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, 50,0001957 – 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-

VISIONASIAN 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.

MISSIONIts mission is to be the largest decorative paint company worldwide and to be the 5th largest paint manufacturing company worldwide.

GOALS AND OBJECTIEVESThe 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 MISIONMission 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 OBJECTIEVES1. analyse the competitor’s 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 Vision Mission objectives1. Customers Yes Yes yes2. Specification about Product

and servicesNo no Yes

3. Market Yes yes no4. Technology No no Yes 5. Concern for survival, growth

and profitabilityYes no Yes

6. Philosophy No no Yes 7. Self concept Yes yes Yes 8. Concern for Public image No no No 9. Concern for employee. No 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 FACTORSThis 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 VOC’s 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 VOC’s 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 VOC’s. With environmental awareness at an all time high, formulators and suppliers alike are working feverishly to reduce the remaining VOC’s 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 licenseii. Heavy excise duty on carsiii. Price discrimination by government iv. High import duty

v. Liberal policy on foreign participation

Adversely,

b. post-liberalization period i. foreign direct investmentii. 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 competitor’s 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 FACTORSThese 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 porter’s five forces analysis for ASIAN PAINT

1. The threat of new entrants.2. The bargaining power of buyers/customers.3. The threat of substitute products.4. The amount of bargaining power suppliers have.5. 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

low

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.

EXISTING RIVALS

1 Berger

2 goodlass nerolac

3 ICI

4 Jenson & NicholsonOeral rivalry: moderate

Supplier Power

Volatile rawmaterial prices Low switching costs from one

supplier to another Volatile energy prices Move towards supplier

consolidation and integration

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

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

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

HIGHmod

L0W

MOD

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 levelb. 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.

iii. Profit potential Profit potential is concerned with the degree to which

differentiation or standardization is there in industry. 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 ever-expanding 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 Asian Paints

Category Paint Industry

Sector Industrial Products and Chemicals

Tagline/ Slogan Merawala blue; Har ghar kuch kehta hai ki ;Ask Aparna

USP India’s biggest brand with widest reach.

STP

Segment

Caters to all segments with brand Royale aimed at premium segment

and rest at mass market.

Target Group

Home-owners, industries-hotels, education, healthcare, agro &

manufacturing equipment and automobile etc.  infrastructure, govt.

buildings

Positioning A complete array of products to cater to everyone.

SWOT Analysis

Strength 1. The largest paint company in India and third largest company in

Asia

2. They have over 50% of market share and are clear leaders

decorative paints and are strong competitors to Kansai Nerolac to be

leaders in Industrial paints and coatings.

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

providing service to 65 countries all over the world.

4. Asian paints has strong international presence with its four 4

subsidiaries; Berger International Limited, Apco Coatings, SCIB Paints

and Taubmans.

5. Most renowned brand in Indian Paint Industry & its strong customer

focus and innovative-spirit has made it market leader since 1968.

6. Superior technologies deployed to achieve maintain the competitive

edge for eg. Supply chain management system that integrates plants,

regional distribution centers, outside processing centers etc. hence

they have strongest supply chain system with

7. They have maintained their brand name and increased awareness

by unique ways of advertising and roping in celebrities like Saif Ali

Khan.

8. The company has strong financials.

Weakness

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

change very fast and products may become obsolete with change in

trends, hence production planning and inventory problem.

Opportunity

1. Big an international standard paint company it should look for more

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

good financial and intellectual capital can go for hi-tech.

Threats

1. Growth prone to slowdown effects

2.Stringent Government rules and regulations regarding the quality of

products and manufacturing facilities as Environment policies are

given more emphasis

3.Raw material scarcity and volatlility in prices.

Competition

Competitors 1.Jenson & Nicolson India Limited.

2. Kansai Nerolac

3.Akzonobel

4. Sherwin-Williams Co.

5. Nippon Paints Co.

6. PPG Industries Inc.

Question 11: ETOP for Asian Paints:

Environmental threats and opportunity profile of Asian Paints

Factors analyzed Degree of importance(out of 5)

Degree of strength for Asian paint (+)

Degree of weakness for Asian paint (-)

Total

Political and legal environment

1. Taxation 5 3 -152. industrial policy 4 3 123. import duty 2 2 44. export promotion

measures1 3 3

5. stability of government 3 4 12Total 16

Demographic environment1. urbanization 4 4 162. Income of family 5 3 153. Population increase in

India 4 5 20

Total 51Natural environment1. availability of raw

materials4 3 -12

2. anti pollution controls 3 3 93. new technology for eco

friendly paint3 5 15

Total 12Economic factors1. FDI 4 3 -152. Fiscal policy 4 2 -83. Economic policies of

India3 4 12

Total -11Socio cultural environment1. Lifestyle and

preferences of people 4 4 16

2. Social norms 2 2 4Total 20

Technological environment1. Innovations 4 3 122. Research and

development4 3 12

3. Cost efficient technologies for paint

3 4 12

Total 36Competitive environment1. No of competitors 3 3 -92. Entrance of foreign

companies4 5 -20

Total -29Grand total score of (16+51+12-11+20-29

Asian paint )=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 controliii. Te pricing strategy is oriented to lower and middle level

customers.iv. Geographically well spread giving the company logistical advantagev. It serves widest product range in terms of shades, pack

sizes, product.vi. Strong finanacial helps the company to invest in

marketing and brandrecall activities.vii. Comprehensive nationwide coverage of market.

b) Weaknessi. 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 COMPETENCEBrand 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 ADVANTAGELack 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

Organizational Threats and opportunity profile of Asian paints

Factors analyzed Degree of importance(out of 5)

Degree of strength for Asian paints (+)

Degree of weakness for Asian paints (-)

Total

A. Production factors1. Plant location 4 3 122. Plant capacity 4 4 163. Capacity utilized 4 4 164. Quality of technology

used3 4 12

5. Supply of raw materials

5 3 -15

6. R& D facilities 3 3 9Total 50B. Marketing Factors1. Competitive advantage 3 5 152. Market share 5 5 253. Product life cycles 3 2 -64. Distribution outlets 5 3 155. Promotional efforts 3 3 -96. Market research 3 3 -97. Competitive pricing 5 4 31

Total

C. Finance factors1. Cost of capital 4 3 -122. Ease in raising fund 5 3 153. Financial position 3 3 94. Use of financial

resources 4 3 12

5. Tax advantages 4 4 -16Total 8D. Human resources

factors1. Quality of managerial

personnel5 3 15

2. Quality of operatives 5 4 203. Employee attitude 4 3 -124. Employee motivation

and morale4 4 -16

5. Employee absenteeism 4 4 -166. Employee turnover 2 5 -10

Total -19E. General

management factors

1. Company image 5 4 202. Information and

reporting system3 2 6

3. Willingness to bring change

3 2 6

Total 32Total score for Asian paints

102

Question: 14 preparation of SAP for Asian paint

Factors analyzed Degree of importance(out of 5)

Degree of strength for Asian paints (+)

Degree of weakness for Asian paints (-)

Total

F. Operation factors7. Size 4 3 128. Plant capacity 4 4 169. Fineness in planning

etc4 4 16

10. technology used 3 4 1211. Supply of raw

materials5 3 -15

12. R& D facilities 3 3 913. Quality of product

Total 50G. Marketing Factors8. Competitive advantage 3 5 159. Market share 5 5 2510. brand 3 2 -611. Distribution outlets 5 3 1512. Promotional efforts 3 3 -913. Product range 3 3 -914. Competitive pricing 5 4 31

Total

H. Finance factors6. Cost of capital 4 3 -127. Ease in raising fund 5 3 158. Financial position 3 3 99. Use of financial

resources 4 3 12

10. Tax advantages 4 4 -16Total 8I. Human resources

factors7. Quality of managerial

personnel5 3 15

8. Quality of operatives 5 4 209. Employee attitude 4 3 -12

10. Employee motivation and morale

4 4 -16

11. Employee absenteeism 4 4 -1612. Employee turnover 2 5 -10

Total -19J. General

management factors

4. Company image 5 4 205. Information and

reporting system3 2 6

6. Willingness to bring change

3 2 6

Total 32Total score for Asian paints

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 logisticsii. Operations

iii. Outbound logisticsiv. Marketing and salesv. Service

Support activitiesi. Firm infrastructure

ii. Human resource managementiii. Technology developmentiv. Procurement

FUNCTIONAL ANALYSIS