IVEY Case study Analysis

1. Asian Paints Ltd
International Business Division

2. Asian Paints
INTRODUCTION
Asian Paints Limited was set up as a
manufacturing unit in suburbsofMumbai
in the year 1942. APL has beenleading the
Indian market since 1967. In 1998 the
company workedwith Booz AllenHamilton
to craft a restructuringprogramand
ultimately come up with a new vision.“To
securea place among the Top Five
decorative paint companiesin the worldby
the end of the decade.”
Asian Paints: A brief History

3. “To secure a place among the Top Five decorative paint
companies in the world by the end of the decade.”
VISION 2008
APL’s global aspirations

4. Start and Growth
1942 : A partnershipwas established
1945: The partnershipchangedto a
company
1954: First Plant set up in MUmbai
1967 : APLbecomes market leader
COMPANY TIMELINE
APL from 1942 to 2005
Initial Years

5. Formative Years
1978 : EnteredFijian Market througha JV
1982: Entered Tonga, an island in South
Pacific
1982: Went Public; Share issues
1983: Entered Nepal
1985: Entered Solomon Islands
1995: AP enters Australia
1996: 50:50 JV with PPG for automotive
Paints
Domestic Leadershipand entry to Foreign
Markets

6. Restructuring and New
Vision
1998: Restructuring
1999: Entered Oman
2000: AcquiredPacific Paints in Australia
2002: AcquiredSCIB chemicals in Egypt
2002: AcquiredBerger Internationaland its
11 subsidiariesinSingapore
AggressiveGlobal Strategy

7. Domestic Leadership
APL’s Competencies
Identifiedneed gaps
Pricing Policies
Products Line
AP Helpline, Home Sol
New Revenue
Streams
Mainframein 1971
V-SATS in1994
Demand Forecasting
Reduce Inventory
Low Working Capital
Avg Cap – 67,000 MT
Bargaining power
Investment in R&D
FormulationEfficacy
Reduced Cost
16,000 dealers
18-20 % exclusive
Intangible Assets
B-School Recruiters
Top Management
Customer Centric IT Infrastructure Supply and R&D Distributionand Talent
Feedback Collection Real Time Data High Bargaining Power Reach and Sales Force

8. Size of Paint Maker
Investment Potential
APL usedthe above model to identify the markets acrossthe world where it planned to establish a footprint
Size of Economy
Nature of Competition
Size Economy
Investment Competition
APL
APL’s International Strategy
Parameters and Metrics
In order to to make the firstcut;
• A GDP > 6 %
• Limited Comp and No MNC
• A market that would provide APL
an opportunity to be among the
Top 3 players within 5 years

9. A Focus in Emerging Markets
Opportunities to Expand
Emerging markets had similar supply chain and distribution
system as India
Buying out a leading player would be less expensivein
emerging markets rather than in developedmarkets
No single MNC had a presenceacrossall emergingmarkets
1
2
3

10. Growth Through JVs
Ready Made Platforms for Distribution, Brandsand Capacity
Egypt
Singapore
Bangladesh
Berger
$12.9 Million;access
to 11 countries
SCIB
$ 5.33 Million
GreenfieldProject
$2.22 Million(No
attractive JVs)

11. Segmentation of Global Markets
For faster roll out of products and better management
After the acquisitionofBerger International;, APL extendedits footprintto morethan 70 countries.Consolidationof
previousclutch ofJVs and better management of all the acquisitionswere the key to success for APL
LeadershipMarket Growth Markets Strategy Dept.
APL is a leader
Size: $ 100 Million
Sales: $ 55 Million
FutureGrowth
Size: 3.3 Billion
APL MS: 10 %
Drive Profitability
Size: $ 75 Million
Niche Player

12. • Market
Knowledge
• Commitment
Decisions
• Market
Commitment
• Current
Activities
Evaluating APL through UPPSALA model
The model states that additional market
commitments are made in small
incremental steps; choosingadditional
geographic markets with small Psychic
difference;combinedwith entry modes
with few additional risks.Differententry
modes are
• No Regular Expert (Sporadic Mode)
• Export via Independent
Representatives (Export Mode)
• Establishment ofForeignsales
Subsidiary
• ForeignProduction/Manufacturing
Units

14. Country APL's Stake
Population
(Millions)
GDP
(%)
Market Size
Per Capita
Usage
(in kgs)
APL's Market
Share
(%)
APL's
Revenues
APL's Revenues (Forecasted)
CAGRVolume
(Metric Tonnes)
Value
($ Millions)
2006 2007 2008 2009 2010
Bahrain 100% 0.66 5.0% 8,240 13.30 12.49 45.0% 5.99 6.43 6.92 7.44 7.99 8.59 3.25
Barbados 100% 0.28 3.1% 3,250 15.24 11.73 48.0% 7.32 7.66 8.01 8.38 8.77 9.18 1.48
Fiji 51% 0.87 - 3,529 8.07 4.07 42.0% 1.73- - - - - -
Jamaica 51% 2.73 3.1% 9,500 35.90 3.47 76.0% 13.91 14.56 15.24 15.95 16.69 17.47 1.48
Nepal 51% 26.11 5.8% 5,097 5.25 0.20 34.0% 0.91 0.99 1.08 1.17 1.27 1.38 4.30
Solomon Islands 75% 0.50 - 198 0.93 0.40 70.0% 0.49- - - - - -
Tonga 51% 0.11 3.1% 280 0.67 2.62 62.0% 0.21 0.22 0.23 0.24 0.25 0.27 1.48
Trinidad and
Tobago 70% 1.14 3.7% 5,000 19.59 4.39 36.0% 4.94 5.21 5.50 5.81 6.13 6.47 1.95
Vanuatu 60% 0.20 4.5% 201 0.91 1.02 75.0% 0.41 0.44 0.47 0.50 0.53 0.57 2.69
Bangladesh 50% 136.59 5.8% 31,000 90.00 0.23 1.0% 0.45 0.49 0.53 0.58 0.63 0.68 4.30
China 100% 1,283.41 7.5% 1,620,000 2,421.00 1.26 1.0% 24.21 26.93 29.96 33.33 37.08 41.26 7.43
Egypt 60% 73.83 3.0% 140,000 150.00 1.90 5.0% 4.50 4.70 4.91 5.14 5.37 5.61 1.41
Malaysia 100% 22.83 5.3% 94,500 147.40 4.14 4.0% 5.90 6.36 6.87 7.42 8.01 8.64 3.62
Myanmar 60% 42.66 - 20,000 26.20 0.47 10.0% 1.57- - - - - -
Singapore 100% 4.24 4.2% 67,500 152.30 15.92 3.0% 4.57 4.86 5.16 5.49 5.83 6.20 2.39
Sri Lanka 100% 19.74 5.8% 16,005 34.73 0.81 9.0% 3.13 3.40 3.69 4.01 4.36 4.74 4.30
Thailand 75% 63.83 5.1% 105,000 176.50 1.65 2.0% 2.65 2.85 3.07 3.30 3.56 3.83 3.37
UAE 100% 2.45 4.5% 63,000 85.60 25.74 10.0% 8.56 9.14 9.75 10.41 11.12 11.87 2.69
Australia 90% 19.44 3.7% 210,000 550.00 10.80 0.5% 2.48 2.61 2.76 2.91 3.07 3.24 1.95
Oman 49% 2.45 4.5% 9,806 15.87 3.58 6.0% 0.47 0.50 0.53 0.57 0.61 0.65 2.69

15. Why These Countries
Revenue and CAGR aredeterminants of growth
Asian Paints Limited has a major shareholdingin these countries
The revenues arenot distributed among other shareholdersandare retained by the parent company
The growth inrevenues forecastedfor the next 5 years in these countriesismore than other countries
In China, the largest market ofall the above, the company has the highest potential to grow its revenuesand
profitability

16. Thank You