capstone final copy nazmul

MD. NAZMUL ALAM Roll No:-0875095/1 Module Code: BB430999S Capstone Project

Table: A: MACRO ENVIORNMENTAL ANALYSISPEST UK BRAZIL CHINA INDIA

POLITICALStrong democratic setup(R33)Stable system of governanceStrong opposition & forecast of hung parliament in 2010(R34)

Federal Republic(R36)Judicial system isdysfunctionalViolent Crime (R35)Rampant Corruption (R35)Unstable government

Communist countryMore pragmatic perspective On politicaland Socioeconomicproblems (R37)Reduced the rule ofIdeology in economic policy

Largest democracyStable govt & ruling

2nd

term (R38)Low import duty (R32)Environmental Law (R3)FDI Inflows (R1, 18)

ECONOMICALDeveloped EconomyEconomic RecessionI (R54)Budget Deficit £200bn(R39)Tax rates highInflation growth 2.2%GDP growth negative 3.7% (T4)Low lending rate0.6%High Unemploymentgrowth 37.3%

Tax burden high (R40)Inflation growth 4.9%GDP real growth 4.9%Lending rate high (T4)Unemployment growthReasonable 4.4%

Low cost labourInflation growth negative 0.7% (T4)High Tax rates (R37)GDP growth negative 3.5%Lending rate 3.5% (T4)High Unemploymentgrowth 49.5%

High Inflation(R5, 23, T4)Tax Rates Low (R32)GDP Growth high 10.3% (R5, 17, T4)Lending Rate 12.2%Unemployment growth mild 4.1%Currency positive fromstable and increased Credit rating-Moody (R22)

SOCIALHigh standard of livingLiteracy rates highRelatively high dependency ratioHigh old age peopleHigh urban population89.6% (T4)Disposable income negative growth for bothMale- 2.7%Female-4.6% (R48)Consumers taste towardslow premium products (R55)Total Population lowi.e. 0.06bn

High Urban populationsize 85.4% (R49)Disposable income growthFor male 7% and forFemale 4.9% (T4)Old Age people 6.7%Increasing rates of nonattendance and dropoutsin school pose a seriouschallenge towards theaccomplishment of socialand economic goals (R31)Total Population 0.19bnConsumers are choosingselected products

Many different dialectsStd. Chinese Languagefor written and Englishfor speakingLiteracy rates over 90%High Population 1.3bnLow urban population46.4% (T4)Low old age population4.8%Consumers tastes have increased and believesin spending (R56)

High Population 1.15bnOld age 9.6%ageLow urban population29.8% (T4)Consumers awarenessincreased for spending(R13, 19, 20,24)Developing country and 46% increase in totalplan allocation ininfrastructure, 16% increase in Educationand 75% Increase in urban developmenthousing (R32)

TECHNOLOGICAL

Renowned scientificExpertise (R31)Effective enforcement ofIP lawsLack of skilled personnelRegulatory control overindigenous innovation (R31)

Low penetration rate inTelecommunication in theHilly & Amazon regions(R40)Mobile market continuesto post double-digit (R49)growth

Roads are not well builtand road congestionis commonly seen inChina (R31)Govt is building onrailways and improvement can be seen by 2010.(R37)

Significant growth inTelecommunication IndIn 2008-09 (R15)Increasing broadbandconnectivity for growthof knowledge basedSocietyInnovative strategies ((R9)

Table: B: INDUSTRY LIFE CYCLE(R31, R55)


Table: 6 PORTERS FIVE FORCES MODEL ((R41,42 and R58) Threat of Entry Internal Rivalry

I. Economies of Scale importantii. Substantial amount of capital investmentiii. High Marketing expenditureiv.Imposed govt regulationv. High level of technological access

i.Lot of competitors in the market.ii.High Degree of differentiation & diversification.iii. High fixed costiv. High endorsement of brand

Product Substitute Buyer power

i.High Product complements.ii.Cheap & Beneficial alternativeiii.Low switching cost

i. Strong independence and significant bargain powerii. Low switching cost.iii. Brand loyalty reduces buyer power.

Supplier Power

i. Monopolized cosmetic industry reduces supplier power.ii. Backward integration of industry. iii. Few relative chemical suppliersiv. Competitive market to get biggest piece of share.

Table: 7 MODE OF ENTRY DECISIONSDecision Variables (R43) Entry

ModeAdvantage (R44,45) DisadvantageR44,45)

i. Product Oriented Opportunitiesii. Market GrowthGovernment Supportiii. Geographical Positioniv. Riskvi. Flexibility of International Business policy

Join venture

i. Better Market Feedbackii. Experience in International Marketingiii. Minimize Resourcesiv. Low financial risk

i. Reduce control.ii. Involve greater riskiii. Unprofessional partner.iv. Associating with wrong people

Acquisiti

on

i. Skilled Management and Labourii. Contract with local market and governmentiii. Removing a potential competitor

i. Involve more capitalii. Exposure to political riskiii. Greater managerial complexity.

Table: BENCHMARKING WITH COMPETITORS(T6)(R25,26,27)

RATIO GCPL DABUR INDIA MARICO


2008 2009 2008 2009 2008 2009

Total Revenues (Cr) 1102.6 1393 2396 2834 1914 2400

Revenue Growth (%) 26.33 18.28 25.39

PAT 159.2 173.3 333 391 169 189

Gross Profit Margin(%)

19.3 14.7 16.9 16.4 12.7 12.4

Net Profit Margin(%) 14.4 12.4 13.9 13.8 8.9 7.9

ROE (%) 704.42 674.31 385.41 452.02 277.5 310.3

EPS 7.1 6.7 3.9 4.5 2.8 3.1

ROCE(%) 55 23 47.6 38.8 40.3 37.4

Debt Equity Ratio 0.1 0.5 0.1 0.1 0.2 0.3

Dividend Per Share 4 4 1.5 1.75 0.7 0.6

Number of Employees

1450 4200 2585

Table: 8 THE SWOT ANALYSIS (R25, 26, 27, 46, 53)SWOT GCPL DABUR INDIA MARICO LTD

STRENGTH

a- Strong Balance sheet with huge cash & comfortable debt equity ratio

b- Differentiate product offerings5 modern & integrated plants with ISO 9002 and 14001

quality stdsc- Strong presence in rural markets (R52)d- Established brands & leadershipe- Widespread sales & distribution network & supply

chain

a- Strong online presence ahead of its competitors

b- Leadership in aurvedic products

c- Deals with rural and urban customers

a- Good understanding of Indian consumers in hair oil segment

b- Large distribution network all over India

c- Rural Market reach


WEAKNESSE

S

a- Low advertisementb- Lack of continuous training & educationc- Incompatible organisational structure and isolated

individuals & Dept.

a- Products services are low quality

b- Old & outdated technologies hold company back & limits success

c- A limited customer based- Weak employees

performance appraisal

a- Small range of productsb- Very weak financial

performance(T6) & Low market share

c- Lack of management commitment and improper planning

OPPORTUNITI

ES

a- Increasing penetration in smaller towns and rural areas

b- Target of increasing distribution channels significantly by 10-18%

c- Increase brands by more advertisementsd- Value for money pricinge- Alliance & joint venture strategies to increase

market share

a- Alliance & takeover strategies to maximise profits, revenues, customer base and market share

b- Increasing product quality and services by using TQM

c- Effective performance appraisal system for employees

a- Strategy to capture youth in mid 20 in increasing the mkt set up

b- Shifting from urban to rural area to increase demand

c- Increase R&D exp for innovative products & existing brands

THREAT

a- Competition in FMCG space on a/c of low entry barriers of technology and capital requirements

b- Price war due to multinationals & regional players could impact revenues & profits

c- Rise in cost of raw materials & rising in food inflation means less spending on non food items

d- Increasing Advt & publicity exp will effect profit margin

a- Increasing raw material will effect on profit margin

b- Rising inflation is main threat in consumer spending

c- Recession may come in FMCG industry

a- Competition from the diverse players may cause losing mkt share

b- Increasing input cost prices may result low profit margin

Table: 9 CONSUMER BEHAVIOUR MODEL (R53) (R64)

Table: 10: BRANDING & BRANDING ISSUES:Factors Impact

Brand loyalty i. Godrej acquired a Nigerian Cosmetic and Toiletries product which produce Tura bar soap product in local market. (R: 25)ii. Godrej create market penetration, Enhance brand presence by acquired of Kinky group a South African company. (R: 25,66)

Brand awareness i. The market share position of Godrej holding 5th

position in Cosmetic and Toiletries (R: 25)ii. Godrej hair colour leading the colour cosmetic in cosmetic and toiletries industry. (R: 25)iii. Godrej soap second largest toilet soap in India. (R: 25)

Perceived Brand quality i. Increasing market share, brand positioning indicate the quality of Godrej brand in the market. (R: 25)

Sensor Branding i. Godrej -1, Cinthol, Ezze and Fair Glow brands create consumers attention and increase market share due to sensitiveness of packaging and product. (R: 25)

Celebrity Branding i. Indian Film hero Hrithik Roshan, actress Katrina Kapoor are engaged as brand ambassador with Godrej product and increase business grew sharply by 25%.

Table: 11: Risk (R33)


Financial Business Country Risk management

a-Loss incurred by promoter group might affect the company’s finance.b- Competition might force the company to compress its profit margins and increase marketing costs.c- the company should be able to manage its growth, otherwise this will affect the business and financial results.d- Failure to successfully identify and conclude acquisitions, joint ventures or manage the integration of the businesses acquired or the performance of such businesses being below expectations may cause profitability and operations to suffer.

e- Significant fluctuations in certain foreign currency exchange rates can have an adverse impact.f- A Significant portion of our Objects are for the purposes of repayment of loans.g- Many liabilities are not provided in the company's financial statements.

a- Distributors might affect the distribution network, thus distribution should be well managed.b- the launch of new products, if unsuccessful, may impact earnings.c- the existence of look-alikes products could damage the business.d- the business relies on IT for its supply chain, any faults may result in loss.e- any proposed acquisitions by the company may have A material impact on its business, financial condition and results of operations.

a-Outstanding litigations against the company & compliance with laws.b- Fiscal benefits being enjoyed by the company (income tax and excise duty) may not be available in future could affect our post-tax profits.c. Probability of Cultural risk due to heterorganic community.d. Language barriere. Regional Parties.f. Social and Communal tension.g. Compliance with laws.

a- Gogrej is an established brand name and market leadershipb- Widespread sales and distribution network and supply chain competencies in Indiac- Manufacturing facilities spread across locations both internationally and domesticallyd- Research and Product Developmente- Qualified employee base and management teamf- Leverage and enhance the Godrej brand name and that of our brands.g- Focus on enhancing our sales and distribution network within the domestic marketh- To grow and expand our market share through organic growthi- To accelerate growth and expand our international presence through strategic acquisitions and partnershipsj- Continue to upgrade and modernise our plants and facilities to manufacture and supply products at a low


Table: 12: Kaplan & Norton Model for Benchmarking GCPL with Competitors (T6, T7, R25, 26, 27, 30, 46, 47, 52, 53)GCPL DABUR INDIA MARICO

FINANCIAL PERFORMANCE

Revenue Growth 26.33%Net Profit Margin 12.4%Employees Cost on revenues 6.2%Advt Exp on revenue 9.09%EVA in 2009 Rs129.83 cr (T7)ROE 674.31%

Revenue growth 18.28%N.P Margin 13.8%Emp. Costs on Revenue 8.28%Advt Exp on revenue 12.11%EVA in 2009 Rs 144 crROE 452.2%

Revenue growth 25.39%N.P Margin 7.9%Emp Costs on revenue 6.8%Advt Exp on revenue 10.43%ROE 310.3%

CUSTOMER PERFORMANCE MEASURES

Sahayog & Sampooran projects resulted 30% time saving in customer order taking & between reach of all range of products

Outsourcing IT services helped Dabur by implementing a new sales and distribution strategy, supply chain management capability, optimizing ERP capabilities and outsourcing IT operations

Marico is doing well in their customer satisfaction by meeting personally and finding their needs and IT has also improved its customer service

INTERNAL BUSINESS PROCESS

Above two projects resulted 30% time saving in despatch timePlant utilisation Capacity is 65%

Dabur is utilising at 80% capacity approximatelyThe above use of IT increased business process efficiency, quality, flexibility and product development.

Marico deployed Microsoft dynamics TM NAV 4.0 for faster decision making which resulted improved sales efficiency & faster reporting

LEARNING & GROWTH

GCPL has EVA based performance management system which is linked with employees remuneration& bonuses and satisfaction.Best Employee of India award in 2007 rank 6

Company is using Young Managers development programme from recruitment to appraisal which satisfies all employees at all levels.Satisfying & keeping employees by giving them stock options

Learning through sharing concept in which members have opportunity to directly interact with board under Popcorn Session with Harish.

Table: 13: RECOMMENDATION FOR ALTERNATIVE INVESTMENT OF ASSET CLASS (R60. 61)TYPES DESCRIPTION REASONS TO CHOOSE MAJOR RISK

SHARES Common, preferredLarge cap, mid cap, small capGrowth valueInternational/domestic

High return potentialMay provide incomeLong term horizon

High

BONDS Government, AgencyMunicipalCorporateMortgaged-backed, asset-backedInternational/domestic

Regular incomePotential for price appreciationPossible tax advantagesLower risk

Medium

CASH EQUIVALENTS Treasury BillsCommercial PaperCD’s & banker’s acceptancesMoney markets

Regular incomeRelative price stabilityLiquidityLower-risk

Low

PROPERTY Real estateProperty unit trustsListed property/fundsInternational/domestic

High return potentialMay provide incomeLong-term horizen

Low

RISKS (R25)


Seasonal fluctuations, Political risks associated with unrest and instability in countries where the company has a presence or operations, Economic depression and inflation, Labour shortages and attrition of key staff, Exchange rate fluctuation and arbitrage risk, Increasing costs of raw material, transport and storage, Competitive market conditions and new entrants to the market, Compliance and regulatory pressures including changes to tax laws, Supplier & distributor relationships and restriction of distribution channels

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