International Marketing Assignment: Essel Propack Case Study Submitted to : Dr. Gautam Dutta Subject: International Marketing Management Indian Institute of Foreign Trade EPGDIB (VSAT) – 2014- 2015 Trimester – II (July – Submitted by Group 1 Name Roll No Sanjay Vaid 47 Puneet Diwan 39 Narendra Kumar 31 Komal Grovar 24
1. International Marketing Assignment: Essel Propack Case Study
Submitted to : Dr. Gautam Dutta Subject: International Marketing
Management Indian Institute of Foreign Trade EPGDIB (VSAT)
2014-2015 Trimester II (July October, 2014) Submitted by Group 1
Name Roll No Sanjay Vaid 47 Puneet Diwan 39 Narendra Kumar 31 Komal
Grovar 24 Anuj Abrol 10
2. ` Background About: Is the First Specialty Packing company
manufacturing Laminate and seamless or extruded plastic tubes.
Chairman: Subhash Chandra Goyal Current market share; 60% in India
and 33% globally. Sales revenue: 4.5 billion tubes per year. Sales
revenue: INR 1694 crores. Employees: 750 in India and 2200 globally
Presence in 12 countries. Production facilities 23 Sunday, May 10,
2015 Yahoo Case Analysis 2
3. ` Products EPL Divided into Tubes : Laminated tubes & co
extruded plastic tubes Specialty packaging. 3
4. ` Partial List of EPL Key customer 4
5. ` Essel Propack evolution 5 1984: Set up of manufacturing
facility in India for production of laminate tubes and laminates.
1993: Essel Propack takes its first step tow ards becoming a global
player by setting up its first overseas plant in Egypt. 1997:
Opening of a w holly ow ned subsidiary in Guangzhou, China. 1999:
Essel Propack set up their joint venture in Dresden, Germany. 2000:
Acquisition of Propack w orldw ide laminate tube business. 2002:
Entry into the US w ith a greenfield facility in Danville for
laminated tubes. 2004: Essel Propack acquired Arista Tubes, UK -
leading manufacturer of seamless plastic tubes in UK - now know n
as Essel Propack UK. 2005: Commercial operations began in Russia.
Essel Propack acquired another laminated tube manufacturing
company, Telcon Packaging in UK, now Essel Propack UK. In July
2005, Essel Propack commissioned one more manufacturing plant in
Nalagarh, India. 2006: With acquisition of Tacpro Inc., US and
Avalon Medical Services, Singapore, both manufacturers of catheters
and balloons Essel Propack entered the Medical Devices business.
Essel Propack set up a co-extruded plastic tubes plant in Poland
under the banner of Arista Tubes, UK w hich 2007: Large-scale
production of co-extruded plastic tubes began in Poland under the
brand name Arista Tubes. The second plant of Packaging India Pvt.
Ltd., located in Uttaranchal, for manufacturing 2008: Acquired
Medical Device companies CDT and Med Inc., both based in
Minneapolis 2009: Divested Medical Device business unit 2010:
Started a new green field plant in Tianjin city of North East
China. The facility is located w ithin customer premises.
6. ` Questions for analysis of the case study What are the
reasons that led Essel Propack Limited to enter international
markets? Find out the key reasons for the success of EPL in
international markets. Identify the benefits and risks for EPL in
operating in a niche market segment of laminated tubes. Suggest
measures to leverage its strengths and manage the risks identified
by you. In view of the intensifying competition among laminated
tube manufacturers on one hand and rise in customers negotiating
power on the other hand, how should EPL tackle these marketing
challenges so as to achieve its goal of gaining 50% of worlds
market share in laminated tubes in the next few years ? Test Essel
Propack towards its ability for global market participation. 6
7. ` What are the reasons that led Essel Propack Limited to
enter international markets? Profit and growth goals Potential of
International Market. Managerial urge Technology competence Foreign
market opportunities Economies of scale. Lower cost. Higher
negotiation power on Sourcing. Risk Mitigation Spread R&D cost.
Greater purchasing power among people of the world. 7 Competitive
pressure Proximity to international customer. Success in Domestic
market and best practices and competencies acquired. Leverage
Competitive advantage. Proactive Reason : Reactive Reason:
8. ` Find out the key reasons for the success of EPL in
international markets. Large scale gave them opportunity to build
center of excellence. The Internalization strategy of Essel Propack
is clearly the outcome of an aggressive acquisition led plan backed
by the finances of the Essel Group. This suggests that the
Internationalization process can be substantially accelerated with
readily available funding. Each market that EPL serves has a
manufacturing plant installed that serves the host country as well
as others that are its neighbors. In the Uppsala model Essel
Propack is at the 4th Stage where it has the capacity of producing
its products abroad. This has been the outcome of its market
knowledge gathered since 1984 or over a period of 25 odd years. The
clearly shows that Essel Propack has grown by incremental knowledge
about the markets it operates in. 8
9. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Benefits for EPL operating in niche market are : Sizing the
Potential for growth: The laminated tubes has been a niche segment
of the tube market characterized by high growth and high margins
Spread Risk considering global tube market size of 32 billion and
only 38% have been so far been converted into laminated tube market
being in this niche market has great potential. Spread R&D
Cost: by being in niche market EPL can spread its R&D across
the global markets. Economy of scale: EPL can take full advance by
reducing its production cost by specialization and standardization
in manufacturing process. EPL can take advantage of global sourcing
and negotiation power it get due to common component procured
though vendor. 9
10. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you. Risk
for EPL: Raw material price escalation and the lag effect in
passing these on to the customers. Single product dependency
Attracting and retaining talent in the context of the business
exigencies Currency volatility Economic downturn High debt equity
ratio 10
11. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Measures to leverage its strengths and manage the risk identified:
Cont . Raw material price escalation and the lag effect in passing
these on to the customers: - Proactively managing its pricing terms
to customers in order to minimize the lag in passing through the
raw material price increases. - Where possible, the Company should
established alternate sources and equivalent materials in order to
effectively manage the material cost 11
12. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Measures to leverage its strengths and manage the risk identified:
Cont . Single product dependency: - Oral care category still
accounts for large part of Companys business. Being an essential
consumer product and an item of daily use, tooth paste as a
category naturally dominates the Companys product range. However,
it also tends to have a stable demand in an adverse economic
environment. - All the same, the Company should rapidly develop
Product/customers in the cosmetics, food and pharma categories with
a view to maximizing value and tapping the benefits of a
diversified portfolio. - Technology, integrated manufacturing
process and innovation capability are other factors which further
strengthen its competitiveness. 12
13. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Diversification: Foraying into the Medical Devices Business: - With
the global medical devices market valued at EUR 144 billion and
growing at rate of 7 to 10 percent per annum, Essel Propack has
availed of the opportunity and forayed into medical devices
business. - The company plans to leverage its expertise in polymers
and polymer processing in this field. It expects that its medical
equipment business will evolve into major business line over the
next to three years. This business is expected to account for a 5
per cent growth in its revenue in 2006. After acquiring Tacpro Inc.
USA and Avalon Medical Services, Singapore, Essel Propack is
looking for acquisitions in the medical devices business in EU.
13
14. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Exploring New Business Model: Currently Essel Propack offers empty
packaging material to its clients. It now should plan to implement
novel delivery models, wherein the client would only focus on
product development, brand building and distribution and entrust
Essel Propack with entire responsibility of packaging process till
the finihed products are ready. 14
15. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Focus on the Plastic Tubes Market: - With the European plastic
tubes market estimated at 2.5 to 3 billion tubes (in terms of
Volume) and plastic tubes earning nearly 1.5 to 2 times more profit
than laminate tubes, Essel Propack is now focusing on the UK. It
looks forward to garnering a 20 per cent market share in the global
market by 2010, therby evolving into a leading manufacturer of
plastic tubes 15
16. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Attracting and retaining talent in the context of the business
exigencies: High demand for talent globally impacts people
turnover: - Company should address this to the best possible extent
by on going initiatives of career planning, competitive
remuneration, culture of empowerment, objective performance
management system and variable performance pay. - Annual employee
engagement survey further provides the frame-work for improving
employee morale and talent retention. 16
17. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Currency volatility: The global nature of operations exposes the
Company to multiple currencies; fluctuations in exchange rates
could affect the Companys performance. - Appropriate pass through
clauses have to be built into customer contracts in order to offset
the impact on material cost of exchange rate fluctuations. - The
Company should also have the policy of systematically hedging its
exposures using forward contracts. 17
18. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you. High
debt equity ratio: In a downturn, higher debt could increase
financial risk. - EPL should focus on reducing financial leverage
through higher capital productivity and improved cash generation. -
It should have in place system for regular review of funds flows
and a prudent financing policy aimed at optimal mix of short and
long term debt. - Measures to conserve cash should be actively
pursued. - Try and better operational performance from previous
years to help improve the debt service capacity and take steps to
improve this even further. 18
19. ` Identify the benefits and risks for EPL in operating in a
niche market segment of laminated tubes. Suggest measures to
leverage its strengths and manage the risks identified by you.
Economic downturn: This could impact your Companys markets,
suppliers, customers and finances leading to business slow down,
disruptions etc. - EPL products are linked to daily necessities of
consumers and should not be much impacted by the downturn. In fact,
consumption continues to be strong even in these times - However
EPL should be geared to constantly monitoring the emerging trends
in consumption and offering relevant solutions so as to stay ahead
of the curve. - The Company also is focused on containing costs and
improving efficiencies as a means to stay competitive. - Proactive
supplier and customer engagement is another way your Company seeks
to minimize risk to business continuity 19
20. ` In view of the intensifying competition among laminated
tube manufacturers on one hand and rise in customers negotiating
power on the other hand, how should EPL tackle these marketing
challenges so as to achieve its goal of gaining 50% of worlds
market share in laminated tubes in the next few years ? Increase
vault share from their existing top 10 global account and target to
get 50% plus of the spend on laminated tube manufacturing like
P&G, Uniliver etc by account planning and mapping. Leverage
from its existing establishes supply chain and distribution plus
economy of scale thus giving the cost advantage to acquire new
customer. Apply Market pull in developed market where quality
sensitivity is high and market push in emerging market by offering
discount etc where price sensitivity is high to penetrate in to new
accounts/customers. Adopt a short term, medium term and long term
strategy Short term market push by offering discount. Medium term
of market pull by brand awareness. Acquisition of regional player.
Focus on profitability by regularly monitoring project, contract
and provisioning for currency fluctuations. Cost Control: Company
should continued to focus on cash generation through cost
management and capital productivity improvement measures. Capital
expenditure is managed carefully through a rigorous evaluation of
profitability and risks and regular project review for delivery on
time and at budgeted cost. Large capital expenditure should be
further backed by long term contracts so as to minimize cash flow
risk to the business. Inventory and receivables should be closely
managed. Continue focus on R&D. Diversification: EPL should
plan to diversify in to Cosmetics, food and pharma categories
20
21. Weakness Threat Opportunity Strength SWOT Global Presence
& relationship large MNC. Market leadership internationally.
Technical Know how. Economic Growth. Development Center in India
and other target country. High Market demand. Test Essel Propack
towards its ability for global market participation ANALYSIS
Dependence on Oral Care Business. Single business model at present
Raw Material Price. Economics Uncertainty. Key Competitors.
Contn.
22. ` Test Essel Propack towards its ability for global market
participation 22
23. ` Thank you Source: Case study shared by IIFT - Strategy
Management Dr. K. Ranagrajan and research work over internet.