Total Natural environment 1. availability of raw materials 2. anti pollution controls 3. new technology for eco friendly paint Total Economic factors 1. FDI 2. Fiscal policy 3. Economic policies of India Total Socio cultural environment 1. Lifestyle and preferences of people 2. Social norms Total Technological environment 1. Innovations

4 5 4

4 3 5

4 2

4 2

16 4 20

12

2. Research and development 3. Cost efficient technologies for paint Total Competitive environment 1. No of competitors 2. Entrance of foreign companies Total Grand total score of Asian paint

4 3

3 4

12 12 36

3 4

3 5

-9 -20

-29 (16+51+12-11+20-29 ) =59

From above ETOP analysis we can say that Asian paint has its own advantages from external environment but competition, economical factors are unfavourable to some extent to them.

Question 12:STRENGTH AND WEAKNESS IN DIFFERENT AREAS a) Strength and weakness Strength: i. It is market leader with 44% of share. ii. It is strong in inventory control iii. Te pricing strategy is oriented to lower and middle level customers. iv. Geographically well spread giving the company logistical advantage v. It serves widest product range in terms of shades, pack sizes, product.

Strong finanacial helps the company to invest in marketing and brandrecall activities. vii. Comprehensive nationwide coverage of market. b) Weakness i. Seasonal demand, hence in offseason can lead to cash flow problems. ii. Innovation in developing new product is inadequate. iii. Weakness on the technology front in industrial paints. c) CORE COMPETENCE Brand image is the main core competency for the Asian paint i.e. well established brand name over the years provides it competitive benefit for its product. d) COMPETITIVE ADVANTAGE Lack of any threatening competition Nearest competitor half our size Balanced portfolio of products Products are positioned across All price points (economy Mid range - premium) Closeness to customers & keen market Understanding Completely redefined the Exterior Coatings market Products perceived as positive value propositions by Customers
Question 13: preparation of OCP for Asian paints

vi.

Organizational Threats and opportunity profile of Asian paints

Factors analyzed

Degree of Degree of strength Degree of Total importance for Asian paints (+) weakness for (out of 5) Asian paints (-)
4 4 4 3 5 3 3 3 4 4 4 3 12 16 16 12 -15 9

A. Production factors
Plant location Plant capacity Capacity utilized Quality of technology used 5. Supply of raw materials 6. R& D facilities Total 1. 2. 3. 4.

50
3 5 3 5 3 3 5 5 5 2 3 3 3 4 15 25 -6 15 -9 -9

B. Marketing Factors
1. Competitive advantage 2. Market share 3. Product life cycles 4. Distribution outlets 5. Promotional efforts 6. Market research 7. Competitive pricing Total

31

C. Finance factors
Cost of capital Ease in raising fund Financial position Use of financial resources 5. Tax advantages Total 1. 2. 3. 4. 4 5 3 4 4 3 3 3 3 4 -12 15 9 12 -16

D. Human resources factors

1. Quality of managerial personnel 2. Quality of operatives 3. Employee attitude 4. Employee motivation and morale 5. Employee absenteeism 6. Employee turnover Total 5 5 4 4 4 2 3 4 3 4 4 5 15 20 -12 -16 -16 -10

-19

E. General

management factors
1. Company image 2. Information and reporting system 3. Willingness to bring change Total 5 3 3 4 2 2 20 6 6

Total score for Asian paints

32 102

Question: 14 preparation of SAP for Asian paint Factors analyzed Degree of Degree of strength Degree of Total importance for Asian paints (+) weakness for (out of 5) Asian paints (-)
4 4 4 3 5 3 3 4 4 4 3 3 12 16 16 12 -15 9

F. Operation factors
7. Size 8. Plant capacity 9. Fineness in planning etc 10. technology used 11. Supply of raw materials 12. R& D facilities 13. Quality of product Total

50
3 5 3 5 3 3 5 5 5 2 3 3 3 4 15 25 -6 15 -9 -9

G. Marketing Factors
8. Competitive advantage 9. Market share 10. brand 11. Distribution outlets 12. Promotional efforts 13. Product range 14. Competitive pricing Total

31

H. Finance factors
6. Cost of capital 7. Ease in raising fund 8. Financial position 4 5 3 3 3 3 -12 15 9

9. Use of financial resources 10. Tax advantages Total

4 4

3 4

12 -16

I. Human resources factors

7. Quality of managerial personnel 8. Quality of operatives 9. Employee attitude 10. Employee motivation and morale 11. Employee absenteeism 12. Employee turnover Total 5 5 4 4 4 2 3 4 3 4 4 5 15 20 -12 -16 -16 -10

-19

J. General management factors

4. Company image 5. Information and reporting system 6. Willingness to bring change Total 5 3 3 4 2 2 20 6 6

Total score for Asian paints

32 102

Question 15:value chain analysis

Every activity performed in the organisation is interrelated and each activity creates a value important to the whole chain. The nine value creating activities are divided under two heads primary activity and support activity. Primary activity: These are those involved in creating value or service: i. Inbound logistics ii. Operations iii. Outbound logistics

iv. v.

Marketing and sales Service Support activities i. Firm infrastructure ii. Human resource management iii. Technology development iv. Procurement

FUNCTIONAL ANALYSIS