Strategic Approach Adopted by HUL (Hindustan Unilever Limited)

Strategic Management Project Report

Submitted to: By: -

Dr. Piyush Verma Shaurya Trehan (400907039) Sandeep Singh (401087003) Harparkar Singh (400907007)

Word Count: Due Date: -

6701 22nd September 2013

Date Submitted:-22nd September 2013

ACKNOWLEDGEMENTS

I would like to extend my sincere thanks to LMTSOM B-School (Thapar University) for extending all their resources cooperatively to carry out my Strategic Management project. My thanks are due to Dr. Piyush Verma for facilitating my project. My project would have been woefully inadequate without the devoted guidance and mentorship of Dr. Piyush Verma, my Project Guide, for not only guiding my project but also enhancing my experience with the richness of his experience during the entire course of the project. I thank my parents, my siblings and friends for their support and encouragements that helped me in successfully completing the project. Last but not the least; I thank God for His blessings throughout the course of my learning.

CONTENTS
Acknowledgements........................................................................................................................................ 2 Introduction ..................................................................................................................................................... 4 Company overview ......................................................................................................................................................................4 Mission ..........................................................................................................................................................................................5 Corporate Purpose ..................................................................................................................................................................5 Strategic Position ............................................................................................................................................................................6 Environment ...................................................................................................................................................................................6 Porters Five forces .................................................................................................................................................................6 SWOT analysis ...........................................................................................................................................................................8 MARKET SEGMENTS AND STRATEGIC CUSTOMERS: STP .............................................................................14 BRANDS .....................................................................................................................................................................................15 Value chain process ..................................................................................................................................................................17 Strategies of HUL in Competitive Environment.........................................................................................................20 BCG Matrix ........................................................................................................................................................................................23 What is BCG Matrix? .................................................................................................................................................................23 Assumptions Of BCG.................................................................................................................................................................23 HUL-BCG.........................................................................................................................................................................................24 HUL Product Mix ...................................................................................................................................................................24 Market Growth Analysis....................................................................................................................................................25 Market Share Analysis .......................................................................................................................................................25 BCG of HUL ...............................................................................................................................................................................26 Types of Strategies ......................................................................................................................................................................27 CORPORATE LEVEL STRATEGY .........................................................................................................................................27 Strategy for expansion of business..............................................................................................................................27 BUSINESS LEVEL STRATEGY...............................................................................................................................................29 Focus on Product Innovation/ Relaunches/ Development of New Markets .........................................29 OPERATIONAL LEVEL STRATEGIES................................................................................................................................32 STRATEGY INTO ACTION.........................................................................................................................................................37 BALANCED SCORECARD........................................................................................................................................................39 MANAGING PEOPLE .................................................................................................................................................................39 Pricing Strategies .......................................................................................................................................................................42 CONCLUSION ....................................................................................................................................................................................43 References ........................................................................................................................................................................................44

INTRODUCTION

COMPANY OVERVIEW
HUL (HUL) is Indias largest fast moving consumer goods company, with leadership in Home & Personal Care and Foods & Beverage products HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians. They endow the company with 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 to life". With 35 Power Brands, HUL meets every day needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. It is a mission HUL shares with its parent company, HUL, which holds 52.10% of the equity. A Fortune 500 transnational, 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, and personal care with brands that help people feel good, look good and get more out of life.

CORPORATE PURPOSE
Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are the foundation for our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers a truly multi-local multinational. Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously. To succeed also requires, we believe, the highest standards of corporate behavior towards everyone we work with, the communities we touch, and the environment on which we have an impact.

STRATEGIC POSITION

ENVIRONMENT

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.

SWOT ANALYSIS
a) 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 foods Distribution networks together, thereby aligning all the units towards the common goal of achieving success. Hul 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 costs. Hul has come up with a unique and successful initiative wherein the women from the rural sector market hul products, and hence, are able to reach the same 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 to the premium segment for the upper class. Very high market price per share compared to the face value. Continuous increase in earnings 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.

 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

b) Weaknesses

HUL's market dominance, originating from its extensive reach and strong brand presence, 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 margins attracted competition in areas of operations. HUL's strategy remained focused on 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 pricing power, and hul has shown weakness over both these factors. Hul's weakness was its 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. Hul'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. Diversification into various lines in which it does not have much knowledge would be very risky proposition. High competition from established brands which has resulted in reduction in profit margins. Non FMCG products are losing ground & their market share & sales have been declining. Working capital turnover is negative. Unable to make a big impact in rural areas. Competition from its own brands ( lux, liril, lifebuoy )

Opportunities

Opportunities India is one of the world's largest producer of FMCG goods but its exports are miniscule as compared to production.

Though Indian companies have been going global, their focus is more towards Asian countries because of the similar preferences. Hul is one of the top companies exporting FMCG goods from India. An expansion of horizons towards more and more countries would help HUL grow its consumer base and henceforth the revenues. Opportunity in food sector - the advent of modern trade has opened up greater opportunities For HUL to diversify its brand and strength its food division. It could look at introducing products from its parents stable like margarines and could also look at expanding its more range of products. It has a very well-defined product portfolio spread across many product categories. Penetration levels for some major categories like skincream (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% to 70%. 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. 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.

MARKET SEGMENTS AND STRATEGIC CUSTOMERS: STP

India offers tremendous opportunities to global companies. The past history of 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) growing at 10% a year, more than 110 million households with earnings of US$7,500 to US$20,000 and more than 70% of the population below the age of 36. So, it would be true to say that the 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 depicts that there is the presence of highly discerning and demanding customers. In spite of the booming economy and the 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 growing number of Indian brands that offer superior quality at affordable prices. Unilever is a classic example of a global brand which has pioneered serving the locals with products 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 the pyramid - 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 less as 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 tooth paste in sachets. Even though the unit price was higher, rural consumers were able to afford to purchase the smaller quantity at their convenience. HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers using its products. According to Brand Equity, HUL has the largest number of brands in the Most Trusted Brands List. It has consistently had the largest number of brands in the Top 50, and in the Top 10 (with 4 brands).

BRANDS

The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands Its brands include Kwality Wall's ice cream, Knorr soups & meal makers, Lifebuoy, Lux, Pears, Breeze, Liril, Rexona, Hamam and Moti soaps, Pureit water purifier, Lipton tea, Brooke Bond (3 Roses, Taj Mahal, Taaza, Red Label) tea, Bru coffee, Pepsodent and Close Up toothpaste and brushes, and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and atta, Pond's talcs and creams, Vaseline lotions, Fair and Lovely creams, Lakm

beauty products, Clear, Clinic Plus, Clinic All Clear, Sunsilk and Dove shampoos, Vim dishwash, Ala bleach, Domex disinfectant, Modern Bread, Axe deosprays and Comfort fabric softeners. HUL doesnt target a single line of customers but customers of all segment are targeted by it products. The variety of its products targets from premium customers to the customers of rural India. Its aim is to cater the local customers. E.g. Hul have Dove Shampoo and soaps a product for the premium customer and the products like Lifebuoy and Clinic plus for the lower end customers.

Demographic Variables It essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size. Hul has focused on the customers of the urban India with the premium products life Dove, Lux, Surf excel etc and at the same time a focused penetration can be seen in the rural market with economic products. Hul has a strong distribution network which is the main tool to reach to its customer. Even a small retailer in the rurals of India is having HUL product.

Behavioural Segmentation Some consumers are brand loyali.e., they tend to stick with their preferred brands even when a competing one is on sale. Some consumers are heavy users while others are light users. So HUL with the unique range of its products have

focused this aspect too. All the products of HUL are available in small packs and sachets. The company introduces the sachet form especially for the rural market so the people started buying even the expensive products and HUL the untapped market of rural was taken by HUL. HULs corporate position is to meet the everyday needs of people everywhere. HLL'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 and the company has also begun an e-tailing service, called Sangam, which can homedeliver on order by phone or through the Net, a diverse range of about 5000 branded and unbranded products.

VALUE CHAIN PROCESS

Primary and Secondary Activities

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. Their product ranges are health care, personal care, household care, beverages etc. They have developed products which focus on all ranges.

Inbound Logistics Inbound logistics of HUL is very efficient in the manner in the form of maintain the goods manufactured. The logistics management is very efficient with respect to rural areas. The focus of HUL is to make available the goods to the shops and retail outlets which supplies HUL products to its consumers.

Procurement and Manufacturing 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.

Service and Logistics 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.

Outbound Logistics The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Hindustan Unilever services each with a tailor-made mix of services. The emphasis is equally on using stores for direct contact with consumers, as much as is possible through in-store facilitators. HUL has also revamped its sales organisation in the rural markets to fully meet the emerging needs and increased purchasing power of the rural population. The company has brought all markets with populations of below 50,000 under one rural sales organisation. The team comprises an exclusive sales force and exclusive redistribution stockists, under the charge of dedicated managers.

HUL's distribution network in rural India already directly covers about 50,000 villages, reaching about 250 million consumers, through about 6000 sub-stockists.

Marketing Activities It focuses on short supply chain for distribution. It also focuses to meet the every need of people everywhere. It also uses direct selling channel, franchisee to reach everyone. For long term benefits, HUL started Project Streamline in 1997. They appointed 6000 Sub-stockists that directly covers about 50,000 villages & 250 million customers. They also undertook PROJECT SHAKTI, partnership with Self help groups of rural women & covers 5000 villages in 52 districts in different states to make available HUL products in rural areas. HUL has also a portal named: ISHAKTI portal which focuses on the activities of PROJECT SHAKTI. Shakti has already been extended to about 15 states, 80,000 villages in with 45,000 women entrepreneurs and generating Rs.700-1000 per month to each woman.

STRATEGIES OF HUL IN COMPETITIVE ENVIRONMENT

Focus on product innovation/ relaunches/ development of new markets

Successful re-launch of Lux helped volume growth in the soaps segment and market share seems to be stabilizing now. Fair & Lovely winter fairness cream was

re-launched and the company is seeing good growth. In the hair & oil category, Dove and Clinic Plus grew strongly and the former is now the No. 1 brand in modern retail. Sunsilk was re-launched in November 2009 and growth momentum continues in this category as well. Launch of Cif continues to see good momentum. Brooke Bond Sehatmand was launched to attract down trading customers. The tea also projects additional health benefits and should lead to filling up of the void in the discount tea segment. Knorr soup is registering good growth post relaunch. In the ice cream category, HUL launched the Litchi Zap and 85 swirl parlours are in operation now, recording good growth in the segment.

Recent price cut in Rin / price war in laundry Currently, the price cut in Rin is just a price promotion/offer over the near term. This will be evaluated again. HUL took a 30% price cut in Rin washing powder (to INR 50 from INR 70). Price cuts could also lead to upgrading to mid segment from lower price points. Growing India opportunity means competition will increase. However, HUL remains focused on leadership. It remains confident of growth over medium and long term.

Market share improvement is the key objective over near term : HUL will focus on competitive growth over near term. However, profitable growth remains the key objective over the medium and long term. There is a change in

strategy from a competitive and profitable growth to competitive growth over the near term. HUL is focused on speed to market and determined to grow ahead of the market.

New products/ innovations which have done well Fabric conditioner, hair conditioner, OOH consumption of ice creams, water, premium skin lightening.

Ad spends The level of ad spends will depend on competitive intensity and product innovations. Launches and re-launches will keep happening. However, over the near term, ad spends are likely to remain high. Ad spends are unlikely to go back to 10% of sales.

Down trading in tea and detergents HUL has introduced a new variant in low end of tea which is competitively priced with respect to regional players. The new brand is Brooke Bond Sehatmand and has been introduced in UP, Bihar, and MP. Prices of tea as a commodity have shot up so up trading decreased from packets to lose consumption.

BCG MATRIX

WHAT IS BCG MATRIX?

BCG matrix is often used to prioritize which products within company product mix get more funding and attention It has 2 dimensions: MARKET SHARE & MARKET GROWTH 4 categories: - Stars, Cash cows, Dogs, Question marks?

ASSUMPTIONS OF BCG
1. This matrix assumes that a larger market share in a growth market leads to profitability. An effort to obtain a large market share in a slowly growing market requires too much cash. 2. The higher the growth rate, the easier to gain market share.

HUL-BCG

HUL PRODUCT MIX

The entire product range of HUL can be visualized in terms of the following of the following segments: Food Brands (Kissan, Annapurna, Knorr, Kwality Walls, Broke Bond, Taj Mahal) Home Care Brands (Surf Excel, Vim, Wheel, Rin, Bleach, Domex) Personal Care Brands (Pepsodent, Close Up, Axe, Rexona, Sunsilk, Dove , Lifebuoy, Liril, Lux, Pears, Fair & Lovely, Lakme, Ponds, Vaseline, Etc.)

Growth And Market Share

MARKET GROWTH ANALYSIS

MARKET SHARE ANALYSIS

BCG OF HUL

TYPES OF STRATEGIES

CORPORATE LEVEL STRATEGY

STRATEGY FOR EXPANSION OF BUSINESS

Takeovers Unilever considered takeovers as a preferred more units strategy of rapid expansion in all its major businesses. In food and beverages section the takeover of UB groups Kissan Products and Dipys.brook bond was spearheading the acquisition which absorbed Kissan. In Cosmetics and personal care HUL acquired Lakme sin care through joint venture 50:50 first in 1995 and formed a marketing company as Lakme-Lever Company. It used all its readymade dedicated nationwide distribution chain of Lakme to market all its products.

Joint Ventures HUL derived the expansion route through joint ventures also first being LAKME. In Cosmetics and personal care .a joint venture 50:50 in year 1995 enabled HUL to have readymade dedicated nationwide distribution chain of Lakme to market all its products. The Lakme lever company successful thus launched products like Elizabth Arden, Rimmele and Calvin Klein through the dedicated shelf spaces.

Organic Growth Route

Start up route: backward integration strategy HLL invested some 40 crores in skin care factory at silvasa in dadra and nagar haveli. This unit became one of the largets manufacturing facilities of skin care products with capacity to manufacture entire line and range of Skin care compounds and Ingriediets. This facility enabled HUL to produce Fair &Lovely cream and lotion, shampoo bases and lotion bases for the brand Ponds and Lakme.

Integration Strategy HUL like the parent company UNILEVER carried out regrouping and integration of existing businesses and company in the country into a single mega firm.It took two companies at a time two companies which enjoyed the closest synergy were merged into a single entity, and subsequently merged into another company to form a larger group. This continued till a stage where there remained one and sole single company in India HUL. i. Brook bond merger- two of the existing HULs company Doom Dooma India and tea estates India and two taken over companies. Kissan General Foods and Brook Bond were merged into one company. ii. Quest international Indian ltd was merged with ponds brand. QIL was engaged in perfumery and flavours which enabled ponds expertise in launching many unique\ perfumes and fine fragrances.

iii.

HUL took over Stephan chemical ltd and its detergent business (wheel) mainly to create a low cost popular segment detergent base and mainly to compete with Nirma detergents.

BUSINESS LEVEL STRATEGY

FOCUS ON PRODUCT INNOVATION/ RELAUNCHES/ DEVELOPMENT OF NEW MARKETS

HUL has undertaken hands on focus on developing new markets and products brands. The successful relaunch of Lux helped volume growth in the soaps segment and market share seems to be stabilizing now. Fair & Lovely winter fairness cream was relaunched and the company is seeing good growth. Sunsilk was relaunched in November 2009 and growth momentum continues in this category as well. Brooke Bond Sehatmand was launched to attract down trading customers. The tea also projects additional health benefits and should lead to filling up of the void in the discount tea segment.

Higher Ad Spending To Prop Up Volumes and Market Share Hindustan Unilevers (HUL) first level of aggression was to increase ad spends from 12.5% in Q1FY10 to 13.5% of sales in Q2FY10. The company is also trying to improve product/mix with superior high growth margin products (through new product launches, rebranding, etc.) and this predicts that HUL will be able to deliver volume growth and market share gain through this strategy.

Aggressive Price Cuts HULs second level of aggression was to cut prices sharply in the soaps and detergents category. HULs global management has emphasized the importance of a strong foothold in its own backyard and the recent price cuts indicate the companys strong commitment to continue as market leader in the soaps and detergents segment, while maintaining profitability. As a reminder, the company still holds 45% market share in toilet soaps and 37% in washing powder as per industry data.

High Investment in Advertising and Sales Promotions HUL is the biggest FMCG player and has the scale to absorb increased ASP costs. Therefore increasing brand awareness for new and existing products improves brand equity in the longer run and HUL believe this is the right strategy at this point of time. This should also enable the company to focus on other high margin business such as personal products.

Outlook and valuations: investors entry made easier The company is investing heavily in its brands, realigning its sales and distribution strategies and it will start regaining market share, a trend which has already begun in Q3FY10. HUL has underperformed in the Sensex and BSEFMCG Index in the past six months by 22% and 19%, respectively. Recent correction has been overdone and these levels provide a good entry for investors looking for defensive names and a likely turnaround in fortunes. At CMP of INR 237, the stock is trading at P/E of 20.9 xs and 18.3 xs of FY11E and FY12E, respectively. On relative return basis, the stock is rated Sector Performer.

Premiumization of Customers HUL is focused on market development as well as up trading consumers in certain categories. New product launches (in ice cream and foods) as well as the recent price cut in Rin are possible opportunities to upgrade customers to mid segment from lower price points. Dove grew rapidly across shampoo and conditioners, becoming the No.1 hair care brand in modern trade while Dove sachet has captured ~5% of the market. In skin care, Ponds White Beauty and Fair & Lovelys winter fairness' cream has received good response from the market.

Clearly, HUL is benefitting from the premiumization trend of Ind ian consumers.

OPERATIONAL LEVEL STRATEGIES

HUL has institutionalized the process of attracting, developing and retaining top talent. Some steps in this process are: Get them early Train them well Build careers Encourage diversity Reward top performance Instil values

HUL does capability building across functions and at every level of the organisation. For example, HUL has skills -maps against which the workforce in its manufacturing units and its sales force are benchmarked.

Supply Chain Management HUL prioritise speed and flexibility in its supply chain to deliver growth. HUL are doing this through simple ideas.

For example, in some of its detergent factories HUL are running 'twin track' on single production lines. This has helped us to nearly double its production thus enabling better customer service while improving operating efficiencies. Apart from this, today most of its production lines have developed the capability of quick changeovers to meet the market demand.

Return on Marketing Investments (ROMI) An area where we drive continuous improvement ROMI is about maximizing the effectiveness of its advertising, promotional and trade investments. HUL have developed advanced marketing mix modelling techniques that allow us to assess all the marketing levers to drive growth and superior yields from marketing investment.

Information Technology (IT) In 2009, HUL enhanced this capability for analytics and intelligent sales calls. As part of the thrust of further improving its direct coverage in rural areas, HUL are leveraging geospatial aids extensively. HUL have also established an IT enabled consumer interaction centre for addressing complaints and suggestions. HUL has deployed an end-to-end technology solution which helps reduce inventory cycles while enabling optimum service levels. All its salesmen are equipped with handheld devices which help to improve on-shelf availability of its products while also building assortment at individual store level.

HUL DISTRIBUTION NETWORK

HULs distribution network is recognised as one of its key strengths -- that which helps reach out its products across the length and breadth of this vast country. The need for a strong distribution network is imperative, since HU Ls corporate purpose is to meet the everyday needs of people everywhere. 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. HUL is using the opportunity of interfacing more directly with consumers in this retail environment through specially designed communication and promotions. This is building traffic into the stores while yielding high growth for the business. An IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis. The objective is to catalyse HU Ls growth by ensuring that the right product is available at the right place in right quantities, in the most cost-effective manner. For this, stockists have been connected with the company through an Internetbased network, called RS Net, for online interaction on orders, despatches, information sharing and monitoring. RS Net covers about 80% of the company's turnover. RS Net has come as a force multiplier for HUL Way, the company's action-plan to maximise the number of outlets reached and to achieve leadership in every outlet. Powered by the IT tools it has further improved customer service, while ensuring superior availability and impactful visibility at retail points.

For rural India, HLL has established a single distribution channel by consolidating categories. In a significant move, with long-term benefits, HLL has mounted an initiative, Project Streamline, to further increase its rural reach with the help of rural sub-stockists. Distribution will acquire a further edge with Project Shakti, HLL's partnership with Self Help Groups of rural women. The project, started in 2001, already covers over 5000 villages in 52 districts of Andhra Pradesh, Karnataka Madhya Pradesh and Gujarat, and is being progressively extended. The vision is to reach over 100,000 villages, thereby touching about 100 million consumers. For HLL, the project is bringing new villages under direct distribution coverage. Plans are being drawn up to cover more states, and provide products/services in agriculture, health, insurance and education.

SUSTAINABILITY STRATEGY Small individual actions multiplied with our large consumer base will make a big difference in combating the issues society faces. For example, if one household uses Surf Excel detergent, it can conserve two buckets of water per wash. A million Indian households using Surf Excel can save enough water for meeting the basic hygiene needs of many Indians.

Our Brands

Small Actions Every Day

BIG DIFFERENCES Billions of Customers

In HUL, its Brands, customers and processes are the key drivers for sustainable growth and improvement in business processes. So HUL considers these factors as change elements in bringing BIG DIFFERENCE to the nation through their contribution by involving in the lives of every two out of every three Indians.

STRATEGY INTO ACTION

Unilever represents another common organizational structure; the hybrid form. This company operates with three divisional regions, two product segments, and five functional segments. Unilever developed and implemented this organizational structure for their company to improve communication and to take advantage of resources that are available to them. Typically this kind of structure is organized in a top-down manner. Once the executive level is satisfied with the structure, it flows down to management.

Advantages: Integrated knowledge Flexible Allows for dual dimensions

Disadvantages: Length of time required for decision making Unclear job and task responsibilities Unclear cost and profit responsibilities High degrees of conflict

BALANCED SCORECARD

HUL follows a very good balanced score card system. Every department right from marketing, logistics, sales, finance and human resource are internally connected. It is very important for an organization like HUL to have an internal fixed process in a company which has very less profit margin. Every department is very well connected. It has had good competition from proctor and gamble but it has emerged out as a leader in the fight between both of them. HR strategy of HUL is so good that the employee satisfaction is to the highest level which enhances the motivation in the employees and allows them to be very open in their minds for the effectiveness of the organization.

MANAGING PEOPLE

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 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. The critical role of a leader at HUL is to create talent and capability for the future. Each identified leader is expected to create leaders within and draft their succession plan. In the process of identifying leadership talent, Performance and Behavior are considered equally important. You need to be delivering great performance, but just that is not sufficient. The demonstrated behaviors or Standards of Leadership as we call them at Unilever, will also determine your potential for future growth and success, says Leena. Unilever uses the Leadership Differentiation Tool (LDT), a 3x3 grid of performance VS potential to differentiate amongst its talent pool. These principles are applied to around 5,000 people as part of talent assessment across the company.

Information on performance is taken from the appraisal review process & KRAs on the job, while information on behaviors and potential is taken from multiple sources: a 360 degree profiling (done once every two years), behaviors demonstrated on the job & GPS (Global People Survey) results. GPS is an employee survey that captures insights into employee engagement levels across various teams, thus giving information and feedback at the organizational level. Employees identified in the talent pool will go through planned moves to ensure that they get the right skills and exposure required for the next level of responsibility. There is also this interesting concept at HUL called Hot Jobs for Hot People. Every year the management committee identifies around 50 jobs that could be the most impactful jobs for the year, either because it is an area of growth or a strategic pursuit for the group. Hot Jobs are opportunities with very high visibility in the company and provide a chance to the employees in HP/SHP pool to create an impact at the organizational level. The HP/SHP pool is a dynamic pool since about 20% of managers in this would move into new roles every year. Transparency is paramount for the success of the process. Managers in the organization are given a capability card after the annual review cycle. This capability card details all the output of the review cycle and highlights the path for development for the coming year. Leadership development is ingrained in the Hindustan Unilever culture and is aligned to the vision of being a high performance workplace. The success of HUL leadership program has been proven over decades. The leadership team now tracks metrics like succession plan compliance, listing cover,

number of positions with ready now candidates, number of successors for each position, percentage of roles with female successors as potential options etc. Indeed, Hindustan Unilever is a model example of how taking talent and its management seriously across the organization can create a culture of performance, excellence and leadership.

PRICING STRATEGIES

HUL always believes in customer friendly products with major emphasis on low cost overall without compromising on the quality of the product. They are leveraging the capabilities and scale of the parent company and focusing on the value of execution. The entire product portfolio is also being tweaked to include premium offerings such as Pond's Age Miracle and dove shampoo in skin and hair care. HUL brought sachets and small bottles which can be used by middle income group as well. In each of its products all range starting from premium price to low price range products are arranged.

CONCLUSION

Thus from the study of HUL through strategic model it can be understood that being so large and so extensive in brands it has allocated equal importance to each of its product and services. Moreover being so evident in each of its segment which is widely used by Indian as well as worldwide customers; HUL is not only focusing in major brands but also on those brands which are not performing well and new products are brought into market by viewing the importance of Innovation in this changing environment. As bees are treated as social insects, committed to prioritising the colon ys needs and working together, such team work and a passionate commitment to achieve a shared goal is what help HUL create milestones.

EVERY SMALL ACTION MAKES A BIG DIFFERENCE

REFERENCES
http://www.hul.co.in/

http://articles.economictimes.indiatimes.com/2012-0928/news/34148327_1_unilever-spokesperson-d-e-markets-unilever-ceo

http://www.researchandmarkets.com/reports/2218752/hindustan_unilever_limit ed_strategy_and_swot

http://www.academia.edu/402825/Hindustan_Unilever_Limited_a_study_on_the_marketing_concept

http://www.studymode.com/subjects/2-at-what-different-levels-is-strategyformulated-in-hul-page1.html

http://www.business-standard.com/article/opinion/hul-growth-strategy-pays111091400016_1.html