Swadeshi Industrial Works PLC is Sri Lanka's leading manufacturer of herbal beauty and baby care products. The summary analyzes the company's strategic position: 1. Internally, Swadeshi possesses valuable resources like its brand reputation and knowledge of local herbal ingredients that provide competitive advantages. However, manufacturing costs could be reduced through process improvements. 2. Externally, the cosmetics industry has low barriers to entry but Swadeshi differentiates itself through its natural ingredients. Supplier bargaining power is balanced by local sourcing. Demand is impacted by economic and demographic factors. 3. Porter's five forces analysis found the threat of new entrants and substitution to be moderate due to

1. Individual Assignment
STRATEGIC REVIEW REPORT OF THE SWADESHI
INDUSTRIAL WORKS PLC
A Report
By
V.A.L.S. Ranaweera - SAB/BSc/MOHE/2018/A/16
Course:MGT 30625 Strategic Management
Dr. Bandara Wanninayake
Year 3, Semester 1
School of Accounting and Business
The Institute of chartered Accountants of Sri Lanka
20th June 2020

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Contents
EXECUTIVE SUMMARY ........................................................................................................................3
BRIEF INTRODUCTION OF THE THE SWADESHI INDUSTRIAL WORKS PLC.................................................4
INTERNAL CAPABILITY ANALYSIS..........................................................................................................6
RBV Method(Resource based view) ....................................................................................................6
VRIO framework................................................................................................................................8
Value ChainAnalysis...........................................................................................................................8
VALUE CHAIN ANALYSIS BY STEPS..........................................................................................11
EXTERNAL ENVIRONMENT ANALYSIS .................................................................................................13
PESTDN analysis ...............................................................................................................................13
INDUSTRY ANALYSIS BASED ON 5 FORCES MODEL..............................................................................16
SWOT ANALYSIS OF THE SWADESHI INDUSTRIAL WORKS PLC..............................................................19
TWOS MATRIX..................................................................................................................................22
CONCLUSION....................................................................................................................................24
REFERENCES.....................................................................................................................................27

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EXECUTIVE SUMMARY
This document provide an analysis of the strategic review report of swadeshi industrial PLC
which is one of the leading company in Sri Lanka.Basic introduction provides the overview of
company and the strategic management background whiles describing its vision, mission and the
products which provides the company a future direction. Internal capability analysis shows how
the company achieve the competitive advantage through the internal environment. Furthermore,
analyzes the external environment with subject to this company. Finally done SWOT analysis
and TOWS Matrix to take some good points and bad points of the company. When reviewing
this, the company can get more effective strategic management decisions.

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1.0 BRIEF INTRODUCTION OF THE SWADESHI INDUSTRIAL WORKS PLC
Whilst having traveled our chosen path of exploring new techniques and natural products while
maintaining the highest quality standards for over 75 years, we stand tall today as a company that
is renowned for offering total value to our customers.
Our brand portfolio now extends to a range of categories including Herbal beauty products,
herbal baby soaps, herbal shampoos, herbal liquid soaps, herbal facial washes, herbal creams,
floral perfumes, laundry soaps, detergent powders, liquid detergents and cleaners. They all bear
the stamp of Swadeshi quality, assuring you of the purity of our ingredients and superiority of
our products.
At Swadeshi it is our firm belief that our heritage, culture, family values and traditional herbal
concepts play a key role in the designing and manufacturing of our products that have made their
mark not only nationally but internationally as well.
Products
 Skin care
 Baby care
 Kids care
 Hair care
 Men’s care

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 Fragrance
Ingredients for the products
 Sandalwood
 Margosa
 Turmeric
 Aloe vera
“We are committed to delighting our customers by providing products of the highest quality
standard. Our quality culture is passionately shared by all employees. Pure herbal ingredients,
with both beautifying and curative properties, and fragrances from internationally renowned
perfumeries are used in our products.” (From the website of the swadeshi)

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2.0 INTERNAL CAPABILITY ANALYSIS
An internal analysis examines your organization's internal environment in order to assess its
resources, competencies, and competitive advantages. Performing an internal analysis allows
you to identify the strengths and weaknesses of your organization
The data generated by an internal analysis is important because we can use it to develop
strategic planning objectives to sustain and grow your business
There are two methods we can analyze internal capabilities
i. RBV method
ii. Value chain method
2.1 RBV Method (Resource based view)
The resource-based view (RBV) is a model that sees resources as key to superior firm
performance. If a resource exhibits VRIO attributes, the resource enables the firm to gain and
sustain competitive advantage
The following model explains RBV and emphasizes the key points of it.

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According to RBV proponents, it is much more feasible to exploit external opportunities using
existing resources in a new way rather than trying to acquire new skills for each different
opportunity. In RBV model, resources are given the major role in helping companies to achieve
higher organizational performance. There are two types of resources: tangible and intangible.
2.1.1 Tangible assets Swadeshi has the own buildings in Kandana. Physical resources can easily
be bought in the market so they confer little advantage to the companies in the long run because
rivals can soon acquire the identical assets.
Intangible assets are everything else that has no physical presence but can still be owned by the
company. Swadeshi has brand called swadeshi which gave the reputation to the company,
trademarks are all intangible assets. brand reputation is built over a long time and is something
that other companies cannot buy from the market. Intangible resources usually stay within a
company and are the main source of sustainable competitive advantage.
The two critical assumptions of RBV are that resources must also be heterogeneous and
immobile.
2.1.2 Heterogeneous
The first assumption is that skills, capabilities and other resources that organizations possess
differ from one company to another. Today in the economic world there is perfect competition.
In the natural skin care products & baby care products industry there are more companies, so the
environment is more competitive. Therefore, RBV assumes that companies achieve competitive
advantage by using their different bundles of resources.
The competition between Dettol. and lifebuoy is a good example of how two companies that
operate in the same industry and thus, are exposed to the same external forces, can achieve
different organizational performance due to the difference in resources. Unliver competes with
Reckitt Benckise in soaps, sprays and wipes markets, where Dettol sells its products at much
higher prices and, as a result, reaps higher profit margins. Why lifebuoy does not follow the
same strategy? Simply because lifebuoy does not have the same brand reputation or is capable to
design user-friendly products like Dettol does. (heterogeneous resources)

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2.1.3 Immobile
The second assumption of RBV is that resources are not mobile and do not move from company
to company, at least in short run. Due to immobility, swedhi can’t replicate rivals’ resources and
implement the same strategies. In swadeshi, their brand, their specific knowledge of the
ingredients is usually immobile.
2.1.4 VRIO framework
Value Chain Analysis
Swadeshi hasthe local ingredientsto
increase the value offeredtothe
customers.Thisdone bydecreasing
the cost of the product.So theylead
to the competitive advantage
Swadeshi resourcesonlycanfindby
the local companiessocause of that
theycan catch the international
marketas well.
For to getsustainable competitive
advantage theyincrease their
resourceswhichcostlyfora rival
The resourcesitself donot
conferany advantage fora
companyif it’snot organizedto
capture the value fromthem.
But Swadeshi identifiedthe
value of the themselves,sothey
gainthe advantagesoutof that.

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2.1.5 Competitive advantage
An organization that can outperform its competitors over a long period of time has sustainable
competitive advantage.
KOHOMBA has achieve their competitive advantage since this company is one of the
prestigious company in the industry. Swadeshi overcome and compete with the companies such
as velvet ,baby cheromy etc. This overcome shows from their year by year growth of sales.
2.2 Value Chain Analysis Method
Value chain analysis (VCA) is a process where a firm identifies its primary and support
activities that add value to its final product and then analyze these activities to reduce costs or
increase differentiation.
Value chain represents the internal activities a firm engages in when transforming inputs into
outputs.
2.2.1 Porters’ value chain model

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How do the industry value chain relate to the company value chain

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2.2.2 Valuechain analysisbysteps
SWADESHI INDUSTRIAL WORKS PLC
Step 1 - Firm's primary activities
Design and
manufacturing
the products
Purchasing
materials and
components
Assembly Testing and
quality
control
Sales and
marketing
Distribution
and dealer
support
Step 2 - Toal cost and importance
Rs 516
less important
Rs 550 M
very
important
Rs 670 M
very
important
Rs 25 M
not
important
Rs 460 M
important
Rs 315 M
less important
Step 3 - Cost drivers

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 Sales per
product wise
 Order size
 Average value
of purchases
per supplier
 Location of
suppliers
 Scale of
factory and
capacity of
the factory
 Level of
quality
targets
 Frequency
of defects
 Size of
advertising
budget
 Strength of
existing
reputation
 Sales
Volume
 Number of
dealers
 Sales per
dealer
 Frequency of
defects
requiring
repair recalls
Step 4 - Links between activities
1. If the swadeshi incur High-quality assembling process reduces defects and costs in quality control
and dealer support activities.
2. If they are locating plants near the cluster of suppliers or dealers reduces purchasing and
distribution costs.
3. If they manufactured higher order sizes increase warehousing costs.
Step 5 - Opportunities for reducing costs
1. Create just one model design for different regions to cut costs in designing and engineering, to
increase order sizes of the same materials, to simplify assembling and quality control processes
and to lower marketing costs.
2. Manufacture components inside the company to eliminate transaction costs of buying them in the
market and to optimize plant utilization. This would also lead to greater economies of scale.

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3.0 EXTERNAL ENVIRONMENT ANALYSIS
PESTDN analysis
i. Political/Legal environment
ii. Economic environment
iii. Socio- cultural environment
iv. Technological environment
v. Demographic environment
vi. Natural environment
3.1 Political/Legal environment
These factors are all about how and to what degree a government intervenes in the economy or a
certain industry. There are more guidelines when make the products under the standards those
are implemented by sri Lanka government those are affect to the swadeshi when they prepare
their products. As an example, Sri Lanka standard guidelines for packaging and labelling of
beauty products. Also, they certified from sri Lanka standard institute (SLS) and ISO 9001:2015
those make them legally certified manufacture the products.
3.2 Economic environment
Economic factors are determinants of a certain economy’s performance. Factors include
economic growth, exchange rates, inflation rates, interest rates, disposable income of consumers
and unemployment rates. Swadeshi also affect from those factors because as a country if the
inflation rates are high, unemployment rate are high means the people who living the country
haven’t the money in hand then their buying power is less.

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3.3 Socio- cultural environment
This includes population trends such as the population growth rate, age distribution, income
distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and
cultural barriers. These factors are especially important for marketers when targeting certain
customers. Today we are struggling from covid 19 pandemic so, Swadeshi has introduced new
product as sanitizer to their customer that makes the health consciousness of the people and they
have keen knowledge of the population trends so they have produced variety of products for
every generation. As examples Rani sandalwood soap specially for the ladies ,kohomba baby
soap for babies.
3.4 Technological environment
These factors pertain to innovations in technology that may affect the operations of the industry
and the market favorably or unfavorably. This refers to technology incentives, the level of
innovation, automation, research and development (R&D) activity, technological change and the
amount of technological awareness that a market possesses. The Swadeshi Lanka has introduced
new soap manufacturing machine in 2012 that can make more soaps than the previous one
3.5 Demographic environment
Follows are the factors of demographic environment Let see how these affects to the swadeshi
 Population growth rate
That gives the measurement of sales
 Age distribution and life expectancy rates

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From age distribution swadeshi can find out the more efficient age limit and then they can
manufacture particular goods for them.
 Sex distribution
That gain the various products. Swadeshi has particular goods for male and female respectively
like shampoo, oil, fragrances
 Social classes
Swadeshi has the wide range of product list and those are in different prices some are very low
price some are high price so then the people can buy the products that can incur the money for
the products.
 Family size and structure
In Sri lanka most of families have 5 or 6 members cause of that products they use is vary but
most of the families are used more of products and most of the sri lanka are tend to buy same
product or brand so when attracting the customer they have to prove the attributes of the
products.
3.6 Natural environment
Refers to the factors that are determined by or influence the environment.
Swadeshi for most of the products they get the natural ingredients, so they want the environment
in very smooth way. Weather is a one thing that gain good and bad effect to the ingredients most
of the products swadeshi use the kohomba and aloe vera so in sri Lanka these two plants can
grow in most of the places in the country without north province so they can get the more out
from plants. Air and water pollution are one of the bad effects to the environment, so swadeshi
has made the perfect factory that does not pollute air and water. That proves by still now they are
in the city in kandana.

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4.0 INDUSTRY ANALYSIS BASED ON 5 FORCES MODEL
4.1 Porter’s five forces model
This is an analysis tool that uses five industry forces to determine the intensity of competition in
an industry and its profitability level.
1. Threat of new entrants.
This force determines how easy (or not) it is to enter a particular industry. If an industry is
profitable and there are few barriers to enter, rivalry soon intensifies. When more organizations
compete for the same market share, profits start to fall. It is essential for existing organizations to
create high barriers to enter to deter new entrants.

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The swadeshi manufactures the natural skin care products. In sri Lanka there’s no more barriers
form the government to this industry so most of the manufactures who manufacture these
products can come into the industry without a threat. Therefore, the manufactures who
manufacture these products have to have good reputation and good market share in the field
nothing they can not survive in the field, As per the management strategies of the swadeshi for
these factors they did was,
 Get the certifications E.g.: SLS, ISO
 Grant the variety of product range
 They supply the range of products to more generations (They have the products for kids,
women, male and for the elders)
 Conducts the different CSR projects and to have happy customers and get the loyalty
2. Bargaining power of suppliers
Strong bargaining power allows suppliers to sell higher priced or low-quality raw materials to
their buyers. This directly affects the buying firms’ profits because it must pay more for
materials. Suppliers have strong bargaining power.
Swadeshi they get the materials for their products from the local suppliers so, the product cost
and delivery cost be lower. But like unliver like those companies get their materials from out of
the countries so their cost for the materials are high so their products also get higher process but
swadeshi maintain the lower price since their material cost is lower.
3. Bargaining power of buyers
Buyers have the power to demand lower price or higher product quality from industry producers
when their bargaining power is strong. Lower price means lower revenues for the producer,

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while higher quality products usually raise production costs. Both scenarios result in lower
profits for producers. Buyers exert strong bargaining power
4. Threat of Substitution.
This refers to the likelihood of swadeshi customers finding a different way of doing what they
do. When swadeshi supplies a unique product that automates an important process, people may
substitute it by doing the process manually or by outsourcing it. A substitution that is easy and
cheap to make can weaken swadeshi position and threaten their profitability. So, they make their
unique feature as their all the ingredients are natural and all the ingredients from our country.
Still to now in sri Lanka there are no companies that fully act on this particular method so
kohomba remains theirs’s place.
5. Competitive Rivalry
This looks at the number and strength of your competitors. How many rivals do you have? Who
are they, and how does the quality of their products and services compare with yours?
Where rivalry is intense, companies can attract customers with aggressive price cuts and high-
impact marketing campaigns. Also, in markets with lots of rivals, your suppliers and buyers can
go elsewhere if they feel that they're not getting a good deal from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing what you do,
then you'll likely have tremendous strength and healthy profits.
For swadeshi main competitor is LUX,LIFEBUOY because some of these products are form
multinational companies so they have big customer base and they have big marketing plan so

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they can catch more customers since their cost for that is high. But unfortunately, Swadeshi is
local company since those companies came to local platforms the companies such as swadeshi
have to meet hard situation.
5.0 SWOT ANALYSIS OF THE SWADESHI INDUSTRIAL WORKS PLC
5.1 Strengths
 Adequate financial resources
 Product innovation skills
 Acknowledge market leader
 Advertising effectiveness
 Ahead on experience curve
 ISO certified product
5.2 Weakness
 Insufficient experience
 Can not satisfy the demand at initial stage
 Higher price for (Khomba Clear Transparent Soap )
 NO halal certified
5.3 Opportunities
 Growing FMCG market environment in SRI LANKA
 Few competitors

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 Unsatisfied demand
 Serve additional customers
 Enter new market segment
 Diversify products
5.4 Threats
 Competition from existing international brands in the market -LUX, LIFEBUOY,
VELVET and etc.
 Growing bargain power of customers &suppliers
5.1.1 STRENGTHS
KHOMBA has a high market share and is the leader of natural beauty and gives natural
protection soap industry which is its biggest strength.
Advertising effectiveness
The advertising campaigns launched by KHOMBA have been very effective and have positioned
it well in the minds of its customers
Ahead on experience curve
KHOMBA was the first brand of good quality Natural beauty soap that was launched in SRI
LANKA
5.1.2 WEAKNESS
Price & sizes

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The weakness of KHOMBA is small sizes relative to its competing products. A 70 grams
KHOMBA original herbal care soap bar is available for RS 38 whereas the 100 grams size bar of
VELVET is available for Rs. 45- and 100-gram size bar of LIFEBUYO is available for Rs43
Halal: Another weakness of KHOMBA is no halal certified to its competing products whereas
the VELVET is certified halal.
5.1.3 OPPORTUNITIES
Serve additional customers
KHOMBA has various opportunities for growth in the market which includes the opportunity of
serving additional customers through market penetration. KOHOMBO can increase its markets
penetration by promoting its use in hospitals and such other places where beauty soaps can be
used.
Enter new market segment
KHOMBA also has the opportunity of entering a new market segment by increasing its product
line horizontally. It can modify its nature’s care & nature’s beauty soap into clear soap which
promises gem protection and can enter in the anti-bacterial soap market
Diversity into related products
KHOMBA can also introduce a new product line of liquid cleaners and other related products to
increase its growth.
5.1.4 THREATS
Increasing competition

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The threats posed to KHOMBA from the external environment include increasing competition.
KHOMBA is a facing increasing competition from other anti-bacterial soap brands like
LIFEBUOY treat and DETTOL beauty soaps like LUX VELVET and etc. Lifebuoy has
launched an aggressive promotional campaign against KHOMBA by the name of ‘lifebuoy Germ
Busters’ which is based on a similar format as ‘KHOMBA CLEAR’ launched by KHOMBA.
Anti-bacterial soaps.
Beauty soaps
Growing bargain power of suppliers and customers with the increase in the supply of anti-
bacterial soaps and the beauty soaps in the market, another threat that is posed to KHOMBA is
the growing buying power of its suppliers and customers.
6.0 TWOS MATRIX
The TOWS Matrix is a tool that can be used to compare and contrast different strategies to select
the best one for the organization. The matrix breaks down the strategies according to internal
(Strengths and Weaknesses) and external (Opportunities and Threats) factors. Within the TOWS
Matrix, the organization considers the interaction of the internal and external factors (e.g.,
strengths-opportunities, weaknesses-threats) to identify the strategy that provides the most
benefit to the company. Using this method allows the organization to see how it can
simultaneously maximize its opportunities, minimize threats, conquer its weaknesses and take
advantage of its strengths.
Follows shows the TWOS matrix of the Swadeshi industrial works PLC
There’re only shows strategies because the SWOT analysis already mentioned above.

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CONCLUSION
The KHOMBA is native soap due to that It has the emotional value addition. Not only emotional
value addition but also it has the functional value same as other brands. It is going to market
under the SWADESHI PLC. The SWADESHI PLC already has country wide distributors. It is
well recognized brand also. Therefore, the KHOMBA has the competitive advantage over the
LUX, LIFEBUOY, VELVET and etc. KHOMBA can maintain the continuous supply without
effect by international market. So, the KHOMBA can satisfy its customers at any time.
Though, it is native brand. The production of the soap is slightly old sector to SRI LANKA. It
has insufficient experience due to that it has to face lot of problem from production side and
marketing side also. To overcome this problem, the company should appoint the experience
workers and get the help from expertise in abroad. Further, the state should appoint the
researchers to research and develop this sector. The KHOMBA cannot satisfy the total demand at
initial stage due to pressure from other competitors and lack of technology and knowledge in this
sector. The KHOMBA should satisfy and keep its initial level customers while increasing the
market at the end of the next quarter year 2011. It should capture the 18.5% of market as
mentioned in objective.
The termination of war creates the good marketing environment in SRI LANKA. The people
have positive mind set towards the Lankan products. KHOMBA has lot of opportunity at this
marketing environment. There are only few competitors. Therefore, KHOMBA has low
competition from competitors. Anyhow, unsatisfied demand is available in the market. The
KHOMBA has the above opportunities to penetrate the market and it can achieve its goal.
KHOMBA will reduce the import soap. Therefore, the exporting soap countries will reduce their
soap import to us in retaliation manner. Therefore, the country will face sudden increase in
demand. Therefore, KHOMBA has to develop in very rapid phase to handle any amount of
demand in country. KHOMBA needs lot of communication to change the customers. Attitudes
from low price mindset to premium price.

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RECOMMENDATIONS
KHOMBA has a high market share and is the leader of natural beauty and gives natural
protection soap industry which is its biggest strength. The advertising campaigns launched by
KHOMBA have been very effective and have positioned it well in the minds of its consumers
and KHOMBA was the first brand of good-quality Natural Beauty soap that was launched in SRI
LANKA. KHOMBA can also introduce a new product line of liquid cleaners and other related
products to increase its growth so can be to catch more customers that’s good ways the weakness
of KHOMBA is higher sizes relative to its competing products. A 70grams KHOMBA original
herbal care soap bar is available for Rs.38 whereas the 100 grams size bar of VELVET is
available for Rs.45 and 100 grams size bar of LOFEBOUY is available for Rs.43 so KHOMBA
want to increase soap’s size and reduces the soap price. Another weakness of KHOMBA is no
halal certified to its competing products whereas the VELVET is certified as halal so KHOMBA
want to get halal certified. Similar products are increasing other LIFEBUOY, treat and
DETTOL, beauty soap like LUX, VELVET. SWADESHI PLC can be best place in some years.

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REFERENCES
https://swadeshiherbal.com/
Annual reportsof the swadeshi industrial worksPLC
https://www.unicef.org/srilanka/press-releases/swadeshi-khomba-baby-joins-forces-unicefs-
betterparentinglk
https://www.lankabusinessnews.com/swadeshi-awarded-iso-90012015-certification/
E book - Porter’s Five Forces Framework (Book Description - ISBN 978-1-62620-999-2 (33 Pages)
(3121 WORDS IN THE CONTENT – ACHIEVED WORD LIMIT )

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