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ICI Paints

Introduction
ICI Paints Business
ICI is the world’s largest manufacturer of the paints and
industrial coatings. ICI paints is headquartered in Berkshire,
UK and operates 55 manufacturing sites in 25 countries. In
this sector its main strength are in

 Decorative paints
 Industrial paints
 Refinish paints for vehicles.

Its main customer industries are housing and construction


automotive refinish, can manufacturing, commercial and
industrial maintenance.

There is an emphasis on customer service,


innovative technology and strong branding with familiar
names as Dulux, Glidden, Maxilite and Paintex.

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ICI Paints Business Lahore


In 1965, ICI UK acquired a 50% interest in the paints
company named as “Fullers Paints Pakistan Ltd” situated at
Ferozepur Road, Lahore. Its name was changed to Paintex
limited and it was converted into a public limited company in
1973. the capacity of the plant was upgraded and enhanced
in 1981 and since then the business has proceeded
progressively to consolidate the market share in the major
segments of decorative paints. Industrial and automotive
paints market. ICI paints business Pakistan has become an
undisputed leader in the decorative motor and refinish
segments of Pakistan’s paint market.

With production of 14milion litres, ICI Pakistan touches the


lives of painters, architects, paints retailers and home
owners with color throughout the country. ICI’s Dulux,
Glidden, Maxilite and paintex brands have become as much
a part of painter’s vocabulary as color choice, quality, variety
and durability are the criteria for the selection of the paints
by the end-users.

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ICI Paints Brands In Pakistan


Dulux Weather Shield (Acrylic Based). (Decorative)
Dulux water repellent (D)
Dulux matt enamel , (D)
Dulux Gloss (Industrial)
Dulux Pentalite (D)
Dulux Pentalite Natural Whites (D)
Paintex Plus Emulsion. (D)
Glidden Higloss (I)
Glidden Ultrahide (D)
Glidden Ultratex (D)
Maxilite (D)
Dulux Pearl Glo Matt Finish Enamel (I)
Dulux once (D)
Dulux Super Gloss Enamel (I)
Dulux Aluminium Paint Dual Pack (I)
Dulux Synthetic Clear Varnish (D)

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Paints Production Process

Paint contains three main classes of material:


1) A resin or mixture of resins, which forms the paint film.
This is known as the binder and on its own gives a clear film.
The type of resin used can be varied to enable the paint to
have whatever final properties are required.

2) Pigments to give colour to the paint film and also to


enable the coat of paint to hide what is underneath.

3) Solvents to dissolve or suspend the binder and give the


paint the correct consistency (viscosity) for easy application.
They must also evaporate after application to allow the paint
to dry.

A mixture of resin and solvent is called the “vehicle” for the


pigment. Most paints also contain small quantities of various
additives e.g. driers to speed up the drying process,
substances to adjust pH of the paint, etc.

This section describes the way the paint chemist blends the
“vehicle” and pigment together to make paint.

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Pigments are supplied industry in the form of dry powders.


These consist of “primary particles” which are sized to give
the best results in paint films. For example, white pigments
(Titanium dioxide TiO2) scatters light most efficiently
(whiteness and opacity) when the particle size is 0.22
microns. Some pigments are much smaller, some larger.
The small primary particles of pigment clump together when
the powder is dried and stored to form relatively large
clumps (A ‘clump’ of Titanium oxide may contain 5,000,000
primary particles)

These clumps are known as aggregates and it is in this


aggregated form that the pigments are supplied. To produce
good paints, it is necessary that the pigment should be at its
primary particle size when mixed with the vehicle. Otherwise
most of the expensive coloured pigment could not be used
efficiently, and the dry film will not be smooth, glossy,
opaque or have the correct colour.

It is therefore necessary to break down the aggregates of


pigment particles in the presence of the vehicle and to
prevent them from re-aggregating. For this reason, it is not
normally possible simply to stir the pigment into the vehicle:
rather, work has to be done on the mixture in order to break
down the aggregates and ensure that the resin coats the

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small particle surfaces. This process is known as “pigment
dispersion”, and the following processes must occur:
1) “Wetting” of the pigment surface by the vehicle.

2) De-aggregation of the pigment aggregates to small


primary particles.

3) “Stabilisation” of these small particles by the resin to


prevent re-aggregation.

A resin which is to perform well as a pigment dispersant


must therefore be composed of molecules consisting of two
parts:

1) An “anchor group”, which wets the pigment surface and


becomes associated with it.

2) A “stabilising chain” which is soluble in the solvent used


and therefore stretches out into it.

As mentioned previously, pigment particle surfaces contain


areas of electrical charge. The “anchor group” in a
dispersing resin is chosen for its ability to be attracted to
some of these charged areas. In this way, during dispersion,
the original surface of the aggregate, and the new surfaces

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exposed during grinding are covered by molecules of the
dispersing resin. This process is known as “wetting”.

Many different types of dispersion machinery have been


developed but they all use one or both of two mechanisms to
break up aggregates.
The machinery falls into two groups:

1) Those that use “dispersion media”, usually ceramic balls 9


to 12mm in diameter or glass beads 1 to 3mm (like marbles)
in diameter. Dispersion occurs where the balls touch each
other by a combination of impact and shear depending on
the conditions.

2) Those that do not use media - these disperse entirely by


shear.

Pigments are always dispersed at the highest concentration


possible for technical and economic reasons. Finished paints
contain only enough pigment to give the desired properties
for the same reasons.
Millbases are therefore converted to paint by mixing with
film forming resins, with solvents and any necessary
additives. This must be done carefully, mixing the
ingredients in the right order to get the best results.

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Obviously the resins and solvents must be compatible but
problems may arise if components with large differences in
resin solids, viscosity or temperature are mixed - “pigment
shock” - reaggregation of the pigment particles may occur.
For these reasons pigment dispension are usually “second
staged” when dispersion is complete - they are diluted with
resin and solvent to give a recipe which is still more
concentrated than the final paint but much easier to use
than the dispersion recipe. Waterborne millbases and paints
must have the pH adjusted at this stage.

To be converted to paint, dry pigment powder must be


dispersed in resin solution. During this process, aggregates
must be broken up into primary pigment particles, the
surfaces of which must be coated with resin. This resin
stabilises the pigment dispersion and prevents the particles
from reaggregating.
A lot of mechanical energy is needed to carry out this
process. Various machines (or “mills) are used.

After pigment dispersion, the millbase is mixed with further


resin, solvent and additives to give the final paint
composition.

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ICI Vision
The company vision is to compete in the industry by
emphasizing on customer needs and to build and promote
a culture of continuous improvement .

Mission Statement
“The ICI paints team intends to remain market leader in
the paints business. We wish to be recognized for offering
the best products and excellent customer service. We will
run a high quality, profitability and growth oriented
business in an exciting and safe environment.

Goals
1. Total adherence to SHE.
2. Dedicated involvement of every employee at all
levels of the organization to the total quality
management concepts.
3. a complete focus or prevention of non
conformance through cohesive team work.
4. Constant emphasis on “doing it right the first time
and every time”.
5. Improving the quality of every thing we do, to the
complete satisfaction of our internal and external
customers.

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Objectives
 To be No. 1 in all its 6 Pakistani businesses

 To achieve turnover of 20% in 2002 from over all


business portfolio.

 To reduce its industrial wastes by 50% till 2004.

 To contribute at least 25% in overall ICI Pakistan profits.

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Situation Analysis
INTERNAL ANALYSIS
SWOT Analysis
After studying the ICI paints strategies, and its
performance we have identified some strengths, weakness
opportunities and threats.

Strengths
1. ICI’s Positive Image
ICI has positive image and reputation in the minds of
customers so far them it’s a great strength because
its helps in the sale of their products.
2. Financial Strength Of The Business
The paints business is financially very strong as
mentioned by present annual report.
3. Established Nation- Wide Infra-Structure
The ICI paints business has established nation-
wide infrastructure. It has network of dealers
in all over the country, which will help in the
sale of company’s products.
4. Committed and enthusiastic staff
5. Up To Date Technology
ICI paints has up to date technology in its
production. ICI paints Pakistan claim that they offer 6134

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colors to the customers out of which customer can
demand any color and then they will make that color for
customer. For that they have latest machinery in which
they just give name of the colour that customer want and
then machinery gave them the formula which will produce
that particular color a then they will produce that color for
the customer.

Weaknesses

1. No Distribution Network
The major weakness of ICI paints business is that they
don’t have their own distribution network. They just have
dealers in different cities which carry their products and
then retailers have to use their own means to get paint
from those dealers and then make it available for sale for
the customer.

Opportunities
1. Increase Quality Awareness Among The
Customers
One of the greatest opportunity for ICI paints is that now a
days people are very much conscious about the quality of
the paints and they are aware of the fact that good quality
paint is long lasting. As ICI is producing high quality paints

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so it will increase the demand of company’s so it is a great
opportunity for ICI paints.

2. Increasing Paints Markets


Another opportunity for ICI is that as now a days in
Afghanistan re-construction of the country is taking place
so there will be great demand for paints and ICI paints can
reap this opportunity by exporting paints products to
Afghanistan and can earn great profits.

Threats
1. Decrease in Construction Activity
Due to decrease in the construction activity in the country
the company’s sales are decreasing as compared to
previous few years.

2. Increased Competition From Cheap Paints


Producers
Cheap paints producers capture almost 60% of the
market share of paints so it’s a great threat for ICI paints
because other companies will share the market as well.

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Performance Analysis
The paints business continued its focus on operating
excellence and productivity improvement and in this regard
capital expenditure of Rs. 27 million was undertaken to
upgrade production facilities and to achieve further
operational improvements. Consequently the business was
able to enhance production capacity by 1.5 million litres.
Despite pf recessionary condition, which are prevailing in the
market due to slow trading environment the ICI decorative
paints, was able to increase its market share by 1% through
its strong advertising and promotional campaigns and
increasing effective after sale service.
The industrial business continued to deliver a robust
performance driven by a penetration of new market
segments within the general industry sector. Consequently
despite a decline in the traditional Automobile and projects
segment the industrial business was able to increase its
sales by 10% over last year.
The market for the Refinish business however remained
static with no increase in sales volumes over last year.

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Financial Analysis
Due to very significant decline in the size of the decorative
market the ICI paints business registered an overall
reduction in sales volume of 4% compared to the previous
year. However gross margin increased by 6% through
improvemeNt in product mix and efficiencies in
procurements and manufacturing, which coupled with
stringent control over fixed costs resulted in an operating
profit improvements of 14.4% over last year to Rs. 262.9
million.

99 2000
Sales Rs. 3090.09M 2966.4864 4%
Gross profit Rs. 500.593114 530.6286 6%
Operating profit Rs. 230.22M 262.9 14.4%

Ratios
Gross Profit Margin
Gross Profit Margin = gross profit / net sales
1999 2000
16.2% 17.8%

The gross profit margin has increased from 16.2% to 17.8%


despite of in sales. This shows that the firm has controlled
its cost of sales.

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Operating Profit Margin

1999 2000
7.7% 8.86%
The operating profit margin has also increased as compared
to previous year.

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External Analysis
5 FORCES ANALYSIS

Threat of new entrants


ICI is enjoying No.1 position in paints industry they are
having 25% of total market share. They do not consider now
entrant as threat for themselves.

Because of unstable economy and decrease in trend of


construction, there is not much attraction in paints industry
for the new entrants.

Threat of existing rivalry


ICI has to compete with a large number of paint makers. But
the threat is from two major competitors.

Those competitors are Master Paints and Berger Paints.


Berger paints is having market share of 10% - 12% of the
paints market. Their hot selling brand is Berger Robbialac.

Other major competitor is Master Paints. Master Paints is


having market share of about 2% to 3%. All other
competitors are having a very small portion of market and
are not considered as threat for ICI paint.

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Threat of substitutes
There are not many substitutes available for the paints. For
past few years there is an increasing trend of use of
designed tiles and coloured bricks.

But ICI do not think that they are under any threat as far as
substitutes are concerned.

Bargaining power of buyers


Bargaining power of buyer is a considerable threat for ICI
paints. Because many competing brands are available in the
market. It is necessary for ICI to satisfy their customers as
far as price and quality is concerned. Otherwise the
customers will switch to other brands.

Bargaining power of suppliers


There are two major suppliers as far as ICI paints is
concerned.

If any of the suppliers offer the terms and conditions that do


not suit ICI, they would switch to the other supplier. So ICI
people think that supplier do not have much bargaining
power.

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ICI Paints

PEST Analysis

Political and legal analysis


Politics and govt. rules and regulations have a critical role in
fostering the success or (creating problems for any
organization.

Similarly in case of ICI political instability in recent years has


affected the sales and growth rate immensely.
Govt has imposed 15% sales tax and heavy duties on
imports and raw materials.

As ICI paints import 75% of its raw materials so import duties


have increased the production cost thus decreasing the
profit margin.

Economic analysis
Recessionary conditions continued to prevail as the
government pressed on with its efforts to document the
economy.
The depressed construction industry and the slow trading
industry and the slow trading environment resulted in an
overall market shrinkage in the decorative business by 10%.
Against this back drop the business was however able to
increase its market share by 1% through its strong

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advertising and promotional campaigns and increasingly
effective after sale service. The industrial business continued
to deliver a robust performance driven by penetration of new
market segments within the general industry sector.

Consequently despite a decline in the traditional Automobile


and projects segment the industrial business was also able
to increase its sales by 10% over last year.

The market for the refinish business however remained static


with no increase in sales volumes over last year.
Although decorative business increased market share by 1%
and industrial sales also increased because of the very
significant decline in the size of the decorative market, the
points business registered or overall reduction in sales
volume of 4% compared to the previous year.

However gross margin increased by 6% through


improvement in product mix and efficiencies in procurement
and manufacturing, which coupled with stringent control
over fixed costs resulted in as operating profit improvement
of 14.4% over last year to Rs. 262.9 million.

Societal Analysis
In recent years ICI has shown a lot of concern for society.
Organization is very conscious about safety and health of its

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employees. The business successfully completed its fourth
year without any reportable injury.

At present, ICI is the leader in following SH&E guidelines. The


company wants to maintain its leadership role in the
protection of the environment.

Rs. 27 million was undertaken not only to upgrade


production facilities and achieve further operational
improvements but also to be more environment friendly by
installing plants and machinery that do not cause any
damage to environment.

Technological Analysis
ICI paints have got the latest technology with them as
compared to their competitors. Their production process is
highly automated. They can offer any colour as demanded
by the customer. Customers can ask for any of 6134 colours.

For every shade of colour there is a specific formula


that states about composition of constituents and their
proposition.

High level of automation is one of the critical success factors


of ICI that differentiates then from their competitors and
serves as a source of competitive advantage.

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Competitor Analysis
ICI is the largest manufacture of paints in Pakistan. There are
hundreds of competitors competing with ICI. But their market
share is very small as compared to ICI. Mainly there are only
2 major competitors i.e Burger paints and Master paints.

Company Market share


ICI paints 25%
Berger paints 12%
Master paints 3%
Silky paints 1%

All other companies are having market share less than 1%.
Let us have a look at hot selling brands of above mentioned
paint manufacturers.

Company Market share


ICI paints Dulux
Berger paints Burger Robbialac
Master paints Master
Silky paints Silky

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Problem Statement
Due to depression in construction industry and the slow
trading environment in Pakistan the ICI Paints has faced
tremendous market shrinkage.

Because of this very significant decline in the size of


decorative market the paints business registered as overall
reduction in volume by 4% compared to the previous year.

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Existing Strategies

Corporate Level Strategies


HORIZONTAL DIVERSIFICATION
ICI Pakistan is a vast group which is involved in several
businesses so it is following the strategy of Horizontal
diversification as it is involved in unrelated industries.

A brief description of its different business is as under.

Pure Terephthelic Acid


At port Qasim near Karachi, a plant for the manufacture of
pure terephthelic acid, an essential raw material for the
polyester staple fiber and PET bottle polymer industries is
constructed. It has capacity of 400,000 tons per annum, thus
making Pakistan self sufficient in PTA and also providing a
small surplus for export.

PTA plant has a major contribution in the sales and profits of


ICI group. The investment of $450 million in the PTA plant
would move ICI Pakistan becoming the first billion dollar
company on the basis of assets.

ICI Soda Ash

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The Soda Ash plant of ICI is situated in Khewra, district
Jhelum. Soda Ash is an industrial raw material used in the
manufacturing of glass, glass products, paper and chemicals.
It is also used in the formation of soaps and detergents. The
plant was established in 1994 with the capacity of 18000 tpa
[tons per annum].

Currently it is operating at the capacity of 300,000 tpa. ICI


Soda Ash business supplies over 80% of the total of country.

ICI Polyester Staple Fiber Business


ICI Pakistan’s polyester staple fiber plant is situated
Sheikhopura, near Lahore. It was established in 1982 at a
cost Rs. 630 million and at that time, capacity of the plant
was 12,000 tpa. Capacity was expanded to 19000 tpa in
1989 with the expenditure of about Rs. 450 million. Now a
days, this plant is operating at 28,000 tpa.

Currently, ICI is the second largest PSF producing company


after Dewan Salman Fibers limited, who has a capacity of
108,000 tpa.

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Agrochemicals And Seeds Business


ICI Pakistan Agrochemical division was expanded in 1984
when the company entered into direct distribution. Since
then it has become the fastest growing business of the
company. Operating in the competitive market, ICI
agrochemicals in Pakistan has been able to diversify and
increase its products range to meet the needs of the
country’s developing agriculture.

Company hopes that the seeds business will continue to


maintain its dominance in the agro and seeds business.

Pharmaceuticals & Animals Health


ICI Pakistan pharmaceuticals business markets prescription
drugs with a strong portfolio of innovative products from
Zeneca (formerly ICI pharmaceuticals) and Syntax. These
products have a leading position in the treatment of
cardiovascular diseases, breast cancer, prostate cancer as
well as anesthetics. Recently, the product range has been
extended to include an antibiotic.

As the ICI Pakistan got a novel technology in the


pharmaceutical business it earns a lot for the company’s
total earnings.

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ICI Consumer Products


ICI Pakistan entered in the consumer products business in
1993 offering a range of domestic insecticides under the
brand name of Zapit for the control of all types of crawling
and flying insects normally found in the house.

By deepening the product range, active support of


advertisement and promotional programs, ICI consumer
products business will be able to mature into a big profit
center for ICI Pakistan limited in the next few years. Through
increasing brand loyalty and share consolidation.

ICI Chemicals
1) Specialty Chemicals
ICI’s specialty chemicals plant was commissioned at Karachi
in 1968 with the capacity of 1500 MT per annum. It was
primarily designed to manufacture a range of Textile
auxiliaries. Today, with the capacity of 3600 metric ton per
annum, it manufactures and formulates over 40 products
used in industrial processing that call for specialty chemicals
applications.

II) General Chemicals

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The general chemicals products offered by ICI chemicals are
used for variety of applications by nearly all industries of
Pakistan including fertilizers, cement, polyester oil and gas,
plastic and paints. Sales of these products are packed by a
technical laboratory services for which sales staff is specially
trained.

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Business Level Strategies


Differentiation
ICI paints division operates in three areas:

1. Decorative paints
2. Industrial paints
3. Refinished goods

The most important and successful area comprises of


decorative paints.
The two hottest selling brands of ICI paints are

 Dulux
 Glidden

Their major competitors are:

 Burger paints
 Master paints

Burger Paints
The share of Berger paints in paint market is 12%. Their hot
selling brand is Berger Robbialac.

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Master Paints
The share of master paints in paint market is 3%.
Their hot selling brand is “Master”

ICI Paints
ICI are market leaders in paints business. Their market share
in paints market is 25%.

As discussed above their hot selling brand are Dulux paints


and Glidden paints. ICI paints are relatively more expensive
than those of their competitors.
A unique feature of ICI paints is they offer 6134 colours to
their customers. So the customers have got more choice.
They can demand any of those 6134 colours. This facility is
not available with any other paints market. They have got
the automation formula.

So they just put the material according to the formula and


the desired colour is manufactured. For this unique feature
they change extra cost.

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Operations Level Strategy


Total quality management (TQM)
TQM is what ICI paints follow in each and every operation
they perform. They want quality in every thing they do. Total
quality management is one of the basic objective of the
company and they do not compromise on quality at any cost.

To ensure TQM ICI offers various training programs to its


employees.

Training package is offered at all levels of employees.


Training courses are offered 3-4 times per year.
LUMS, Pearl Continental Hotel Lahore, Avari hotel Karachi are
the Locations where those courses are often organized.

Performance of every employee is monitored every month.


ICI is very concerned about efficiency and effectiveness of
employees. They discourage wrong deliveries and late
deliveries.

The focus on improving productivity has continued during


the year achieving a further gain of 20% in man power
productivity.

The company continues to remain committed to training and


development of its staff. As discussed earlier that previously

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training courses were offered 3 – 4 times per year. But
recently new initiatives taken in this area resulted in a total
of 28 courses being offered inhouse accessed by 879
managers during the year. On average each management
staff in the company was provided approximately 5 days of
training during the year. Special training of high potential
staff was also stepped up and 7 staff was provided with
specialized high quality training opportunities abroad.

They emphasize on customer satisfaction. Customer can


register their complaints regarding wrong delivery and late
delivery of products. They put their best effort to minimize
the number of complaints and increase the number of
satisfied customers.

ICI is ISO 9001 certified company that is proof of their


continuous efforts towards total quality management.

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Societal Level Strategies


ICI is very much concerned with the betterment of society.

They are involved in social welfare and community work


programs.

At ICI, hospital Khewara they support eye clinic programmes


with assistance of the doctors of Lyton Rehmatulla
Benevolent Trust (LRBT).

They are also very conscious about environment friendly


operations.

ISO 14001 certifications proves ICI to be environment


friendly organization. They try their best to ensure that their
operations do not cause any harm to the environment and
society.

They also are for safety and health of their employees.


Employees are trained that how can they avoid accident.
They make it sure that employees are provided with safe
working conditions.

In case of any accident or injury to any employee, they have


got all needed facilities to handle the situation and minimize
as well as financial loss.

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There are doctors, ambulances, fire extinguishes etc to cope


up with any accidents.

Carrying lighters and smoking in plant is prohibited. Concern


for safety, health and environment is their main objective.
The intense focus maintained by the company on its safety
performance resulted in the continued maintenance of its
excellent injury prevention second and no (RIA)/ reportable
injury accident occurred at any of its operating sites.

During the year paints business completed 21 million man-


hours without any RIA. Based on it’s excellent SH&E
performance the company received considerable recognition
with ICI group worldwide.

ICI Pakistan was declared the winner of chief executive’s SHE


leadership award in product steward ship in the paints, Soda
Ash, agrochemicals and pharmaceuticals business received
recognition for sustained safety, health and environment
excellence.

With a view to maintain its leadership role in the protection


of the environment, the company becomes a voluntary
participant in the Pakistan Environment Protection Agency’s
“Self monitoring” program (SMART) strict operating

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standards and monitoring of all its effluent treatment plants,
resulted in an assurance that the company has met all the
national environmental quality standards (NEQS) applicable
to its manufacturing activities.

Product Development
ICI paints Pakistan has a well-established R & D department
in Lahore at their paints division. There all people are
continuously making tests to develop new products and
that’s the main reason why the company is able to launch its
new products frequently into the market. The top
management has allocated good budgets for this R&D
department. ICI Paints has qualified and competent people in
the field of R&D activity. After about 2-3 months they launch
their new brands in the markets, which will help them to
maintain their competitiveness. Recently they have launched
following brands.

1. ICI Glidden Hi glass


2. Dulux water repellent
3. Dulux pearl G10 Matt finished Enamel
4. ICI Glidden ultra hide

Demand Management

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ICI paints mange its demand by first identifying its customer
needs through market research and then introduce its
products to customers. The media they use for
advertisement are TV, sign boards etc.

Order Fulfillment
ICI paints uses 2 approaches for its order fulfillment process.
For decorative business they have customized brands and
they send their brands to dealers then deliver it to retailers.

While for industrial business they first receive demand for


the paint to be delivered and then they make paint for them
and then deliver to them and for that they charge high price.

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Alternative Strategies
There are several strategic options for ICI paints Pakistan.
They can reduce their competition, and market share by
using any of the following strategies.
These strategies are:

1. Forward integration
ICI at the moment is depending on dealers for the sale of
their products. These dealers store company’s products,
retailers have to get ICI products from these dealers & then
offer customers for sale.

If ICI instead of depending on dealers use their own on


distribution to supply products to retailers then they can
increase the sales of their products by giving products to
every possible retailers and in this way they can get
acceptance of every retailer to get their product and offer it
to customer for sale.

2. Backward integration
Presently ICI Pakistan is purchasing its raw material from
both local as well as foreign suppliers. About 75% material is
purchased from foreign countries and 25% is purchased
locally.

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As such as huge quantity of raw material is purchased from
foreign countries that’s why change in government import
duties have a great impact on prices of raw material and
now a days government is continuously increasing its import
duties so it rents in reverse in prices of raw material which
also increase the prices of finished products.

Therefore if ICI acquires local suppliers for start making its


own raw material then it can save itself from such
fluctuations in prices, which could result in the stabilization
of prices, and customers can purchase the products at low
prices.

3. Acquisition
At present ICI is the largest manufacturer of paints in
Pakistan. Its market share is 25%. There are several
companies in paints business having a small portion of over
all market.

ICI can increase its market share by acquiring a few


companies like master paints, silky paints etc.

As a result of this acquisition ICI can increase its market


share up to 30%.

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ICI Paints

4. Combination
Business strategy of ICI includes differentiation and quick
response. Recently ICI has introduced master palette that
offers plentitude of 6134 colours to match every
environment and mood. ICI offers premium quality product
at premium prices. Although ICI offers brands like Glidden,
Paintex and Maxilite, which are quite economical yet they
are comparatively expensive as far as brands of, competitors
are concerned.

As ICI brands are of higher price so other companies get


benefit and capture the lower end of the market.

If ICI starts offering cheaper products it can increase not only


its market share but also its sales volume.

Combination of differentiation and cost leadership can be


very fruitful for the organization.

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ICI Paints

Recommended Strategies

Backward Integration
Seeking ownership or increasing control over firm suppliers
can be very fruitful strategy.

ICI paints imports 75% of raw material from its foreign


suppliers only 25% of raw material is purchased from local
suppliers. In past few years govt. has increased import
duties. As a result cost of production is increased.

If ICI gains control over their local suppliers by ownership


and take charge of their operation then a significant cost
cutting is possible. After getting ownership if ICI start
manufacturing all or most of the required raw material
locally then they can significantly reduce the volume of
import thus avoiding the heavy import duties imposed by the
govt. It will result in decrease in cost of product and ICI
would be able to offer its product at a relatively cheaper
price.

Acquisition
Acquisition or horizontal integration refers to seeking
ownership or increasing the control over firm’s competitors.

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ICI Paints
As mentioned above; there are several competitors of ICI.
But most of them are quite smaller companies having a very
small portion of market.
If ICI acquires a few of those competitors, it would be very
beneficial. It would not only reduce the no of competitors but
there will be a notable increase in market share as well.

By getting ownership over some of its competitors ICI would


be able to follow a combination of business strategies. It
could follow cost leadership by offering brands of those
acquired companies and at the same time it could follow
differentiation and quick response strategy when offering its
own brands like Dulux.

Following such sort of strategy will not only result in increase


in sales volume but also in profit margin and ICI can capture
both the upper end market and lower end market at the
same time.

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ICI Paints

Implementation Plan
For successful implementation of the strategies that we
have recommended, ICI should emphasize on the following
main points to implement those strategies.

Budget
For above 2 strategies, which we have recommended there,
should be separate budget allocated for the implementation
of the recommended strategies.

In this context the finance department personnel should


work to develop budget for these alternative and then the
top management should approve that budget so that the
actual work can be executed. Because without top
management’s approval the whole task can’t be
implemented.

Human Resources
ICI should believe in their people’s potential and ability. They
should invest in them and consider them as most valuable
assets. Because business goals can be best realized through
people.

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ICI Paints
Before bringing any change employees should be
communicated about why the change is necessarily and
what are the objectives and goals that company want to
achieve through those changes. Employees should be given
training so that they can better adapt to those changes.
Employees are vital to the profitability of the company
because they directly contribute to the success of the
organization. Human resource department should strive to
ensure that a professional and caring environment continues
to be fostered so that the creative energies of staff are
released and fully utilized while developing their potential

Sales
As the company will undergo backward integration and
combination strategies therefore it should increase its sale
by exploring new geographical areas and markets which will
result in increase in profitability for the company and the
company will have funds for the new strategies to implement

Production
For selling more definitely the company should also increase
its production so that the product should be readily available
for sale.

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