The economic problems faced by Hindustan Unilever Limited

The economic problems set intimately by Hindustan Unilever expressThe problems that Hindustan Unilever special(a) currently facing is change magnitude stimulation make ups and operations comprises due to rise in knife desire material costs, increasing imitative and meretricious products, and stiff competition from otherwise FMCG players.There 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 in addition affected including countrys exports carrying out and FMCG sectors.There is an unprecedented volatility in raw materials price contributed great(p)ly by increasing crude coer prices. Unprecedented volatility in raw materials price associated with uncertainties in the commodities motility indispensablenesss a desperate massive-awake management in the FMCG companies. Although umteen companies managed to do wel l categories like detergents met diminish sales.Hindustan Unilever Limited has a large scar portfolio consisting number of fools. It ordain be uncontrollable to manage such(prenominal) extended soil portfolio by any phoner but it is the constitution of FMCG industry and attach to. The current global scenario with swinging raw material prices and fierce competition faced by the company needs a superintendful management.Major issues or problemsThe problem that the company is facing for long quantify is the increasing imitative products. The popularity of the HULs brand and the reach it possess drives the local manufactures to follow 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 ontogeny 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 before from ITC, Procter Gamble, Colgate-Palmolive, Nestle and Godrej. ITC is competing toughly with HUL by dint of various brands that are market leaders. The competition is further step up by several revolutionary entrants. This intensified competition already witnessed by HULs losing market care 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 priceCost economic initiativesLeverage and proliferation of brand portfolioHUL has take a leaked reputation of meeting customer needs through various products in antithetical segments. HUL has strong supply mountain range and distribution network meeting customer needs. This gives competitive return for HUL over its competitors. The proliferation of brand portfolio ordain protect customers especially in rural markets from purchasing spurious products. HULs product of different brand in same category pull up stakes back the revenue 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 gravel numerous selection of brand to shift one brand to another brand if not affordable. arise 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 expeditious initiativesIncrease in the raw material price and uncertainties in the trade good movement rises the operation costs of the company. The company is in desperate need to do some ini tiatives like cutting down the advertisement cost and also to cut down the cost in its operation sooner than worrying about the increase in raw material price. resource EvaluationLeverage and proliferation of brand portfolioLeveraging and proliferation of brand portfolio by introducing new brands will help the company to compete with the spurious products and competitors brands by providing the customers a variety of brand in the same category. This will prevent the customers from displacement 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 compa ny is dealing with increase in input and operation costs. Reducing the price of the products will accrue 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 closely track 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 requires 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 organization so-and-sonot 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 round-eyed 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 diffic ult to retain the customers. So it is risky to go head on head with the competitors with revenue generating brands. Proliferation of brand will increase the volume growth and profit margin.STRATEGY executionHUL will not require any culture or geomorphological 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 grade the strong performing and revenue generating brands from the non-performing brands. It is important to de stipulationine brand relevancy 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 interrogation 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 p erforming monitoring system to analyze the performance of brands before and after the introduction of new brand.