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Asian Paints

Asian Paints faces challenges from fluctuations in global crude oil supply and prices of raw materials like titanium dioxide that increase production costs. It has more resources than competitors to develop solutions, such as new pigments or vertical integration. Berger Paints and Nerolac face similar issues but have fewer options due to their smaller size. Strategic recommendations include targeted price increases, stronger supplier partnerships, diversification, and innovation to reduce cost pressures and protect margins. Successfully addressing rising costs could boost Asian Paints' competitive advantage, margins, shareholder returns and support the Indian economy.

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Mukesh Parmar
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17 views3 pages

Asian Paints

Asian Paints faces challenges from fluctuations in global crude oil supply and prices of raw materials like titanium dioxide that increase production costs. It has more resources than competitors to develop solutions, such as new pigments or vertical integration. Berger Paints and Nerolac face similar issues but have fewer options due to their smaller size. Strategic recommendations include targeted price increases, stronger supplier partnerships, diversification, and innovation to reduce cost pressures and protect margins. Successfully addressing rising costs could boost Asian Paints' competitive advantage, margins, shareholder returns and support the Indian economy.

Uploaded by

Mukesh Parmar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Competitor Benchmarking

Global Crude Oil Supply:

All Companies faces almost similar challenges due to potential supply disruptions and price fluctuations.

Asian Paints and Berger Paints have more money and options to try different things to deal with problems related to global crude oil supply and
find ways to reduce their impact.

Nerolac might not have as many problems with its supply chain as bigger companies because it's smaller. This could help it handle issues a bit
better.

Titanium Dioxide Supply: Titanium dioxide is a critical pigment for white paints, and supply constraints or price increases can significantly affect
production costs.

Asian Paints is trying new pigments and thinking about making their own materials to help in the long run.

Berger Paints faces the same problems, but they might not have as much money for research and development to find solutions.

Nerolac faces the same problems, but it might hit their white paint sales harder.

Volatile Currency Swings:

Asian Paints and Berger Paints might have more money to use tactics to protect against risks and to buy materials from within the country.

Nerolac faces the same problems, but it might hurt their profits more because they're smaller and have fewer resources.

Overall:-

Major players sacrificing their margins to gain the market share.

Nerolac increased advertising spend by 45% to protect share.

Berger Paints investing in backward integration plants .

Asian Paints projected gross margins of 35%

Nerolac projected gross margins of 37%

Berger Paints projected gross margins of 39%

Asian Paints is doing well because they sell different types of paint, have a strong brand, and work to keep costs down. But since they have a
big part of the market and rely on imports, it's not all smooth sailing.

Berger Paints tries to sell value-based products, which could help, but they rely on imports too and they're not as big, so it's tougher.

Nerolac is smaller, which might help them move quickly, but they don't have as much money or rely on certain types of paint, which makes
things tricky.
Strategic Recommendations
1). Targeted Price Increases: Raise prices on certain products or types of customers where costs are going up the most, so it doesn't affect
everyone's wallets as much.

We can achieve it by:

Segmentation: Analyze customer data to identify which products or customer segments are less price-sensitive or are willing to pay more for
certain features or benefits.

Product Differentiation: Determine which products have unique features, higher quality, or are perceived as premium by customers. Price
increases can be targeted towards these products, as customers may be more willing to accept higher prices for perceived value.

Gradual Increases: Implement price increases gradually over time rather than all at once. This allows customers to adjust to the new prices
more easily and reduces the risk of losing customers due to sudden price hikes.

2). Supplier Partnerships: Develop stronger relationships with suppliers to negotiate better pricing and secure stable supply chains.

We can achieve it by:

Long-term Contracts: Consider entering into long-term contracts with key suppliers to provide stability for both parties. These contracts can
include clauses for pricing adjustments based on market conditions and volume commitments to secure preferential pricing.

Shared Goals and Incentives: Align incentives between the company and its suppliers to encourage mutual success. This can involve tying
supplier performance metrics to key business objectives, such as cost reduction, quality improvement, or on-time delivery.

Long-Term Strategies:

Diversification: Diversify the product portfolio to reduce reliance on segments highly affected by crude oil price fluctuations.

Innovation: Invest in research and development to find alternative, sustainable, and cost-effective raw materials and production processes.

Potential Impact if Problem is Addressed


1). Increased Margins:

Reduced Cost Pressure: Successfully mitigating the impact of rising crude oil prices and supply disruptions would lead to lower production
costs, directly boosting profit margins.

Strong brand image:- Asian Paints' strong brand image and reputation for quality can enable them to command premium prices for their
products. Investing in brand-building activities, such as advertising, product innovation, and customer service, helps reinforce this perception of
value and gives Asian Paints more flexibility in setting prices.

2). Protecting Market Leadership:

Competitive Advantage: Effective strategies to manage rising costs would give Asian Paints a competitive edge over rivals who struggle to
maintain margins. Resources saved by managing costs effectively could be directed towards innovation and development of new products and
technologies
3). Better Shareholder Returns:

Increased margins and market share directly translate to higher profits, leading to better returns for shareholders in the form of dividends and
stock appreciation. It will boosts investor confidence and potentially attracting new investments.

4). Supporting Indian Economic Growth:

Job Creation: As Asian Paints expands and invests in new technologies, they would create more jobs, contributing to overall economic growth
and employment opportunities.

Increased Tax Revenue: Higher profits would translate to higher tax contributions for the government, supporting infrastructure development
and social welfare initiatives.

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