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Business Strategic
Management Project Report
On Hindustan Unilever Limited
On Hindustan Unilever Limited
Submitted to:
Prof. Anil Kamboj
Submitted by:
Nisha Burman (281)
Vikrant Kumar (473)
Subhashish Mondal (485)
Amisha Sinha (40)
Saurav Taluja (239)
Prince Kumar (280)
Table of Content
Sl. No. Content Page No.
1. Introduction ………………………………………………………..
2. Mission 9 Factor Analysis …………………………………………
3. Vision……………………………………………………………….
4. Matrixes & Strategy Analysis ……………………………………...
5. Strategy Formulation Framework ………………………………….
5.1 PEST Analysis ……………………………………………………..
5.2 Porter’s Five Forces Analysis ……………………………………...
5.3 EFE Matrix ………………………………………………………...
5.4 IFE Matrix ……………………………………................................
5.5 Balance Score Card ………………………………..........................
5.6 SFAS Matrix ………………………………….................................
5.7 TOWS Matrix ……………………………………...........................
5.8 SPACE Matrix ……………………………………………………..
5.9 QSPM Matrix ……………………………………...........................
5.10 BCG Matrix ………………………………………………………..
5.11 Grand Matrix ………………………………………………………
6. Strategies of HUL ………………………………………………….
7. Conclusion …………………………………………………………
8. Recommendation …………………………………………………..
Introduction of the company
Hindustan Unilever Limited (HUL) is India's largest Fast-Moving Consumer Goods
Company with a heritage of over 80 years in India. On any given day, nine out of ten Indian
households use HUL products to feel good, look good and get more out of life giving the
company a unique opportunity to build a brighter future.
HUL works to create a better future every day and helps people feel good, look good
and get more out of life with brands and services that are good for them and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos,
skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and
water purifiers, the Company is a part of the everyday life of millions of consumers across
India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel,
Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent,
Close up, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pure it.
The Company has about 18,000 employees and has a net sales of INR 33895 crores
(financial year 2016-17). HUL is a subsidiary of Unilever, one of the world’s leading
suppliers of Food, Home Care, Personal Care and Refreshment products with sales in over
190 countries and an annual sales turnover of €52.7 billion in 2016. Unilever has over 67%
shareholding in HUL.
Vision Statements of the company
• Commonplace sustainable living
• Best long-term way
• Business growth
Mission Statements of the company
• Add vitality to life
• Meet every day needs for nutrition, hygiene and personal care with brands that help
people feel good, look good and get more out of life
• Total commitment to exceptional standards of performance and productivity
Nine factors of mission statement on which HUL is focused upon -
• Function
• Target consumers
• Target regions
• Values
• Technology
• Employees
• Strategic positioning
• Financial objective
• Images
External and Internal Analysis
PEST analysis
Political:
1) Nonconformance with legislative obligations can lead to sanctions such as fines,
adverse publicity and imprisonment.
2) Ineffective voluntary codes and practices will often lead to government introducing
legislation to regulate the activities covered by the codes and practices.
Economical:
1) Affected by national and global economic factors
2) Inflation has affected HUL such that it lead to increase in raw materials
3) National and Global interest rate and fiscal policy will be set around economic
conditions
Social:
1) Population changes
2) Changing interest among individuals
Technological:
1) Created a society which expects instant results
2) Increased the rate at which information is exchanged between stakeholders
3) A faster exchange information can benefit businesses as they are able to react
quickly to changes
4) Technology infrastructure help them manage their business transmit and record
information
Unilever’s five forces analysis
Competitive Rivalry or Competition with Unilever (Strong Force)
Competition is a major force in Unilever’s industry environment. This section of the Five
Forces analysis identifies the external factors that present the impact of firms on each other.
The strong force of competitive rivalry against Unilever is based on the following external
factors and their intensities:
• High number of firms (strong force)
• High aggressiveness of firms (strong force)
• Low switching costs (strong force)
There are many firms operating in the consumer goods industry. This external factor
imposes a strong force on Unilever. In addition, these firms are generally aggressive, further
adding to the intensity of competition. Unilever also experiences tough competition because
of low switching costs. For example, it is easy for consumers to switch from one firm to
another. Thus, a high level of competition is shown in this section of Unilever’s Five Forces
analysis, highlighting the need to consider competitive rivalry as a high-priority force in the
company’s industry environment.
Bargaining Power of Unilever’s Customers/Buyers (Strong Force)
Unilever’s business and industry environment depend on the response of consumers to its
products. The influence of buyers on business performance is considered in this section of
the Five Forces analysis. Unilever must address the following external factors that lead to the
strong force of the bargaining power of customers:
• Low switching costs (strong force)
• High quality of information (strong force)
• Small size of individual buyers (weak force)
The low switching costs make it easy for consumers to transfer from Unilever’s products to
other companies’ products. This external factor contributes to the strong intensity of the
bargaining power of buyers. In addition, consumers have access to high quality of
information about consumer goods, making it even easier for them to decide when
transferring from Unilever to other providers. For example, buyers can compare products
based on online information. The small size of an individual consumer’s purchases has
minimal impact on Unilever’s profits. However, the low switching costs and high quality of
information outweigh this third external factor in the industry environment. Based on this
section of the Five Forces analysis, the bargaining power of customers is one of the strongest
forces affecting Unilever’s consumer goods business.
Bargaining Power of Unilever’s Suppliers (Moderate Force)
Suppliers impact Unilever’s industry environment by affecting the level of supply
available to firms. This section of the Five Forces analysis presents the influence of suppliers
on companies. The following are the external factors that contribute to the moderate force of
the bargaining power of suppliers on Unilever:
• Moderate size of individual suppliers (moderate force)
• Moderate population of suppliers (moderate force)
• Moderate overall supply (moderate force)
While Unilever has large suppliers like foreign firms that supply paper and oil, the average
supplier is moderate in size. This external factor imposes a moderate intensity force on the
consumer goods industry environment. In addition, the moderate population of suppliers
enables them to impose significant but limited influence on firms like Unilever. Similarly,
the moderate level of the overall supply adds to such significant but limited influence of
suppliers. For example, any supplier’s change in production level leads to significant but
limited change in the availability of raw materials used in Unilever’s business. Other firms in
the industry are similarly affected. As shown in this section of the Five Forces analysis of
Unilever, the bargaining power of suppliers is a significant but moderate consideration in the
consumer goods industry environment.
Threat of Substitutes or Substitution (Weak Force)
Substitutes can reduce Unilever’s revenues and the strength of firms in the consumer
goods industry environment. The impact of substitution is determined in this section of the
Five Forces analysis. In Unilever’s case, the following external factors are responsible for
the weak force of the threat of substitution:
• Low switching costs (strong force)
• Low substitute availability (weak force)
• Low performance to price ratio of substitutes (weak force)
The low switching costs enable consumers to easily use substitutes to Unilever’s
products. This external factor imposes a strong force on the company and the consumer
goods industry environment. However, the overall impact of substitution is weakened
because of the low availability of substitutes. For example, it is easier to access Unilever’s
Close-Up toothpaste from grocery stores than to obtain substitutes like homemade organic
dentifrice. In relation, most substitutes have low performance with minimal or insignificant
cost difference when compared to consumer goods readily available in the market. This
condition makes Unilever’s products more attractive than substitutes, thereby further
weakening the intensity of the threat of substitution. This section of Unilever’s Five Forces
analysis shows that the threat of substitutes is a minor issue in the business.
Threat of New Entrants or New Entry (Weak Force)
Unilever competes with established firms as well as new firms in the consumer goods
market. This section of the Five Forces analysis considers the influence of new firms on the
industry environment. The following external factors create the weak force of the threat of
new entrants against Unilever:
• Low switching costs (strong force)
• High cost of brand development (weak force)
• High economies of scale (weak force)
The low switching costs enable new entrants to impose a strong force against Unilever. For
example, consumers can easily decide to try new products from new firms. However, it is
costly to build strong brands like Unilever’s. This external factor weakens the intensity of the
threat of new entrants against the company. Also, Unilever takes advantage of high
economies of scale, which support competitive pricing and high organizational efficiencies
that new firms typically lack. As a result, the company remains strong despite new entrants.
Based on this section of the Five Forces analysis, the threat of new entry is a minor concern
in Unilever’s industry environment.
Performance Matrix – IFE of HUL
Balance scorecard of HUL
The Balanced Scorecard was first developed in the early 1990s by two researchers:
Kaplan and Norton (2001). The researchers Marr and Adam (2004) found that the balanced
scorecard was designed to be used as a strategic performance measurement and management
framework. Kaplan and Norton (1996) describe the originality of the balanced scorecard as:
“The balanced scorecard retains traditional financial measures. But financial measures tell
the story of past events, an adequate story for industrial age companies for which
investments in long-term capabilities and customer relationships were not critical for
success. These financial measures are inadequate, however, for guiding and evaluating the
journey that information age companies must make to create future value through investment
in customers, suppliers, employees, processes, technology, and innovation".
In recent years, balanced scorecards have been proposed and widely used to measure
organizational performance from four different perspectives that help companies focus on
their critical areas, and to translate their strategy into action (Seraphim, 2006).
• Financial Perspective
• Customer Perspective
• Internal Business Process Perspective
• Learning and Growth Perspective
However, in my opinion the balanced scorecard also has other weaknesses, which mean that
the balanced scorecard will not always guarantee success. Many companies fail to put the
required measurements in place to make the balanced scorecard a success. Two reasons for
this may be:
(a) Time
The balanced scorecard takes time to implement and many companies may not have the time
or the sufficient resources to properly invest in this performance measurement.
(b) Fee
It can be costly to implement the balanced scorecard. The organizational will have to ensure
that all employees are sufficiently trained and if they are not they will have to send them on
training courses which is costly. They may also have to improve their production processes
i.e. having new, up to date technology and machines that are of high quality.
Financial Perspective
The Financial Perspective covers the financial objectives of an organization and allows
managers to track the financial success of a company for example how wealth is created for
shareholders” (Advanced Performance Institute 2010). However, despite the need to provide
a balanced approach to performance measurement, companies remain focused on traditional
financial measures (gross revenue, profit before tax, and cost reduction) and often forget
about intangible assets (Chia, Goh and Hum 2009).
Financial
Customers
Vision &
Strategy
Internal
Business
Processes
Learning &
Growth
Customers’ Perspective
“In the customer perspective of the Balanced Scorecard, managers identify the
customer and market segments in which the business unit will compete and the measures of
the business unit’s performance in these targeted segments” (Kaplan and Nortan 1996, p26).
According to Kaplan and Norton (1996) the customer perspective, if implemented correctly,
should have successful outcomes such as customer satisfaction, customer retention, customer
profitability, new customer acquisition and market share in targeted segments.
HUL’s brands have become household names. The company’s strategy is to concentrate its
resources on 30 national power brands, and 10 other brands which are strong in certain
regions. The top five brands together account for sales of over Rs.3000 crores. Each of these
mega brands has a potential scale of Rs.1000 crores in the foreseeable future
Internal Business Process Perspective
In the internal business process perspective, managers identify the important internal
processes that the business must succeed in, in order to implement its strategy (Drury 2004).
Metrics based on this perspective let managers measure how successful their organization is
doing and whether its goods and services conform to customer needs (Papenhausen 2006).
Product Development:
HUL has concentrated in a very wide way on the product development factor. The
product has been focused on various segments from low price products to premium products.
Most of our products are developed on a global scale by following the policies and
procedures laid down by Unilever. They have entered untapped markets and tried to focus on
products which can satisfy the demands of all class of customers. Their product ranges are
health care, personal care, household care, beverages etc. They have developed products
which focus on all ranges.
Operations Process:
The procurement procedure undertaken by HUL is followed by a combination of
backward integration and with suppliers. HUL has its own farms for the production of agri
based products. HUL has a strong network of suppliers which supply materials for the
production purpose. HUL has a speedy process of procurement to make it reach to
production as it is needed to meet the growing demand. HUL has its own 19 tea estates
which produces tea leaves which are certified by Rain Forest Alliance. HUL has a speedy
process of manufacturing. Material consumed and Purchase of goods is round about INR
8,901 crores in 2009-10. HUL has its own production departments which focus only on
packing of goods produced.
Supplier Processes:
Hindustan Unilever, which once pioneered distribution in India, is today reinventing
distribution - creating new channels, and redefining the way current channels are serviced. In
the process it is converging product availability, with brand communication and brand
experience. Services and Logistics of HUL is very efficient. The sales services of HUL are
very efficient as their supply chain management is very efficient. Hindustan Unilever's
distribution network is recognized as one of its key strengths. Its focus is not only to enable
easy access to our brands, but also to touch consumers. HUL's products, manufactured across
the country, are distributed through a network of about 7,000 redistribution stockists
covering about one million retail outlets. The distribution network directly covers the entire
urban population.
Learning & Growth Perspective
An organization that is serious about leadership development makes it a way of life.
Hindustan Unilever has been consistently producing CEOs and corporate leaders for India
INC for more than 25 years now; the leadership development process at Levers is more of a
tradition, institutionalized over the last many decades. With more than 1000 alumni sitting
on boards globally, HUL is a source of inspiration for many companies.
The key tenets of this solid tradition have been -- commitment from top leadership, a
robust and consistent process, strong linkage between individual development and level of
exposure offered, mentoring, training – all fostered in a culture of transparency and equal
opportunity. The company uses what it calls a “70-20-10” model for developing its
workforce: 70% of learning happens on the job, 20% through mentoring, and 10% through
training and coursework. Leadership development is one of the core tasks of the
Management Committee at Hindustan Unilever. “Senior management devotes enormous
time in the leadership development process,” says Leena Nair, Executive Director HR. In
every fortnightly management review meeting, talent review session is an integral part of the
overall agenda. Top management at Hindustan Unilever invests anywhere between 30 to
40% of their time in grooming and mentoring leaders for the future. They get involved at
various stages -- from redefining the talent identification process, to identifying talent, to
grooming and coaching, to creating opportunities for growth and exposure
Strategies operations
Strategy Formulation Analytical Summery
SL. External Factor Weightage Rating Score
1 Customers Preference to Physically Evaluate Products 0.15 2 0.30
2 High Brand Loyalty and Switch Over Threshold 0.20 1 0.20
3 Existing Customer Base as A Captive Market Source 0.15 1 0.15
4 Product Offerings in Popular Product/Service Categories 0.10 2 0.20
5 Customer’s Demand for Differentiation– Integrated
Content, Simple Design, Differentiation, Pricing
0.40 4 1.60
Total 1.0 2.45
SL. Internal Factor Weightage Rating Score
1 Focus on Invention With Innate Understanding Of
Customers Point of View
0.20 4 0.80
2 Possible Dilution of Corporate Culture 0.10 3 0.30
3 Resources 0.30 3 0.90
4 Distribution Network Supporting Retail Operations 0.30 4 1.20
5 Appetite For Risk Taking And Risk-Reward History 0.10 4 0.40
Total 1.0 3.60
TOWS MATRIX
TOWS Analysis
External
Factors
Internal
Factors
Strengths (S)
1. Strong brand equity
2. It has over 18000 employees
3. Reach of 6.4 million retail
outlets
4. Own R&D centres in India
5. Over 700 million Indian
consumers
Weaknesses (W)
1. Presence of other strong
0FMCG brands
2. HUL faced controversies
Opportunities (O)
1. Mergers and acquisitions to
strengthen the brand
2. Increasing purchasing power
of people
SO Strategies
1. HUL can tap rural markets
and increase penetration in
urban areas as HUL
distributed through a
network of about 7,000
redistribution stockists
covering about one million
retail outlets. The
distribution network directly
covers the entire urban
population.
2. Mergers and acquisitions to
strengthen the brand like
taking over of Tomco,
Kothari general foods,
Lakme etc.
WO Strategies
1. Market share is limited due
to presence of other strong
FMCG brands though
Increasing purchasing power
of people thereby increasing
demand.
Threats (T)
1. Intense and increasing
competition amongst
other FMCG companies
2. FDI in retail thereby
ST Strategies
1. HUL is a part of the
Unilever group, hence
strong brand equity which
makes HUL superior than
WT Strategies
1. HUL should work on
controversies like skin
lightening creams, pollution
etc & to make customers
allowing international
brands
3. Competition from
unbranded and local
products can
hurt Hindustan
Unilever's market
competitors.
2. Hindustan Unilever has a
reach of 6.4 million retail
outlets which includes direct
reach to over 1.5 million
retail outlets, which is much
more compared to
competitors.
believe in HUL products &
Competition from
unbranded and local
products can hurt Hindustan
Unilever's market, so
company should also
consider that facts.
Strategic Business unit of HUL
Strategic business units are absolutely essential for multi-product organizations. These
business units are basically known as profit centres. They are focused towards a set
of products and are responsible for each and every decision / strategy to be taken for that
particular set of products. Strategic business units can be best explained with an example.
Example of Strategic business units – The best example of strategic business unit would be
to take organizations like HUL
Space Matrix Of Hul
The Strategic Position and Action Evaluation (SPACE) Matrix is one of the strategic
management tool for analyzing the company and its environment to formulating the
strategies. It is four-quadrant structure which specify whether aggressive, defensive
competitive or conservative strategies are most suitable for a given organization, company or
business.
QSPM Matrix Of HUL
Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic
management approach for evaluating possible strategies. • QSPM provides an analytical
method for comparing feasible alternative actions. • The QSPM method falls within so-
called stage 3 of the strategy formulation analytical framework.
Portfolio Matrices -
BCG Matrix of HUL
Grand Strategy Matrix Of HUL
The grand strategy matrix helps us to determine the strategy that the firm must pursue,
based on its competitive position and market growth. HUL lies in quarter 1 which represents
excellent strategic position of a company. Continued concentration of current market and
products is an appropriate strategy.
HUL has abundant resources, so backward, forward and horizontal integration may
also prove effective.
Strategic focus of HUL
At Unilever we want to grow our business in the right way so that our consumers,
employees, suppliers, shareholders and communities all benefit.
We have a clear purpose – to make sustainable living commonplace – and a vision to
grow our business whilst decoupling our environmental footprint from our growth and
increasing our positive social impact. These are set out in our ‘Compass’, our business
strategy document.
We believe this is the best way to achieve business success in the long term, and in
fact, we’re already seeing strong results. In 2015 our 12 Sustainable Living brands grew 30%
faster than the rest of the business; in 2016 they grew 40% faster and delivered nearly half
our growth. Sustainable Living brands are brands that combine a strong purpose delivering a
social or environmental benefit, with products contributing to at least one of our USLP goals.
What do we mean by sustainable living?
We want to help create a world where everyone can live well within the natural limits
of the planet. We’re putting sustainable living at the heart of everything we do including:
Our brands and products How we behave Working with others
We create brands that offer
balanced nutrition, good hygiene
and give people confidence. We
are making our products accessible
and affordable to consumers,
wherever they live and we’re
innovating to find new products
that make life better.
We source our products
carefully, so that we protect the
earth’s resources. We treat
people fairly and respect their
rights, so employees, suppliers
and communities all benefit
from working with us.
We are working with others to create
transformational change beyond our
business while our brightFuture
campaign is motivating millions of
people to take small, everyday
actions that together make a big
difference.
A strong business case -
With 7 billion people on our planet, the earth’s resources are increasingly strained.
Sustainable, equitable growth is the only acceptable model for our business. But growth and
sustainability are not in conflict.
Our four-point framework shows how sustainability drives value for our business.
More growth - sustainability creates innovation opportunities, opens up new markets and
allows our brands to connect with consumers in new ways. Consumers are responding - our
Sustainable Living brands are growing faster than the rest of our business.
Lower costs - by cutting waste and using resources carefully we create efficiencies, cut costs
and improve margins, while becoming less exposed to the volatility of resource prices. Since
2008 we have avoided costs of over €700m through eco-efficiency in our factories.
Less risk - operating sustainably helps us future-proof our supply chain against the risks
associated with climate change and long-term sourcing of raw materials. By 2016, 51% of
our agricultural raw materials were sustainably sourced.
More trust - placing sustainability at the heart of our business model strengthens our
relationships. It helps us maintain our value and relevance to consumers, whilst inspiring
Unilever’s current and future employees. For example, in 2016, we maintained our status as
the Graduate Employer of Choice in the fast-moving consumer goods sector among 34 of the
60 countries we recruit from.
Our blueprint – the Unilever Sustainable Living Plan
Our Sustainable Living Plan provides the detailed blueprint for how we will achieve
our purpose. It covers all aspects of our business, each of our brands and categories and
every country we work in. It seeks to create change across our value chain – from our
operations, to our sourcing and the way consumers use our products. It is designed to drive
profitable growth and fuel innovation and to do so in the right way so that all our
stakeholders feel the benefits.
The Plan, launched in 2010, is built around three big goals.
1 2 3
By 2020 we will help more
than a billion people take
action to improve their health
and well-being.
By 2030 our goal is to halve the
environmental footprint of the making
and use of our products as we grow our
business.
By 2020 we will enhance the
livelihoods of millions of
people as we grow our
business.
For each goal we have detailed targets and objective measurement techniques, see The
Unilever Sustainable Living Plan.
Transformational change beyond our business
Many sustainability challenges are complex and global in scale. Tackling them
requires change to whole systems and ways of working. Collaboration between business,
governments, NGOs and others is crucial if we are to achieve this change – through
partnerships such as the World Business Council for Sustainable Development’s Action
2020, the Tropical Forest Alliance 2020 and the Global Task Force for Scaling up Nutrition.
Our Sustainable Living Plan provides the blueprint for change within our organisation and
supply chain. But we want to go further and we’ve identified four key areas where we can
use our scale and influence to help bring about transformational change:
• taking action on climate and halting deforestation
• improving livelihoods and creating more opportunities for women
• improving health and well-being
• championing sustainable agriculture and food security.
We support the UN’s Global Goals for Sustainable Development and the UN Climate
Conference’s Paris Agreement. Through our Sustainable Living Plan and transformational
change agenda, we’ll play our part in helping to achieve the ‘zero poverty and zero carbon’
goals.
We’re still learning
We’ve had some great results from our Sustainable Living Plan. We know it
contributes to business growth as we see consumers responding to campaigns by our
Sustainable Living brands - such as Hellmann’s, Breyers and Omo - on issues ranging from
sustainable sourcing to water scarcity.
We’ve also learnt a lot about what does and doesn’t work and we’ll keep making
changes to get things right. One of our biggest challenges is our ability to stimulate change
outside our business, where we don’t have direct control. For example, while we’ve made
good progress on reducing greenhouse gas emissions (GHG) from our factories and reached
our 2020 target by 2016, the GHG impact of our products per consumer use has increased by
8% since 2010. We’ve updated our GHG strategy to reflect what we’ve learnt.
We are continually looking for new ideas and ways to influence our wider value chain.
We know that collaboration with others holds the key to tackling many sustainability
challenges and we will be focusing even more on this in the years ahead. Our
transformational change initiatives will help us to bring about the systems change needed to
address some of the most complex social and environmental problems.
What others think
We’re pleased that our strategy has been recognized by others, including:
• Dow Jones Sustainability Index (DJSI) - following 15 years of industry group
leadership in the Foods, Beverage & Tobacco Industry Group (out of 16 years’
participation), Unilever was named leader of the Household & Personal Products
Industry Group with a score of 92 out of 100.
• We were also selected as an index component of the Dow Jones Sustainability Indices
(DJSI) following our participation in the 2016 RobecoSAM Corporate Sustainability
Assessment.
• Globe Scan/Sustainability Leaders survey – we’ve retained our top ranking for six
consecutive years.
• CDP - in 2016 we were also listed in the ‘A’ performance bands in CDP’s Climate,
Water and Forests Reports. We were also included in CDP’s Leadership Report on
Supply Chain.
Conclusion
HUL being India’s largest FMCG Company with 35 brands and 20 distinct categories
is doing very well, company is also very focused on mission statement and vision statement
and working accordingly, the financial statement of the company is also good and there is
always increment in turnover of the company. The board of directors, the management the
core managers everybody is responsible and is loyal to the company, the main reason of
company’s success is it is maintain its quality, coming with new products, making
innovations in the product, maintaining its price and the most important thing which is taking
HUL towards continuous success is the strong distribution channel and the intensive and
extensive selling strategy. The company has more than 30000 people in distribution channel
which give the company a competitive edge , and each year in annual report the company
makes a strategy and work according to the strategic focus .
Recommendations to the company
• The company should maintain its quality.
• The company should focus on more herbal products
• The company should always keep an eye on competitors
• As the competition in FMCG sector is becoming intense it’s very necessary to keep a
track on it.
• The company should always survey about the likeness of the product of the company
which will give the company the extra edge.
• Company should always focus on taste and preference of the consumers
• The company should do more CSR activities which will help in good word of mouth
for the company.
• The company should give advertisement in newspapers and other media weekly.

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Strategic Business Management Project Report on HUL

  • 1. Business Strategic Management Project Report On Hindustan Unilever Limited On Hindustan Unilever Limited Submitted to: Prof. Anil Kamboj Submitted by: Nisha Burman (281) Vikrant Kumar (473) Subhashish Mondal (485) Amisha Sinha (40) Saurav Taluja (239) Prince Kumar (280)
  • 2. Table of Content Sl. No. Content Page No. 1. Introduction ……………………………………………………….. 2. Mission 9 Factor Analysis ………………………………………… 3. Vision………………………………………………………………. 4. Matrixes & Strategy Analysis ……………………………………... 5. Strategy Formulation Framework …………………………………. 5.1 PEST Analysis …………………………………………………….. 5.2 Porter’s Five Forces Analysis ……………………………………... 5.3 EFE Matrix ………………………………………………………... 5.4 IFE Matrix ……………………………………................................ 5.5 Balance Score Card ……………………………….......................... 5.6 SFAS Matrix …………………………………................................. 5.7 TOWS Matrix ……………………………………........................... 5.8 SPACE Matrix …………………………………………………….. 5.9 QSPM Matrix ……………………………………........................... 5.10 BCG Matrix ……………………………………………………….. 5.11 Grand Matrix ……………………………………………………… 6. Strategies of HUL …………………………………………………. 7. Conclusion ………………………………………………………… 8. Recommendation …………………………………………………..
  • 3. Introduction of the company Hindustan Unilever Limited (HUL) is India's largest Fast-Moving Consumer Goods Company with a heritage of over 80 years in India. On any given day, nine out of ten Indian households use HUL products to feel good, look good and get more out of life giving the company a unique opportunity to build a brighter future. HUL works to create a better future every day and helps people feel good, look good and get more out of life with brands and services that are good for them and good for others. With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Close up, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pure it. The Company has about 18,000 employees and has a net sales of INR 33895 crores (financial year 2016-17). HUL is a subsidiary of Unilever, one of the world’s leading suppliers of Food, Home Care, Personal Care and Refreshment products with sales in over 190 countries and an annual sales turnover of €52.7 billion in 2016. Unilever has over 67% shareholding in HUL.
  • 4. Vision Statements of the company • Commonplace sustainable living • Best long-term way • Business growth Mission Statements of the company • Add vitality to life • Meet every day needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life • Total commitment to exceptional standards of performance and productivity Nine factors of mission statement on which HUL is focused upon - • Function • Target consumers • Target regions • Values • Technology • Employees • Strategic positioning • Financial objective • Images
  • 5. External and Internal Analysis PEST analysis Political: 1) Nonconformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. 2) Ineffective voluntary codes and practices will often lead to government introducing legislation to regulate the activities covered by the codes and practices. Economical: 1) Affected by national and global economic factors 2) Inflation has affected HUL such that it lead to increase in raw materials 3) National and Global interest rate and fiscal policy will be set around economic conditions Social: 1) Population changes 2) Changing interest among individuals Technological: 1) Created a society which expects instant results 2) Increased the rate at which information is exchanged between stakeholders 3) A faster exchange information can benefit businesses as they are able to react quickly to changes 4) Technology infrastructure help them manage their business transmit and record information
  • 6. Unilever’s five forces analysis Competitive Rivalry or Competition with Unilever (Strong Force) Competition is a major force in Unilever’s industry environment. This section of the Five Forces analysis identifies the external factors that present the impact of firms on each other. The strong force of competitive rivalry against Unilever is based on the following external factors and their intensities: • High number of firms (strong force) • High aggressiveness of firms (strong force) • Low switching costs (strong force) There are many firms operating in the consumer goods industry. This external factor imposes a strong force on Unilever. In addition, these firms are generally aggressive, further adding to the intensity of competition. Unilever also experiences tough competition because of low switching costs. For example, it is easy for consumers to switch from one firm to another. Thus, a high level of competition is shown in this section of Unilever’s Five Forces analysis, highlighting the need to consider competitive rivalry as a high-priority force in the company’s industry environment. Bargaining Power of Unilever’s Customers/Buyers (Strong Force) Unilever’s business and industry environment depend on the response of consumers to its products. The influence of buyers on business performance is considered in this section of the Five Forces analysis. Unilever must address the following external factors that lead to the strong force of the bargaining power of customers: • Low switching costs (strong force) • High quality of information (strong force) • Small size of individual buyers (weak force) The low switching costs make it easy for consumers to transfer from Unilever’s products to other companies’ products. This external factor contributes to the strong intensity of the bargaining power of buyers. In addition, consumers have access to high quality of information about consumer goods, making it even easier for them to decide when transferring from Unilever to other providers. For example, buyers can compare products based on online information. The small size of an individual consumer’s purchases has minimal impact on Unilever’s profits. However, the low switching costs and high quality of information outweigh this third external factor in the industry environment. Based on this section of the Five Forces analysis, the bargaining power of customers is one of the strongest forces affecting Unilever’s consumer goods business.
  • 7. Bargaining Power of Unilever’s Suppliers (Moderate Force) Suppliers impact Unilever’s industry environment by affecting the level of supply available to firms. This section of the Five Forces analysis presents the influence of suppliers on companies. The following are the external factors that contribute to the moderate force of the bargaining power of suppliers on Unilever: • Moderate size of individual suppliers (moderate force) • Moderate population of suppliers (moderate force) • Moderate overall supply (moderate force) While Unilever has large suppliers like foreign firms that supply paper and oil, the average supplier is moderate in size. This external factor imposes a moderate intensity force on the consumer goods industry environment. In addition, the moderate population of suppliers enables them to impose significant but limited influence on firms like Unilever. Similarly, the moderate level of the overall supply adds to such significant but limited influence of suppliers. For example, any supplier’s change in production level leads to significant but limited change in the availability of raw materials used in Unilever’s business. Other firms in the industry are similarly affected. As shown in this section of the Five Forces analysis of Unilever, the bargaining power of suppliers is a significant but moderate consideration in the consumer goods industry environment. Threat of Substitutes or Substitution (Weak Force) Substitutes can reduce Unilever’s revenues and the strength of firms in the consumer goods industry environment. The impact of substitution is determined in this section of the Five Forces analysis. In Unilever’s case, the following external factors are responsible for the weak force of the threat of substitution: • Low switching costs (strong force) • Low substitute availability (weak force) • Low performance to price ratio of substitutes (weak force) The low switching costs enable consumers to easily use substitutes to Unilever’s products. This external factor imposes a strong force on the company and the consumer goods industry environment. However, the overall impact of substitution is weakened because of the low availability of substitutes. For example, it is easier to access Unilever’s Close-Up toothpaste from grocery stores than to obtain substitutes like homemade organic dentifrice. In relation, most substitutes have low performance with minimal or insignificant cost difference when compared to consumer goods readily available in the market. This condition makes Unilever’s products more attractive than substitutes, thereby further weakening the intensity of the threat of substitution. This section of Unilever’s Five Forces analysis shows that the threat of substitutes is a minor issue in the business.
  • 8. Threat of New Entrants or New Entry (Weak Force) Unilever competes with established firms as well as new firms in the consumer goods market. This section of the Five Forces analysis considers the influence of new firms on the industry environment. The following external factors create the weak force of the threat of new entrants against Unilever: • Low switching costs (strong force) • High cost of brand development (weak force) • High economies of scale (weak force) The low switching costs enable new entrants to impose a strong force against Unilever. For example, consumers can easily decide to try new products from new firms. However, it is costly to build strong brands like Unilever’s. This external factor weakens the intensity of the threat of new entrants against the company. Also, Unilever takes advantage of high economies of scale, which support competitive pricing and high organizational efficiencies that new firms typically lack. As a result, the company remains strong despite new entrants. Based on this section of the Five Forces analysis, the threat of new entry is a minor concern in Unilever’s industry environment.
  • 9. Performance Matrix – IFE of HUL Balance scorecard of HUL The Balanced Scorecard was first developed in the early 1990s by two researchers: Kaplan and Norton (2001). The researchers Marr and Adam (2004) found that the balanced scorecard was designed to be used as a strategic performance measurement and management framework. Kaplan and Norton (1996) describe the originality of the balanced scorecard as: “The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation". In recent years, balanced scorecards have been proposed and widely used to measure organizational performance from four different perspectives that help companies focus on their critical areas, and to translate their strategy into action (Seraphim, 2006). • Financial Perspective • Customer Perspective • Internal Business Process Perspective • Learning and Growth Perspective However, in my opinion the balanced scorecard also has other weaknesses, which mean that the balanced scorecard will not always guarantee success. Many companies fail to put the
  • 10. required measurements in place to make the balanced scorecard a success. Two reasons for this may be: (a) Time The balanced scorecard takes time to implement and many companies may not have the time or the sufficient resources to properly invest in this performance measurement. (b) Fee It can be costly to implement the balanced scorecard. The organizational will have to ensure that all employees are sufficiently trained and if they are not they will have to send them on training courses which is costly. They may also have to improve their production processes i.e. having new, up to date technology and machines that are of high quality. Financial Perspective The Financial Perspective covers the financial objectives of an organization and allows managers to track the financial success of a company for example how wealth is created for shareholders” (Advanced Performance Institute 2010). However, despite the need to provide a balanced approach to performance measurement, companies remain focused on traditional financial measures (gross revenue, profit before tax, and cost reduction) and often forget about intangible assets (Chia, Goh and Hum 2009). Financial Customers Vision & Strategy Internal Business Processes Learning & Growth
  • 11.
  • 12.
  • 13. Customers’ Perspective “In the customer perspective of the Balanced Scorecard, managers identify the customer and market segments in which the business unit will compete and the measures of the business unit’s performance in these targeted segments” (Kaplan and Nortan 1996, p26). According to Kaplan and Norton (1996) the customer perspective, if implemented correctly, should have successful outcomes such as customer satisfaction, customer retention, customer profitability, new customer acquisition and market share in targeted segments. HUL’s brands have become household names. The company’s strategy is to concentrate its resources on 30 national power brands, and 10 other brands which are strong in certain regions. The top five brands together account for sales of over Rs.3000 crores. Each of these mega brands has a potential scale of Rs.1000 crores in the foreseeable future Internal Business Process Perspective In the internal business process perspective, managers identify the important internal processes that the business must succeed in, in order to implement its strategy (Drury 2004). Metrics based on this perspective let managers measure how successful their organization is doing and whether its goods and services conform to customer needs (Papenhausen 2006). Product Development: HUL has concentrated in a very wide way on the product development factor. The product has been focused on various segments from low price products to premium products. Most of our products are developed on a global scale by following the policies and procedures laid down by Unilever. They have entered untapped markets and tried to focus on products which can satisfy the demands of all class of customers. Their product ranges are health care, personal care, household care, beverages etc. They have developed products which focus on all ranges. Operations Process: The procurement procedure undertaken by HUL is followed by a combination of backward integration and with suppliers. HUL has its own farms for the production of agri based products. HUL has a strong network of suppliers which supply materials for the production purpose. HUL has a speedy process of procurement to make it reach to production as it is needed to meet the growing demand. HUL has its own 19 tea estates which produces tea leaves which are certified by Rain Forest Alliance. HUL has a speedy process of manufacturing. Material consumed and Purchase of goods is round about INR 8,901 crores in 2009-10. HUL has its own production departments which focus only on packing of goods produced.
  • 14. Supplier Processes: Hindustan Unilever, which once pioneered distribution in India, is today reinventing distribution - creating new channels, and redefining the way current channels are serviced. In the process it is converging product availability, with brand communication and brand experience. Services and Logistics of HUL is very efficient. The sales services of HUL are very efficient as their supply chain management is very efficient. Hindustan Unilever's distribution network is recognized as one of its key strengths. Its focus is not only to enable easy access to our brands, but also to touch consumers. HUL's products, manufactured across the country, are distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets. The distribution network directly covers the entire urban population. Learning & Growth Perspective An organization that is serious about leadership development makes it a way of life. Hindustan Unilever has been consistently producing CEOs and corporate leaders for India INC for more than 25 years now; the leadership development process at Levers is more of a tradition, institutionalized over the last many decades. With more than 1000 alumni sitting on boards globally, HUL is a source of inspiration for many companies. The key tenets of this solid tradition have been -- commitment from top leadership, a robust and consistent process, strong linkage between individual development and level of exposure offered, mentoring, training – all fostered in a culture of transparency and equal opportunity. The company uses what it calls a “70-20-10” model for developing its workforce: 70% of learning happens on the job, 20% through mentoring, and 10% through training and coursework. Leadership development is one of the core tasks of the Management Committee at Hindustan Unilever. “Senior management devotes enormous time in the leadership development process,” says Leena Nair, Executive Director HR. In every fortnightly management review meeting, talent review session is an integral part of the overall agenda. Top management at Hindustan Unilever invests anywhere between 30 to 40% of their time in grooming and mentoring leaders for the future. They get involved at various stages -- from redefining the talent identification process, to identifying talent, to grooming and coaching, to creating opportunities for growth and exposure
  • 15. Strategies operations Strategy Formulation Analytical Summery SL. External Factor Weightage Rating Score 1 Customers Preference to Physically Evaluate Products 0.15 2 0.30 2 High Brand Loyalty and Switch Over Threshold 0.20 1 0.20 3 Existing Customer Base as A Captive Market Source 0.15 1 0.15 4 Product Offerings in Popular Product/Service Categories 0.10 2 0.20 5 Customer’s Demand for Differentiation– Integrated Content, Simple Design, Differentiation, Pricing 0.40 4 1.60 Total 1.0 2.45 SL. Internal Factor Weightage Rating Score 1 Focus on Invention With Innate Understanding Of Customers Point of View 0.20 4 0.80 2 Possible Dilution of Corporate Culture 0.10 3 0.30 3 Resources 0.30 3 0.90 4 Distribution Network Supporting Retail Operations 0.30 4 1.20 5 Appetite For Risk Taking And Risk-Reward History 0.10 4 0.40 Total 1.0 3.60 TOWS MATRIX TOWS Analysis External Factors Internal Factors Strengths (S) 1. Strong brand equity 2. It has over 18000 employees 3. Reach of 6.4 million retail outlets 4. Own R&D centres in India 5. Over 700 million Indian consumers Weaknesses (W) 1. Presence of other strong 0FMCG brands 2. HUL faced controversies Opportunities (O) 1. Mergers and acquisitions to strengthen the brand 2. Increasing purchasing power of people SO Strategies 1. HUL can tap rural markets and increase penetration in urban areas as HUL distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets. The distribution network directly covers the entire urban population. 2. Mergers and acquisitions to strengthen the brand like taking over of Tomco, Kothari general foods, Lakme etc. WO Strategies 1. Market share is limited due to presence of other strong FMCG brands though Increasing purchasing power of people thereby increasing demand. Threats (T) 1. Intense and increasing competition amongst other FMCG companies 2. FDI in retail thereby ST Strategies 1. HUL is a part of the Unilever group, hence strong brand equity which makes HUL superior than WT Strategies 1. HUL should work on controversies like skin lightening creams, pollution etc & to make customers
  • 16. allowing international brands 3. Competition from unbranded and local products can hurt Hindustan Unilever's market competitors. 2. Hindustan Unilever has a reach of 6.4 million retail outlets which includes direct reach to over 1.5 million retail outlets, which is much more compared to competitors. believe in HUL products & Competition from unbranded and local products can hurt Hindustan Unilever's market, so company should also consider that facts. Strategic Business unit of HUL Strategic business units are absolutely essential for multi-product organizations. These business units are basically known as profit centres. They are focused towards a set of products and are responsible for each and every decision / strategy to be taken for that particular set of products. Strategic business units can be best explained with an example. Example of Strategic business units – The best example of strategic business unit would be to take organizations like HUL Space Matrix Of Hul The Strategic Position and Action Evaluation (SPACE) Matrix is one of the strategic management tool for analyzing the company and its environment to formulating the strategies. It is four-quadrant structure which specify whether aggressive, defensive competitive or conservative strategies are most suitable for a given organization, company or business.
  • 17. QSPM Matrix Of HUL Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach for evaluating possible strategies. • QSPM provides an analytical method for comparing feasible alternative actions. • The QSPM method falls within so- called stage 3 of the strategy formulation analytical framework.
  • 18. Portfolio Matrices - BCG Matrix of HUL Grand Strategy Matrix Of HUL The grand strategy matrix helps us to determine the strategy that the firm must pursue, based on its competitive position and market growth. HUL lies in quarter 1 which represents excellent strategic position of a company. Continued concentration of current market and products is an appropriate strategy. HUL has abundant resources, so backward, forward and horizontal integration may also prove effective.
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  • 20. Strategic focus of HUL At Unilever we want to grow our business in the right way so that our consumers, employees, suppliers, shareholders and communities all benefit. We have a clear purpose – to make sustainable living commonplace – and a vision to grow our business whilst decoupling our environmental footprint from our growth and increasing our positive social impact. These are set out in our ‘Compass’, our business strategy document. We believe this is the best way to achieve business success in the long term, and in fact, we’re already seeing strong results. In 2015 our 12 Sustainable Living brands grew 30% faster than the rest of the business; in 2016 they grew 40% faster and delivered nearly half our growth. Sustainable Living brands are brands that combine a strong purpose delivering a social or environmental benefit, with products contributing to at least one of our USLP goals.
  • 21. What do we mean by sustainable living? We want to help create a world where everyone can live well within the natural limits of the planet. We’re putting sustainable living at the heart of everything we do including: Our brands and products How we behave Working with others We create brands that offer balanced nutrition, good hygiene and give people confidence. We are making our products accessible and affordable to consumers, wherever they live and we’re innovating to find new products that make life better. We source our products carefully, so that we protect the earth’s resources. We treat people fairly and respect their rights, so employees, suppliers and communities all benefit from working with us. We are working with others to create transformational change beyond our business while our brightFuture campaign is motivating millions of people to take small, everyday actions that together make a big difference. A strong business case - With 7 billion people on our planet, the earth’s resources are increasingly strained. Sustainable, equitable growth is the only acceptable model for our business. But growth and sustainability are not in conflict. Our four-point framework shows how sustainability drives value for our business. More growth - sustainability creates innovation opportunities, opens up new markets and allows our brands to connect with consumers in new ways. Consumers are responding - our Sustainable Living brands are growing faster than the rest of our business. Lower costs - by cutting waste and using resources carefully we create efficiencies, cut costs and improve margins, while becoming less exposed to the volatility of resource prices. Since 2008 we have avoided costs of over €700m through eco-efficiency in our factories. Less risk - operating sustainably helps us future-proof our supply chain against the risks associated with climate change and long-term sourcing of raw materials. By 2016, 51% of our agricultural raw materials were sustainably sourced. More trust - placing sustainability at the heart of our business model strengthens our relationships. It helps us maintain our value and relevance to consumers, whilst inspiring Unilever’s current and future employees. For example, in 2016, we maintained our status as the Graduate Employer of Choice in the fast-moving consumer goods sector among 34 of the 60 countries we recruit from. Our blueprint – the Unilever Sustainable Living Plan Our Sustainable Living Plan provides the detailed blueprint for how we will achieve our purpose. It covers all aspects of our business, each of our brands and categories and every country we work in. It seeks to create change across our value chain – from our operations, to our sourcing and the way consumers use our products. It is designed to drive profitable growth and fuel innovation and to do so in the right way so that all our stakeholders feel the benefits.
  • 22. The Plan, launched in 2010, is built around three big goals. 1 2 3 By 2020 we will help more than a billion people take action to improve their health and well-being. By 2030 our goal is to halve the environmental footprint of the making and use of our products as we grow our business. By 2020 we will enhance the livelihoods of millions of people as we grow our business. For each goal we have detailed targets and objective measurement techniques, see The Unilever Sustainable Living Plan. Transformational change beyond our business Many sustainability challenges are complex and global in scale. Tackling them requires change to whole systems and ways of working. Collaboration between business, governments, NGOs and others is crucial if we are to achieve this change – through partnerships such as the World Business Council for Sustainable Development’s Action 2020, the Tropical Forest Alliance 2020 and the Global Task Force for Scaling up Nutrition. Our Sustainable Living Plan provides the blueprint for change within our organisation and supply chain. But we want to go further and we’ve identified four key areas where we can use our scale and influence to help bring about transformational change: • taking action on climate and halting deforestation • improving livelihoods and creating more opportunities for women • improving health and well-being • championing sustainable agriculture and food security. We support the UN’s Global Goals for Sustainable Development and the UN Climate Conference’s Paris Agreement. Through our Sustainable Living Plan and transformational change agenda, we’ll play our part in helping to achieve the ‘zero poverty and zero carbon’ goals. We’re still learning We’ve had some great results from our Sustainable Living Plan. We know it contributes to business growth as we see consumers responding to campaigns by our Sustainable Living brands - such as Hellmann’s, Breyers and Omo - on issues ranging from sustainable sourcing to water scarcity. We’ve also learnt a lot about what does and doesn’t work and we’ll keep making changes to get things right. One of our biggest challenges is our ability to stimulate change outside our business, where we don’t have direct control. For example, while we’ve made good progress on reducing greenhouse gas emissions (GHG) from our factories and reached our 2020 target by 2016, the GHG impact of our products per consumer use has increased by 8% since 2010. We’ve updated our GHG strategy to reflect what we’ve learnt. We are continually looking for new ideas and ways to influence our wider value chain. We know that collaboration with others holds the key to tackling many sustainability
  • 23. challenges and we will be focusing even more on this in the years ahead. Our transformational change initiatives will help us to bring about the systems change needed to address some of the most complex social and environmental problems. What others think We’re pleased that our strategy has been recognized by others, including: • Dow Jones Sustainability Index (DJSI) - following 15 years of industry group leadership in the Foods, Beverage & Tobacco Industry Group (out of 16 years’ participation), Unilever was named leader of the Household & Personal Products Industry Group with a score of 92 out of 100. • We were also selected as an index component of the Dow Jones Sustainability Indices (DJSI) following our participation in the 2016 RobecoSAM Corporate Sustainability Assessment. • Globe Scan/Sustainability Leaders survey – we’ve retained our top ranking for six consecutive years. • CDP - in 2016 we were also listed in the ‘A’ performance bands in CDP’s Climate, Water and Forests Reports. We were also included in CDP’s Leadership Report on Supply Chain.
  • 24. Conclusion HUL being India’s largest FMCG Company with 35 brands and 20 distinct categories is doing very well, company is also very focused on mission statement and vision statement and working accordingly, the financial statement of the company is also good and there is always increment in turnover of the company. The board of directors, the management the core managers everybody is responsible and is loyal to the company, the main reason of company’s success is it is maintain its quality, coming with new products, making innovations in the product, maintaining its price and the most important thing which is taking HUL towards continuous success is the strong distribution channel and the intensive and extensive selling strategy. The company has more than 30000 people in distribution channel which give the company a competitive edge , and each year in annual report the company makes a strategy and work according to the strategic focus . Recommendations to the company • The company should maintain its quality. • The company should focus on more herbal products • The company should always keep an eye on competitors • As the competition in FMCG sector is becoming intense it’s very necessary to keep a track on it. • The company should always survey about the likeness of the product of the company which will give the company the extra edge. • Company should always focus on taste and preference of the consumers • The company should do more CSR activities which will help in good word of mouth for the company. • The company should give advertisement in newspapers and other media weekly.