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Capstone Final Copy Nazmul


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Capstone Final Copy Nazmul

  1. 1. Table: A: MACRO ENVIORNMENTAL ANALYSIS EST UK BRAZIL CHINA INDIA POLITICAL democratic Strong Federal Republic(R36) Communist country Largest democracy setup(R33) Judicial system is More pragmatic Stable govt & ruling Stable system of dysfunctional perspective On political nd 2 term (R38) governance Violent Crime (R35) and Socioeconomic Low import duty (R32) Strong opposition Rampant Corruption (R35) problems (R37) Environmental Law (R3) & forecast of hung Unstable government Reduced the rule of FDI Inflows (R1, 18) parliament in 2010(R34) Ideology in economic policy ECONOMICAL Economy Developed Tax burden high (R40) Low cost labour High Inflation Economic RecessionI (R54) Inflation growth 4.9% Inflation growth (R5, 23, T4) Budget Deficit £200bn GDP real growth 4.9% negative 0.7% (T4) Tax Rates Low (R32) (R39) Lending rate high (T4) High Tax rates (R37) GDP Growth high Tax rates high Unemployment growth GDP growth 10.3% (R5, 17, T4) Inflation growth 2.2% Reasonable 4.4% negative 3.5% Lending Rate 12.2% GDP growth Lending rate 3.5% (T4) Unemployment growth negative 3.7% (T4) High Unemployment mild 4.1% Low lending rate0.6% growth 49.5% Currency positive from High Unemployment stable and increased growth 37.3% Credit rating-Moody (R22) SOCIAL High standard of living High Urban population Many different dialects High Population 1.15bn Literacy rates high size 85.4% (R49) Std. Chinese Language Old age 9.6%age Relatively high Disposable income growth for written and English Low urban population dependency ratio For male 7% and for for speaking 29.8% (T4) High old age people Female 4.9% (T4) Literacy rates over 90% Consumers awareness High urban population Old Age people 6.7% High Population 1.3bn increased for spending 89.6% (T4) Increasing rates of non Low urban population (R13, 19, 20,24) Disposable income attendance and dropouts 46.4% (T4) Developing country and negative growth for both in school pose a serious Low old age population 46% increase in total Male- 2.7% challenge towards the 4.8% plan allocation in Female-4.6% (R48) accomplishment of social Consumers tastes have infrastructure, 16% Consumers taste towards and economic goals (R31) increased and believes increase in Education low premium products (R55) Total Population 0.19bn in spending (R56) and 75% Increase in Total Population low Consumers are choosing urban development i.e. 0.06bn selected products housing (R32) TECHNOLOGICscientific Renowned Low penetration rate in Roads are not well built Significant growth in AL Expertise (R31) Telecommunication in the and road congestion Telecommunication Ind Effective enforcement of Hilly & Amazon regions(R40) is commonly seen in In 2008-09 (R15) IP laws Mobile market continues China (R31) Increasing broadband Lack of skilled personnel to post double-digit (R49) Govt is building on connectivity for growth Regulatory control over growth railways and improvement of knowledge based indigenous innovation (R31) can be seen by 2010.(R37) Society Innovative strategies ((R9) able: B: INDUSTRY LIFE CYCLE(R31, R55)
  2. 2. ble: 6 PORTERS FIVE FORCES MODEL ((R41,42 and R58) hreat of Entry Internal Rivalry Economies of Scale important i.Lot of competitors in the market. Substantial amount of capital investment ii.High Degree of differentiation & diversification. . High Marketing expenditure iii. High fixed cost .Imposed govt regulation iv. High endorsement of brand High level of technological access roduct Substitute Buyer power High Product complements. i. Strong independence and significant bargain power Cheap & Beneficial alternative ii. Low switching cost. .Low switching cost iii. Brand loyalty reduces buyer power. upplier Power Monopolized cosmetic industry reduces supplier power. Backward integration of industry. . Few relative chemical suppliers . Competitive market to get biggest piece of share. ble: 7 MODE OF ENTRY DECISIONS Decision Variables (R43) Entry Advantage (R44,45) DisadvantageR44,45) Mode i. Product Oriented Join i. Better Market Feedback i. Reduce control. Opportunities vent ii. Experience in International ii. Involve greater risk ii. Market Growth ure Marketing iii. Unprofessional partner. Government Support iii. Minimize Resources iv. Associating with wrong iii. Geographical Position iv. Low financial risk people iv. Risk vi. Flexibility of International Business policy Acq i. Skilled Management and i. Involve more capital uisit Labour ii. Exposure to political ion ii. Contract with local market risk and government iii. Greater managerial iii. Removing a potential complexity. competitor Table: BENCHMARKING WITH COMPETITORS(T6)(R25,26,27)
  3. 3. 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 19.3 14.7 16.9 16.4 12.7 12.4 Margin(%) 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 1450 4200 2585 Employees Table: 8 THE SWOT ANALYSIS (R25, 26, 27, 46, 53) SWOT GCPL DABUR INDIA MARICO LTD
  4. 4. a- Strong Balance sheet with huge cash & comfortable a- Strong online presence a- Good understanding of debt equity ratio ahead of its competitors Indian consumers in hair b- Differentiate product offerings b- Leadership in aurvedic oil segment 5 modern & integrated plants with ISO 9002 and 14001 products b- Large distribution quality stds c- Deals with rural and network all over India c- Strong presence in rural markets (R52) urban customers c- Rural Market reach STREN d- Established brands & leadership e- Widespread sales & distribution network & supply chain GTH WEAK a- Low advertisement a- Products services are low a- Small range of products NESSE b- Lack of continuous training & education quality b- Very weak financial S c- Incompatible organisational structure and isolated b- Old & outdated technologies performance individuals & Dept. hold company back & limits (T6) & Low market share success c- Lack of management c- A limited customer base commitment and improper d- Weak employees planning performance appraisal OPPOR a- Increasing penetration in smaller towns and rural a- Alliance & takeover a- Strategy to capture youth TUNITI areas strategies to maximise in mid 20 in increasing the ES b- Target of increasing distribution channels profits, revenues, customer mkt set up significantly by 10-18% base and market share b- Shifting from urban to c- Increase brands by more advertisements b- Increasing product quality rural area to increase d- Value for money pricing and services by using TQM demand e- Alliance & joint venture strategies to increase c- Effective performance c- Increase R&D exp for market share appraisal system for innovative products & employees existing brands THREA a- Competition in FMCG space on a/c of low entry a- Increasing raw material will a- Competition from the T barriers of technology and capital requirements effect on profit margin diverse players may cause b- Price war due to multinationals & regional players b- Rising inflation is main threat losing mkt share could impact revenues & profits in consumer spending b- Increasing input cost prices c- Rise in cost of raw materials & rising in food c- Recession may come in may result low profit inflation means less spending on non food items FMCG industry margin d- Increasing Advt & publicity exp will effect profit margin ble: 9 CONSUMER BEHAVIOUR MODEL (R53) (R64) able: 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 th i. The market share position of Godrej holding 5 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)
  5. 5. 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%. ble: 11: Risk (R33)
  6. 6. Financial Business Country Risk management a-Loss incurred by promoter group a- Distributors might a-Outstanding a- Gogrej is an established brand name and might affect the company’s finance. affect the litigations against the market leadership b- Competition might force the distribution network, company & compliance b- Widespread sales and distribution network company to compress its profit thus distribution with laws. and supply chain competencies in India margins and increase marketing costs. should be well b- Fiscal benefits being c- Manufacturing facilities spread across c- the company should be able to managed. enjoyed by the locations both internationally and domestically manage its growth, otherwise this will b- the launch of new company (income tax d- Research and Product Development affect the business and financial products, if and excise duty) may e- Qualified employee base and management results. unsuccessful, may not be available in team d- Failure to successfully identify and impact earnings. future could affect our f- Leverage and enhance the Godrej brand conclude acquisitions, joint ventures c- the existence of post-tax profits. name and that of our brands. or manage the integration of the look-alikes products c. Probability of g- Focus on enhancing our sales and businesses acquired or the could damage the Cultural risk due to distribution network within the domestic performance of such businesses being business. heterorganic market below expectations may cause d- the business relies community. h- To grow and expand our market share profitability and operations to suffer. on IT for its supply d. Language barrier through organic growth chain, any faults e. Regional Parties. i- To accelerate growth and expand our e- Significant fluctuations in certain may result in loss. f. Social and international presence through strategic foreign currency exchange rates can e- any proposed Communal tension. acquisitions and partnerships have an adverse impact. acquisitions by the g. Compliance with j- Continue to upgrade and modernise our f- A Significant portion of our Objects company may have laws. plants and facilities to manufacture and supply are for the purposes of repayment of A material impact products at a low loans. on its business, g- Many liabilities are not provided financial condition in the company's financial statements. and results of operations.
  7. 7. ble: 12: Kaplan & Norton Model for Benchmarking GCPL with Competitors (T6, T7, R25, 26, 27, 30, 46, 47, 52, ) GCPL DABUR INDIA MARICO FINANCIAL Revenue Growth 26.33% Revenue growth 18.28% Revenue growth 25.39% PERFORMANCE Net Profit Margin 12.4% N.P Margin 13.8% N.P Margin 7.9% Employees Cost on revenues 6.2% Emp. Costs on Revenue 8.28% Emp Costs on revenue 6.8% Advt Exp on revenue 9.09% Advt Exp on revenue 12.11% Advt Exp on revenue 10.43% EVA in 2009 Rs129.83 cr (T7) EVA in 2009 Rs 144 cr ROE 310.3% ROE 674.31% ROE 452.2% CUSTOMER Sahayog & Sampooran projects Outsourcing IT services Marico is doing well in their PERFORMANCE resulted 30% time saving in customer helped Dabur by customer satisfaction by meeting MEASURES order taking & between reach of all implementing a new sales personally and finding their needs range of products and distribution strategy, and IT has also improved its supply chain management customer service capability, optimizing ERP capabilities and outsourcing IT operations INTERNAL Above two projects resulted 30% time Dabur is utilising at 80% Marico deployed Microsoft BUSINESS PROCESS saving in despatch time capacity approximately dynamics TM NAV 4.0 for faster Plant utilisation Capacity is 65% The above use of IT increased decision making which resulted business process efficiency, improved sales efficiency & faster quality, flexibility and product reporting development. LEARNING & GCPL has EVA based performance Company is using Young Learning through sharing concept GROWTH management system which is linked Managers development in which members have with employees remuneration& programme from recruitment to opportunity to directly interact bonuses and satis appraisal which satisfies all with board under Popcorn Session faction. employees at all levels. with Harish. Best Employee of India award in 2007 Satisfying & keeping employees rank 6 by giving them stock options Table: 13: RECOMMENDATION FOR ALTERNATIVE INVESTMENT OF ASSET CLASS (R60. 61) YPES DESCRIPTION REASONS TO CHOOSE MAJOR RISK SHARES Common, preferred High return potential High Large cap, mid cap, small cap May provide income Growth value Long term horizon International/domestic BONDS Government, Agency Regular income Medium Municipal Potential for price appreciation Corporate Possible tax advantages Mortgaged-backed, asset-backed Lower risk International/domestic CASH EQUIVALENTS Treasury Bills Regular income Low Commercial Paper Relative price stability CD’s & banker’s acceptances Liquidity Money markets Lower-risk PROPERTY Real estate High return potential Low Property unit trusts May provide income Listed property/funds Long-term horizen International/domestic
  8. 8. RISKS (R25) easonal fluctuations, Political risks associated with unrest and instability in countries where the company has a presence or operations, conomic depression and inflation, Labour shortages and attrition of key staff, Exchange rate fluctuation and arbitrage risk, Increasing osts of raw material, transport and storage, Competitive market conditions and new entrants to the market, Compliance and regulatory ressures including changes to tax laws, Supplier & distributor relationships and restriction of distribution channels REFERENCES 1) FDI Inflows to Soaps, Cosmetics, and Toilet Preparations, , Accessed on Feb2, 2010) 2) Sangeeta Mehta (Feb1, 2010), ET Bureau, Financial inclusion is commercially viable’. The Economic Times, 3) SIS Global research Media(NOV, 2007): Fast-MovingConsumerGoodsIndustry, 4) Diana Dodson (July 2, 2007): Frontier markets a new beauty hotspot as the BRICs cool down, 5) Dey Choudhury( Feb 4, 2010 ) IMF forecasts India GDP growth at 6.75 pct in 09/10 6) Ranjit Puranik & P K Dave (Nov 1, 2008):- India: Now is the time to invest in this market. 7) Tag Cloud( Oct 2009) India And Cosmetics Cosmetics Magazine, Oct 2009 Issue, 8) Press Office( Jan 25, 2010): India Cosmetics Market Sees Rapid Growth 9) ( Aug 08, 2009): : Cosmetic Sector Analysis in India, 10) Simon Pitman(Jan 21, 2010): China cosmetic sales growth powers ahead, but rate slows, 11) Alexander Kirillov( June 18, 2008): Annual State of the Cosmetics and Toiletries Industry, 12) 1888PressRelease (). Cosmetic Industry to Witness 9% Growth in Russia, 13) CSM Services(Jan 7, 2008) .Cosmetics market to grow to $1.4 bn: Assoc ham, 14) Federica Cucchiella,Massimo Gestalt(Nov1,2007)Risk management in a globalised cosmetic firm, International Journal of Logistics Economics and Globalisation, Issue:VOL1,pp21-33,Through Anglia Ruskin Library Resources on Feb 8, 2010) 15) (Dec 22, 2009): Actives Innovation Grows in India, 16) Selen Sarisoy Guerin (2006): The Role of Geography in Financial and Economic Integration: A Comparative Analysis of Foreign Direct Investment, Trade and Portfolio Investment Flows, World Economy, Vol 29, Issue no 2. Through Anglia Ruskin Library Resources, 17) BMO (Nov 17, 2009), India poised to emerge strong from the global crisis. Global Banking News(GBN) Through Anglia Ruskin Library Resources, 18) Jing Lin Duanmu, Yilmaz Guney, (2009): A Panel Data Analysis of Locational Determinants of Chinese and Indian Outward Foreign Direct Investment. Journal of Asia Business Studies Spring 2009, V3 12, p1 (15). Through Anglia Ruskin Library Resources 19) Emmeplus s.p.a(2007-08): Indian Cosmetic Sector 2007-08, 20) Priyanka Bhattacharya (Jan 2006): India’s cosmetic market ready for big leap. Global cosmetic Industry Journal, Jan 2006, Vol 174, Issue 1, p42-44, Through Anglia Ruskin Library Resources 21) CTPA(2008): The CTPA: Cosmetic and Toiletry Market Data’s, 22) IBEF(2009), Indian Economy Overview, 23) Martnrtin Hutchinson (Feb 10, 2010): Despite India’s Optimism, There May Be a Better Time to Buy Indian Stocks. Money Morning Website: 24) Priyanka Bhattacharya (Jeb, 2009): Indian Beauty Market Roundup. Global cosmetic Industry Journal, Feb 2009, Vol 177, Issue 2, p21-22, Through Anglia Ruskin Library Resources 25) GCPL Annual Reports & EVA Calculation, 26) Annual report of Dabur India, 27) Annual report of Marico, 28) Advance search from Anglia Ruskin University Library, www. 29) Stock Share Prices of companies & ratios from National Stock Exchange of India 30) Kaplan & Norton’s Balance scorecard model, 31) GMID - Global Market Information Database from Euro monitor of Cosmetics & Toiletries, 32) Key Features of Indian Budget 2010-2011, 33) System of Government(2003) The official site of the Prime Minister’s Office 34) Peter Riddell (Feb 24, 2010). Speculation about a hung Parliament calls for new set of guidelines. The Times 35) and — December 20, 2009. Brazil on the World Stage. Harvard Political Review , 36) One in five: The crisis in Brazil’s prisons and criminal justice system (Feb, 2010). An International Bar Association Human Rights Institute Report.
  9. 9. 37) Background Note: China (Oct, 2009) US Department of State Diplomacy in Action. China (10/09) 38) Press trust of India (May 22, 2009). Political stability to positively impact India’s rating S&P. The Financial Express 39) Nadeem Walyat (Nov19, 2009). UK budget deficit could hit £200bn, 18% of GDP. UK Economics, 40) Background Note: Brazil (Feb, 2010) US Department of State Diplomacy in Action. Brazil (02/10), 41) S.Kumar, C.Massie and M.D.Domonceaux (2006). Comparative innovative business strategies of major players in cosmetic industry. From (accessed on Feb 26, 2010) 42) Personal product in Europe(2009) 43) S. Kumar, Sharma and R. Srinivasan, (2008) Perception of Foreign Players for Effective Position in India. 44) Dr. Rakesh M. Jashi, Identifying Opportunities, selection and Entry Strategy for International Market for SMEs, ) 45) R. W. Griffin & M. W. Pustay, International Business, 2009, Prentice Hall.4. G.E. Osland, C.R. Taylor &S. Zou, Selecting International Modes of Entry and Expansion, (accessed 8 March 2010) 46) (May 14, 2009). Marketing, Lead Generation, Business Intelligence 47) Apple Green on GCPL through 7, 2009), 48) UK National statistics: Economy 49) EDC on Brazil country overview(2010/01), th 50) G.Jhonson& K.Scholes (2005). Exploring Corporate Strategy. 6 Edition. Prentice Hall. Chapter 3-8 nd 51) Glen. Arnold (2005). Corporate Financial Management. 2 Edition. Prentice Hall. Chapter 2,3,4,7 &Part4 52) Nitin Srivastava (Jan 4, 2010).Godrej Consumer has a rural edge. From DNA read the world. maile 53) Scribd. Total Quality management in Godrej.PPt2. 54) Central Intellegence Agency Punlications (March 4, 2010). The World Factbook:United Kingdom, 55) Julia Ray(Feb23, 2010).Bathroom Products-Cleanup Operations. Cosmetics Business. 56) Business Insights. Women in China 2008. Women consumers and lifestyle trends. 57) Michael Mainwaring.(2007) ACCA Bluff Notes. Business Analysis Paper P3ACCA 58) Hem Securities on Indian FMCG(Jan11, 2009). Industry Research Report on Indian FMCG 59) Currecncy Exchange rates between different countries from 60) Investment in shares 2, Standard.Investment Risk 61) Investing Internationally. Fact Sheet ANZ - Australia th 62) Barry.Elliott & Jamie Elliott(2005). Financial Accounting and Reporting. 9 Edition.FT Prentice Hall. Part 3,4,5 63) GCI(Feb,2007) Cosmetics Retailing in India, Cover Story Part II 64) Strategies for building sustainable Indian brands 65) G.E. Osland, CR Taylor & S. Zou, Selecting International Modes of Entry and Expansion, (accessed 8 March 2010)