ASIAN PAINTS – GLOBAL

EXPANSION STRATEGY
INTRODUCTION
 Started by H. Choksey, Chimanlal N. Choksi,
Suryakant C. Dani and Arvind R. Vakil in the year
1942
 Present in 24 countries with 27 manufacturing
locations, over 2500 SKU's, Integrated SAP – ERP
 Subsidiaries: Burger Paints, APCO, SCIB

 Product lines: Ancillaries, Paints for automotives,

Decorative Paints, Industrial Paints
 It become the 11th largest decorative paint
company in the world in its 53 years
AWARDS AND ACHIEVEMENTS
 Forbes Global magazine USA ranked Asian Paints
among the 200 Best Small Companies of the world
in 2002
 AP is the only company in India to have won the
prestigious Economics Times – Harvard Business
School Association of India award in the categories
of “Mini- Giants” and “ Private Sector Giants”
 The only paint company to be ranked amongst the
'200 Best Under a Billion Dollar Companies' in the
world for 2005
VISION AND MISSION
 Vision:
Asian Paints aims to become one of the top five
Decorative Coatings companies world-wide by
leveraging its expertise in the higher growth
emerging markets

 Mission:
To build long term value in the coatings business
through alliances with established global partners


EVOLUTION OF ASIAN PAINTS
 a)1942-1967 Evolution A Different Market Segment
Phase

 b)1967-1982 Extension and

Consolidation
Phase

 c)1982-1986 The years of

Excellence

 d)1987-1997 Moving Closer

to the Consumer

 e)1997-1999 Changing rules

of the game
EVOLUTION OF ASIAN PAINTS
 a)1942-1967 Evolution
Phase

 b)1967-1982 Extension Investments for greater distribution

and
Consolidation
Phase

 c)1982-1986 The years of

Excellence

 d)1987-1997 Moving Closer

to the Consumer

 e)1997-1999 Changing rules

of the game
EVOLUTION OF ASIAN PAINTS
 a)1942-1967 Evolution
Phase

 b)1967-1982 Extension and

Consolidation
Phase

 c)1982-1986 The years of

Excellence Repositioning of the Brand

 d)1987-1997 Moving Closer

to the Consumer

 e)1997-1999 Changing rules

of the game
EVOLUTION OF ASIAN PAINTS
 a)1942-1967 Evolution
Phase

 b)1967-1982 Extension and

Consolidation
Phase

 c)1982-1986 The years of

Excellence

 d)1987-1997 Moving A different marketing strategy

Closer
to the
Consumer

 e)1997-1999 Changing rules

of the game
EVOLUTION OF ASIAN PAINTS
 a)1942-1967 Evolution
Phase

 b)1967-1982 Extension and

Consolidation
Phase

 c)1982-1986 The years of

Excellence

 d)1987-1997 Moving Closer

to the Consumer

 e)1997-2005 Changing New global targets

the rules
of the game
 EVOLUTION PHASE (1942-1967)
 Concentration was on the smaller towns which
were largely neglected by the MNCs
 Low involvement purchasing behavior
 Less Brand Awareness
 Introduction of 50ml packs for rural India clubbed
with grassroots marketing campaign
 Product Innovation was also concentrated upon
EXTENSION AND CONSOLIDATION
(1967-1982)

 Started selling overseas

 Invested in systems that ensured greater
distribution reach
 Established itself as a brand leader
YEARS OF EXCELLENCE(1982-1986)

 Collaboration with Nippo paints to gain

technical know-how
 Perceived as a distemper ordinary enamel
and emulsion paints for the masses
 Launched a campaign called “Spectrum of
Excellence” which resulted in higher
intention to purchase among customers.
MOVING CLOSER TO THE CONSUMER
(1987-1997)
 Introduced backward integration in order to
reduce production costs
 For this purpose, it went into Joint Ventures
with Pantasia Chemical Ltd for mfg of some
components of paints
 With liberalization of the Indian economy, AP
moved aggressively into international
expansion through JVs
 “Celebrate with Asian Paints” campaign
CHANGING RULES OF THE GAME
(1997-2005)
 There was a restructuring to bring more
focus to the corporate brand
 Launch of AP Helpline, retail shops
FOREIGN EXPANSION MODES
PRODUCTION PRODUCTION LOCATION
OWNERSHIP
HOME COUNTRY FOREIGN COUNTRY

Equity Arrangements Exporting a. Wholly owned

b. Partially Owned
c. Joint Ventures
d. Mergers &
Acquisitions
Non Equity a. Licensing
Arrangements b. Franchising
c. Management
Contracts
JOINT VENTURES & GREENFIELD
UNITS
 In countries where there are no major
players, AP started its own Greenfield units
through JV’s
 Nepal

 South Pacific

 Tonga

 Australia
MERGERS AND ACQUISITIONS
 It focused on acquisitions in markets where there
were other players

1999 2000 2002

76% in Full •50.1% stake •JV with
Delmege Acquisition of in Berger Confidence
Forsyth & Co, Pacific Paints Paints, Cement Ltd. –
which was Company Pty Singapore largest
Srilanka’s 2nd Ltd, Australia •60% stake in cement
largest paint SCIB producers in
company Chemical, Bangladesh
Egypt
TYPE OF STRATEGY
TRANSNATIONAL
Prefers a flexible value
HIGH GLOBAL chain to facilitate local
responsiveness and
innovation

LOW INTERNATIONAL MULTIDOMESTIC

LOW HIGH

Pressure for National

Responsiveness
“ Think Global, Synergize Regional and Act Local”
EXTENT OF INTERNATIONALIZATIONInternal vs
Degree of HIGH External handling
similarity of foreign
between Very operations
foreign and Dissimilar MEDIUM
domestic
C/O handles its own foreign
markets operations
Moderately
Similar LOW
Other firms handle external contracts
Quite Similar

Domestic
Business
Limited foreign functions, usually
export/import

one
Limited foreign prod’on &
multiple functions
Several
No. of foreign Extensive production abroad
countries in and FDI
Many
which the co.
does B/S Mode of
Operation
AP’S PRESENCE
 Classified different regions into 3 broad
categories:
 Growth Markets – There is a lot of growth
potential, AP is present but with very little
market share
 Leadership Markets – The company is dominant
in these countries and wants to consolidate
 Turnaround Markets- AP is facing problems, so
has to improve the performance
LEADERSHIP MARKETS
 South Pacific – Started operations 25years
ago, now it’s a Cash Cow
 Has 76% market share in Jamaica

 34% in Nepal – there is scope for growth

 Asian Paints(SI) (70%) – Focusing on

increasing margins and ROCE
 Tonga – Focus on consolidating presence

 Trinidad – Launch of tinting systems and

focus on improving margins
COUNTRY SELECTION FOR GROWTH
 Objective: To expand as a decorative paints
company
 Criteria: Fast growing country with low per
capita paints consumption
 Market Size
 Demand (for which product? )
 Market Growth Rate
GROWTH MARKETS
Country Criteria
Bangladesh Price Sensitive and so will have
Myanmar to play a volume driven game

SriLanka
China Focus is on protective and
Singapore marine coatings
Egypt AP is traditionally strong in
wood finishing paints in Egypt
UAE and UAE
Malaysia Target Markets ( S E Asian
Thailand countries)
S E ASIAN COUNTRY SELECTION
SE Asian Country Criteria
Indonesia Price Driven
Thailand Market is growing rapidly
due to the housing boom

Malaysia Attractive Market, already

has 4% market share

Singapore Potential for protective

and marine coatings

Philippines Price Driven

 COMPETITOR ANALYSIS
  ICI Paints Nippon Paints TOA Paints
Objectives Building Businesses in high Provide end to end Expanding its
Growth Areas solutions for all kinds of business abroad
painting needs
Using Innovation as a POD Achieve more that 20B Major regional
Yen by the end of the pain supplier in
fiscal year of 2010 the next 5 years

Reducing costs through Expand the range of Obtain a huge

efficient Supply Chain advanced products and market share in
Management services under its own China and
brand Vietnam
Strategy Maintain their branded Core values of integrity Green Marketing
leading market position and a drive to excel in strategy
everything
Expand to Vietnam where Aggressive promotion of Boosting
the market growth is at its marine coating production in
10% company in Singapore. China and
Vietnam
Expanding its distribution New bases at Europe, Low pricing
in the US market America and Middle East strategy

  Providing technical  
services to customers for
CURRENT HAPPENINGS
 Current Market shares of top 3 companies in India:
1. Asian Paints: 47%
2. Berger Paints: 18%
3. Nerolac Paints: 13%
 AP is the market leader in decorative paints in India,
growing at 16%
 Got the highest and the most compliant tax payer
award from the Kerala Govt in July 2010
 Asian Paints divested its subsidiaries in Malaysia,
Thailand, Hong Kong and China.
CURRENT HAPPENINGS
 The company is now concentrating more on Nepal,
Bangladesh and Egypt as the business is really doing
well in those markets
 The company will review its overseas strategies and
take steps to strengthen its presence in key markets
like the Middle East and South Asia.
 The firm currently gets more than half of its revenue
from the Middle East. (July 2010)
 Asian Paints is now among the 10th largest
decorative paint companies in the world
CURRENT GLOBAL REACH
REFERENCES
 http://www.financialexpress.com/news
 http://www.business-standard.com/india/news

 http://www.netmba.com/strategy/competitor-analysis/

 http://www.researchandmarkets.com

 http://www.asianpaints.com/

 http://news.smh.com.au

 http://www.businessworld.in

 http://economictimes.indiatimes.com

 http://expressbuzz.com