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Company overview: HUL (HUL) is Indias largest fast moving consumer goods company, with leadership in Home &Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinctconsumer categories, touch the lives of two out of three Indians. They endow the companywith a scale of combined volumes of about 4 million tonnes and sales of Rs.13,718 crores. The mission that inspires HUL's over 15,000 employees is to "add vitality tolife". With 35 Power Brands, HUL meets every day needs for nutrition, hygiene, and personal carewith brands that help people feel good, look good and get more out of life. It is a mission HULs h a r e s wi t h i t s p a r e n t c o mp a n y, H U L , wh i c h h o l d s 5 2 .1 0 % o f t h e e q u i t y. A F o r t u n e 500transnational, HUL sells Foods and Home and Personal Care brands in about 100 countries worldwide.

Mission: HUL's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, andpersonal care with brands that help people feel good, look good and get more out of life. Corporate Purpose: O u r d e e p r o o t s i n l o c a l c u l t u r e s a n d ma r k e t s a r o u n d t h e wo r l d g i v e u s o u r s t r o ng relationship with consumers and are the foundation for our future growth. We will bringour wealth of knowledge and international expertise to the service of local consumers - atruly multi-local multinational. Our long-term success requires a total commitment toe x c e p t i o n a l s t a n d a r d s o f p e r f o r ma n c e a n d p r o d u c t i v i t y, t o wo r k i n g t o g e t h e r effectively, and to a willingness to embrace new ideas and learncontinuously. To succeed also requires, we believe, the highest standards of corporatebehavior towards everyone we work with, the communities we touch, and theenvironment on which we have an impact.

Strategic position
II. Environment:
a) Porters five forces Buyer power: Consumer faces weak buying power because customers are fragmented and have little influence on price or product. Considering buyer power retailers it is very high since they are able to negotiate the price with the companies. Verdict: strong buyer power from retailers. Supplier power: Consumer product faces some amount of supplier power simply because of the cost they incur when switching suppliers. Suppliers that do a large amount of business with these companies are also beholden to their customers.

 Verdict: limited supply power Threat of new entrants: Given the amount of capital investment needed to enter certain segment in house hold consumer products, the threat of new entrant is fairly low. Whether the new entrant can get its products on the shelves of the same retailers as its much larger rivals. Verdict: low threat of new entrants. Threat of substitutes: Within the consumer product industry, brand succeeds in helping to build a competitive advantage, but even the pricing power of the brands can be eroded. Verdict: high threat of substitutes. Degree of rivalry: Consumer in this category enjoy multitude of choices. It does not cost anything for a consumer to buy one brand of shampoo instead of another, making the industry quite competitive.

b) SWOT
Strengths HUL enjoys a formidable distribution network covering over 3400 distributors and 16 million Outlets. This helps them maintain heavy volumes, and hence, fill the shelves of most outlets. The new sales organization named 'one hll' brings "household and personal care" and fo ods distribution networks together, thereby aligning all the units towards the common goal of achieving success. Hll has been continuously able to grow at a rate more than growth rate for FMCG sector, thereby reaffirming its future stronghold in Indian market. Project Shakti - Rural India is spread across 627,000 villages and possesses a serious Distribution challenge for FMCG cos. Hll has come up with a unique and successful initiative wherein the women from the rural sector market Hll products, and hence, are able to reach the s ame wavelength as of the common man in village. Apart from product reach, the initiative also Creates brand awareness amongst the lower strata of society. This has brought about phenomenal results.

 Deep roots in local culture & markets & great understanding of consumer needs. Wealth of local knowledge & international expertise helps it to be globally competitive. Exceptional high quality standard products. New innovative ideas & products. Highly professional management. Excellent distribution network & good relationship with the wholesalers & retailers. Continuous efforts to reduce cost & pass on benefit to consumers. Good reputation & goodwill in the market for its products. Good advertisements so as to make the consumers aware of its products, uses & price &also have a lasting impression by catchy ads. Excellent brand making capability. It has 110 brands out of which 30 are power brands(ie, leader in market share with high growth potential) Ability to provide good quality goods to middle class at reasonable rates & also cater tothe premium segment for the upper class. Very high market price per share compared to the face value. Good returns by way of dividend per share every year. Last year 5/- rs dividend per share. Steady increase in the return on capital employed. Continuous increase in earning per share (EPS) Good cash reserves. Excellent past performances for a number of years. Ability to manage diverse business Having Unilever as parent company gives it a global presence. Excellent research & development.

 Use of rsnet a web enabled customer management s y s t e m t o e s t a b l i s h t w o w a y connectivity with stockist. Using information technology to connect supply chain Excellent financial support from banks & financial institutions. Good financial liquidity & also ability to complete projects on time. Good export earnings

Weakness
H U L ' s ma r k e t d o mi n a n c e , o r i g i n a t i n g f r o m i t s e x t e n s i v e r e a c h a n d s t r o n g b r a n d p r e s e n c e , allowed it to raise the prices even as raw materials were getting cheaper. Hence, though the volumes decreased, the margins grew, and company was able to earn more profits. But higher ma r g i n s a t t r a c t e d c o mp e t i t i o n i n a r e a s o f o p e r a t i o n s . H U L ' s s t r a t e g y r e ma i n e d f o c u s e d o n creating power brands and earning higher margins. It was not left with any other option but to try cutting down the costs in order to protect volumes, if not increase it. As shown in above figure, the key differentiators for an fmcg player are ability to call shots and p r i c i n g p o we r , a n d h l l h a s s h o wn w e a k n e s s o v e r b o t h t h e s e f a c t o r s . Hl l ' s w e a k n e s s wa s i t s inability to transform its strategies at the right time. They continued with the same old strategy which helped them gain profits but was not genuine in this changed environment. Hll's risk aversion and market myopia led to stagnation of business, and ferocity of competition forced it into a defensive mode. Lack of pricing power in core business and absence of growth drivers have put HUL on a deflationary mode.

We l l - p l a c e d t o t a k e a d v a n t a g e o f f u t u r e f mc g g r o wt h - h l l r e a c h o u t 8 0 % o f 2 0 7 mi l l i o n Households in the country through various brands. It has a very well-defined product portfolio Spread across many product categories. Penetration levels for some major categories like skin-cream (22%), shampoo (38%), toothpaste (48%) and processed foods continue to remain low offerings but great growth opportunities products. Big untapped market available. Especially the rural areas. Growth potential is high for the power brands.

 Good source of revenue & foreign exchange available by way of exports of its products. Its competitors dont have the financial banking like it so it can take advantage of this. Due to good reputation it may experiment & introduce new innovative products in the market. The food, culinary & ice-cream category have a lot of growth potential available

Threats
ITC has reduced its dependence on the cigarettes business - contribution of the core business in revenues has come down from 87% in fy99 to 70% in fy05. Over a period of five years, ITC has extended its presence into areas like foods, retailing, hotels, greetings, agri, paper, etc. These are businesses that can give it growth impetus in the long run. With ITC gaining momentum in each of these businesses, it is turning into a consumer monolith, and hence, the Greatest threat to HUL's business. ski india has gone on to say, "we maintain out performer on itc with a price target of rs. 2200, while our under performer call on HUL remains unaltered (price target of rs. 160)." High competition from established brands.(Nirma, Colgate, P & G ) Competition from unbranded products. Competition from its own brands.( lux,breeze,liril) (pepsodent & close up) Poor monsoon leads to poor growth due to lack of purchasing power by the rural areas. Negative working capital turnover may lead to short term instability. Its food, culinary, ice-cream segment & beverage segment are facing reduction in sales &hence innovation required to meet threats of competitors.

c) Market segments and strategic customers: STP

India offers tremendous opportunities to global companies. A brief look at the Indian landscape would prove why - an estimated 1.2 million affluent households that is expanding at 20% a year,40 million middle income households (earnings of US$20,000 to US$45,000 adjusted for PPP)g r o wi n g a t 1 0 % a ye a r , mo r e t h a n 1 1 0 mi l l i o n h o u s e h o l d s wi t h e a r n i n g s o f US $ 7 , 5 0 0 t o US$20,000 (adjusted for PPP) and more than 70% of the population below the age of 36. It is no wonder then, that global brands are making a bee line to the Indian market to grab a share of the growing pie. This alluring face of the Indian business landscape has another facet to it and that is the presence o f h i g h l y d i s c e r n i n g a n d d e ma n d i n g c u s t o me r s . I n s p i t e o f t h e b o o mi n g e c o n o my a n d t h e increasing disposable income, Indian consumers are very cautious and clear in their priorities. Consumers are still not ready to splurge on branded goods at premium prices. Added to this is a g r o wi n g n u mb e r o f Indian brands that offer superior quality at affordable prices. In s u c h a scenario, global brands can win only if they attune themselves to the local conditions.Unilever is a classic example of a global brand which has pioneered serving the locals withproducts that address the local sensitivities. Unilever's Indian subsidiary Hindustan Lever Limited(HLL) has been the leader in recognizing the tremendous opportunity lying at the bottom of thepyramid customer base that aspires to consume products but in smaller quantities and at lesser prices. HLL literally invented the shampoo sachets - small plastic packets of shampoo for as lessas INR 1 (USD0.022). This became such a rage among the rural consumers that many other brands started offering products such as detergent, coffee and tea powder, coconut oil and toothpaste in sachets. Even though the unit price was higher, rural consumers were able to afford topurchase the smaller quantity at their convenience