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Contents

Asian Paints Expansion in Middle East...........................................................1


Acquisition of Berger...................................................................................... 1
Product/Market Mix........................................................................................ 2
Organizational Structure and Organizational culture...............................3
Divestments..................................................................................................... 4
References.......................................................................................................... 5
Appendix.............................................................................................................. 6
Asian paints Subsidiaries.............................................................................. 6
Asian paints International Expansion Timing & Mode...........................6

Asian Paints Expansion in Middle East


The company classified different regions in three broad categories: growth markets,
leadership markets and turnaround markets. With an influx of foreign investments in
the Middle East (Egypt, UAE, Bahrain and Oman), construction has reached new
heights in terms of large-scale infrastructural and industrial projects. Hence this
region was identified as a Growth Market. It therefore adopted acquisition strategy
in this market.
Asian paints has a long history of operating internationally since 1960s. The pace of
expansion paced up after 1990s when Mr Dani came over. Asian Paints strategy was
to expand into the emerging markets as no single paint firm operated broadly in
these markets and as many of these operations were not properly coordinated and

organized.

Acquisition of Berger
Berger International Ltd. was one of the oldest firms in the paint and specialist
coating industry, tracing its history back to its founding in London in 1760. In the
1990s, it had operations in 11 countries, and was headquartered and listed in
Singapore.
Asian Paints (India) Ltd., the largest paint manufacturer in India, announced
plans to acquire a controlling 50.1% stake in Berger International Ltd.
(November, 2002), a Singapore-based coatings producer with operations in 11
countries in Asia, the Middle East and the Caribbean.
Asian Paints said the acquisition is largest outside India, and will expand its
operations to 23 countries. This acquisition provided entry into high-growth
markets in China and Southeast Asia.

Ashwin Dani, Asian Paints vice chairman and managing director, said the
purchase is "in line with our vision of becoming a leading player in
emerging markets."
Company knew that it would be able to recover the cost of acquisition without
any difficulty.

Product/Market Mix
Asian Paints said it sells more than 200,000 metric tons of paint annually in
domestic and export markets in Asia-Pacific, the Middle East and Africa.

Products offered in Middle East


Berger had strengths in protective, industrial and marine coatings, and offered
comprehensive range of products. Berger International manufactures a variety of
coatings, including protective, industrial and marine products.
Manufacturing & Distribution Strategies
Berger had manufacturing plants in Singapore, Bahrain, Malaysia, Thailand,
Malta, UAE, China, Myanmar, Toboda with total manufacturing capacity of 50,000
tons. It had three R&D laboratories developing products specific to regional
markets.
In Berger, APs strategy was to focus on shareholder value by improving supply
chain management in the subsidiaries. For increased plant efficiency and asset
productivity it planned to implement cost structures in Bergers operations
worldwide. It focussed on working capital management and introduced
information technology in areas where required. It planned to innovate and
develop new products for individual units of Berger International to boost top line
sales.
The company has thrived against foreign competitors by developing its local
assets, notably an extensive distribution network. Asian Paints brings substantial
advantages to these countries.

Customers
Its managers are used to dealing with the kind of marketing environment there
thousands of scattered retailers, illiterate consumers, and customers who want
only small quantities of paint that can then be diluted to save money. Asian
Paints knew that even after they develop a low-end paint product, the
competitors (multinationals) will still have a long way to go to catch up in
emerging markets. Asian Paints already knows how to speak the language of
these customers.

Organizational Structure and Organizational culture

After Berger and SCIB acquisition company faced serious issues of diversity. They
had to deal with new brands, new customers and new people. People were from
different backgrounds, cultures and languages. While trying to ensure
operational efficiency company made sure that it did not impose itself on people.
It was present in all five continents of the world, in 13 out of 24 time zones and
in 22 countries.
We were a multinational. We had to deal with new brands new people and new
customers, and most importantly, manage the complete integration of this new
organization, Our people came from different backgrounds, different cultures,
and different languages. How could we tackle the people issues?

Creation of shareholder wealth was paramount and delivering on the plans was
the way to achieve that. Managers spent the first six months visiting all of their
subsidiaries and getting this message across and talking about values and other
corporate issues. This was important because people need to connect and
belong
Employee Satisfaction Initiatives
They addressed the emotional issues. Reached out to people and convinced
them that the company is committed to growing the business and servicing the
customers. People should feel that they are adding value, but at the same time
they did not compromise on growth. The top line had to grow, costs had to come
down. Balance sheet had to improve. Inventory management was absolutely
critical.
To address these issues. Asian Paints held a Global Managers' conference in
February 2003, attended by senior managers and unit heads from 23 countries in
order to share ideas and cultivate a sense of belonging.

During the conference, they defined four guiding principles for business and
success: Responsibility, Entrepreneurship, Continuous improvement and
Trust. These four values determined their actions in all markets in which they
were leaders and others in which they aspired to be.
Knowledge Sharing and Team Building
Asian Paints also realized that lack of knowledge sharing was a critical issue
Berger, for example had had four CEOs during the six years prior to its
acquisition. Asian Paints implemented a knowledge-management and
information-sharing system, the starting point of which was collecting data about
the brands in every region and systematically registering all intellectual property
including logos, trademarks and designs. It also began benchmarking best
practices within member countries and companies.
The company formed Lead Technology Centers and Regional Technology Centers.
The latter were responsible for driving regional technology development, local
sourcing, manufacturing equipment and for reacting to needs. The Lead
Technology Centers were expected to provide technological expertise in specific
arease.g. Dubai was the Lead Technology Center on wood finishes outside
India.

Divestments
In 2007 the company identified its focus as scaling up existing foreign operations
rather than expanding geographically. It was especially encouraged by its
performance in the Middle East markets In Egypt, for instance where 6 operated
through SCIB Paints, production increased fourfold between 2002 and 2007 In
Oman. Dubai, and Bahrain production had more than doubled over the four years
up to 2007.
To rationalize its portfolio, Asian Paints also carried out a number of divestments.

In May 2004 it sold its Malta plant, which it had acquired though Berger and
licensed the Asian Paints brand name and technological knowledge to the
acquirers.

In April 2005 it announced plans to divest itself of its Mauritius subsidiary in a


plan to exit the country as the Mauritian paint market was stagnant, the
company had been making losses, and the contribution of the unit to the
overall groups results was insignificant.
In 2006. Berger sold as 30 percent stake in Dutch Boy Philippines for about
US$1.

Products for South East Asia


Its paint formulations and packaging practices make for an extremely low-cost
productone that, its managers have discovered, holds considerable appeal in
other developing countries.
Small SKUs for customers who want paints in small quantities. Multinational
rivals, by contrast, have built their operations around the demands of affluent
customers looking for a wide choice of colors and finishes.

References
1. Asian Paints growth Strategy. Retrieved December 7, 2002, from
http://www.siliconindia.com/shownews/Asian_Paints_announces_growth_strat
egy-nid-17940-cid-3.html
2. Asian Paints Berger Acquisition news, Retrieved October 2, 2002 from
http://www.pcimag.com/articles/84116-asian-paints-india-to-acquire-majoritystake-in-berger-ltd
3. Asian Paints Group Subsidiaries from
https://www.asianpaints.com/company-info/about-us/group-subsidaries.aspx
4. Asian paints Middle East Expansion Strategy from
https://books.google.co.in/books?id=iiJaCAAAQBAJ&pg=RA3-PA14&lpg=RA3PA14&dq=asian+paints+middle+east+expansion+strategy&source=bl&ots
=_Ns7OsHKgU&sig=prdavjQHfemj5DJgntEMzb49gvo&hl=en&sa=X&ved=0CE
gQ6AEwBmoVChMIq83HjPCqxwIVQwOOCh0h7Q68#v=onepage&q=asian
%20paints%20middle%20east%20expansion%20strategy&f=true
5. Asian paints Middle East Expansion Strategy from
https://books.google.co.in/books?
id=FtDRz1uBxekC&pg=PA584&lpg=PA584&dq=asian+paints+middle+east+
expansion+strategy&source=bl&ots=5kIJgIjC8&sig=8yUHtKNxPjlX10kYGpJ_fXb1bM&hl=en&sa=X&ved=0CEUQ6AEwBWoVChMI__uSkP2sxwIVFwiOCh1IGQ
LA#v=onepage&q=asian%20paints%20middle%20east%20expansion
%20strategy&f=false

Appendix
Asian paints Subsidiaries

Asian paints International Expansion Timing & Mode