SWOT ANALYSIS OF ASIAN PAINTS

SWOT analysis is a basic, straightforward model that provides direction and serves
as a
basis for the development of marketing plans. It accomplishes this by assessing an

organizations strengths (what an organization can do) and weaknesses (what an

organization cannot do) in addition to opportunities (potential favorable
conditions for an
organization) and threats (potential unfavorable conditions for an organization).
SWOT
analysis is an important step in planning and its value is often underestimated
despite the
simplicity in creation. The role of SWOT analysis is to take the information from
the
environmental analysis and separate it into internal issues (strengths and
weaknesses) and
external issues (opportunities and threats).

SWOT analysis is done for a company, to find out its overall Strengths,
Weaknesses,
Threats and opportunities leading to gauging the competitive potential of the

company.

The SWOT Analysis enables a company to recognize its market standing and adopt

strategies accordingly. Here SWOT analysis of Asian Paints is made to understand

the
positioning of the company better.
2.1. Strengths:
1.
Market leaders with 35% market share in the organized sector, the closest
competitor does not have even half of AP’s share;
2.

Comprehensive nation wide coverage of the market – urban, semi-urban and

rural areas. They have quite a number of brands, covering all segments and filling
all gaps. For example, they have brands in different price slots like Utsav for
rural lower-end markets and Apcolite for high end-markets;

3.
AP’s logo ‘Gattu’, an impish boy with the paint tin and brush, is most
popular and easily recognized;
4.
Widest product range in terms of products, shades, pack sizes - 40 different
decoratives, some in 150 shades, 8 different pack sizes;
5.
Unlike its competitors who concentrate only in urban areas, AP is found
everywhere. It has a country wide distribution
6.

A network of 13,000 dealers spread all over the country. The nearest
competitor has less than 8,000. For this, they have large network of regional
offices and company depots and sales personnel to service the nationwide dealer
network;

7.
Strong in inventory control. APs average inventory level is 28 days sales
against 51 days for the industry. AP has 45% edge in inventory carrying costs;
8.
The pricing strategy is oriented to middle/lower end consumers;
9.

AP is quite strong in production-marketing coordination. Their policy of

offering tailor-made products to suit customer need has resulted in an ever
growing product range;

10.
In-house production, no outsourcing, high reliability in suppliers, superior
in quality assurance;
11.

Leader in profit and operating margins, ROI of AP is 40% while ROI of the rest of the industry is 22%, Net worth of
Rs 204 crores against Rs 58 crores of Goodlass Nerolac and Rs 41 crores of Berger.

12.
High caliber human resource, employs maximum number of MBAs, as a proportion
to total number of employees;
13.

Corporate reputation has been a major strength for AP. The image is that of
a successful and well-managed company. They have won many accolades and awards.
For example, 1995 Corporate Excellence Award from HBSA and ET, IDBI study rated AP
as one of India’s most excellent companies, another study rated AP among top 5
paint manufacturers in the world. They have an enviable track record in breaking
the position of MNCs in the Indian paint industry.

2.2. Weaknesses:
1.
In industrial paints, AP has only a 15% market share. It is far behind the

leader Goodlass Nerolac, which has a market share of 43%. Since this is going to be the major growth segment in the future, a lag
in this segment will end up as a major weakness;

2.
Widening product mix puts strain on production distribution, accounting and
administration;
3.
Innovation in developing new products is adequate;
4.
AP has a major weakness on the technology front in industrial paints. Most

paint firms have technology tie-ups with manufacturers abroad. For example,
Goodlass Nerolac has a tie-up with Kansai paints, which has provided the company
with Cathodic Electro Deposition (CED) technology. Since Kansai is the supplier to
Suzuki, Japan, Goodlass with its Kansai connection finds it easy to tap Maruti in
India. AP has not been able to make any significant advances either with Maruti or
the auto segment in general. Berger has a technical tie up wuth Herbets, Germany,
for automotive paints, Valspar Corp, USA for heavy-duty coatings and Teodur NV,
Holland for powder coatings;

5.
Ever expanding product mix throws some strain on inventory management;
6.
Seasonal demand and hence in off seasons it can lead to cash flow problems;
7.
No tie up with foreign manufactures. Through it has units in several
countries
2.3. Opportunities:
1.
Acquiring/ increasing market share in Industrial paint sector.
2.
Developing market in automobile industry, which accounts for 50% of
Industrial paint market.
3.

AP has always encashed on opportunities that have come its way. It has
maintained a product profile keeping the market trends in picture. It shifted to a
predominance in industrial paints than industrial paints than in decorative paints
as was evident from the production figures of 1995-96;

4.
The automobile industry accounted for 50% of the industrial paint market.
2.4. Threats:
1.
Domination of few foreign companies;
2.

Since both Goodlass Nerolac (43%) and Berger’s (14%) have a higher market share than AP’s (14%), it is possible
that in the future, they may capture the entire industrial paint market;

3.
Competitors have gone in for hi-tech with instacolour spot mixing. For
example, J&N’s instacolour offers 626 shades;
4.
Automated paint blending in retail points already there. ICI’s Touch Colour
and Berger’s Colour Bank are indicative of this;
5.
Competiton is catching up fast, hi-tech facilities gives abundant choices.
The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far
outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are fundamental
and

weaknesses and threats are transitory. Any investment idea can do well only when

you have three essential ingredients: entrepreneurship (the ability to take

risks),
innovative approach (in product lines and marketing) and values (of
quality/ethics).
Benjamin Franklin discovered electricity, but it was the man who
invented the meter that really made the money