The economic problems faced by Hindustan Unilever Limited

The economic problems faced by Hindustan Unilever LimitedThe problems that Hindustan Unilever Limited currently facing is increasing arousal costs and routines costs due to rise in lancinating strong costs, increasing imitative and spurious products, and lopsided controversy from other FMCG players. in that respect is slowdown in the global economy and the problem that started in the financial sector extended rapidly to other sectors affecting non only the US but the global economy. Most of Indias domestic sectors are also affected including countrys exports performance and FMCG sectors.There is an unprecedented volatility in raw materials terms contributed more often than not by increasing crude oil expenses. Unprecedented volatility in raw materials scathe associated with uncertainties in the commodities movement needs a desperate on the alert management in the FMCG companies. Although some companies managed to do well categories like detergents met decreasing sales.Hin dustan Unilever Limited has a large brand portfolio consisting number of brands. It pass on be problematical to manage such extended brand portfolio by any company but it is the nature of FMCG fabrication and company. The current global scenario with swinging raw material prices and intense competition faced by the company needs a shareful management.Major issues or problemsThe problem that the company is facing for long duration is the increasing imitative products. The popularity of the HULs brand and the reach it possess drives the local manufactures to imitate the products leading some to produce even the fake products. The fake products are seen highly in rural markets. This greatly affects the brand equity of the HUL.The company is facing increasing input costs due to sum up in price of the raw materials. There is a potential impact on the company due to rising inflation, freight costs and raw materials.Hindustan Unilever Limited is facing tough competition than years be fore from ITC, Procter Gamble, Colgate-Palmolive, Nestle and Godrej. ITC is competing toughly with HUL through and through various brands that are market leaders. The competition is further increase by several new entrants. This intensified competition already witnessed by HULs losing market share in certain segments and also increase in operation costs.STRATEGY FORMULATIONStrategic alternativesThe strategic alternatives for HUL to address the issues of increasing input costs and operations costs due to rise in raw material costs, increasing imitative and spurious products, and stiff competition from other FMCG players are,leverage and Proliferation of brand portfolioCompetitive pricingCost efficient initiativesLeverage and proliferation of brand portfolioHUL has gained reputation of meeting customer needs through various products in different segments. HUL has strong submit chain and distribution network meeting customer needs. This gives competitive advantage for HUL over its c ompetitors. The proliferation of brand portfolio get out protect customers especially in rural markets from purchasing spurious products. HULs product of different brand in selfsame(prenominal) category exit back the receipts generating brand from imitative products.Competitive pricingHindustan Unilever Limited facing stiff competition from organized as well as unorganized players in the industry. This is an industry where buyers pass numerous choice of brand to shift one brand to another brand if not affordable. Rising inflation in the country makes the companies to increase the price of their product. Competitive pricing will get the local manufactures and organized players on their feet.Cost efficient initiativesIncrease in the raw material price and uncertainties in the commodity movement rises the operation costs of the company. The company is in desperate need to do some initiatives like cutting down the publicizing cost and also to cut down the cost in its operation rat her than worrying about the increase in raw material price. option EvaluationLeverage and proliferation of brand portfolioLeveraging and proliferation of brand portfolio by introducing new brands will facilitate the company to compete with the spurious products and competitors brands by providing the customers a course of brand in the same category. This will prevent the customers from shifting to imitative products and competitor brands thereby retaining the customers. Hindustan Unilever Limited has a competitive advantage of robust supply chain and distribution network. This will help the new brand in reaching the customers effectively. The disadvantage is that the company will have various brands in the same category which may make difficult to manage them.Competitive pricingThis strategy of competitive or decreasing the price of companys product will not to efficient. The company is dealing with increase in input and operation costs. Reducing the price of the products will dec rease the profit margin. Moreover it will start the price war in the industry which is not good for the company as well as to the industry. Most of the HULs market leader brands are being well-nigh chased by its competitors with only slight difference in the market share and lot of local products. Also, in many categories in oral, skin care segments the competitors are having market leader brands with strong foothold. Initiating the price war will have a drastic impact on all the segments also will not increase the profit margin.Cost efficient initiativesThe cost efficient initiative like reducing cost over advertisement and reducing the operation cost will help the company to gain competitive advantage in its operations. However FMCG industry requests consistent advertisements and promotional effects to stay in the minds of customers. Cutting down the expense on advertisement will let the competitor to gain advantage over HUL in reaching the customers mind. Also the governing ca nnot do much about the increasing raw material cost where they have a choice of only optimizing the procurement procedures.Alternative choiceLeverage and proliferation of brand portfolio is the optimal choice to address the problems that the company is facing. HUL has a competitive advantage of possessing many strong brands with robust supply chain and distribution network. They have a strong resource that they can allocate to proliferate the brand that can cover different market segments at different price points. This will prevent the price wars as it will give consumers a wide choice of brands that can cover different market segments at different price points and simultaneously retain the customers from shifting to competitors brands. This will give wide choice to customers and back the revenue generating brands from its competitors. This is an industry which is difficult to retain the customers. So it is risky to go head on head with the competitors with revenue generating brand s. Proliferation of brand will increase the volume growth and profit margin.STRATEGY IMPLEMENTATIONHUL will not require any culture or structural changes in the organization to implement the strategy. The organization with its robust supply chain and distribution network will help the brand to reach the customers like other brands.Immediate action planThe company has to first differentiate the strong performing and revenue generating brands from the non-performing brands. It is important to picture brand relevance and assessing the key competitors in the category.Short term action planThe company has to decide the segments in which they have proliferate the brand portfolio. A research has to be conducted to analyze the performance of existing brand and that of the competitors brand.Long term action planAfter determining the category they need a well designed performing monitoring system to analyze the performance of brands before and after the introduction of new brand.