This document provides an analysis of Britannia Industries Ltd, a leading Indian food company. It discusses Britannia's origin, products, performance, opportunities, challenges, and strategies. An external analysis using PESTEL and Porter's Five Forces models examines factors impacting the bakery and dairy industries in India. Britannia faces competition but has achieved growth and market share through quality, trust, and innovation. The company aims to further expand its business and capture market opportunities both domestically and abroad.

1. Strategic Analysis
Sec- E, Group- 10
The Role of Strategy in Success: A Study of
Britannia Industries Ltd.
Group: 10, Sec: E
:Member list:
Suraj poddar (13202054)
Sarthak Hota (13202040)
Abhinav Tushant (1018002)
Mohadev Mishra (13202024)
Sumit Kumar Mula (1019029)
JYOTI RANJAN MOHAPATRA (13202016)

2. Strategic Analysis
Sec- E, Group- 10
Origin & Governance: In 1892, Britannia industries ltd. was started in Kolkata with an initial
investment of Rs. 295. Britannia's business was flourishing with growing market. In 1978, Indian
shareholding crossed 60%. 1983, it crossed the Rs. 100 crores revenue mark. In 1997, the company
unveiled its new corporate identity - "Eat Healthy, Think Better" - and made its first foray into the
dairy products market. The 50-50 Maska-Chaska became India's most successful product launch. In
2002, it formed a joint venture with Fonterra, the world's second largest Dairy Company. Having
succeeded in garnering the trust of almost one-third of India's population and a strong management
at the helm means Britannia will continue to dream big on its path of innovation and quality.
Products & Services: It has wide range of ready to eat products. Britannia does its business on
Bakery (Biscuit, Cake and Bread) and Dairy (Cheese, Butter and Milk) products. About 90% of
Britannia’s annual revenue comes from biscuits and 10% from Dairy products. The brands in
Britannia are VitaMarieGold, Tiger, Nutrichoice Junior, Good day, 50-50, Treat, Pure Magic, Milk
Bikis, Good Day, Bourbon, Thin Arrowroot, Nice, Little Hearts, pure magic, flavoured Yoghurt,
Dairy Whitener cookies and Actimind.
Performance: Between 1998 and 2001, the company's sales grew at a compound annual rate of
16% against the market, and operating profits reached 18%. About 2007, the company has been
growing at 27% a year, compared to the industry's growth rate of 20%. In FY 2013-14, a
challenging economic environment and intensely competitive market, Profit from Operations
increased 69.6%, from 314.45 crores to 533.24 crores with a revenue growth of 12%. Company
focused on profitability, capital productivity and working capital management to generate cash flow
from operating activities of 614.51 crores compared to 272.01 crores in the previous year. Earnings
per share increased to 30.87 from ` 19.57 in the previous year.
Opportunities: Indian consumer with constantly expanding wallet and higher aspiration constitutes
the largest opportunity for your Company. Second opportunity lies in the constant force of
technology change which will provides Company to compete and to improve efficiency &
productivity e.g. Biomass and Solar energy. The opportunities before the company are to increase
its share in the dairy industry, expansion in foreign lands, product line extension.
Challenges: Entry of new players, rise in cost of raw materials and both domestic & international
seeking a share of the growing industry and willing to invest for the long term is a key threat.
Opportunities are equally visible competitors of your Company and that constitutes the primary
threat. As opportunities in rest of the world diminish, India will become one of the main sources of
growth for many international players and that will pose a threat to your Company.
Outlook: Company estimates growth to be 8%-10% which is lower than growth rates of earlier
years. While this presents a revenue challenge, Company expects to be challenged on the cost front
on account of commodity prices and in some case even by regulatory environment in areas such as
excise and depreciation. In this environment, your Company will focus on the fundamental building
blocks of business viz. width / depth and quality of distribution, efficiency in operations, consistent
and high product quality, aggressive support for its brands and nurturing a strong and cohesive team
to achieve faster than market and profitable growth. In the longer-term your Company expects the
growth to track back to 12%-15% level.
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3. Strategic Analysis
Sec- E, Group- 10
A company's strategic position can be clarified by the various dimensions of corporate strategy,
looking at value, imitations and perimeter, so is with Britannia Industries.
Value Britannia has acquired a reputation of quality
and value. It has also succeeded in garnering
the trust of almost one-third of one billion
population.
Imitation Britannia faces a tough competition with its
competitors as new imitated products are
available, price war is there, therefore,
Britannia always try to build its quality and
deliver value to the customers.
Perimeter Britannia has always focussed on expansion
of business as from Britannia biscuits to dairy
products market. In 2002, Britannia's new
business division formed a joint venture with
Fonterra, the world's second largest dairy
company, and Britannia New Zealand Foods.
Pvt. Ltd. Was born.
Britannia Industry Hierarchy of Strategic Intent
Vision – “to dominate the food and beverage market in India with a distinctive range of tasty yet
healthy Britannia brands". Every third person in India should be a Britannia consumer.
Mission –“to dominate the food and beverage market in India through a profitable range of "tasty
yet healthy products" by making every Indian a Britannia consumer. Britannia also has a mission
vision
mission
goals
objectives
Plans
Most integrative
Most specific
Fewestinnumber
Greatestinnumber
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4. Strategic Analysis
Sec- E, Group- 10
of- development of production in partnership and with our customers to their specifications and
Flexibility and capability to meet the small and large production runs.
Goals -
 To improve profitability
 To increase efficiency
 To capture a bigger market share
 To provide better customer service
 To improve employee training
 To reduce carbon emissions
Objectives-
The short term objectives are:
 to improve image to shareholders
 Improve internal processed and controls.
The long term objectives are:
 To be the lowest cost producer in the market.
 to become the largest national player in the
Plans :
 Britannia is planning to invest ₹200 crore over next two-three years to expand its production
capacity.
 The company wanted to diversify into other areas of foods from biscuits and cakes and become
a total foods company.
Apart from these strategies, Britannia industry also focuses on various strategies as:
 Marketing channels- Britannia has tactically managed its marketing channels to retain control
on products as well as pricing. It adopted the indirect marketing channel and uses the two level
distribution channel. The company also relies on the dependent channel arrangement to avoid
any conflict with the intermediaries.
 Physical distribution cum Logistic strategies- Physical distribution starts at the factory.
Managers at Britannia makes decision of warehouse and transportation carrier that will deliver
the goods to final destination in the desired time at the lowest cost possible. Britannia has level
1 , level 2, level 3 distribution channel levels.
Level1: Availability of Britannia biscuits at all the departmental stores across the country.
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5. Strategic Analysis
Sec- E, Group- 10
Level2: Since it's an FMCG products this channel exist for the customers spread across
India.
Level3: Mass consumption and suitable for both domestic and international coverage.
 Sales Force Strategy- The main objective of the sales force of Britannia is to generate higher
sales which would translate to increase revenue for the company. The sales manager in
different regions delivers the product of the company to the distributors in those region who in
turn supply the products to the various retailers and grocery outlets.
 Promotional strategy-
Britannia is well known in the market for its various promotional strategy as:
In 1999"Eat Britannia, Go for World Cup" (Britannia khao, world cup jao) was the
theme adopted by Britannia in which people bought the biscuit packs and searched for the
lucky scratch for flying to England to see world Cup Cricket match. The sales bounced 37%
high on account of this strategy. The scheme came alive again during the world Cup Match in
2002-2003 in South Africa.
They again gain market attention with the launch of movie "Lagaan" in which they invited
40,000 Britannia biscuit buyers to come and play with the star cast.
.
The Britannia Industries also follows the corporate social responsibility as:
 Catering to the national interest
 Committed to be a good corporate citizen
 The company prohibits any payment of bribes
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6. Strategic Analysis
Sec- E, Group- 10
Internal and External Analysis of Britannia Industries
Bakery industry in India today has an important place in the industrial map of the country. With
rapid growth, improvement in standard of living, westernization, increase in spending power,
changing eating habits of people and increased transition from the unorganized sector to organized
sector, bakery products have gained immense popularity among masses.
Industry Structure
The bakery industry is mainly popular in the southern part of India like the states of Andhra
Pradesh, Maharashtra, West Bengal, Karnataka, Tamil Nadu and Kerala. Around 60% of production
takes place in the unorganized sector. There are around 2 million unorganized bakeries in the
country, comprising small bakery units, cottage and household type manufacturing. The organized
sector consists of large, medium and small-scale manufacturers producing bread and biscuits. The
market size for the industry in India is expected to reach 47 billion by 2015 with a growth of 50 to
60 % per annum.
Industry Segments
Bread: About 50% of this segment is organized and is growing at a rapid rate of 14-15% per year.
The estimated size of the organized bread industry is about 50 billion.
Biscuit: The biscuit market in India is estimated to be $100 billion and the industry is also gearing
up to aggressively tap the medium and premium segment within the country. Biscuit industry in
India in the organized sector produces around 60% of the total production, the balance 40% being
contributed by the unorganized bakeries. Mainly in rural India the biscuit consumed by consumer is
from unorganised sector.
PORTER'S FIVE FORCES MODEL:
Competitor Rivalry:
BIL has a market share of 38% and has been growing at 27%, compared to the industry growth rate
of 20% Battle-scarred Britannia on expansion spree, Business Standard and has many competitors
based on the nature of product. Parle and ITC (Sunfeast) pose a great competition to BIL. BIL
earning major of its income from the biscuits, and Parle and ITC are the other major players in
biscuit market. BIL is also into the production of dairy products, where the two major players in
market are Amul and Nestle. Amul is the leader in the dairy industry. There is also a high level of
competition from the unorganized baking sector. Overall rivalry is high.
Threat of New Entrants:
The entry on a small scale dairy industry and in the unorganized baking sector is easy. But on the
other hand to enter the large scale dairy industry and organized baking sector a huge amount of
investment is required in terms acquiring assets and to establish supply and distribution chains.
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7. Strategic Analysis
Sec- E, Group- 10
Government regulations pertaining to food norms and others may also seem to be unattractive.
Looking at the latest trends, the bakery industry is expected to earn huge revenues which might
attract new entrants. So the threat of new entrants is moderate.
Threat of Substitutes:
Savoury snacks, crisps, cereals, fruits and other fast food can be substituted for biscuits. Dairy
products are dubious to be replacing with other products as they key ingredients of majority of
people’s diet. So the threat is a very moderate threat of substitutes.
Buyer’s Power:
The buyer’s of these products could be a retailer or the consumer. Both the dairy and bakery
industry are price sensitive, so a little increase in price might lead the consumer to shift other brand
or product. So the buyer’s power is calculated to be very strong.
Supplier’s Power:
The major supplies for a bakery industry include wheat, sugar and other agriculture products. And
the major supplies for dairy products are milk. It’s difficult to bargain with the suppliers of the
above mentioned inputs as the price of these inputs is majorly influenced by the production of these
inputs. The prices tend to be high as the demand for these products is rising at much faster rate than
supply.
The secondary supplies include the packaging material. The secondary supplies can be easily
substituted with the low-cost ones to save on cost. Overall the supplier’s power is assessed to be
moderate.
Conclusion of Five Forces Analysis:
There is an existence of major players in the market with a moderate level of threat of new entrants
and substitutes. The supplier’s power is moderate but the buyer’s power is measured to be strong.
So the rivalry is suggested to be high.
PESTEL ANALYSIS
Political:
Exemption on Customs Duty on Sugar Raw Material Import: Due to the shortage in the
production of sugar the deadline for the exemption on customs duty on raw sugar imports has been
extended. Exemption on customs duty will help in purchasing sugar at lower cost, which in turn will
control the cost of production.
VAT on Biscuits: The VAT of 12.5% on Biscuits. Price of the biscuits might need to be increased
due to the high VAT rates which may result in switch of brands due to the highly competitive
market.
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8. Strategic Analysis
Sec- E, Group- 10
Removal of Import Duty on Dairy Products: The whole-sale price based inflation indicates that the
milk prices have moved up by 14.73% over the last year. The imports at cheaper rate would help in
reduce the cost factor for dairy products.
Incentives to Build Cold Storage Facilities: Wastage of food items due to lack of cold storage
facilities lead to a loss of Rs. 500 billion every year. The government announces schemes and
incentives to attract investments in cold storage warehousing would help in preserving products
better and reduce the wastage cost.
Economical
Shortage of Milk: Even though the milk production has risen by 4.6% compound annual average
growth rate, it still cannot match up with the increasing demand. Price of milk increased by 12.6%
to 13.6% . This can cause an increase in the input cost for the dairy products and which in turn can
lead to hike in price or lower profit margins.
Globalization: Globalization a universal phenomenon is affecting each and every industry. This can
serve as an opportunity to expand the business to a global level but on the other hand there is a
threat of new entrants from international market.
Requirements for Logistics: Logistics in India suffer due to the poor infrastructure and other
limitations. Sophisticated third party logistics system will help in proper supply chain management
and on time delivery of goods, which help in maintaining the shelf life of goods on meeting the
demand on time.
Social:
Need for Healthy Eating Habits: Studies say that Indians are more prone to Coronary Artery
Disease (CAD), which is the major independent risk factor causing Cardiovascular diseases, due to
the smaller calibred arteries found in Indians. This suggests that Indians should move towards more
healthy food and diet. This could be a new area to explore for Britannia with its new health
associated products like Nuti-Choice biscuits and Actimind flavoured milk.
Problems with Cloned Livestock: Cloned animals are supposed to be suffering from large-offspring
syndrome. The mother cows face a problem in giving birth to the cloned animals as they are larger
than normal. Also these cloned animals suffer from health which might make unsafe to consume the
produce from them.
Technological:
Cloning of Livestock: India, a late entrant in cloning research, is now moving with a great pace in
cloning technology. ‘Hand guided cloning technique’, a technique very different from the
conservative cloning practice has been a successful venture.
New Age Packaging: The new packaging systems help in protecting food from micro-organisms by
creating shelter layer. It uses new technologies like oxygen scavenging function, atmosphere
control, biodegrability etc. and is low cost.
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9. Strategic Analysis
Sec- E, Group- 10
Environmental:
Change in the Climatic Conditions: Climate plays an important role in the agriculture process. The
change in the rainfall pattern has been a matter of concern now in India. The agriculture sector in
areas which are monsoon dependent suffered badly due to the change in the rainfall pattern. The
sector suffered a huge loss in terms of total output. The loss in crop will affect the input supply and
this might delay or cause problems in the production. So the industry might not be able to meet the
demands resulting in the loss of customers.
Legal:
Raising the Norms for the Probiotic Food: There is a need for setting the standards for probiotic
food. Clinical tests should be conducted on the probiotic foods before they could reach the market
for sale. The Indian Council of Medical and Research has submitted the proposal for the same to the
government. Strict norms will help in raising the quality standards but on the other hand the cost
and time of production might subsequently increase.
Identifying key success factors
WHAT DO
CUSTOMERS
WANT? (Analysis of
demand)
HOW DO FIRMS
SURVIVE
COMPETITION?
(Analysis of
competition)
KEY SUCCESS
FACTORS
BISCUITS Low price, variety,
quality, quantity,
flavours, availability
at convenient stores,
discounts, offers,
packaging, taste,
healthy, wheat
instead of refined
flour, health
conscious.
Markets localized,
extension of product
line, managing
supplier and
distributors network
for availability of
products, launching
promotional offers,
R&D in tastes and
flavours, introducing
more dietary and
healthy product
range.
Convenient locations,
competitive price
challenge, wide
variety of offerings,
new product launch,
quality parameters.
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10. Strategic Analysis
Sec- E, Group- 10
Internal analysis of Britannia:
MCKINSEY'S FRAMEWORK:
THE HARD S's:
Strategy:
The direction and scope of the Britannia company over the long term.
Structure:
The basic organization of the Britannia company, its departments, reporting lines, areas of expertise
and responsibility (and how they inter-relate).
Systems:
Formal and informal procedures that govern everyday activity, covering everything
frommanagement information systems, through to the systems at the point of contact with
thecustomer (retail systems, call center systems, online systems, etc)
THE SOFT S's:
Skills:
The capabilities and competencies that exist within the Britannia company. What it does best.
Shared values:
The values and beliefs of the Britannia company. Ultimately they guide employees towards 'valued'
behaviour.
Staff:
The Britannia company's people resources and how they are developed, trained and motivated.
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11. Strategic Analysis
Sec- E, Group- 10
Style: The leadership approach of top management and the Britannia company's overall operating
approach.
The Challenges and the Opportunities Britannia faced
While the fast-moving consumer goods sector has not had it as bad as others, nevertheless has been
challenging. Battling costs rising and hurt consumer demand, the company have been hard pressed
to balance growth in sales and profit.
The challenges faced by Britannia:
Britannia one of the India’s largest biscuit brands held market share of 38% in terms of value.
Indian biscuit industry, the third largest producer of the biscuit in the world was highly under-
penetrated. This presented numerous growth opportunities to new as well as existing players. Apart
from the presence of big players like ITC foods, Parle, the local manufacturers of biscuits and other
Indian snacks had been raising concerns for Britannia. Besides competition Britannia faced critical
challenges due to declining margins in the biscuit industry due to increase costs of raw materials.
The biscuits-to-breads company Britannia finds itself staring at a new challenge, which is
employee attrition. Several middle and senior level managers are choosing to exit and the company
is struggling to find replacements. Actual attrition rate (YTD) is around 25% (which has a seasonal
bias) and there is no change in the pattern from previous years. This is typically the time when post-
appraisal, some people from all the companies leave and settle in various other ones. The attrition
rate on annual basis is likely to be near long-term averages.
The opportunities the company have:
The company adopted a three-pronged approach to overcome the challenges it faced. It focused on
driving innovation by producing new high-margin, value-added product offerings, and boosting
revenue by introducing differentiated brands with differential pricing and restructuring costs
through improving operational efficiencies throughout the value chain.
The company leveraged its strong brands through steady investment, investing in building
additional capacity in order to increase in-house manufacturing of premium brands and focusing on
complexity reduction with rationalised stock keeping units (SKUs) and work processes that resulted
in profitable growth. The company invested in further strengthening its reach in urban and rural
markets. It restructured distribution models to gain depth of distribution in urban markets and width
of distribution in rural markets.
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12. Strategic Analysis
Sec- E, Group- 10
SWOT Analysis of Britannia
STRENGTH WEAKNESS
OPPORTUNITIES THREATS
Recommendations
 The manufacturer should understand the consumer behaviour to beat the competition.
 Britannia should adopt a Push strategy of marketing in order generate more sales and giving
more margins to the retailers.
 The company should try to get associated with the Government initiatives as Mid-day meal,
Sarva Shiksha Abhiyan, National Rural Health Missions
 Introduce new flavours in their product range.
 They can open dedicated Britannia stores as of Amul for more market share and
differentiating from others in the industry.
 Extensive distribution network
 Providing a wide range of biscuits
 Innovative advertisement
 Widely accepted in all generations
 Easily available in various form
 Depends on stores and retailers
 Low penetration in rural area
 Not an extensive overseas market
 Increases the cost of food products
 Increasing demand for diet and
sugar free biscuit
 Retaining loyal retailers and
wholesalers
 Targeting interior area of India
 Generate employment opportunity
 Local bakery products limitation
 New entrants like Cadbury Oreo,
Sunfeast Dark fantasy
 Margin war among the major brands
 Unable to utilise all the resources
efficiently
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13. Strategic Analysis
Sec- E, Group- 10
Conclusion
Britannia Industries limited is the India's largest manufacturing company covering all sectors of
bakery products and diversifying into dairy products market. Developing and generating trust
amongst its consumer base and delivering quality products had made it success for Britannia.
As we see the strategic direction of the company, today there is a neck-to-neck competition between
the competitors in the market. Not only the manufacturers but also the home made bakery products
is also giving a tough competition to Britannia. Imitation of the product is very fast in the FMCG
industry. And companies like ITC, Parle G, are giving direct competition in terms of new product
development, market coverage, and gaining more market share.
In this scenario Britannia should adopt a Push strategy of marketing and on the same time provide
the retailers and distributors with more percentage of margin as compared to the competitors margin
so that the retailers also try to sell the products in the market. Research and Development is also one
of the major concern and should be taken over on a continuous basis as the customers taste and
preference and buying behaviour is changing on a fast pace.
Britannia should join hands with the Government initiatives and support the activities to gain a good
image and presence in the mindset of every Indian consumer.
Britannia will surely be able to fulfil its desired mission of making every third person the consumer
of Britannia if it follows the path of innovation and diversification.
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14. Strategic Analysis
Sec- E, Group- 10
SOME CALCULATION (INR Cr)
NOPAT= EBIT * (1- Tax Rate)
= 533.24* (1- 0.30)
= Rs 373.26 Cr
Invested Capital = Total liabilities + Total Equity – (Current Liabilities + Excess Cash)
= Total liabilities + Total Equity – Current Assets
= 1,844.44 – 860.06
= Rs 984.38 Cr
WACC = (E/V *Re) + (D/V*Rd*(1- Tc)) = 9.8%
 Re = Cost of equity =9.9%
 Rd = Cost of debt =9%
 E = Marker value for firm’s equity = 64,264
 D = Marker value for firm’s debt = 1,787
 V = Firms Value = 66,051
 E/V = Percentage of financing that is equity = 97.3%
 D/V = Percentage of financing that is debt = 2.7%
 Tc = Corporate Tax = 30%
Economic Value Added (EVA) = NOPAT – (WACC * Invested Capital)
= 373.26 – (9.8/100 * 984.38)
= Rs 276.79 cr
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