ICI Paints
Introduction ICI Paints Business ICI is the worl world’ d’s s larg larges estt manuf manufac actur turer er of the the pain paints ts and industrial coatings. ICI paints is headquartered in Berkshire, UK and operates 55 manufacturing sites in 25 countries. In this sector its main strength are in
Decorative paints
Industrial paints
Refinish paints for vehicles.
Its main customer industries are housing and construction autom automot otiv ive e refi refini nish sh,, can can manuf manufac actu turin ring, g, comm commer erci cial al and and industrial maintenance.
There
is
an
emphasis
on
customer
service,
innov innovat ativ ive e techn technol ology ogy and stro strong ng brandi branding ng with with fami famili liar ar names as Dulux, Glidden, Maxilite and Paintex.
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ICI Paints
ICI Paints Business Lahore In 1965, ICI UK acq acqui uirred a 50% intere erest in the the pai paints nts company named as “Fullers Paints Pakistan Ltd” situated at Ferozepur Road, Lahore. Its name was changed to Paintex limited and it was converted into a public limited company in 1973. the capacity of the plant was upgraded and enhanced in 1981 and since then the business has proceeded progressively to consolidate the market share in the major segments segments of decorati decorative ve paints. paints. Industr Industrial ial and automo automotiv tive e paints market. ICI paints business Pakistan has become an undi undisp sput uted ed lead leader er in the the deco decora rati tive ve moto motorr and and refi refini nish sh segments of Pakistan’s paint market.
With producti production on of 14milion 14milion litres, litres, ICI Pakist Pakistan an touches the live lives s of pain painte ters rs,, arch archit itec ects ts,, pain paints ts reta retail iler ers s and and home home owne owners rs with with colo colorr thro throug ugho hout ut the the coun countr try y. ICI’ ICI’s s Dulu Dulux, x, Glidden, Maxilite and paintex brands have become as much a part of painter’s vocabulary as color choice, quality, variety and durability are the criteria for the selection of the paints by the end-users.
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ICI Paints
ICI Paints Brands In Pakistan Dulux Weather Shield (Acrylic Based). (Decorative) Dulux water repellent (D) Dulux matt enamel , (D) Dulux Gloss (Industrial) Dulux Pentalite (D) Dulux Pentalite Natural Whites (D) Paintex Plus Emulsion. (D) Glidden Higloss (I) Glidden Ultrahide (D) Glidden Ultratex (D) Maxilite (D) Dulux Pearl Glo Matt Finish Enamel (I) Dulux once (D) Dulux Super Gloss Enamel (I) Dulux Aluminium Paint Dual Pack (I) Dulux Synthetic Clear Varnish Varnish (D)
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ICI Paints
Paints Production Process Paint contains three main classes of material: 1) A resin or mixture of resins, which forms the paint film. This is known as the binder and on its own gives a clear film. The type of resin used can be varied to enable the paint to have whatever final properties are required.
2) Pig igme ment nts s to gi give ve colo colour ur to the the pain paintt film film and and also also to enable the coat of paint to hide what is underneath.
3) Solvents to dissolve or suspend the binder and give the paint the correct consistency (viscosity) for easy application. They must also evaporate after application to allow the paint to dry.
A mixture of resin and solvent is called the “vehicle” for the pigment. Most paints also contain small quantities of various add additives e.g. e.g. dri driers to speed peed up the dry drying pro process ess, substances to adjust pH of the paint, etc.
This section describes the way the paint chemist blends the “vehicle” and pigment together to make paint.
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ICI Paints
Pigments are supplied industry in the form of dry powders. These consist of “primary particles” which are sized to give the best results in paint films. For example, white pigments (Tit (Titan aniu ium m
dio di oxide xide
TiO2 iO2)
scat sc atte ters rs
ligh lightt
most most
effi effici cien entl tly y
(whi (white tene nes ss and and opac opacit ity) y) when when the the part partiicle cle size size is 0.2 .22 2 microns. Some pigments are much smaller, some larger. The small primary particles of pigment clump together when the the powd powder er is drie dried d and and st stor ored ed to form form rela relati tive vely ly larg large e clumps (A ‘clump’ of Titanium oxide may contain 5,000,000 primary particles)
The These se clum clumps ps are are know known n as aggr aggreg egat ates es and and it is in this this aggregated form that the pigments are supplied. To produce good paints, it is necessary that the pigment should be at its primary particle size when mixed with the vehicle. Otherwise most of the expensive coloured pigment could not be used effi effici cien entl tly, y, and and the the dry dry film film will will not not be smoo smooth th,, gl glos ossy sy,, opaque or have the correct colour. colour.
It is therefore necessary to break down the aggregates of pigm pi gmen entt part partic icle les s in the the pres presen ence ce of the the vehi vehicl cle e and and to prevent them from re-aggregating. For this reason, it is not normally possible simply to stir the pigment into the vehicle: rather, work has to be done on the mixture in order to break down the aggregates and ensure that the resin coats the
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ICI Paints small particle surfaces. This process is known as “pigment dispersion”, and the following processes must occur: 1) “Wetting” of the pigment surface by the vehicle.
2) De-a De-agg ggrregat egatiion of the the pi pigm gmen entt aggr aggreg egat ates es to smal smalll primary particles.
3) “S “Sta tabi bili lisa sati tion on” ” of these these smal smalll parti particl cles es by the resi resin n to prevent re-aggregation.
A resin which is to perform well as a pigment dispersant must therefore be composed of molecules consisting of two parts:
1) An “anchor group”, which wets the pigment surface and becomes associated with it.
2) A “stabilising chain” which is soluble in the solvent used and therefore stretches out into it.
As mentioned previously, pigment particle surfaces contain areas
of
electrical
charge.
The
“anchor
group”
in
a
dispersing resin is chosen for its ability to be attracted to some of these charged areas. In this way, during dispersion, the original surface of the aggregate, and the new surfaces
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ICI Paints expo exposed sed duri during ng grin grindi ding ng are are cover covered ed by mole molecu cule les s of the dispersing resin. This process is known as “wetting”.
Many Many diff differ erent ent types types of disp dispers ersio ion n mach machin inery ery have have been been developed but they all use one or both of two mechanisms to break up aggregates. The machinery falls into two groups:
1) Those that use “dispersion media”, usually ceramic balls 9 to 12mm in diameter or glass beads 1 to 3mm (like marbles) in diameter. Dispersion occurs where the balls touch each other by a combination of impact and shear depending on the conditions.
2) Those that do not use media - these disperse entirely by shear.
Pigments are always dispersed at the highest concentration possible for technical and economic reasons. Finished paints contain only enough pigment to give the desired properties for the same reasons. Millbases are therefore converted to paint by mixing with film film form formiing resin esins, s, with with sol solvent vents s and and any any nece necess ssar ary y additives.
This
must
be
done
carefully,
mixing
the
ingredients in the right order to get the best results.
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ICI Paints Obviously the resins and solvents must be compatible but problems may arise if components with large differences in resin solids, viscosity or temperature are mixed - “pigment shock” - reaggregation of the pigment particles may occur. For these reasons pigment dispension are usually “second staged” when dispersion is complete - they are diluted with resin and solvent ent to give a reci ecipe which is still more concentrated than the final paint but much easier to use than the dispersion recipe. Waterborne millbases and paints must have the pH adjusted at this stage.
To be conv conver erte ted d to pain paint, t, dry dry pi pigm gmen entt powd powder er must must be dispersed in resin solution. During this process, aggregates must must be brok broken en up into into prim primar ary y pi pigm gmen entt part partic icle les, s, the the surf su rfac aces es of whic which h must must be coat coated ed with with resin esin.. This This resi resin n stabilises the pigment dispersion and prevents the particles from reaggregating. A lot of mecha echani nica call ener energy gy is need needed ed to car carry out out this this process. Various Various machines (or “mills) are used.
After pigment dispersion, the millbase is mixed with further resin,
solvent
an d
additives
to
give
the
final
paint
composition.
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ICI Paints
ICI Vision The The comp compan any y visi vision on is to comp compet ete e in the the indu indust stry ry by emphasizing on customer needs and to build and promote a culture of continuous improvement .
Mission Statement “The ICI paints team intends to remain market leader in the paints business. We wish to be recognized for offering the best products and excellent customer service. We will run run a hi high gh qual qualiity, ty, prof profit itab abil iliity and and growth owth orie orient nted ed business in an exciting and safe environment. en vironment.
Goals 1.
Total adherence to SHE.
2.
Dedicated iin nvolvement of of eve every em employee at at al a ll leve levells of the the orga organi niza zati tion on to the the tota totall qual qualit ity y management concepts.
3.
a
complete
focus
or
prevention
of
non
conformance through cohesive team work. 4.
Constant em emphasis on “doing it right the first time and every time”.
5.
Improving th the qu quality of of ev every th thing we we do do, to to th the complete satisfaction of our internal and external customers.
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ICI Paints
Objectives To
To
be No. 1 in all its 6 Pakistani businesses
achi achiev eve e tur turnove noverr of 20% in 20 200 02 from from over over all all
business portfolio.
To To
reduce its industrial wastes by 50% till 2004.
To To
contribute at least 25% in overall o verall ICI Pakistan profits.
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ICI Paints
Situation Analysis INTERNAL ANALYSIS SWOT Analysis After ter
stud tudying
the
ICI ICI
pai paints nts
strategi tegies es,,
an d
its
performance we have identified some strengths, weakness opportunities and threats.
Strengths 1.
ICI’s Positive Image
ICI has positive image and reputation in the minds of customers so far them it’s a great strength because its helps in the sale of their products. 2.
Financial Strength Of The Business
The paints business is financially very strong as mentioned by present annual report. 3.
Esta Establ blis ishe hed d Nat Natio ionn- Wide Wide Infr Infraa-St Stru ruct ctur ure e
The ICI paints business has established nationwide
infrastructur infrastructure. e. It has network of dealers
in all over
the country, country, which will help in the
sale of company’s
products.
4.
Com Co mmitte itted d and and enth enthus usia iast stic ic staf staff f
5.
Up To Date Technology
ICI ICI pain paints ts has has up to date date tech techno nolo logy gy in its its production. ICI paints Pakistan claim that they offer 6134
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ICI Paints col colors ors to the cust custom omer ers s out out of whic which h cust custom omer er can can demand any color and then they will make that color for customer. For that they have latest machinery in which they just give name of the colour that customer want and then machinery gave them the formula which will produce that particular particular color a then they will produce that color for the customer.
Weaknesses
1.
No Distribution Network
The major weakness of ICI paints business is that they don’t have their own distribution network. They just have dealers in different cities which carry their products and then retailers have to use their own means to get paint from those dealers and then make it available for sale for the customer.
Opportunities 1.
Increase
Quality
Awareness
Among
The
Customers
One of the greatest opportunity for ICI paints is that now a days people are very much conscious about the quality of the paints and they are aware of the fact that good quality paint is long lasting. As ICI is producing high quality paints
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ICI Paints so it will increase the demand of company’s so it is a great opportunity for ICI paints.
2.
Increasing Paints Markets
Anot An othe herr oppo opport rtun uniity for ICI ICI is that that as now a days days in Afghanistan re-construction of the country is taking place so there will be great demand for paints and ICI paints can reap reap this this oppo opport rtun unit ity y by expo export rtin ing g pain paints ts prod produc ucts ts to Afghanistan and can earn great profits.
Threats 1.
Decrease in Construction Activity
Due to decrease in the construction activity in the country the the comp compan any’ y’s s sale sales s are are decr decrea easi sing ng as comp compar ared ed to previous few years.
2.
Increased Competition From Cheap Paints Producers
Chea Cheap p pain paints ts prod produc ucer ers s capt captur ure e almo almost st 60 60% % of the the market share of paints so it’s a great threat for ICI paints because other companies will share the market as well.
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ICI Paints
Performance Performance Analysis The The pai paints nts busi busine nes ss cont contin inue ued d its focus ocus on opera perati ting ng excellence and productivity improvement and in this regard capi capital tal expen expendi ditur ture e of Rs. Rs. 27 mill millio ion n was was undert undertak aken en to upg upgrad rade
producti uction on
facilities
and
to
achieve
furth urthe er
operational improvements. Consequently the business was able to enhance production capacity by 1.5 million litres. Despite pf recessionary condition, which are prevailing in the market due to slow trading environment the ICI decorative paints, was able to increase its market share by 1% through its its st stro rong ng adve advert rtis isin ing g and and prom promot otio iona nall camp campai aign gns s and and increasing effective after sale service. The The indus ndustr tria iall busi busine ness ss conti ontinu nued ed to deli delive verr a robus obustt perf perfo ormance
driv riven by
a
pene penetr tra atio tion
of new
mark arket
segments within the general industry sector. Consequently despite a decline in the traditional Automobile and projects segme segment nt the indus industri trial al busin busines ess s was was able able to incr increas ease e its its sales by 10% over last year. The The mark market et for for the Refini efinish sh busi busine ness ss howev however er rema remain ined ed static with no increase in sales volumes v olumes over last year.
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ICI Paints
Financial Analysis Due to very significant decline in the size of the decorative marke rket
the
ICI ICI
pai paints nts
busines ness
regi egister tered
an
overall
reduction in sales volume of 4% compared to the previous year year.. Howe Howeve verr gro gross mar margi gin n incr ncrease eased d by 6% thr through ough improvemeNt
in
product
mix
an d
proc procur urem emen ents ts
and and
manu manufa fac cturi turing ng,,
whic which h
efficiencies coupl oupled ed
in with with
stringent control over fixed costs resulted in an operating profit improvements of 14.4% over last year to Rs. 262.9 million.
Sales Gross profit Operating profit
99 Rs. 3090.09M Rs. 500.593114 Rs. 230.22M
2000 2966.4864 530.6286 262.9
4% 6% 14.4%
Ratios Gross Profit Margin
Gross Profit Margin = gross gross profit profit / net sales 1999
2000
16.2%
17.8%
The gross profit margin has increased from 16.2% to 17.8% despite of
in sales. This shows that the firm has controlled
its cost of sales.
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ICI Paints Operating Profit Margin 1999
2000
7.7%
8.86%
The operating profit margin has also increased as compared to previous year.
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ICI Paints
External Analysis 5 FORCES ANALYSIS Threat of new entrants ICI ICI is enjo enjoyi ying ng No.1 No.1 posi positi tion on in pain paints ts indu indust stry ry they they are are having 25% of total market market share. They do not consider now entrant as threat for themselves.
Beca Becaus use e of unst unstab able le econ econom omy y and and decr decrea ease se in tren trend d of construction, there is not much attraction in paints industry for the new entrants.
Threat of existing rivalry ICI has to compete with a large number of paint makers. But the threat is from two major competitors.
Thos Those e comp competi etito tors rs are are Mast Master er Paints aints and and Berg Berger er Paints aints.. Berger paints is having market share of 10% - 12% of the paints market. Their hot selling brand bra nd is Berger Robbialac.
Other Other majo majorr comp competi etitor tor is Mast Master er Paints aints.. Mast Master er Paints aints is having
market
share
of
about
2%
to
3%.
All
other
competitors are having a very small portion of market and are not considered as threat for ICI paint.
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ICI Paints
Threat of substitutes There are not many substitutes available for the paints. For pas past few years the there is an incr ncreasing trend end of use of designed tiles and coloured bricks.
But ICI do not think that they are under any threat as far as substitutes are concerned.
Bargaining power of buyers Bargaining power of buyer is a considerable threat for ICI paints. Because Because many competing brands are available in the market. It is necessary for ICI to satisfy their customers as far far as price and quality is concerned ned. Other herwis wise the customers will switch to other brands.
Bargaining power of suppliers Ther here are two major suppl ppliers ers as far far as ICI paints is concerned.
If any of the suppliers offer the terms and conditions that do not suit ICI, they would switch to the other supplier. So ICI peopl people e thin think k that that su suppl pplie ierr do not not have have much much barg bargai aini ning ng power.
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ICI Paints
PEST Analysis Political Political and legal analysis Politics Politics and govt. rules and regulations regulations have a critical critical role in fos fosteri tering ng
the the
succ uccess
or
(cr (creatin ting
problems
for
any
organization.
Similarly in case of ICI political instability in recent years has affected the th e sales and growth rate immensely. immensely. Govt Govt has has impo impose sed d 15 15% % sales ales tax tax and and heav heavy y dutie uties s on imports and raw materials.
As ICI paints import 75% of its raw materials so import duties have have incr increa ease sed d the prod produc ucti tion on cost cost thus thus decre decreas asin ing g the profit margin.
Economic analysis Recessionary ary
condi nditions
contin tinued
to
preva evail
as
the
gover governm nment ent pres presse sed d on with with its its effor efforts ts to docu docume ment nt the economy. The depressed construction industry and the slow trading indus industry try and and the slow slow tradi trading ng envi enviro ronm nmen entt resu result lted ed in an overall market market shrinkage in the decorative decorative business by 10%. Against this back drop the business was however able to increase
its
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market
share
by
1%
through
its
strong
19
ICI Paints advert advertis isin ing g and and prom promot otio ional nal camp campai aigns gns and and incr increa easi singl ngly y effective after sale service. The industrial business continued to deliver a robust performance driven by penetration of new market segments within the general gene ral industry sector.
Consequently Consequently despite a decline decline in the traditional traditional Automobile Automobile and projects segment the industrial business was also able to increase its sales by 10% over last year. year.
The market for the refinish business however remained static with no increase in sales volumes over last year. Although decorative business increased market share by 1% and and indu indust stri rial al sale sales s also also incr increa ease sed d beca becaus use e of the the very very significant decline in the size of the decorative market, the poin points ts busi busine ness ss regis egiste terred or over overal alll redu reduct ctio ion n in sale sales s volume of 4% compared to the previous year. year.
However
gross
margin
increased
by
6%
through
improvement in product mix and efficiencies in procurement and manu manufac factur turing ing,, which which coupl coupled ed with with stri stringe ngent nt cont contro roll over fixed costs resulted in as operating profit improvement of 14.4% over last year to Rs. 262.9 million.
Societal Analysis In recent years ICI has shown a lot of concern for society. Organization Organization is very conscious conscious about safety and health of its
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ICI Paints employees. The business successfully completed its fourth year without any reportable injury. injury.
At present, ICI is the leader in following SH&E guidelines. The comp compan any y want wants s to maint aintai ain n its its lead leader ersh shiip role in the the protection of the environment.
Rs.
27
million
prod produc ucti tion on
was
fac facilit ilitie ies s
undertaken and and
n ot
achi achiev eve e
o n ly
furt furthe herr
to
upgrade
oper operat atiional onal
improvements but also to be more environment friendly by inst in stal alllin ing g pl plan ants ts and and machi achine nery ry that that do not cause ause any damage to environment.
Technolog Technological ical Analysis ICI ICI pain paints ts have have got got the the late latest st tech techno nolo logy gy with with them them as compared to their competitors. Their production process is highly automated. They can offer any colour as demanded by the customer. Customers can ask for any of 6134 colours.
For ever every y shade hade of col colour our ther there e is a sp spec ecif ific ic form formul ula a that that st stat ates es abou aboutt comp compos osit itio ion n of cons consti titu tuen ents ts and and thei theirr proposition.
High level of automation is one of the critical success factors of ICI ICI that that diffe differe renti ntiate ates s then then from from their their comp competi etitor tors s and serves as a source of competitive advantage.
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ICI Paints
Competitor Analysis ICI is the largest manufacture of paints in Pakistan. There are hundreds of competitors competing with ICI. But their market share is very small as compared to ICI. Mainly there are only 2 major competitors i.e Burger paints and Master paints. Company ICI paints Berger paints Master paints Silky paints
Market share 25% 12% 3% 1%
All other companies are having market share less than 1%. Let us have a look at hot selling brands of above mentioned paint manufacturers. Company ICI paints Berger paints Master paints Silky paints paint s
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Market share Dulux Burger Robbialac Master Silky
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ICI Paints
Problem Statement Due to depr depres essi sion on in cons constru truct ctio ion n indus industr try y and the slow slow tradi trading ng envir environ onme ment nt in Pakis akistan tan the the ICI ICI Paints aints has has faced faced tremendous market shrinkage.
Bec Becaus ause of this this very very sign signif ifiicant cant dec decline line in the the size size of decorative market the paints business registered as overall reduction in volume by 4% compared to the previous year.
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ICI Paints
Existing Strategies Corporate Level Strategies HORIZONTAL DIVERSIFICATION ICI ICI Pakis akista tan n is a vast vast grou group p whic which h is invo involv lved ed in seve severa rall busi busine ness sses es so it is foll follow owin ing g the the st stra rate tegy gy of Hori Horizo zont ntal al diversification as it is involved in unrelated industries.
A brief description of its different business is as under.
Pure Terephthelic Acid At port Qasim near Karachi, a plant for the manufacture of pure pure terep terephth hthel elic ic acid acid,, an esse essenti ntial al raw raw mate materi rial al for for the the polyester staple fiber and PET bottle polymer industries is constructed. It has capacity of 400,000 tons per annum, thus making Pakistan self sufficient in PTA and also providing a small surplus for export.
PTA plant has a major contribution in the sales and profits of ICI group. The investment of $450 million in the PTA plant would would move move ICI ICI Pakis akista tan n becom becomin ing g the the firs firstt bill billio ion n doll dollar ar company on the basis of assets.
ICI Soda Ash Internship
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ICI Paints The The Soda Soda As Ash h pl plan antt of ICI ICI is situ situat ated ed in Khew Khewra ra,, di dist stri rict ct Jhelum Jhelum.. Soda Ash is an industr industrial ial raw materi material al used in the manufacturing of glass, glass products, paper and chemicals. It is also used in the formation of soaps and detergents. The plant was established in 1994 with the capacity of 18000 tpa [tons per annum].
Currently it is operating at the capacity of 300,000 tpa. ICI Soda Ash business supplies over 80% of the total of country.
ICI Polyester Staple Fiber Business ICI ICI
Pakis akista tan’ n’s s
pol polyest yester er
stap st aple le fibe fiberr
plan pl antt
is
situ situat ated ed
Sheikhopura, near Lahore. It was established in 1982 at a cost Rs. 630 million and at that time, capacity of the plant was 12 12,0 ,000 00 tpa. tpa. Capa Capaci city ty was was expan expanded ded to 19 1900 000 0 tpa in 1989 with the expenditure of about Rs. 450 million. Now a days, this plant is operating at 28,000 tpa.
Currently, ICI is the second largest PSF producing company after Dewan Salman Fibers limited, who has a capacity of 108,000 tpa.
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ICI Paints
Agrochemicals Agrochemicals And Seeds Business ICI Pakista akistan n Agroch Agrochemic emical al divisi division on was expande expanded d in 1984 1984 when when the comp compan any y enter entered ed into into dire direct ct dist distri ribut butio ion. n. Sinc Since e then then it has has beco become me the the fast fastes estt grow growin ing g busi busine ness ss of the the company.
Operating
in
the
competitive
market,
ICI
agroc agrochem hemic ical als s in Pakis akistan tan has has been been able able to dive divers rsif ify y and and increas ease its products ucts range nge to meet eet the nee needs of the country’s developing agriculture.
Company Company
hopes hopes that the seeds seeds busin business ess will will conti continue nue to
maintain its dominance in the agro and seeds business.
Pharmaceuticals & Animals Health ICI Pakistan pharmaceuticals business markets prescription drugs drugs with with a stro strong ng portf portfol olio io of innov innovat ativ ive e prod produc ucts ts from from Zeneca Zeneca (forme (formerly rly ICI pharmac pharmaceut eutica icals) ls) and Syntax. Syntax. These These pro products ucts hav have a leadi eading ng positio tion in the treat eatment of cardiovascular diseases, breast cancer, prostate cancer as well as anesthetics. Recently, the product range has been extended to include an antibiotic.
As
the
ICI
Pakistan
got
a
novel
technology
in
the
pharm pharmac aceut eutic ical al busin busines ess s it earn earns s a lot lot for for the comp company any’s ’s total earnings.
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ICI Paints
ICI Consumer Products ICI Pakistan entered in the consumer products business in 1993 19 93 offer offerin ing g a range range of domes domesti tic c inse insect ctic icid ides es under under the brand name of Zapit for the control of all types of crawling and flying insects normally found in the house.
By
deepening
the
product
range,
active
support
of
advert advertis isem ement ent and prom promoti otiona onall prog program rams, s, ICI ICI cons consum umer er products business will be able to mature into a big profit center for ICI Pakistan limited in the next few years. Through increasing brand loyalty and share consolidation.
ICI Chemicals 1)
Specialty Speci alty Chemicals Chemi cals
ICI’s specialty chemicals chemicals plant was commission commissioned ed at Karachi Karachi in 1968 with the capacity of 1500 MT per annum. It was prim primar ariily des desig igne ned d
to manu manufa fac ctur ture a rang range e of Textil xtile e
auxiliaries. auxiliaries. Today, with the capacity capacity of 3600 metric metric ton per annum, annum, it manufac manufactur tures es and formul formulate ates s over over 40 produc products ts used in industrial processing that call for specialty chemicals applications.
II)
General Gener al Chemical Chemi calss
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ICI Paints The general chemicals chemicals products offered by ICI chemicals are used for variety of applications by nearly all industries of Pakistan including fertilizers, cement, polyester oil and gas, plastic and paints. Sales of these products are packed by a technical laboratory services for which sales staff is specially trained.
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ICI Paints
Business Level Strategies Differentiation ICI paints division operates in three areas:
1.
Decorative paints
2.
Industrial paints
3.
Refinished goods
The The most most impor mporta tant nt and and succe uccess ssfu full area area compr ompris ises es of decorative paints. The two hottest selling brands of ICI paints are
Dulux
Glidden
Their major competitors are:
Burger paints
Master paints
Burger Paints The share of Berger paints in paint market is 12%. Their hot selling brand is Berger Robbialac.
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ICI Paints
Master Paints The share of master paints paint s in paint market is 3%. Their hot selling brand is “Master”
ICI Paints ICI are market leaders in paints business. Their market share in paints market is 25%.
As discussed above their hot selling brand are Dulux paints and Glidden paints. ICI paints are relatively more expensive than those of their competitors. A unique feature of ICI paints is they offer 6134 colours to their customers. So the customers have got more choice. They can demand any of those 6134 colours. This facility is not available with any other paints market. They have got the automation formula.
So they just put the material according to the formula and the desired colour is manufactured. For this unique feature they change extra cost.
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ICI Paints
Operations Level Strategy Total Total quality management managemen t (TQM) TQM is what ICI paints follow in each and every operation they perform. They want quality in every thing they do. Total quali quality ty mana managem gement ent is one one of the basi basic c obje object ctiv ive e of the company and they do not compromise on quality at any cost.
To To ensure ensure TQM ICI offers offers variou various s trainin training g progra programs ms to its employees.
Training Training package is offered at all levels of employees. Training courses are offered 3-4 times per year. LUMS, Pearl Continental Hotel Lahore, Avari hotel Karachi are the Locations where those courses are often organized.
Performance of every employee is monitored every month. ICI is very concerned about efficiency and effectiveness of empl employ oyee ees. s. They They di disc scou oura rage ge wron wrong g deli delive veri ries es and and late late deliveries.
The focus on improving productivity has continued during the the year year achi achiev evin ing g a furt furthe herr gain gain of 20 20% % in man man powe powerr productivity.
The company continues to remain committed to training and development development of its staff. staff. As discussed earlier that previously previously
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ICI Paints trai traini ning ng cour course ses s were were offe offerred 3 – 4 time times s per per year year.. Bu Butt recently new initiatives taken in this area resulted in a total of 28 cours ourses es bein being g offe offerred inhou nhous se acces ccess sed by 87 879 9 managers during the year. On average each management staff in the company was provided approximately 5 days of training during the year. Special training of high potential staf st afff was was also also st step eppe ped d up and and 7 st staf afff was was prov provid ided ed with with specialized high quality training opportunities abroad.
They They emph emphas asiz ize e on cust custom omer er sati satisf sfac acti tion. on. Cust Custom omer er can can register their complaints regarding wrong delivery and late delivery of products. They put their best effort to minimize the the numb number er of com compl plai aint nts s and and incr ncreas ease the the num number ber of satisfied customers.
ICI ICI is ISO ISO 900 001 1 cert certiified fied com company pany that that is proo prooff of thei theirr continuous efforts towards total quality management.
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ICI Paints
Societal Level Strategies ICI is very much concerned with the betterment bett erment of society. society.
They They are are invo involv lved ed in soci social al welfar welfare e and comm communi unity ty work work programs.
At ICI, hospital Khewara they support eye clinic programmes programmes with
assistance
of
the
doctors
of
Lyton
Rehmatulla
Benevolent Benev olent Trust (LRBT).
They They are are also also very very cons consci cious ous about about envir environ onme ment nt frie friendl ndly y operations.
ISO ISO 14 140 001 certi ertifi fica cati tion ons s proves oves ICI ICI to be envi envirronm onment ent friendly organization. They try their best to ensure that their operations do not cause any harm to the environment and society.
The They y also also are are for for safe safety ty and and heal health th of thei theirr empl employ oyee ees. s. Emplo Employee yees s are are trai trained ned that that how how can can they they avoi avoid d acci acciden dent. t. They make it sure that employees are provided with safe working conditions.
In case of any accident accident or injury to any employee, they have got all needed facilities facilities to handle the situation and minimize minimize as well as financial loss.
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ICI Paints
There are doctors, ambulances, fire extinguishes etc to cope up with any accidents.
Carrying lighters and smoking in plant is prohibited. Concern for safety, health and environment is their main objective. The intense focus maintained by the company on its safety performance resulted in the continued maintenance of its excellent injury prevention second and no (RIA)/ reportable injury accident occurred at any of its operating sites.
During the year paints business completed 21 million manhou hours without out any RIA. Based on it’s excell ellent SH&E SH&E performance the company received considerable recognition with ICI group worldwide.
ICI Pakistan was declared the winner of chief executive’s SHE leadership award in product steward ship in the paints, Soda Ash, agrochemicals and pharmaceuticals business received reco recogn gnit ition ion for for su sust stai aine ned d safet safety, y, healt health h and and envir environ onme ment nt excellence.
With a view to maintain its leadership role in the protection of the the envi envirronme onment nt,, the the comp compan any y beco become mes s a volu volunt ntar ary y participant in the Pakistan Environment Protection Agency’s “Self elf
monitoring” ng”
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progra gram
(SMART)
strict
opera peratting
34
ICI Paints standards standards and monitoring monitoring of all its effluent treatment treatment plants, resulted in an assurance that the company has met all the national environmental quality standards (NEQS) applicable to its manufacturing activities.
Product Product Development ICI paints Pakistan has a well-established R & D department in Lahor ahore e at thei theirr pain paints ts di divi visi sion on.. Ther here all all peop peoplle are are conti continu nuous ously ly maki making ng tests tests to devel develop op new produ product cts s and that’s the main reason why the company is able to launch its new
products
frequently
into
the
market.
The
top
mana manage geme ment nt has has allo alloc cated ated good good budg budget ets s for for this this R&D department. ICI Paints has qualified and competent people in the field of R&D activity. After about 2-3 months they launch their new brands in the markets, which will help them to maintain their competitiveness. Recently they have launched following brands.
1.
ICI Glidden Hi glass
2.
Dulux wat water repellent
3.
Dulu Dulux x pear pearll G10 G10 Matt Matt fini finish shed ed Enam Enamel el
4.
ICI Gl Glidden ul ultra hi hide
Demand Management
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ICI Paints ICI paints mange its demand by first identifying identifying its customer need needs s thr through ough mark market et resea esearrch and and then then intr introd oduc uce e its its products
to
customers.
The
media
they
use
for
advertisement are TV, sign boards etc.
Order Fulfillment ICI paints uses 2 approaches for its order fulfillment process. For decorative business they have customized brands and they send their brands to dealers then deliver it to retailers.
While for industrial business they first receive demand for the paint to be delivered and then they make paint for them and then deliver to them and for that they charge high price.
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ICI Paints
Alternative Strategies There are several strategic options for ICI paints Pakistan. They They can can redu reduce ce thei theirr comp competi etiti tion, on, and and mark market et sh shar are e by using any of the following strategies. These strategies are:
1. Forward integration ICI at the moment is depending on dealers for the sale of their their produ product cts. s. Thes These e deal dealers ers stor store e comp compan any’ y’s s produ product cts, s, retailers have to get ICI products from these dealers & then offer customers for sale.
If ICI ICI inst instea ead d of depe depend ndin ing g on deal dealer ers s us use e thei theirr own own on dist distri ribut butio ion n to su suppl pply y prod produc ucts ts to retai retaile lers rs then then they they can can increase the sales of their products by giving products to eve every possibl ble e retailers ers and in this way they hey can get get acceptance of every retailer to get their product and offer it to customer for sale.
2. Backward integration Presen Presently tly ICI Pakista akistan n is purcha purchasin sing g its raw materi material al from from both local as well as foreign suppliers. About 75% material is purch purchas ased ed from from fore foreig ign n coun countri tries es and 25 25% % is purc purchas hased ed locally.
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ICI Paints As such as huge quantity of raw material is purchased from foreign countries that’s why change in government import duties have a great impact on prices of raw material and now a days government is continuously increasing its import duties so it rents in reverse in prices of raw material which also increase the prices of finished products.
Therefore if ICI acquires local suppliers for start making its own raw material then it can save itself from such fluctuations in prices, which could result in the stabilization of prices, and customers can purchase the products at low prices.
3. Acquisition At presen esentt ICI ICI is the the larg larges estt manu manufa fact ctur urer er of pai paints nts in Pakistan. an. Its market share is 25%. There ere are several ral companies in paints business having a small portion of over all market.
ICI ICI can increas ease its mark arket shar hare by acquirin ring a few companies like master paints, silky paints etc.
As a resu result lt of this this acqui acquisi siti tion on ICI ICI can can incr increas ease e its its mark market et share up to 30%.
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ICI Paints
4. Combination Busines Bus iness s strateg strategy y of ICI include includes s differ differenti entiati ation on and quick quick respon response. se. Recently ecently ICI has intro introduce duced d master master palette palette that that offers
plentitude
of
6134
colours
to
match
every
environment and mood. ICI offers premium quality product at premium prices. Although ICI offers brands like Glidden, Paintex and Maxilite, which are quite economical yet they are comparatively expensive as far as brands of, competitors are concerned.
As ICI brands are of higher price so other companies get benefit and capture the lower end of the market.
If ICI starts offering cheaper products it can increase not only its market share but also its sales volume.
Combin Combinatio ation n of differ different entiat iation ion and cost cost leaders leadership hip can be very fruitful for the organization.
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ICI Paints
Recommended Strategies Backward Integration Seeking ownership or increasing control over firm suppliers can be very fruitful fruitfu l strategy. strategy.
ICI ICI pain paints ts impo import rts s 75 75% % of raw raw mate materi rial al from from its its fore foreig ign n suppliers only 25% of raw material is purchased from local supp su ppli lier ers. s. In past past few few year years s govt govt.. has has incr increa ease sed d impo import rt duties. As a result cost of production p roduction is increased.
If ICI gains control over their local suppliers by ownership and take charge of their operation then a significant cost cutt cuttin ing g is poss possib ible le.. After ter gett gettin ing g owne owners rshi hip p if ICI ICI start tart manu manufa fact ctur urin ing g all all or most most of the the requ requir ired ed raw raw mate materi rial al loca locall lly y then then they they can can signi signifi fica cantl ntly y reduc reduce e the the volu volume me of import thus avoiding the heavy import duties imposed by the govt. It will result in decrease in cost of product and ICI would be able to offer its product at a relatively cheaper price.
Acquisition Acquis quisiition tion or hori horizo zont ntal al
inte in tegr grat atio ion n
refer efers s
to seeki eeking ng
ownership or increasing the control over firm’s competitors.
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ICI Paints As mentioned above; there are several competitors of ICI. But most of them are quite smaller companies companies having a very small portion of market. If ICI acquires a few of those competitors, it would be very beneficial. It would not only reduce the no of competitors but there will be a notable increase in market share as well.
By getting ownership over some of its competitors ICI would be able able to foll follow ow a comb combin inat atio ion n of busin busines ess s stra strateg tegie ies. s. It coul could d foll follow ow cost cost lead leaders ershi hip p by offeri offering ng brands brands of thos those e acquired companies and at the same time it could follow differentiati differentiation on and quick response response strategy when offering its own brands like Dulux.
Following such sort of strategy will not only result in increase in sales volume but also in profit margin and ICI can capture both the upper end market and lower end market at the same time.
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ICI Paints
Implementation Plan For su succ cces essf sful ul impl implem emen entat tatio ion n of the the stra strateg tegie ies s that that we have recommended, ICI should emphasize on the following main points to implement those strategies.
Budget For above 2 strategies, which we have recommended there, should be separate budget allocated for the implementation of the recommended strategies.
In this this conte context xt the finan finance ce depar departm tment ent perso personne nnell sh shoul ould d work to develop budget for these alternative and then the top mana managem gement ent sh shoul ould d appro approve ve that that budget budget so that that the actual
work
management’s
can
be
executed.
approval
th e
Because
whole
task
without
top
can’t
be
implemented.
Human Resources ICI should believe in their people’s potential and ability. They should invest in them and consider them as most valuable assets. assets. Because Because business goals can be best realized realized through people.
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ICI Paints Before
bringing
an y
change
employees
should
be
comm communi unica cated ted about about why why the the chan change ge is neces necessa sari rily ly and and what are the objectives and goals that company want to achieve through those changes. Employees should be given train trainin ing g so that that they they can can bette betterr adapt adapt to thos those e chang changes es.. Empl Employ oyee ees s are are vita vitall to the the prof profit itab abil ilit ity y of the the comp compan any y beca becaus use e they they di dire rect ctly ly contr contrib ibut ute e to the the su succ cces ess s of
the the
organization. Human resource department should strive to ensure that a professional and caring environment continues to be fost foster ered ed so that that the the crea creati tive ve ener energi gies es of st staf afff are are released and fully utilized while developing their potential
Sales As the the comp compan any y will will unde underg rgo o back backwa ward rd inte integr grat atio ion n and and combination strategies therefore it should increase its sale by exploring new geographical areas and markets which will result in increase in profitability for the company and the company will have funds for the new strategies to implement
Production For selling more definitely the company should also increase its production so that the product should be readily available for sale.
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