PROJECT REPORT ON

STRATEGIC ANALYSIS OF BISLERI

SUBMITTED TO:

K. J. Somaiya College of Science & Commerce

Affiliated to Mumbai University

In partial fulfillment of the requirement for the award of Degree of M.Com ( Part-I )
ACADEMIC YEAR 2013-2014

SUBMITTED BY:

AMISHA GOHIL

CERTIFICATE
I, Ayyapan Iyer hereby certify that Amisha Gohil student of K.J. Somaiya Collge of Science & Commerce, Nerul has completed project on Strategic Analysis of Bisleri in academic year 2013-14. The information submitted in this project is true and original to best of my knowledge.

_______________ Prof. Ayyapan Iyer

________________ External Examiner

ACKNOWLEDGEMENT
The satisfaction, which accompanies the successful completion of the project, is incomplete without the mention of a few names. I take this opportunity to acknowledge the efforts of the many individuals who helped me make this project possible. First and foremost, I would like to express my sincere thanks to my Faculty Guide Prof. Ayyapan Iyer for her guidance and support throughout my project. Her calm demeanor and willingness to teach has been a great help in successfully completing the project. My learning has been immeasurable and working under her was a great experience. Finally, I would like to thank my Institute Strategic Analysis of Bisleri for making this experience of working on such a project possible for me. The learning from this experience has been immense and would be cherished throughout life.

AMISHA GOHIL

INDEX
Sr. no. 1 2 3 4 5 6 7 8 Particulars Executive Summary Introduction Bisleri Pvt.Ltd Competitor Analysis Functional Strategies Recommendations Conclusion Bibliography Page No.

EXECUTIVE SUMMARY
The bottled water industry in India is currently valued at more than $ 1.5 billion. The bottled water industry is growing at rate of 18% CAGR and has attracted many players including Pepsi and Coca Cola. The pioneer of the industry Parle Bisleri has grown over the years and maintained its top position. The bottled water industry consists of organized and unorganized players. There are about 2000 unorganized players which operate locally. The industry is dynamic and the companies operates in hypercompetitive environment. The strategic analysis of company like Parle Bisleri becomes very important in this situation. In the present report we have done strategic analysis of Parle Bisleri. We have used different models for analysis purpose. We tried to analyze the different strategies adopted over the years, the strategy development and have evaluated those strategies considering the external environment and core competencies. We have found that the company has gained sustainable competitive advantage through its brand, logistics and marketing. The company however faces threat from its competitors as it is single product company. The company has adopted expansion strategy to increase the reach and achieve operational efficiencies. We have made certain recommendation based on this analysis. We recommend that the company should strengthen its distribution network, form alliances and joint venture, acquire small players and adopt related diversification.

INTRODUCTION
The global bottled water industry consists of selling of flavored as well as unflavored water. With regards to Indian context there is sale of only unflavored water. The bottled water segment is rapidly growing which has a total market size of more than $ 1.5 billion. The market is mainly controlled by the organized sector with over 500 brands existing in the market. A growth in the sector has been viewed mainly because of the health conscious people, improper water supply and the unpredictable municipal water supply. With a high growth rate and low entry barriers has attracted many players in this segment. The market operates in lower margins, the price increases when the cost of packaging and transportation increases the major players in the market are trying to establish themselves in bulk water business through brand equity, whereas the unorganized players are resisting them by using differentiation strategy. Parle acquired Bisleri from an Italian entrepreneur Mr. Felice Bisleri in 1967. The company established its first plant in Mumbai in the same year. The company was the first player in the bottled water industry and so it has gained first mover advantage. The company has undergone changes over the years. There was a strategic shift in the direction of the company over the years. We have selected Parle Bisleri for the analysis purpose mainly because, it is important to study how a company with a single product brand has maintained its market position? We have gained insights about the strategic decisions taken by the company over the years, which have enabled it to gain sustainable competitive advantage.

BISLERI PVT. LTD.

The name that epitomizes mineral water today was first introduced in Mumbai in early 60s. In 1969 Signor Felice Bisleri an Italian by origin, came up with the idea of selling bottled water in India. In 1969 Parle brought over Bisleri (India) Ltd. and started bottling mineral water in glass bottles under the brand name Bisleri. In due course Parle switched over to PVC non returnable bottles and finally advanced to PET containers. Under the leadership of Mr. Ramesh J Chauhan, Bisleri has undergone significant expansion in their operations. The company has witnessed an exponential growth with their turnover multiplying more than 20 times in a short span of 10 years. The average growth over this period has been around 40% with Bisleri enjoying more than 60% of the market share in the organized mineral water segment. It is powered by 17 owned plants, 33 co-packers, 11 franchisees and a wide distribution and retail network pan India. The overwhelming popularity of Bisleri and the fact that the company was the pioneer of bottled water industry in India has made it synonymous to mineral water and a household name. So naturally When you think of bottled water, you think Bisleri.

The people at Bisleri value their customers & therefore have developed unique pack sizes to suit the need of every individual. They are present in 250ml, 500ml, 1L, 1.5L, 2L which are one way packs (non returnable) and 5L, 20L which are two way packs (returnable).

Till date the Indian consumer has been offered Bisleri water, however in their effort to bring to the customers something refreshingly new, they have introduced Bisleri Vedica - natural mountain water water brought directly from the foot hills of the Himalayas. Hence the product range now comprises of Bisleri with added minerals and Bisleri mountain water. The commitment of the company is to offer every Indian pure & clean drinking water. Bisleri water is put through multiple stages of purification, ozonization and finally packed for consumption. Rigorous R&D and stringent quality controls has made Bisleri a market leader in the bottled water segment. Strict hygiene conditions are maintained in all plants. In their endeavor to maintain strict quality controls each unit purchases performs & caps only from approved vendors. The company produces bottles in-house. They have recently procured the latest world class state of art machinery that puts the company at par with International standards. This has not only helped them in improving packaging quality but has also reduced raw material wastage and doubled production capacity. People can be assured that they are drinking safe & pure water when they consume Bisleri.

Porters model
The bottled water industry is a part of beverage industry which comes under the fast moving consumer goods. When taking about the porters five forces model with respect to the bottled industry in India. Threat of Entry: since the entry barrier is low, making it easy to enter the bottled water market. As per the product differentiation the threat of new entrants is high. But in a broader prospective it is moderate. Bargaining Power of Suppliers: the bargaining power is low here as the municipal water system, bottles and plastic cap, label printer filtration and deionization equipment, plastic grains and etc. The large availability of suppliers leads to less bargaining power. Bargaining power of Buyer: the bottled water industry is categorized as an oligopoly. The number of producers is less due to which the bargaining power of the buyer becomes less. The bargaining power depends on the price, availability and the product. Substitute products: since bottled water is categorized under the beverage industry hence, the degree of substitutability is medium as the coffee, tea, juice and soft drinks acts as a substitute to water. The availability of substitute affects the price and the market. The availability of substitute provides the option to customer and hence he can switch from one product to other. Rivalry: the degree of rivalry affects the price, quality, profit and revenue in an industry. The market is almost on saturation state, and the industry refers the oligopoly competition so there is a high competition to increase the market share. The intensity of rivalry is low as there is limited player and the product is not price sensitive.

Core Competency
The brand of Bisleri itself is the core competency for Bisleri. The seal of Bisleri bottles help the consumers clear their doubts on the purity of water. The company maintains the physical and financial resources very efficiently and effectively. These resources when combined helps in maintain and retaining customers expectations to achieve the targets of the company. The intellectual capital of the brand plays a major role as the bottle seal of Bisleri is patented. Bisleri has a very strong distribution network, which makes it reach out to almost all the region in the country, company has about 350000 outlets across the country. The company worked on its dualdistribution strategy to gain competitive advantage.

MARKET SIZE & SHARE

The bottled water industry is expected to grow at 22% CAGR in the year 2015. The sale of bottled water industry is expected to reach at 6466.8 million liters translating to market worth of more than $ 1.5 billion. The off trade value of the sales has increased by 33% in 2012. There were no significant products launched during last year. The average price per unit has increased by 4% in the off-trade business in 2012 ("Bottled water- India," 2012). The market consists of organized as well as unorganized players. The organized players consist of brands like Bisleri, Kinley, Aquafina, Oxyrich, Himalaya, etc. Parle Bisleri has continued to be the market leader with a market share of 42.5%. The bottled water industry in India still consists of still bottled water. The carbonated and flavored water has very niche segment and there were negligible sales in 2009. There are large numbers of unorganized players and most of them are involved in selling by means of tampering with seals of organized players product. The market share of different companies in bottled water industry is shown in appendix

COMPETITOR ANALYSIS
The parameters are taken to differentiate Bisleri from its competitors. Bisleri acquires 42.5% of market share whereas Kinley has a market share of 21% only and Aquafina covers only 14% of the total market share of the bottling water. Kinley has a cost price of manufacturing a bottle up to Rs 12.25 and it sells the bottles for Rs. 14/15 which gives it a profit margin of Rs 1.75/2.75. Whereas, Bisleri has a profit margin of Rs 2 as its cost price is Rs 10 and the selling price is Rs 12. Aquafina on the other hand earns a profit margin of Rs 2 with cost price as Rs 8 and selling price as Rs 10. Bisleri focuses a lot on the advertisement of its brand and keeps on differentiating itself by making variances in the brand or packaging of the bottles. As it uses green color packaging whereas the other bottling companies use blue color to pack their bottles ("Parle Bisleri Ltd- Soft drinks- India," 2012). The distribution network of all the three companies varies. The distribution network helps in making the product available to its customers whenever they need it.

Distribution network of Bisleri : The distribution network of Bisleri is such that from the manufacturing plant the bottles reach company warehouse from their through the trucks it reach to its retailers or through distributors it reach to the retailers and then from retailers finally to the customers. Through distributors it also goes to the institutional buyers or orders over internet.

Distribution network of Bisleri

Manufacturing Unit

Company warehouse

Trucks

Distributors

Institutional Buyers/ Seasonal Party Orders

Retailers

Customers

Distribution network of Aquafina :

Aquafinas distribution system is different. From the companys manufacturing unit the bottles reach to distributors and from there to institutional buyers or retailers and then finally to customers.

Distribution network of Aquafina

Company

Distributor

Institutional Buyers Retailer (hotels, corporates, offices of varios companies)

consumer

consumer

Distribution network of Kinley :

Kinley has different distribution network it does not include a big network. From the manufacturing unit the bottles are sent to the sales and distribution department from there the bottles are sent to the distributors and outlets directly and the bottles from distributors are also sent to the outlets. A very small network is there. This makes the product less available in the market.

Distribution network of Kinley

Manufacturing Plant

Sales and distribution operations

Distributors

Outlets

Outlets

STRATEGIC DIRECTIONS
We have used Ansoff matrix to find out the strategic options which are available with Parle Bisleri, in terms of its product and market.

Figure 1: Ansoff Matrix From the analysis we have found that the company can use market penetration and product development strategy. The company has used the penetration strategy by making available products in different sizes. The company uses innovative concepts like 1.2 liter bottle which helps to offer consumers more content at lower price. The company is also penetrating the market by shifting its focus from retail market to the bulk water segment. The company uses its own distribution network to cater the bulk water segment. The company thus penetrates the market bypassing the competition present in the retail segment. We can also observe that the company is using product development strategy. The company is planning to introduce new products like fruit juices under the brand name Alfa. We propose that the company should focus more on market development and introduce new products thus increasing its product portfolio (Bureau, 2005). This will not only decrease the risk of operating with single product but also enables to make use of its competences to develop new products.

CORPORATE LEVEL STRATEGY

Parle Bisleri which had initially a varied product portfolio constrained itself to the bottled water sector. The corporate level strategy adopted by the company is expansion and related diversification. The expansion strategy is indicated by the decision to increase the capacity of present plants and establish 25 new plants ("Bisleri plans 30 plants in 2015 to retain market leadership,"). The company is using related diversification to introduce new products like the mineral water and has also planned to enter the fruit juice segment. The directional policy matrix is generally used for companies which have strategic business units. However we have applied the matrix to this company. The matrix is drawn below,

Figure 2: Directional policy matrix If we apply the above matrix for bottled water industry, we can see that the industry attractiveness is high and also the business strength is high. So the company should adopt investment and growth strategy. We have found that the company is using this strategy. This is

evident from the companys plan to strengthen its distribution network, establish new plants, extension of product length and product line extension. The present strategy adopted by the company will help it to stay ahead of the competitors and hedge the business risk. The company is currently eying the bulk water segment and investing to penetrate that segment. The emergence of many competitors in the organized sector has increased the pressure. The strategy adopted by the company will help the company to sustain its growth in terms of profitability, as it is targeting the segment which does not have presence of organized players.

CURRENT BUSINESS STRATEGY

The next part in our analysis is to find out the present business strategy adopted by Bisleri and the way in which it has implemented. We will then evaluate the strategy adopted, considering the external environment and its core competences. The strategy states that the organization can achieve competitive advantage through three ways : Overall cost leadership Differentiation Focus

Year 1969 to 2000: In 1969, Parle acquired Bisleri with an aim to increase its product
portfolio. Parle introduced Bisleri soda in carbonated and non carbonated types to get a hold in soda market. The product was initially packed in glass bottles. Initially the perceived value of the product was low as well as the price was low. The product was basic and thus we can say that company used No-frills strategy. As the company saw potential in bottled water segment, the company used differentiation in the form of packaging. In 1980, the company changed the packaging from glass bottles to PVC (Polyvinyl chloride) to PET (Polyethylene terephthalate). There was a shift in paradigm for Bisleri when it sold its soft drinks brand to Coca Cola in 1993. The company removed soda water from market and now focused its attention to packaged drinking water. The initial consumers of packaged water were foreigners and NRIs (Non-resident Indians). There were no competitors in the market, so Bisleri adopted low price strategy. The aim of using this strategy was to penetrate the market and establish a significant market share. The price of the product was as low as Rs 5 for 500ml bottle. The company achieved low price by reducing its operational costs. The company had initially 15 plants and the product was sold through over 50000 outlets. So we can see that in period 1969 to 2000 the company used no frills and low cost strategy. The company shifted the position from point 1 to point 2. Now let us analyze the strategies adopted by Parle Bisleri from 2001 to 2012.

Year 2001 to 2012: In August 2000, Coca Cola saw potential in bottled water industry and
entered this market by introducing its brand Kinley. The market saw entry of big players like Pepsi through its brand Aquafina and Nestle through its brand Pure Life. The other players in the market include the Tatas through its brand Himalaya, Manikchand through brand Oxyrich and Parle Agro through its brand Bailey. The organized bottled water segment which was initially dominated by Parle Bisleri saw entry of many players. Currently there are about 8-10 players in the organized sector. In the response to the growing competition Bisleri started using hybrid strategy. According to this strategy differentiation was based on quality; however with number of competitors the differentiation based on quality became difficult. Bisleri has now used differentiation in the form of packaging, price and distribution. The company differentiates through distribution by targeting new channels like chemists and stationery shops which were not used earlier. The company has used its own fleet of about 2000 trucks to manage the distribution network (Iyer, 2010).

The company differentiated in the terms of packaging by making available the products in different shapes and size. The company has used tamper proof seal to assure good quality. The company has patented the tamper proof seal technology and has created barriers for its competitors. The packaged water industry has bifurcated in two segments, retail and bulk water segment. The company has in response to entry of new players have used refocusing strategy. The present strategy of Bisleri involves targeting the bulk water segment, pricing competitively, strengthen distribution, innovate on packaging and product line extension. The company by passes the competition and reduces operational cost by targeting the bulk bottled water segment. The company has shown innovation in packaging by changing the shape and color of pack from blue to aqua green. The company operates in hypercompetitive environment, so it is necessary that company changes its strategies according to the dynamic environment. We have found that the company can be located on position 3 on the strategic clock. However, the company can switch between hybrid and differentiation strategy in accordance with changing environment. The company however presently uses hybrid strategy wherein it has differentiated its offering from its competitive and at the same time making it available at cost lower than its competitors.

STRATEGIC DEVELOPMENT AT BISLERI

Parle Bisleri Pvt Ltd has owned one of the top-three packaged brands in the country, has formulated plans for a diversification into the fruit juice business. The company has already established a fruit juice concentrate plant in Chittor, Andhra Pradesh. Plans are going on to identify a place for the companys offered second plant that is likely to be established in the eastern or northern part of India. Company has decided to make an investment of Rs 100 crores in the fruit juice projects in the next three years. This amount will be generated through internal accumulation and institutional loans. The company is going to begin with mango and guava juice to begin with will be marketed under the Alfa umbrella brand. Company has realized that fruit juices have come out as a fancy drink after water. It is a logical business series for the bottled water producing company to adapt to the fruit juice segment. Bisleri has to establish its market in the region through a restore marketing strategy and a focus on enhanced and innovative packaging. The idea is to be raised by hundred percent in the next one year and 250 percent in the next three years. The company is planning to increase its presence in the eastern part of India. It has assigned Orient Beverages Ltd as its only franchisee in West Bengal, Jharkhand and Orissa. Company has firmed up expansion plans for Sikkim. The company has also prepared to explore for business opportunities in adjacent countries like Nepal and Bhutan in the future. Bisleri is facing severe challenges from both family and outside competitors. There is a big threat to the leadership of Bisleri in the mineral-water market. The company is in the process of developing a market strategy for its next innovation that is enhanced water. The company is planning to launch mineral and protein-added, packaged water in various essences. There are three major brands in the bottled water market Aquafina, Bisleri and Kinley.

Dual market penetration strategy Bisleri has announced to establish thirty bottling plants across country to fulfill the customer requirements. The company has formulated strategies for market penetration, expansion and growth for this fiscal. Bisleri had achieved the growth of 36 percent growth and high customer loyalty in the year 2008-2009. Now Bisleri is aiming to achieve 40 percent growth by this year and sketched a powerful penetration strategy that consist of a dual distribution plan- entering newer markets including towns and rural areas which includes smaller and interiors markets and curiously looking forward to enter newer territories and augmenting shelf existence in the metros and present markets. The company is also establishing dedicated channels for its 20 Liters jars to certify that every corporate and household receives service at their door step. Market strategy development and implementation Market strategy includes the analysis, strategy development and implementation. First, company has developed a vision about the market of interest to the company and then selected market target strategies, establishing objectives and developing and implementing the strategies. It includes managing and marketing program positioning strategies formulated to fulfill the value needs of the customers in every market target. Strategic marketing is a process of market-driven strategy development, taking into consideration a consistent varying business environment and the requirement to bring excellent customer value. Bisleri has developed strategic marketing to concentrate on organizational performance instead of focusing on increasing sales. The marketing strategy of Bisleri tries to bring excellent customer value by integrating the customerinfluencing strategies of the business into an organized set of market- driven activities. The company has connected its strategic marketing with the organizational environment and views marketing as a liability of the whole business instead of a specialized purpose. There is marketings boundary orientation between the organization and its customers, competition and channel members. The marketing processes are centralized to business strategy planning process. Strategic marketing supplies the knowledge for environmental screening, for choosing what customer group to serve, for directing product specifications and for selecting competitors for position against. Bisleri has successfully integrated cross-functional strategies which are decisive for offering excellent customer value.

FUNCTIONAL STRATEGIES
Marketing strategy
The strategic situation analysis considers competitor and market analysis, market segmentation and incessant erudition of markets. Formulating marketing strategy checks customer targeting and positioning strategies, market relationship strategies and planning for latest products. Marketing program development includes product, price, distribution and promotion strategies formulated and applied to fulfill the value needs of target buyers. Strategy execution and management considers marketing strategy implementation, control and organizational design. The marketing strategy adopted by the company has also changed over the years. In the initial years when it was the sole player in the bottled water market it positioned itself as luxury item. The punch line was Very very extraordinary. The entry of players like Pepsi and Coca Cola made it to change the strategy. Now the company positioned itself as quality product to gain the trust of the consumers. The catch line now said Pure and safe. In the recent years t here were cases where insecticide contents were found in bottled waters of some major players including Bisleri. This strongly affected the sales of Bisleri which decreases about 15%. The company carried out a rebranding exercise to recover from the dent created by this incident. The company has changed its packaging and the color has been changed from blue to aqua green. The company is now positioning itself as best product. The present catch line says Play safe. The company uses medium such as television, hoardings, magazines and company trucks for advertising purpose.

Funding strategy
The financial strategies will change according to the phase in which the business is operating. We can find that Parle Bisleri is in maturity phase. The business risk is medium to high. So if we use growth/share matrix, we can find that the company can use debt and equity for funding purpose. The company currently uses only debts as source of finance. However, we would like to propose that the company should use a mix of debt as well as equity. The company should come up with an Initial Public Offering (IPO). The money raised through the IPO can be used to finance its expansion plans and developing new products. The use of equity as source of finance will reduce the financial risk for the company.

Figure 4: Growth/ share matrix

RECOMMENDATION
On the basis of the analysis done, we would like to suggest following recommendations, The brand recall of Bisleri is stronger as compared to its competitors. However, problem arises when the brand is not available and customer ends up buying the brand of competitor. The company should therefore invest heavily on logistics. The company can acquire smaller unorganized players to extend the reach or can tie up with major local players. In Indian villages, even today there is shortage of safe drinking water sources and there is spread of water borne diseases due to contaminated water. The company should therefore focus on rural market penetration. The company is a single product portfolio company. The company should try to introduce more product more beverage products in the market. The company will require funds for the expansion and other projects. The company should fund these projects and plans by coming up with an IPO. Introducing equity in the capital structure will reduce the interest burden on the company. The company should form a joint venture with some companies who have greater rural distribution network to introduce products catering to rural market.

CONCLUSION
The analysis of Parle Bisleri has helped us to understand the different strategies adopted by it to sustain and grow in the hypercompetitive market. From the analysis we have found that the strength lies in its brand, packaging, logistics and marketing. However, the company is subjected to higher risk, as it is a single product company. The bottled water industry which is dominated by Bisleri is facing problems due to arrival of bigger players like Pepsi and Coca Cola. The company has bypassed the competition by shifting the focus towards bulk water segment. However we feel that the company needs to strengthen its present business and diversify in related business. The company can typically form alliances and joint ventures. We feel that tough time for Bisleri is about to come and the company will be severely affected if it does take proper strategic decisions in the present scenario.