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Britannia Biscuits

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Strategic Management


Britannia Industries limited (BIL) is the leading packaged food products company in India with major presence in bakery products especially biscuits. Britannia manufactures and sells bakery products like biscuits, cakes and dairy products. Scope of the project is limited to biscuits division only. Britannia offers full range of product brands .Tiger brand of biscuits positioned for the mass market and is a great success in rural markets. Other major brands include Good Day, Marigold, 50 - 50 and Nutrichoice etc. Britannia biscuits has a market share of around 38 -40%, Good day brand being the vanguard.

Game Theory
Game theory analyses the strategic interactions in which the outcome of ones choices depend upon the choices of others. Final outcome depends upon primarily upon the combination of strategies selected by the adversaries. This theory is based on the assumption that each one has opponents who are adjusting the strategies according to what they believe everybody is doing. Elements of Game Theory (PARTS) 1. Players The decision makers in the game. Comprises customers, suppliers, substitutors and Complementors. 2. Added values How much value addition you are doing or reducing the value of others. This covers the expected rewards enjoyed at the end of the game or the utilities each player realises for a particular outcome 3. Rules Covers which action to take at each point of the game? Changes in rules could be a game changer 4. Tactics This section talks about what kind of actions are necessary during the times of uncertainty, attack and changed scenario 5. Scope Scope covers functions provided, customers served and technologies offered by the player vis--vis competition.

Players Coopetition (Value Net)

Complementors Leading players in biscuit manufacturing industry in India are Britannia, Parle Products (Market leader by Value and volume), and ITC. Other players include Surya Food & Agro (Priyagold brand), Cremica, Anmol biscuits etc. In India almost 40% market is catered by unorganised industry manufacturing and selling biscuits, cakes, pastries etc. Substitutors Any packaged food product that could satisfy the hunger would become a substitutor for Britannia. Packaged food products like salted snack foods (Noodles / Potato chips), namkeen, sweets and confectionery products like chocolates , dairy products like Ice cream and yoghurt, beverages like juices offer variety and substitution to the craving consumers. Customers Consumers above the age 2 years are the broad customers for Britannia. Otherwise middle and above middle class population are the typical customers for Britannia. Britannia has launched different brands of biscuits to cater the various needs like Nutrichoice and Marigold for health conscious, Tiger for kids, Good day for indulgent customer Suppliers Many ingredients go into the making of biscuits, primary being wheat flour, sugar and fat and speciality chemicals like flavours, colours etc. Players into supply of the mentioned product portfolio form the supplier group. Any changes in the above mentioned players would affect the strategy of other players. Increase in the prices of wheat flour or sugar would affect the biscuit costing, thereby forcing the Britannia or other biscuit manufacturers to increase the price or reduce the grammage. This would majorly impact the consumers and could force them to change the consumption pattern or shift to substitutors Added Value All the leading biscuit players add value to the consumer or industry. Everyone is thriving to differentiate their products compared to competition to attract more consumers. Britannia is considered as high quality biscuit company compared to market leader Parle which can be considered as value player. Britannia is trying to add value by providing healthy products (Low fat) like Nutrichoice. Competitors like ITC are reducing the value

of Britannia by offering innovative products like Dream Creams, Dark Fantasy and indulgent flavours. Parle is trying to capture more consumers based on pricing. Britannia need to continuously innovate to add value and become preferred product supplier for the consumers. Rules Change of rules of the game by one player affects the other and requests for attention and action. Changes in Government regulations sometimes affect one player more than others. This could lead to shift in consumer base. Entry of Kraft into Indian market in 2011 with Oreo biscuits created ruffles in consumer market. This has forced all the major manufacturers to shift focus from high volume low margin biscuits (Glucose) to value added products like rich cookies, Choco filled products etc. Price reduction by one player calls for action from the complementors. Tactics Britannia is trying to leverage the respect it has earned over years from quality conscious consumers. ITC employs high decibel and catchy advertising tactics compared to Parle. Britannia primarily takes the route of health and wellness while promoting their products. ITC leverages backward integration in wheat flour gives access to better quality of ingredients. Till couple of years ago Parle is primarily known for Parle G Glucose biscuits and has focussed more on rural consumers.

Scope Britannia offers high quality products through superior technology. They have products for all age groups like Kids, teenagers and adults. Through continuous innovation they have widened the scope. Britannia has tried to venture into salted baked snacks segment and crackers with Nutrichoice range. Apart from these they could extend their presence in rural areas to take the local competition like Priyagold biscuits, Anmol biscuits etc. Being a high quality biscuit manufacturer Britannia should make their presence felt in export markets like Middle East, Africa and South Asia.

Corporate and Business Strategy

Corporate Strategy
The Overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals. Being in the right business like what business you are in? Is it attractive or right business? etc are covered under Corporate strategy.

Britannia Industries Ltd

Britannia biscuits were established way back in 1892 in Dum Dum, Kolkata. In 1924 it became a subsidiary of Peek Frean & Co Ltd, UK based leading Biscuit Company. From Kolkata company expanded business to Mumbai and Chennai by setting up new factories. Britannia has built reputation for quality and value. Looking at this reputation, Indian Govt has contracted with Britannia to supply large quantities of service biscuits to armed forces. In 1975 Britannia took over the distribution of biscuits from Parrys and in 1978 it became Britannia Industries Ltd. Due to heavy competition from food companies and other biscuit manufactures, Britannia focussed on marketing opportunities for its core business and also tap new opportunities in food categories. In 1993 Wadia group acquired 44% stake in Britannia and became equal partner with Group Danone (Britannia). By 1997 Britannia diversified into new categories like Dairy products and snack food markets. Britannia continued bread business despite being a low margin product.

From primarily being a biscuit company Britannia has limitedly diversified into non biscuit businesses like Cakes, Rusks and Bread and non-related businesses like dairy. Dairy products include Cheese, Dahi, flavoured Milk etc. Strategically Britannia is in the bottom of the pyramid business. Cereal products form the base and by virtue of being in biscuits made of wheat and cereals which are staple food Britannia could produce a mass market product. They have a long history of biscuit making along with innovation in technology. Britannia was the first Asian biscuit company to use gas ovens for baking purpose.

Britannia Cheese, Butter & Ghee

Till late 90s Biscuit industry in India comprises both organised and unorganised manufacturers. Increase in the prices of key raw material like wheat, sugar, fats and oils has put the biscuit industry under tremendous pressure leading to shut down of many un organised players. Profits are under pressure due to ever increasing key raw material prices. Indians consume traditional snack products like Samosa, Namkeen etc. Britannia along with traditional snacks has to compete with other packaged products like noodles, confectionery items and also face stiff competition from other biscuit companies like Parle, ITC , Priyagold etc. Parle is leader in low margin , high volume glucose biscuit segment with close to 60% market share and ITC by virtue of financial muscle power and highly efficient distribution network could gain close to 15% market share in less than 5 years of launch though they were not a baking company. Britannia could gain corporate advantage by diversifying into non biscuit segments like cakes, rusks bread and dairy products. Over years Britannia has earned the reputation of quality and value biscuit manufacturer. In fact Britannia was ranked No 2 in brand ranking as most trusted brand. It could leverage the brand Britannia name very well in promoting non biscuit products.

Scope Britannia has competitive presence in new product development / innovation, and production capabilities over competition. Britannia has reached more than 80 % households in urban segments and in fact every third Indian consumer tastes Britannia products. Britannia needs to extend similar presence in rural markets. Organisational Design Similar raw materials are required for cakes, rusks and bread and could leverage the supply chain for procuring the raw material for non-biscuit products. For Dairy products Britannia has tied up with Dynamix Corporation for the manufacture of Cheese and Dahi. Ownership Britannia follows divisional structure and have different teams for biscuits, non-biscuit baked goods and dairy products. Diversification has provided operational economies of scope like cost and revenue through better utilisation of manufacturing facilities and cost reduction through centralised R&D and sourcing. This has also provided financial economies of scope. Strategic Alliances Britannia has got long history. As briefly mentioned earlier after becoming Britannia Industries ltd, Wadia group acquired equal share in Danone group (Britannia). Subsequently

in 2007 the alliance was broken and Britannia has gone alone. In Dairy division they had alliances with Dynamix dairy for manufacturing of Britannia products and Joint venture with New Zealand dairy company Fonterra for procurement of milk and other dairy products like cheese powders and butter milk. JV has allowed technology transfer between the companies.

Business Level Strategy for Britannia Biscuits

Britannia Biscuits has followed Best cost leadership strategy. The most common segmentation of the Indian biscuit is by price point. Mass segment, popular segment and premium segment. These three segments are fairly balanced and need to have separate strategies for all the segments. Britannia is successful in having right products in the above mentioned category. Tiger for Mass market, 50-50, Marie Gold, Good day for popular segment and Pure Magic, Choco chips, Nutrichoice for Premium segments. Britannia has adopted overall cost leadership though in mass market segment Parle G is market leader. Britannia is market leader with close to 38 -40% market share closely followed by Parle .Main strategy for Britannia were managing revenue, managing cost and generating new value though innovation in products, process and technology. Britannias emphasis on innovation has reflected in several new introductions of several health and wellness products which are fortified with Iron, minerals and vitamins along with high indulgent products. Britannia is the first food biscuit company to knock off trans fats which are considered un healthy. Making biscuits taste the same by removing trans fats, fortification with iron are big challenges. Through innovation and technology they could achieve success and better tasting products. Britannias main campaign is Eat healthy and think better (Swasth Kahao, Tan man jagao).During early 90s Britannia has adapted incremental innovation rather than radical innovation. Britannia has used line extension staying within the category and introducing product variations. Britannia has strategically invested in improvement of packaging with the introduction of low cost pack sizes. Beginning 2000 Britannia biscuit divisions major strategy was health and delight along with indulgence. They have launched multi grain biscuits under Nutrichoice brand and high indulgent products under Pure Magic. Britannia has offered products that has a cost benefit profile qualitatively different from those of competitors and also similar benefit products as competition. Britannia has gained overall cost leadership by virtue of economies of scale (volume of production and special technology). They have also come up another innovative product called Little Hearts which was first and only of this kind of product. Britannia biscuits division business strategy could be clearly understood as they have right products for all the segments and price points and cater to taste profiles of pan India consumers. Off late Britannia has given much emphasis on rural market and now more than

40% households consume Britannia products. To negate the increasing costs like transportation of raw material and distribution costs have set up plants across India. Given the length and breadth of the country Britannia has focussed on distribution network. In order to compete with Parle G in glucose segment they have made innovations in Tiger brand by launching fortified biscuits targeting kids. And also reduce costs, operate on wafer thin margins. To summarise the business strategy of biscuits division, they have closely monitored the input costs to ensure better margins and also kept pace with new product launches based on health and wellness rather than being a regular glucose biscuit.


Critical Success factors affect how the industry members perform in the market. Critical success factors are product characteristics, competencies, competitive capabilities and market achievements which would affect the future competitive success in the market. Biscuit is the one of the most economical snack food product available and being rich in Nutrition it could space in the school bags, working population snack box and also consumed by old age people. Critical success factors could be identified by getting answers to below questions 1. How consumers choose different competing brands in the industry? 2. What kind of resources and competitive capabilities are required for a firm in order to be competitive? 3. What are the factors that would cause competitive disadvantage for the firm? Industry level Critical success factors

Technology of biscuit making has changed a lot during last 25 years. Technology has helped in faster production, improved shelf life, better and innovative packaging. Price sensitive brands like Tiger Glucose, Tiger Cream and Marie biscuits, economies of scale played a major role in reducing the price and stay competitive. Continuous mixers, moulding machines and oven have helped the cause.

Distribution Network
Britannia has identified the distribution management as the key factor to maintain competitive positioning in the industry. Their biscuits are available across majority of cities and rural areas. They have a very strong network of CFAs, Wholesalers and retailers. Being in the industry for more than 150 years helped them in understanding the market and strengthen logistics to maintain leadership position. Availability and visibility are the key factors in distribution.

Research and Development

Britannia has relied heavily on innovation. Except for a brief period during 2002 2006, Britannia has churned out new products and brands to keep market excited and provide more options and variety to consumers. Britannia was the first company to introduce Glucose biscuits, Orange Creams and Cookies (Good day brand). Through innovation, Britannia could come up nutrionally rich biscuit which could go along with tea and provide nutrition (Chai Biskoot). Milk biscuits have become immensely popular in South India as they have formulated the biscuits in such a way that they could supplement milk. Little Hearts, Good Day cookies, Maska Chaska, Pure Magic brands are classic examples for Britannias innovation.

Marketing related Critical Success factors

Britannia has a very strong portfolio of brands catering to price conscious / value seeking consumer and also quality conscious premium product seeker. Britannia is known for their aggressive advertisement campaigns. Along with strong advertisement and maintaining high standards, Britannia has reached the No 1 position of Most trusted brand (Brand Equity). Catchy advertisements have helped the brand to stay alive in the minds of the consumers.

Efficient Supply Chain net work

Tie up with flour mills, Sugar industry and Oil industries have helped Britannia in having smooth supply of bulk raw material. Sourcing of other low volume and high value ingredients like flavours, colours and other chemicals from reputed or approved vendors have helped the smooth functioning of manufacturing facilities.

Human Resource Management

Key technical people were given training and sent abroad to get exposed to new technologies. Britannia is one among those food companies with better human resource policies.

Britannia Biscuits strategy implementation has been studied through Balance scorecard. In Balance scorecard performance is measured with multiple perspectives like Financial, Customer, Internal Business processes and Learning and growth. FINACIAL PERSPECTIVE Objectives To be market leader in Biscuit Industry Measures Sales can be used to measure Targets Rs 5000 cr by end of year 2012 Initiatives Implement strong sales promotion strategies and

Increase the returns to shareholders by 10%

Return on Equity


Profit after tax

Target 200 cr for year 2012

improve distribution network in rural areas Cost cutting and reduction of wasteful expenditure by 10% Increase operating efficiency

CUSTOMER PERSPECTIVE Objectives To maximise brand equity Measures Brand position Targets Maintain No1 position Initiatives Strong advertising and supply consistently high quality products Increase retail network

To be No 1 in customer experience and satisfaction

Opening of POP ( Point of purchase)

Target new 3000 POPs

INTERNAL BSUINESS PROCESS PERSPECTIVE Objectives To reduce production outages Measures Productivity Targets Improve productivity by 5% Make availability of machines up to 98% of times Maintain <0.05% level Initiatives Preventive maintenance

Deliver superior or highest quality biscuits

Quality defect ratio

On-line quality checks, Total Quality Management

LEARNING AND GROWTH PERSPECTIVE Objectives Ensure cross functional skills among class B workers To Be technology leader in biscuit industry Measures No of job responsibilities per employee R&D and technology Budget Targets Each employee should be trained for at least two jobs Minimum 3% budget for R&D Initiatives Skill Management and cross functional training Build more technology capabilities

Conclusion / Recommendations
Britannia has started and maintained leadership in industry through continuous innovation. R&D has remained key for them whether it was launch of Glucose biscuits containing Vanilla Flavour taking the market share from un organised bakeries, innovation through cream biscuits, semi-sweet biscuits like Marie, and premium biscuits like Good Day cookies, 50 -50, Little Hearts, Maska Chaska, Nutrichoice brands etc. During years 2002 to 2006 there was lull in R&D activity which has helped in ITCs Sun feast garner significant market share with innovative products. Parle has remained leader in low margin and high volume biscuits like Glucose and also by gearing up their R&D and better distribution network has become market leader in the year 2011- 2012. In order to regain market leader ship Britannia has to invest heavily in premium and healthy products like Nutrichoice. As per recent newspaper reports, Glucose biscuits market share has come down from 22 to 19% and is moving southwards. Whereas Cream biscuits and cookies market share is on steady rise. Through a combination of innovation, fine tuning distribution network and efficient marketing campaign Britannia could take over the market leadership. Key raw material prices are on continuous rise and need to launch profit making brands to come out of the vicious cycle of volume game. Biscuits and economical snack food and need to attract consumers of other snacks like potato chips, salted namkeen, noodles etc. Here Nutrichoice brand which is a very fast growing brand bringing good profits for the company. Changing life style, burgeoning middle class with increased income, increased westernisation, penetration of internet and mobile have changed the landscape of food habits of people of India. This consumer base should form the key segment for Britannia biscuits.