SBU(STRATGIC BUSINESS UNIT)

DEFINITION

An SBU is a unit of the company that has a separate mission and objectives and that can be planned independently from the other businesses. An SBU can be a company division, a product line or even individual brands - it all depends on how the company is organized.

FMCG

ITC HUL P&G Dabur Marico

SBU

ITC:- Foods, Personal Care ,Cigarettes & Cigars

HUL:- Foods , Personal Care ,Home Care.

Marico:-Hair Care , Edible Oil. P&G:-Baby Care , Hair Care , Fabric

Care. Dabur:- Foods , Personal Care , Health

Care.

PORTER’S GENERIC STRATEGIES

The generic strategies are: 1. Cost leadership, 2. Differentiation, and 3. Focus.

STRATEGY ADOPTED BY COMPANIES

ITC:- Cigarettes & Cigars Strategy – Focus :- ITC use Focus

strategy for Cigarettes & Cigars SBU. Reason:- Because it satisfy the unique

smoking need of it’s customer.

HUL:- Personal Care Strategy:-Differentiation & cost(for

some Product) Reason:-HUL uses differentiation

strategy(Dove ,Lakme)for most of products along with cost strategy for some of its products(Lifebuoy,Lux)

P&G:-Baby Care Strategy:-Focus Reason :- Because it caters to very

small segment i.e. children between 0-3 yrs of age.

Marico:-Hair Care Strategy:-Cost Leadership Reason:-Marico is cost leader in Hair oil

segment by launching different packing of it’s parachute hair oil at affordable price.

Dabur:-Health Care Strategy:- Differentiation Reason:- Because it satisfy unique need

of the customer which no other product in health care segment give example Dabur Chyawanprash.

SEGMENT REVENUES

2009-10 2008-09 Goly1. Segment Revenue (Gross)

a) FMCG - Cigarettes 17,283 15,115 14.3 - Others 3,642 3,014 20.8 Total FMCG 20,925 18,129 15.4 b) Hotels 911 1,020 (10.7) c) Agri Business 3,862 3,846 0.4 d) Paperboards, Paper & Packaging 3,234 2,822 14.6 Total 28,931 25,817 12.1 Less : Inter segment revenue 2,672 2,674 (0.1) Gross sales / income from operns. 26,260 23,144 13.5

2009-10 2008-09 Goly2. Segment Revenue (Net)

a) FMCG - Cigarettes 9,321 7,781 19.8 - Others 3,634 3,006 20.9 Total FMCG 12,955 10,786 20.1 b) Hotels 851 935 (9.1) c) Agri Business 3,862 3,846 0.4 d) Paperboards, Paper & Packaging 3,108 2,647 17.4 Total 20,776 18,215 14.1 Less : Inter segment revenue 2,622 2,603 0.8 Net sales / income from operns. 18,153 15,612 16.3

Full Year

Yes, Looking at the financial result for the past 2 financial year the company can sustain the competitive advantage over the next 5 years because of it’s focus strategy.

We can see the approx growth of 20% in net profit from Cigarettes business of the company.

ENVIRONMENT CHALLENGES

1] NEGATIVE PUBLICITY FOR SMOKING COULD EFFECT ITS CIGARETE SEGMENT.

2] GOVERNMENT IS UNDER HUGE PRESSURE FROM PUBLIC ORGANISATIONS FOR BANNING TOBACCO PRODUCTS WHICH COULD EFFECT IT ADVERSILY.

3] HIGH COMPETITION FROM ESTABLISHED BRANDS

4] COMPETITION FROM UNBRANDED PRODUCTS.

5] DUE TO TERRORIST ATTACKS THE TOURISM INDUSTRY HAS TAKEN A BACK SEAT WHICH WOULD AFFECT THE HOTEL SEGMENT.

6]POOR MONSOON LEADS TO POOR AGRICULTURALGROWTH WHICH WOULD AFFECT THE AGRI-EXPORTS.

4] COMPETITION FROM UNBRANDED PRODUCTS.

5] DUE TO TERRORIST ATTACKS THE TOURISM INDUSTRY HAS TAKEN A BACK SEAT WHICH WOULD AFFECT THE HOTEL SEGMENT.

6]POOR MONSOON LEADS TO POOR AGRICULTURALGROWTH WHICH WOULD AFFECT THE AGRI-EXPORTS.

STRENGTHS

1] MANAGING DIVERSE BUSINESS. ITC HAS 105 SUBSIDARIES CONNECTED WITH ITS VARIOUS OPERATIONS.

2] WEALTH OF LOCAL KNOWLEDGE & INTERNATIONAL EXPERTISE HELPS IT TO BE GLOBALLY COMPETITIVE.

3] HIGH QUALITY STANDARD PRODUCTS & SERVICES

4] EXCELLENT EXPORT EARNINGS.5] HIGHILY PROFESSIONAL MANAGEMENT.6] EXCELLENT DISTRIBUTION NETWORK.7] EXCELLENT BRAND MAKING CAPABILITY

HELPING IT TO DIVERSIFY IT INTO RETAILING ,IT & HOTELS SEGMENTS

8] A LASTING IMPRESSION BY CATCHY ADS.

9] THE LIFESTYLE RETAILING SEGMENT HAS WON ACCLAIM & MOVING TOWARDS HIGHER SALES.

10]STEADY INCREASE IN THE RETURN ON CAPITAL EMPLOYED.

11] SOPHISTICATED RESEARCH & DEVELOPMENT FACILITIES.

WEAKNESS

1]DIVERSIFICATION INTO VARIOUS LINES IN WHICH IT DOES NOT HAVE MUCH KNOWLEDGE WOULD BE VERY RISKY PROPOSITION.

2] HIGH COMPETITION FROM ESTABLISHED BRANDS WHICH HAS RESULTED IN REDUCTION IN PROFIT MARGINS.

3] STEEP INCREASE IN CIGARETTE TAXES HAS ADVERSILY AFFECTED THE REVENUE EARNED.

4] DUE TO HIGH PRICE OF CIGARETTE, CONSUMERS ARE SWITCHING TO OTHER CHEAPER FORMS OF TOBACCO.

5] ITS HOTEL INDUSTRY HAS STILL NOT CREATED A BIG SHARE IN THE MARKET SIZE.

THANK YOU