Nitesh

Awasthi 5 Swapnil Karande 17 Pankaj Patkar 30 Sumit Amladi 98 Rohan Satam - 110

Strategic Management
Case Study

Background - Excelsior group

Business - Share of Turnover
Consum er Products Finance, , 8% 10%

Others, 2%

Chief

Real Estate, 10% Liquor 70%

business Liquor Generated cash but had risks Threat of ban on liquor sales Post liberalization attack from transnational companies Threat of takeover Need for diversification

Excelsior takes over WIC

WIC Brands Annual Sales
35 30 25 20 15 10 5 0 30 In Rs. Cr

12

Bharat

Herb

Wash

Sparkle

Bonjour

Bharat

Ayurvedic Soap Herb Herbal toothpaste Wash Detergent powder Sparkle, Bonjour Toilet Soap

Problems for WIC

Only

Bharat and Herb had some brand equity No top of the mind awareness among consumers Lack of funding Strong competitors like HUL and P&G Excelsior chairman having mixed views about WIC Strikes and Go-slows at Aurangabad plant

Strategy Option 1
Phase

out the weak brands Wash, Sparkle and Bonjour Sell excess capacity Use voluntary retirement scheme to reduce labor costs Use surplus cash to introduce new products and categories

Pros

Cons

Management can focus on improving turnover and margins of Bharat and Herb With surplus cash, Bharat and Herb can be promoted aggressively Also, provides opportunity to enter new product categories No debt required for new product launches

Difficult to sell excess capacity at good rate Lay offs can trigger long term labor problems Involves high risk if new product launches dont work Loss of customers loyal to the brands being phased out

Option 2 - Strengthen existing brands

Soaps Market Share Sparkle

Mysore Sandal 2% Cinthol 3% Liril 4%

Others 23% Lifebuoy 42% Hamam 11%

Sparkle and Bonjour, both are toilet soap brands Phase out Bonjour and consolidate sales of Sparkle Promote Sparkle aggressively Launch new products using same brand

Lux 15%

Sparkle liquid soap Sparkle toiletries Sparkle Air freshener

Pros

Cons

Phasing out of Bonjour will avoid cannibalization of sales of Sparkle Existing brand Sparkle will be leveraged to launch related products Less expenditure on creating brand awareness for new product launches

Added expenditure to promote Sparkle e.g. Endorsements by celebs or repositioning of the current brand Loss of low end consumers

Option 2 - Strengthen existing brands

Price sensitive market Premium brands like Ariel and 14% 2% Surf Ultra failed, forcing low priced extensions like Ariel 35% 6% Supersoaker and Rin Power White 8% Flanks have been covered by brands like Shudh and Henko 10% Position Wash as an AntiBacteria detergent powder 25% Launch Wash in smaller SKUs Nirma Wheel Improve distribution so that Surf Ultra Ariel Supersoaker product is readily available

Detergents Market Share

Rin Power white Others

Ariel

Pros

Cons
Cluttered

Potential to tap the hygiene conscious consumers with the Anti-Bacteria positioning Availability of Wash in Tier-2 and Tier-3 cities through improved distribution channel

market Price war can put pressure on margins Difficult to differentiate the product

Option 2 - Strengthen existing brands

3% 1% 5%
5% 12% 52% 22%

Tooth Paste Market Share

Colgate
Colgate Gel Promise Others

Closeup
Pepsodent Babool

Market dominated by Colgate and Pepsodent Colgate is medium-priced and commands premium Target low end segment Attack Babool which is losing market share in the low end segment Launch Herb tooth powder for the rural consumers Initially introduce Herb tooth powder in sachets for market penetration Later introduce paste or gel after customer accepts the brand targeting mid segment

Option 2 - Strengthen existing brands

Pros
Improved

Cons

market share through penetrative pricing strategy

Difficult to finance for advertising and promotions as only way to succeed is by making noise in media Distribution costs will be high in rural markets

Option 3 New Product Categories

Bharat which is a ayurvedic soap has a good brand equity amongst WIC customers. It can be used to foray into new product categories like Beauty Segment

Anti ageing cream Face wash Introduce ayurvedic range of product line like ayurvedic shampoos and hair oil

Hair care

Option 4 Vertical Integration

Backward Integration

Forward Integration

Pros

Cons

Less dependence on suppliers Less sensitivity on fluctuating commodity prices

Pros

Will require huge investment Company can venture in areas in which it does not have expertise

Cons

Will help to improve margins Better access to information about end customers FMCG retail is highly fragmented Very difficult to penetrate and reach out to wider audiences

Tackling workforce problems

Assumption:

Cause of problems

Wage increase demands Unnecessary hiring of contractual labor

Profit sharing plan for permanent employees Stock option plan Layoff workers wherever necessary Invest in labor saving equipment's

Strategy

Recommendation During crisis

Win confidence of Excelsior chairman and get him to commit more funds for WIC Phase out Bonjour, Wash Sell out excess capacity dedicated for Bonjour and Wash Use the funds generated to strengthen Bharat, Herb and Sparkle Manage debt efficiently through negotiating long terms loans Tighten finance controls and reduce unnecessary overheads New inventory management system to control erratic supplies from factory

BCG Matrix
HERB Toothpaste Shampoo Hair Oil Beauty

BHARAT Ayurvedic soap

SPARKLE WASH BONJOUR

Recommendation Period of recovery

Launch new product categories Restructure the organization to recognize the divisions Skin care, oral care, hair care etc. as separate business units Assign profit responsibility to each of these units Outsource manufacturing of new products and focus on marketing and distribution Should not opt for forward or backward integration

Thank You