Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
STRATEGIES
OF ORGANIZATIONS IN
THE CONTEXT OF
BANGLADESH
Term Paper
AUGUST 6, 2014
EAST WEST UNIVERSITY
Group
Members
Syed Mehtab
Hussain 2011-110-404
Amit Sarker
2011-1-10358
Syeda Sabreena
Zaman 2011-1-10248
Md. Abu Rayhan
2011-2-10-089
Submitted
To
Rumana Afroze, Senior Lecturer
Department of Business
Letter of Transmittal
Rumana Afroze,
Senior Lecturer
Department of Business
Administration East West University
Subject: Submission of report for completion of course.
Dear Madam,
This is to inform you that we have completed the report on the topic
Business
Level
Strategies
of
Organizations
in
the
Context
of
Syed Mehtab
Hussain 2011-110-404
Acknowledgement
First and foremost, we would like to thank the Almighty God for giving us
good health to complete this report. Then we would like to thank our
course instructor Rumana Afroze for her relentless support, advice and
guidance throughout the entire preparation of this
assignment. The
development of this term paper took several weeks and the contribution
of many people. Without the support and help of our group members, we
would have not been able to complete this study.
We also would like to thank our family members for their support and
understanding
throughout
the
course
of
the
completion
of
this
assignment. They have always been there to help us and were the force
that pushed us to go on.
Dhaka,
Bangladesh
August 6, 2014
Executive Summary
The report is about Business Level Strategies of Organizations in the
Context of Bangladesh and we chose Unilever Bangladesh and Kohinoor
Chemicals for this analysis. In Bangladesh, KCCL introduced the concept
of marketing Branded Generics. The company stands out for its strong
product
differentiation,
exploration
of
progressive
opportunities,
management,
such
as
and
penetration
of
aggressive
international
marketing approach distinguish the KCCL (Tibet) brand. The company has
identified the key areas that will support future growth
strong
ties
with
the
Cosmetics
community,
comprehensive
history,
they
should
have
proper
functional,
business and
corporate strategies and at the same time, they should be different as one
is a local firm and another one is a multinational firm.
Table of Content
Chapter 1: Introduction
1.1 Background of the study.......................................................................................................4
1.2 Objectives of the study......................................................................................................... 4
1.3 Methodology of the study.....................................................................................................4
1.4 Scope of the study................................................................................................................ 4
1.5 Limitations of the study........................................................................................................4
Chapter 2: Company Overview
2.1 History of Unilever...............................................................................................................6
2.2 History of Kohinoor Chemicals............................................................................................7
2.3 Vision and Mission of Unilever..........................................................................................11
2.4 Vision and Mission of Kohinoor Chemicals.......................................................................11
2.5 Present Scenario of Unilever..............................................................................................12
2.6 Present Scenario of Kohinoor Chemicals........................................................................... 13
2.7 Unilevers contribution to the economy of Bangladesh..................................................... 16
2.8 Kohinoor Chemicals contribution to the economy of Bangladesh....................................17
Chapter 3: Theoretical Background
3.1 Defining Strategy................................................................................................................20
3.2 Functional-Level Strategies................................................................................................20
3.3 Business-Level Strategies...................................................................................................21
3.4 Corporate-Level Strategies.................................................................................................23
Chapter 4: Analysis
4.1 Functional Level Strategy of Unilever............................................................................... 25
4.2 Business Level Strategy of Unilever.................................................................................. 27
4.3 Corporate Level Strategy of Unilever.................................................................................27
4.4 Functional Level Strategy of Kohinoor Chemicals............................................................ 28
4.5 Business Level Strategy of Kohinoor Chemicals............................................................... 31
34
35
36
Chapter 5: Findings
5.1 Findings from the Analysis................................................................................................ 38
Chapter 6: Conclusion and Recommendation
6.1 Recommendations.............................................................................................................. 40
6.2 Conclusion..........................................................................................................................42
1.
INTRODUCTION
Collect information about the business level strategy, functional level strategy and
corporate level strategy.
2.
COMPANY OVERVIEW
Unilevers Timeline:
19th century: Although Unilever wasn't formed until 1930, the companies that joined
forces to create the business we know today were already well established before the
start of the 20th century.
1900s: Unilever's founding companies produced products made of oils and fats,
principally soap and margarine. At the beginning of the 20th century their expansion
nearly outstrips the supply of raw materials.
1910s: Tough economic conditions and the First World War make trading difficult for
everyone, so many businesses form trade associations to protect their shared interests.
1920s: With businesses expanding fast, companies set up negotiations intending to
stop others producing the same types of products. But instead they agree to merge and so Unilever is created.
1930s: Unilever's first decade is no easy ride: it starts with the Great Depression and
ends with the Second World War. But while the business rationalizes operations, it also
continues to diversify.
1940s: Unilever's operations around the world begin to fragment, but the business
continues to expand further into the foods market and increase investment in research
and development.
1950s: Business booms as new technology and the European Economic Community
lead to rising standards of living in the West, while new markets open up in emerging
economies around the globe.
1960s: As the world economy expands so does Unilever and it sets about developing
new products, entering new markets and running a highly ambitious acquisition
program.
1970s: Hard economic conditions and high inflation make the 70s a tough time for
everyone, but things are particularly difficult in the fast-moving consumer goods
(FMCG) sector as the big retailers start to flex their muscles.
1980s: The business expands into Central and Eastern Europe and further sharpens its
focus on fewer product categories, leading to the sale or withdrawal of two-thirds of
its brands.
1990s: The business expands into Central and Eastern Europe and further sharpens its
focus on fewer product categories, leading to the sale or withdrawal of two thirds of
its brands.
The 21st Centuries: The decade starts with the launch of Path to Growth, a five-year
strategic plan, and in 2004 further sharpens its focus on the needs of 21st Century
consumers with its Vitality mission.
Unilever Bangladesh (UBL) is a Joint Venture of the Government of Bangladesh and Unilever,
one of the worlds leading suppliers of fast moving consumer goods with strong local roots in
more than 100 countries across the globe. Unilever holds 60.4% share in UBL. Unilever
Bangladesh (UBL) is the leading Fast Moving Consumer Goods Company in Bangladesh
with a heritage of 50 years and products that are present in 98% of Bangladeshi household.
UBL started its journey in Bangladesh with the production of soaps in its factory in
Kalurghat, Chittagong. Over the years the company introduced many affordable brands
which won the hearts of Bangladeshis all across the country. Today we are present with our
brands in almost every household of the country. UBL is the market leader in 7 of the 8
categories it operates in, with 20 brands spanning across Home and Personal Care and Foods.
Its operations provide employment to over 10,000 people directly and indirectly through
its dedicated suppliers, distributors and service providers. 99.8% of UBL employees are
locals with a large number of local UBL employees now working abroad in other Unilever
companies as expatriates.
Industries (KGI) consisted two manufacturing plants, namely Kohinoor Chemical Company
Limited established in 1959 and Kohinoor battery manufacturers limited established in 1964.
It also started business by producing Tibet Snow in 1956 and from then it never really had to
look back as Tibet Snow gave it solid ground to stand firmly. Then it went on producing Tibet
Ball Detergent, Tibet Kadur Tel and so on. After liberation, these companies were placed
under Bangladesh Fertilizer Chemical and Pharmaceutical Corporation in 1972 and
subsequently under Bangladesh Chemical Industries Corporation (BCIC) in 1976.
Like all other BCIC subsidiaries KGI was also directed by an enterprise/company board,
chaired by one of the directors of BCIC who was also the director-in-charge of KGI. The
enterprise enjoyed separate entity and operated on commercial consideration with full range
of delegated powders for administrative commercial and financial functions. From the
Pakistan period KGI was the largest manufacturer of dry cell battery, laundry and toilet
detergents, snow, cold cream, toothpaste, talcum powder, hair oil, nail polish, after shave
lotion, shaving cream, fountain pen ink and glycerin in the country. Laundry detergent
was the principal product of Kohinoor Chemical Company Limited. Traditionally the target
market of KGI used to be the lower income group of society. It tried to reach them with a
brand name Tibet. KGIs basic management philosophy was to try to meet the needs of
lower income group and satisfy the customer requirements by supplying these products
within their purchasing power as well as maintaining high quality.
After nationalization the mission statement of Kohinoor Group of Industries became to reach
with its products at every home of 68000 villages of Bangladesh. This time, along with its
regular products Kohinoor introduced a full range of quality products for the people of higher
income group to cater to their needs. These products were Honey Dew after shaving lotion,
Envy after shave lotion, Night fever perfume, Flora French perfume; Flora perfumed talc,
Flora luxury talc, Flora nail polish, Medora toilet detergent, Lemon dew toilet detergent,
Sandalina toilet detergent, Tibet Toilet Detergent etc. This new range of products succeeded
in seizing considerable share of the upper-segment market, previously filled by the imported
items of the kind.
Up to mid `80s, KGI was a profitable concern. After nationalization, its yearly profit
experienced an increasing trend till 1983. However, the profit started to decline and from
1986, it started incurring loss. The containing dismal performance of this once-profitable
enterprise prompted the government to seriously pursue its privatization. The privatization
process began in 1988, under the 51-49 plan as per industrial policy, 1986. The process
consisted of -sale of 15% of shares to company workers and staff under Employee
Stock Option Program (ESOP), 34% to the general public through the Stock Market and the
remaining retained by the government. However the employees did not pay for their shares
until 1989, so the government retained 66% for an extra year. In the second and final phase
of the process, the retained 51% of the shares were offered for sale through open tender in
1992. These shares were eventually sold to the Orion Group in 1993. The Group, which had
been a successful private sector owner of three other pharmaceutical concerns, was the
highest bidder for the enterprise. Its interest in acquiring the Kohinoor Chemicals stemmed
for its long association with the enterprise as a supplier/ contractor.
During the prolonged period of privatization, the enterprise continued to run into losses. By
1993, the enterprise was running at only 13% of its annual production capacity and its sales
revenue fell by 32% since 1990.
Up to 80s, KCCL was doing well in government ownership; it could establish itself among
the few profitable organizations of Bangladesh. But the nosedive came in the mid-80s.
Surprisingly the financial condition of Kohinoor was thought to be satisfactory till an audit
report discovered that it was making losses from the mid-80s in 86 alone, Kohinoor incurred
a staggering losses of 5 Crore taka! It came as a total stock for everyone concerned. The
reaction was so intense that the union workers beat the auditors up and threw him out of
Kohinoor. But the process of decadence started long before this revelation. Each of the
departments bore the sign of ill competence and inefficiency as well as incapability to
react positively to the changing environment. We can take an inside picture of some of these
departments to trill these marks of inefficiency that plagued the enterprise.
The administration was in total disarray under labor unions constant interference.
Management lost the bargaining power; the trade union maintained relationship with the
concerned top officials and the minister. Improper demands from the part of labors caused
many humiliating incidents, for example, breaking tabletop glasses was common event. The
union dictated the production schedule and specification. They even sold machine parts and
office materials outside. The management provided dress for workers. They took the
opportunity and regularly misused this benefit and sold the Kohinoor cloths outside. The labor
union also interfered with the recruitment; as a consequence the enterprise became
overstaffed. The link between performance and payment was no longer there. Supervisors
lost their control over workers.
On their part, the management also grew inefficient and corrupt. In fact, after nationalization
the management failed to raise the level of responsibility and accountability. Not only
workers, but also the management including the top management, involved in malpractice
and misuses of power and authority. The purchase procedure had flaws that caused Kohinoor
to pay higher piece for materials. They also accepted below quality raw materials, which led
to the quality deterioration of the products. No initiative was taken from the part of
management to product development to respond to the changing market situation. For
instance, Kohinoor used to produce ink earlier its quality matched with the consumers
expectations. But suddenly it deteriorated. Its competitor youth ink that was imported
from China took the opportunity and grabbed the market with superior quality. With a
virtually non-existent MIS department and inefficient, laggard marketing department, it
failed to identify the variables interacting outside that were causing changes in external
environment.
As far as production is concerned, Kohinoor maintained very old plant. In the detergent
section, all types of detergents were made from a single plant and through a single process.
Detergent, washing detergent, toilet detergent; everything were produced from that plant
and manually operated. The basic raw materials were produced in the plant. The main
ingredient of detergent, sodium salt or plasmatic acid, called noodles or talo, was produced
internally. The quality of detergent depends on these noodles. Since all materials were
produced manually and did not have any sophisticated quality assurance device, the talos
quality varied from batch to batch. Consumers found it inconvenient as Kohinoor failed to
stick to a certain level of product quality for a longer period.
Probably marketing department of KCCL was the most affected department due to this
nosedive. This responsibility center was headed by a marketing manager who did not have
much knowledge to combat the fiercely competitive market of consumer product. This
department believed in selling concept. That is they believed that production of any product
ensures its sell. Kohinoor had its star products like Tibet beauty care detergent, super lemon
dew detergent. It also had a number of popular products like Tibet snow, Genstar shaving
cream, Tibet Pumpkin Hair Oil etc. A little care and planning regarding the products could
well retain its market. But KCCL paid heavily for its concept of taking the market for
granted (selling concept). KCCL relied on a few sales representatives, who earned a fixed
remuneration regardless of performance, and therefore lacked proper incentives. Its years
old packaging gave consumers a monotonous appearance. In a changing society, KCCLs
competitors often came up with better product. Kohinoor could not over trump in answer.
Down the channel, Kohinoor followed a typical system of distribution. It dispersed products
to wholesales from where retailers collected products. But usually in this process sales
representatives play a vital role to increase demand. They do it by pursuing retailers through
various methods such as giving commission and rapport building. Kohinoor sales
representatives lacked the motivation to do this hectic job, due to their inflexible salary
structure, Kohinoor lost its market as its consumer group moved to other brands. It happened
that only the brand loyal consumers stuck to Kohinoor products. The market lost by KCCL
was captured by its competitors such as Unilever, Keya Cosmetics, Square toiletries,
Moushumi Cosmetics industries millat chemical company etc.
The government polices also did not help the Kohinoors case either. The reduction in import
tariff structure led to a boom in the trading business, making competition much more difficult.
Fake Kohinoor items also played a major role in Kohinoors losing market. This was a twoway process; fake Kohinoor products reduced the reliability of original Kohinoor products
and take Kohinoor products flooded the market at a much lesser price.
The government initiated the privatization process as it had had to the bear the burden of the
huge cumulative loss. Ultimately it was handed over to the Orion group. On august 3, 1993
owners of Orion house, there brothers Obaidul karim, Rezaul karim and Ebadul karim bought
KCCL, from BCIC through a sealed bid auction. Down payment was settled at TK. 8 crore
approximately. Orion house diversified its business through acquisition of Kohinoor. Yet they
took the challenge and succeeded in reducing loss. Within three years, the enterprise,
experience an about-turn and first made profit in 1996-97 fiscal year. But the process of
transition was never smooth. The new owners felt that the privatization board was slow to
make decisions and every step required personal follow-ups. / Also the lack of commercial
orientation and non-transparent dealings of the bureaucrats didnt make it any easier. But the
toughest challenge was from the in-house; the labor unions and old management legacy. After
acquiring it the new owners could not enter the organization for 7 days. They were able to
enter the organization only after signing a contract with the labor union-the contract
specified that no labor could be sacked without giving him certain benefits (like gratuity,
provident fund) as was available in the BCIC period. Moreover the enterprise had to bear
the burden of many politically affiliated workers. KCCL also had to carry a number of
BCIC officers for 3 years on deputation. All these factors as well as the long prevailing
bureaucratic bottlenecks made the change of administration quite difficult after privatization.
The major task of the new management was to streamline the inefficient work force. It
retrenched 45% of the employees, paying them due compensations. This large-scale
retrenchment faced little labor resistance since it followed existing labor laws. The have
reorganized their recruitment policy, selection criteria, performance appraisal and job
evaluation system. Now administration department also has begun to recruit some
professional graduates. As a result of a massive rightsizing, in 1993 the total numbers of
workers were 1007,
among them 405 were workers and 602 were staffs- the corresponding figure in 1998 is 623
comprising of 243 workers and 391 staffs.
Mission:
Unilever's mission is to add Vitality to life. They meet everyday needs for nutrition; hygiene
and personal care with brands that help people feel good, look good and get more out of life.
Goal:
The goals of UBL are:
To manufacture high-standard products.
Promoting products to the highest extent
Producing large volume to achieve production cost economies.
Enabling quality products to be sold out at obtainable prices.
Time has rewarded us with the rank of leadership. But we will always remember what it means
to us to be the leader in the market. We will always try to explore beyond the boundaries of
possibilities. Customer need and the customer need alone will be our guiding philosophy in
manufacturing and marketing of products that beautiful people and satisfy their souls.
Quality of the products, reliability, and strong distribution channel are the core values of the
organization and are the basis on which they do business.
Unilever at a Glance:
Type of business: Fast Moving Consumer Goods Company with local manufacturing facilities,
reporting to regional business groups for innovation and business results.
Operations: Home and Personal Care, Foods
Unilever has a portfolio of about 400 brands globally. However many of these are local that
can only be found in certain countries, e.g. Fair & Lovely. In Bangladesh the number of
UBLs existing brands is 18 which are categorized in different sections. The brands fall
almost entirely in two categories:
Food and beverages
Home and personal care brands
In Bangladesh the company operates in four distinct product categories. These are:
Food and Drinks
Home care
Personal care
Water Purifier
Tibet Beauty Soap: A high quality bath soap made from 100% vegetable fat. There are
four variants of new Tibet Beauty Soap.
Tibet Detergent Powder: New Tibet Detergent Powder is prepared from non-effective
extra power whitening and brightening agents to protect delicate skin and fabrics.
Gentle refreshing touch of jasmine or Lemon fragrance keeps a miracle satisfaction of
mind all day long.
Tibet Laundry Soap: Tibet Laundry Soap is a popular laundry soap for an upmarket
target group. This soap is also being used widely throughout the country. It is made
from Vegetable Fat.
Tibet 570 Laundry Soap: Tibet 570 Laundry Soap has been a house-hold name in
Bangladesh for last 50 years. This uniquely formulated washing soap is ideal for any
cloth washing.
Tibet Chandon Attar: Tibet Chandon Attar is specially made from Mysore Sandal
Wood Extracts. Its non-toxic and non-irritating. The fragrance lingers all day long.
Tibet Chandon Attar: Tibet Chandon Attar is specially made from Mysore Sandal
Wood Extracts. Its non-toxic and non-irritating. The fragrance lingers all day long.
Sandalina Sandal Soap: From the time Immemorial sandalwood has been used as a
natural source of beautification. Sandalina Sandal Soap is suitable for all kinds of
skins. Sandalina Sandal soap, enriched with Mysore Sandalwood Oil it makes your
skin softer and supple.
Tibet Ball Soap: Tibet Ball Soap is a high quality washing soap. It is made from
Vegetable Fat. Tibet Ball Soap is a combination of optical brightener for brightening
and protecting the cloth.
Bactrol: A high quality antibacterial soap made of 100% vegetable fat. Specially
formulated with TCC which 100% protect your family's health. It also equally
effective against body odour, cuts & scratches and pimples. Bactrol Family
Healthsoap keeps your family clean and protected.
Tibet Glycerin: Emollient enriched Tibet Glycerin is very popular winter solutions for
beauty conscious men and women. It's i 100% pure & natural formulation that
prevents skin from dryness and improves complexion, nourishes and makes trie
skin soft & smooth.
Tibet Snow: Emolin enriched New Tibet Snow is an ideal skin care cream in all
season for delicate skin. Its a mild skin care cream, made from BP grade
ingredients added with moisturizer, and sufficient skin nutrients.
Tibet Petrolium Jelly: Tibet Petroleum Jelly is a very popular winter tips for beauty
conscious men and women. This unique Tibet Petroleum Jelly is made from the finest
contents added by Jojoba Oil, rejuvenating fragrance and moisturizing fragrance.
Tibet Lipgel: An Addition of Cocoa Butter, extra moisturizing and emollient agents
with pure petroleum jelly and mineral oils makes this product neat all day long
protection against cracking and chapping of the lips in the dry winter season.
Tibet Prickly Heat Powder: Irgason-enriched Tibet Prickly Heat Powder helps treat
and chafing. By absorbing excess perspiration it soothes heat irritation quite instantly.
Tibet PUPKIN HAIR OIL: Tibet Pumpkin Hair Oil , a unique product, represents a
heritage of more than 50 years in Bangladesh. It is produced form pumpkin extract
natures proven hair nourishing agent.
Tibet Baby Lotion: Specially formulated for Baby's soft and tender skin, Tibet Baby
Lotion is a synergistic blend of Aloe Vera Gel, beauty oils, moisturizers and emollient
agents. It keeps the Baby's delicate skin soft, gentle and velvety. Tibet Luxury Talcum
Powder is a deodorant body.
Tibet Luxury Talcum Powder: Tibet Luxury Talcum Powder is a deodorant based
body powder made from the finest and pure imported talc blended with world
famous fragrance from Switzerland and other skin care ingredients that provides
all over protection against body odor.
Tibet Talcum Powder (Photo & Jasmine): Having two variants- Tibet Talcum Powder
(Photo) & Tibet Talcum Powder (Jasmine), it keeps the whole family comfortable
everyday, and enfolds in a fragrant caress all day long.
Sandalina Sandal Talc: Taking extra care of Sandalina Sandal Talc. Keeps skin soft
and smooth. Its sweet sandal perfume soft and smooth. Its sweet sandal perfume
lingers for a long while.
Genstar Leather Shaving Cream: Special beard softening formula gives you the
coolest shave and leaves your face fresh for hours after shaving, it reduce friction to
make the shave comfortable. Genstar Shaving Cream improves the performance of
your razor/ blade.
ICE COOL Shaving Cream: Ice cool Shaving Cream is the latest addition to
companies traditional and most popular products range. It gives the real cooling
sensation to the skin and makes your face fresh and clean. it is made with active
cooling agent and foaming properties make the shave more complete and smooth.
Heel Guard (Cracked Heel Cream): The unique heel softening formula penetrates
through layers of skin to cure dry, cracked & fissured feet. It also assists to prevent
itching and rejuvenates skin of the feel.
ICE COOL Soap: The principal effectiveness of the Ice Cool Soap is manifest in its
very band name, because MENTHOL has been added to all other skin care properties
to ensure cooling, refreshing impact in addition to Sodium Soap, Moisturizer,
Perfume, Preservative and Aqua. Its unique defense system protects your skin from
summer heat, bacteria & dust particles and assists to fresh all day long by imparting
cooling effect on your skin.
FRUITY Chap Stick: Contains vitamin C & E to protect lips from dry and cool
weather. Rich in cocoa butter, jojoba oil and freshly fruity odor, it brings both
moisture and fragrance. The botanical extracts prevent collagen loss and flatten
fine lines on lips Keeps your lips smooth and supple.
ICE COOL Prickly Heat Powder: Ice Cool prickly heat powder gives yOU the relief
from the itching heat rash and skin irritation from hot weather. Its advance triple action
formula provides you the Cooling therapy to refresh and relax your body and mind
from unbearable heat and stress. It also keeps you out from bacterial, fungal agents
and body odor all day long.
CLEAN MASTER Liquid Toilet Cleaner: Clean Master liquid Toilet Cleaner is highly
effective Liquid toilet cleaner. Extra power LABSA and special inorganic chemical
enriched Clean Master Toilet Cleaner removes tough Stains, kill Germs and
Deodorizes toilet within very short time
New Products:
Keeping the increase in market share Kohinoor has introduced two new products in the market,
Ice Cool shaving Cream & Xpert Dish Washing Powder to its wide array of products
Social Commitment:
KCCL has always tried to contribute in every aspect in the development of the country. It has
always organized directly and in some cases by provided the financial and technical support to
help the society through the development of education, environment, sports and cultural
sector of the nation.
Blockbuster Products:
contribution
to
the
economy
Despite the stiff competition in the market and world recession KCCL were able to maintain
its increasing growth tendency as well as the market leadership. During the year of 2011
attained a turnover of Tk. 185.06 crore with a growth rate of 14.20%.
The company has been fully compliant with all Government regulations from the inception of
its operation and maintaining the increasing trend of its contribution to the national exchequer.
During the financial year of 2012-2013, Kohinoor Chemicals contributed BDT 517.42 million
to the government treasury in the form of VAT, supplementary duty, advance income tax etc
against the last years contribution of 483.28 million, representing an increase of 7.06% over
last year.
KCCL takes a proactive approach to aggressively search for new avenues in the international
market place. Some of the major points to note are:
of
Kohinoor Chemical was the first company from Bangladesh to enter the African Market
Their endeavor that began amidst many obstacles has expanded to more than sixteen
countries. In 2002, KCCLs major emphasis in international marketing was to consolidate
and grow in all its existing overseas markets by ensuring sustainable competitive
advantage over our competitors brands. In 2002, they were awarded a tender order for our
Tibet 570 Soap for the whole years consumption of Raffles Hospital-the most expensive
and prestigious hospital in Myanmar.
In order to expand the product portfolio in Myanmar, they launched liquid/bottle items by
organizing a huge scientific seminar. In Kenya, they have started supplying to MEDS the
largest institution and Kenyatta Market the largest Market in Kenya.
While consolidating in all existing overseas markets, they are determined to continue
deploying efforts and resources to develop new overseas markets in Asia, Africa, and
Europe. As a part of the ongoing new market exploration activities, in 2002, they
participated in all major exhibitions held in Russia, Ukraine, Afghanistan and Nepal. For
evaluating business opportunities in new overseas markets, they conducted market research
in various markets in Asia and Europe.
3. THEORETICAL BACKGROUND
Every firm must form and use a business level strategy. Customers are the foundation of
successful business-level strategy. When selecting a business level strategy a firm determines:
Who will be served by the strategy?
What needs those target customers have that the strategy will satisfy?
How those needs will be satisfied by the strategy?
The purpose of business level strategy is to create differences between the firms position and
those of its competitors. To position itself differently from its competitors, a firm must decide
whether it intends to perform activities differently or to perform different activities.
Each business level strategy helps the firm to establish and exploit a particular competitive
advantage within a particular competitive scope. How firms integrate the activities they
perform within each different business level strategy demonstrates how they differ from one
another. There are two types of competitive scopebroad target and narrow target. Firms
serving a broad target market seek to use their competitive advantage on an industry-wide
basis. A narrow competitive scope means that the firm intends to serve the needs of a
narrow target customer group. With focus strategies, the firm selects a segment or group of
segments in the industry and tailors its strategy to serving them to the exclusion of
others. Buyers with particular needs and buyers located in specific geographic regions
are examples of narrow target customer groups. As shown in Figure below, a firm could
also strive to develop a combined cost/uniqueness competitive advantage as the foundation
for serving a target customer group that is larger than a narrow segment but not as
comprehensive as a broad (or industry-wide) customer group. In this instance, the firm
uses the integrated cost leadership/differentiation strategy.
4.
ANALYSIS
Product Development
Process Development
A revolution in online grocery retailing
Unilever is developing new technology that prompts consumers to buy seemingly
unconnected yet relevant and suitable products.
Interesting challenge
The system works by recording the purchasing decisions of previous users to build up a
complex model that can predict the most likely combinations of a persons shopping e-basket.
Ming Li, Unilever R&D, who helped develop the system, says, If someone with similar
shopping habits to you buys certain items of fish, ice cream and deodorant, when you come
along with your basket containing the same fish and deodorant, the system will recommend
ice cream.
Increased sophistication
With book, music and video websites, models are based on what other customers have bought
together and how highly they rated the product in feedback. And some online grocery retailers
use logic-based rules to prompt a consumer to buy, say, biscuits when they select cheese. But
their tool is significantly more sophisticated.
Ben Dias, Senior Research Scientist explains, Grocery shopping is more complex due to the
huge variety of categories, the lack of explicit feedback on preferences and the fact that
shoppers frequently buy many of the same items. Also each product has a different rate of
consumption. In future, the system will take that into account and, in time, will prompt based
on typical usage.
Improving performance
The performance of early prototypes was limited due to their inability to explore transitive
associations between products that have never been co-purchased. They overcame this by
incorporating a basket-based random walk algorithm in a model similar to Googles PageRank
link analysis. This calculates an importance score by also taking into account the consumers
current shopping behaviour.
Impressive results
A trial with the leading Swiss online supermarket www.LeShop.ch (subsidiary of the
countrys number one retailer MIGROS) led to outstanding revenue growth. According to
Dominique Locher, Marketing & Sales Director, Consumers using the tool spent an
average of six per cent more per visit.
The main challenge is to make this technology quick enough so it can generate
recommendations within the time it takes a web page to refresh.
Unilever R&D also collaborated with Professor Paulo Lisboa and his team at Liverpool John
Moores University on this project.
product. They introduced Pure it, water purifier, which is an example of very high level
differentiation (unrelated).
Quality:
KCCL is committed to cater to the healthcare needs of the nation. This commitment demands
immense socials responsibility of ensuring quality in terms of quantity, purity, stability, safety,
efficiency and presentation of the product. At every stage of the production, stringent control
mechanism involving raw material testing, in-process quality control, packaging, labeling,
finished product testing as well as stability monitoring and documentation is maintained to
ensure the highest quality product consistently.
Standard Operating Procedures (SOPs) developed according to the cGMP guidelines of WHO
and EU are being strictly followed in every steps to ensure full compliance with the process
parameters. Well equipped with most modern and sophisticated equipment like High
Performance Liquid Chromatography (HPLC), Gas Chromatography (GC), Infrared (IR)
Spectrophotometer, Ultraviolet (UV) Spectrophotometer, Homogenizer, In-vitro
Bioavailabilty tester, Lung simulator, Disintegrator and many others latest computer-aided
quality control instruments and accessories, BPL ensures the highest quality products. This is
how BPL has succeeded in gaining uncompromising trust and confidence of doctors and
patients all over the country.
Cosmetics is directly related to human life and therefore, its manufacturers have immense
social responsibility of providing safe and effective medication. From its very inception,
KCCL has always emphasized the need for uncompromising quality. KCCL commitment to
quality is clear from its progressive use of state of the art manufacturing technology. BPLs
priority is to build a healthier tomorrow for the nation.
Innovation
KCCL employs a significant part of its resources in its R&D with a view to retaining its
leadership position in the Bangladesh FMCG market through introduction of innovative
products. The R&D team comprises of academically sound and professionally competent
diversified professionals who have firm commitment to new product development. R&D team
of Kohinoor Chemical Co. (BD) Ltd. is consistently striving towards
- developing new formulations
- simplifying manufacturing processes
- bringing cost efficiency
The untiring effort of the R&D team has enabled the company to introduce five new products
with 15 presentation forms and strengths in 2005 while a good number of products are in the
pipeline.
In the wake of the highly competitive scenario, our R&D is focusing on innovations of some
high-value, high-margin new products. We believe our continuous effort in R&D will give us
a competitive edge in the years to come.
To keep pace with the ever-changing global market scenario and to cater to the unmet
healthcare needs of the nation, KCCL always concentrates its efforts in introducing new
products with 15 presentation forms and strengths, which has already gained significant brand
equity in the market. Some of the newly introduced products are:
Bactrol
Family Health care soap Bactrol was introduced by KCCL in 2005. Extensive
consumer promotion, in addition to promotion to the healthcare providers, built a
solid base to meet the changing social needs.
Sandalina Soap:
Sandalina Soap is a first-time-in-Bangladesh product designed to capitalize a niche
market-the FMCG market.
Efficiency
The ever-changing market place has fuelled KCCLs determination to keep up with the
changing times by constantly strengthening the information base, exploring new lines of
business and expanding domestic as well as its overseas marketing network. This prompted
the company to undertake infrastructural development to build competitive advantage in
order to retain its position as a leading Chemicals company. KCCL is committed to
developing individual human, technical and conceptual skills through various educational and
a wide range of internal and external human resource development and job related training
programs each and every year.
At KCCL, a well-planned and structural designed in-house training activity involving sales,
marketing, manufacturing, QC, QA etc. is conducted throughout the calendar year. These
training programs are conducted by in-house resources persons on a regular basis and as per
schedule.
One of its every important function is sales Forecasting. Sales forecasting is done monthly in
association with the Sales Management Dept. During sales forecasting, previous sales trend
and seasonal variations are taken into active consideration. Product life-cycle is also
considered carefully.
MIS & Planning Department
Kohinoor Chemical Division has been brought under exclusive computer network. The MIS
and Planning Dept. have two operational units: (1) Management Information System and (2)
planning.
The primary objective of MIS is to ensure availability of all types of data throughout the
Chemical Division. It collects sales data from points of sales, renewed physicians in-and-out
data and processes market research data and disperse to respective departments. It manages
employee profile including personal details and presence.
The MIS & Planning Dept. also provides computer training to the new employees
Training Department
This department is common of all the companies of Kohinoor Chemical Division. It arranges
training for newly employed personnel of Kohinoor in collaboration with the respective
departments.
The managers of BPL train the Product Officers and usually the Product Officers give training
to the Sales Representatives.
It arranges training programs periodically so that the employees are always in pace with the
changes of the company orientations and modern concepts of the FMCG Market
Human Resources Department
A company is only as good as its people. The day-to-day management of KCCL is in the
hands of experienced professionals dedicated to achieve outstanding levels of performance
which ensures better customer service.
The Human Resources Department of Kohinoor Chemical Division is one of the sophisticated
one in Bangladesh. It is headed by Human Resources Manager.
This Dept. is responsible for all employee related activities. It defines employment need for
the organization and defines job description and qualification of the employees needed. That
is, it is to decide whom to recruit, why to recruit and how to recruit. It recruits personnel
whenever any need arises. Usually if any incumbent fails to be selected in an interview, he!
she loses the chance forever.
There are a number of steps involved in the recruitment procedure. A written test and a faceto-face interview are mandatory for any type of recruitment. Over 880 young, energetic and
highly motivated employees from different cultures and diverse disciplines such as pharmacy,
chemistry, biochemistry, microbiology, medicine, engineering, business, law etc are working
with KCCL at home and abroad
Persons from Pharmacy and Medical are assumed to deserve in the Chemical filed. With as
sales force of over250 highly professionals, KCCL are represented in every part of
Bangladesh
to ensure the promotion and delivery of its products at every level of customer. HRD arranges
orientation for the new employees to the origination. In-house recruitment is encouraged than
head-hunting. Head-hunting is practiced in special cases. Performance appraisal is an
important task of Human Resources Dept. It decides incentive scheme for the employees.
It arranges training courses, family tour and telephone facilities for the employees.
KCCL believes in professionalism and emphasizes job rotation or cross-functional activities.
If one employee is found dissatisfied or deprived with his/her parent dept., she/he is
transferred to another dept. depending on performance and qualification. Termination is a
rare case which is done only against major offers. Human Resources Dept. looks after two
rest houses, canteen, security and transport facilities of employees. According to records,
most of the employees are aged below 45 years. Highest survival rate is 5 9 years. BPL
does not practice any sex discrimination. It has 09% female employees.
competitive intensity and therefore attractiveness of the market where Unilever is operating.
This model describes the attributes of an attractive industry and thus suggests when
opportunities will be greater, and threats less, in these of industries. Attractiveness in this
context refers to the overall industry profitability and also reflects upon the profitability of
Unilever. An unattractive industry is one where the combination of forces acts to drive
down overall profitability. A very unattractive industry would be one approaching
pure competition, from the perspective of preindustrial economics theory. This model is
based on five important elements of an organization and uses both internals well as external
competences and threats faced by a business organization. These five elements including;
1. Threat of New Entry
As Unilever operates in different geographical markets so threat of new entrants varies
indifferent markets. In well developed countries where big players like Unilever have Avery
strong hold and brand image, it is very hard for a new entrant to enter the market because of
higher cost to set up a business. On the other hand in less developed markets, it is easier to
enter as legal requirements and capital needed is not as much as in a developed market.
Unilever has its presence almost in every market either through its subsidiaries, branches or
franchises. But its brand image is a strong barrier in the way of new entrants.
2. Competitive Rivalry
The second of Porters five competitive forces is the intensity of rivalry among established
companies within an industry. Rivalry refers to the competitive struggle between companies in
an industry to gain market share from each other. In consumer products business Unilever has
a large number of competitors and these competitors are in reality very strong. They range
from small local corner shop retailer to big giants like P&G, Kraft and Nestle. These
competitors almost provide equally attractive products and services and sometimes better.
These competitors have the power to attract and influence the customers by more attractive
substitute, prices and marketing techniques.
3. Bargaining power of Buyers
The third of Porters five competitive forces is the bargaining power of buyers. An industrys
buyers may be the individuals customers who ultimately consume its product. Unilevers
buyers are scattered all around the world and they are in billions. In true sense they are not so
powerful to pull prices down. But on the other hand its easier for the customers to switch to a
competitor. So Unilever has to be very precautious in deciding about prices and keep the
customers satisfied.
4. Bargaining power of Suppliers
The fourth of Porters five competitive forces is the bargaining power of suppliers the
organizations that provide inputs the industry, such as materials, service, and labor. The
bargaining power of supplies refers to the ability of suppliers to raise inputs prices or to raise
the costs of the industry in other ways- for example, by providing poor quality inputs or poor
service. Unilever has a policy of local buying and local manufacturing. Which provides itself
an edge to brake power of its suppliers and make them weaker to negotiate at its own terms.
Most of time Unilever has blanket agreements with its suppliers to provide for a certain period
of time at a certain rate. This strategy help to prevent suppliers from switching toothier
competitors and charge higher rates. Also Unilever treat its suppliers fairly so as to create
more loyalty among them like customers.
5. Threat of Substitution
The final force in Porters model is the threat of substitute products. The products of different
business or industries that can satisfy similar customer needs. Continuous research and
development in the consumer and household products has brought about a revolution in the
consumer market and today customers like to try something new and better. This trend has
reduced the customer loyalty and product lifecycle. Unilever is under continuous threat of
substitute products and its competitors are already spending huge sums on R&D and new
product development. Unilever has to be very adoptive and closer to its customers so as to get
what exactly its customers want.
Competitive advantages.
Weaknesses:
Reliance on outside raw materials.
So many substitutes available in the market.
Lack of control in the market.
Lack of informational reliability, since the market is too large.
Opportunities:
Participation within a growing industry.
Utilization of changing lifestyle of people for increasing demand.
Scope of expanding the market vertically and horizontally.
Application of new tactics and surprise packages.
Niche marketing.
Threats:
Threats of the market challengers
A negative effect on peoples spending because of the current financial crisis
Existence of political unrest though out the country
4.10
The KCCL enjoys a reputation in the country. The strength, weakness, opportunity and threat
of KCCL are as followsStrengths
KCCL has good quality and hygienic products.
It has advanced technology.
It has good brand name Tibet.
Pioneer in manufacturing high quality beauty and personal care products in this
subcontinent.
Strong and qualified management.
Commitment to be directed towards to quality service.
Competitive price/commission.
Trained salespeople and committed employees to customer.
Forward looking and continuous development.
Organizational culture to value the customers most.
Product recognition already exists in customer mind.
Weaknesses
Difficult to manage large employees.
High cost for the training of the salespeople.
Less attractive packaging in case of some laundry shop.
Absence of teamwork between branches.
Heavily depends on head office for decision making.
Lack of incentives and rewards from the management section.
Sometimes Lack of Motivation of workers.
Opportunities
Expand market internationally
It can Increase the demand in the customer mind through most visible advertising.
Through huge Investment in potential country, achieve maximum market share.
To relate the Management properly.
Threats
Some other company (like Keya, Uniliver, Arometic).
Countrys strict rules and regulations.
Customer awareness of pricing and service.
Political stability breakdown the outcome result
4.11
The Boston consulting group a leading management consulting firm develops and popularized
the growth share matrix as shown in figure.
Summary:
There are the conclusions for Unilever Pvt. Ltd products, how they are lying in the BCG
matrix is given below:
1. Surf Excel & Lux :
The market share value of Surf excel and Lux are high and relative market growth rate of Surf
excel and Lux are low, that is why Surf excel and Lux are lying in BCG Matrix at Cash cow
point.
2. Broke bond supreme & Knorr noodles:
The market share value of Broke bond supreme and Knoor noodles are high and relative
market growth rate of Broke bond supreme and Knoor noodles are high, that is why
Broke bond supreme and Knoor noodles are lying in BCG Matrix at Star point.
3. Lifebuoy Shampoo:
The market share value of Lifebuoy Shampoo is low and relative market growth rate of
Lifebuoy Shampoo is high, that is why Lifebuoy Shampoo is lying in BCG Matrix at???
Point. At this point, Company makes their investment on this product to get the point of
CASH COW and STAR in BCG matrix.
4. Rexona deodorant:
The market share value of Rexona deodorant is low and relative market growth rate of
Rexona deodorant is low, that is why Rexona deodorant is lying in BCG Matrix at Dog point.
4.12
A key resource of strategic planning is the ability of the management to envision its current
product base, with respect to product life cycle (PLC), cash flows, and the extent of financial
and non-financial support required and justified by each product. Concordantly, the BCG
matrix is an effective strategic tool that can help the management decide on which products to
build on, which products to support, which ones require corrections, and which brands should
be let go off. The following figure illustrates the current positioning of KCCLs main bread
earners with respect to their market share, and market growth.
5. FINDINGS
VALUE (TK)
GROWTH (%)
SHARE (%)
Wheel
Unilever
111,812,640
57.04
Tibet
Kohinoor
78,413,081
68.69
Chaka
Square
62,556,254
75.23
15.56
Keya
Keya
56,895,201
56.47
10.40
24.51
18 19
1.
As we can see from the above diagram, Unilevers most prominent brand is Wheel and
its closest rival is Tibet, the most prominent product of Kohinoor. They have fierce
rivalry amongst themselves but Tibet are not slacking behind, as Chaka, a product of
Square Toiletries is also on the rise.
2.
Kohinoor Chemicals focuses on middle class or rural area people, whereas, Unilever
concentrate on upper middle or high class and urban people.
3.
Unilever has both related and unrelated diversification, whereas Kohinoor has a
related linked diversification business.
4.
5.
At Kohinoor Chemical, they do not wait to react to changes, they create a virtual
future so that when the future arrives, they will be ready to face it. Kohinoor
Chemical is one of the first companies to have an extensively computerized and
automated work environment. The state-of-the-art Management Information
System (MIS) forms a common information platform for the organization so that
everything-from the production floor to the sales people working in a rural area, from
the quality assurance department to the distribution operation of thirteen depots
located throughout the country-is interconnected. In KCCL, information
technology is used as a decision support system and coordination tool to facilitate
human and machine performance and fast communication.
6. CONCLUSION AND
RECOMMENDATIONS
6.1 Recommendations
Product policies- new product development & brand development
New Product Development If KCCL wishes to survive long term in the market,
must invest in new product development. Always, all products eventually reach the
decline stage. Without new variety of white detergent, sales will eventually
become non- existent and customers will seek competitors products. Additionally,
by introducing new and innovative variety of detergent to the market place first,
KCCL may generate customer loyalty and maintain its market share as the market
grows. Innovative shape
& design packaged white detergent of should be launched compared to other brands. It
should be curved & easily hand able. KCCL should have ability to tailor white
detergent according to market and anticipate customer demands. Always should not
follow and copy the competitors strategy rather try to create something new.
Branding- Branding is a major issue in overall product strategy. Branding is used to
give products unique identities and helps the marketer to differentiate their product
from competitors. The brand white detergent should be established in such a way so
that consumers are loved to buy this product.
Promotion Policies
Promotion is more than just advertising. It includes almost all form of communication that a
company has with its customers. Indeed, it includes communication with stakeholders,
suppliers, intermediaries and the general public. The range of parties that a company promotes
to is known as the target group. KCCL can adopt push and pull strategies to promote white
detergent in the market.
Participating in different types of social & cultural activities so that the company can
easily attract the attention of the local & international customers and can easily
promote its brand position.
In TV & Radio channel creative and innovative add should have to be given, various
celebrity and brand ambassador for add etc.
Place Policies
Place is the term used in the marketing mix to mean distribution. Distribution involves all the
activities necessary in getting a product to a customer. Distribution can be looked from two
perspectives: channels of distribution and physical distribution. Channel of distribution refer
to the organizations involved (distributors, wholesalers, retailer, agents). Physical distribution
refers to the physical transportation, handling and storage of products necessary to make
products available to customers.
Produce >Distributor / agent > customer
Distribution system of white detergent should have well-planned to reach the product to very
remote area but distribution system of wheel power, surf excel is excellent and one can find
wheel power, surf excel any part of this country. So, improved distribution system should be
introduced for white detergent powder.
Price Policies Price of white detergent should be competitive. If possible then KCCL may
go for price cut. Present policy is to give 1 packet mini Tibet detergent powder with each soap
cake. But if company changes their strategy and offer Tk. 2 cash when consumer purchases
white detergent then it would be treated as a fantastic offer and sells may jump positively.
Existing Product
New Product
Existing market
Market Penetration
Product variants or
product differentiation
Market expansion
Market segmentation
Market-Product
segmentation
New Market
Market development
Diversification
Conglomerate diversification
The most suitable strategies of meeting the marketing objectives stated above are:
Product Line Extension
Through a product line extension strategy a company might create an augmented product in
order to stimulate the current markets and create new ones.
KCCL must quickly start pursuing this strategy as Tibet detergent is falling out of favor with
the consumer and should pursue this further.
Market Development
By employing a market development strategy, a company might identify new markets for its
product by determining potential user groups for its current products, offering its product for
sale in new geographic locations, either domestic or international. Another alternative is to
develop new products for an existing target market.
KCCL has the opportunity to develop a very profitable market in rural area and urban
industrial area where targeted consumers are located.
6.2 Conclusion
By my analysis I have found that, Unilever is globally successful company. They create
brands for specific countries and regions. Products for example, found in south Americas
will not be found in South Asian countries. Since difference in culture exists worldwide, the
creation and supply of brands have to be taken seriously. Unilever Bangladesh is the market
leader in home and personal care products. The Unilever products are able to gain customer
satisfaction and trust. Their production and distribution is expanding rapidly. Unilever are
starting to consider how they make Unilevers corporate commitments and activities more
visible and relevant to their consumer.
On the other hand, if KCCL wishes to survive long term in the market, must invest in new
product development. Always, all products eventually reach the decline stage. Without new
variety of white detergent, sales will eventually become non-existent and customers will seek
competitors products. Additionally, by introducing new and innovative variety of detergent to
the market place first, KCCL may generate customer loyalty and maintain its market share as
the market grows. Innovative shape & design packaged white detergent of should be launched
compared to other brands. It should be curved & easily hand able. KCCL should have ability
to tailor white detergent according to market and anticipate customer demands. Always should
not follow and copy the competitors strategy rather try to create something new.
References
1. Hill, Charles W. L.; Jones, Gareth R. (8th Edition) Theory of Strategic Management with
Cases. South-Western Cengage Learing.
2. Thomson et al. Crafting and Executing Strategy
3. Mannan, M.A., Strategic Management. Published by Bangladesh Open University.
4. Kohinoor Chemical Company (Bangladesh) Limited(Tibet). Manufacture Chemical
Company." KOHINOOR CHEMICAL CO. (BD) LTD. N.p., n.d. Web. 05 Aug. 2014.
5. "Seeking Young People with Big Ideas." Unilever Bangladesh. N.p., n.d. Web. 05 Aug.
2014