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3. COMPETITORS AND THE INDUSTRY

3.1 Major Competitors

Who are the major Competitors for the chosen business?

Sl No. Competitor

1 Hindustan Unilever Limited

2 Godrej

3 House of Malhotra

3.2 Porters 5-Force Analysis of the Industry

Power of Suppliers

The bargaining power of suppliers of raw materials and intermediate goods is not very high.

There is ample number of substitute suppliers available and the raw materials are also readily

available and most are homogenous. There is no monopoly situation in the supplier side because

the suppliers are also competing among themselves.

Power of Buyers

Bargaining power of consumers is also very high. This is because in FMCG industry the

switching cost of most of the goods is very low and there is no threat of buying one product over

other. Customers are never reluctant to buy or try new things off the shelf.

Power of Substitutes

There are complex and never ending consumer needs and no firm can satisfy all sorts of needsalone. There are plenty of substitute goods available in the market that can be replaced if

consumers are not satisfied with one. The wide range of choices and needs give a sufficient room

for new product development that can replace existing goods. This leads to higher consumers

expectation.

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Power of New Entrants

FMCG industry does not have any measures to control the entry of new firms. The resistance is

very low and the structure of the industry is very complex that new firms can easily enter andalso offer tough competition due to cost effectiveness. Hence potential entry of new competitors

is highly viable.

Competitive Rivalry

In FMCG industry rivalry among competing firms is very fierce. There are scarce customers

because the industry is highly saturated and the competitors try to snatch their share of market.

Market players use all sort of tactics and activities from intensive advertisement campaigns to

promotional stuff and price wars etc. hence the intensity of rivalry is very high.

3.3 Applying Porter's 5-Force Model to the Business

Power of Suppliers

It is indeed enjoying greater supplier power due to its sole presence in the organized, premiumtechnology shaving razors market in India. Also there are no close substitutes to their razors. The

only substitutes in terms of the product per se are in fact very poor on the technology and quality.

There Are several twin blade razors in the market but none would match the superior technology

of a sensor excel, or the triple blade offering by Super-Max 3 is in no comparison with the Mach

3 So in reality there are no potential threats.

Power of Buyers

The buyers as a result are not very powerful as there are no close substitutes,

they buy in small numbers, switching to an alternate product is not easy (as onecartridge does not

fit another razor, and also because once an investment is made on a premium Gillette razor, it is

difficult for the consumer to leave it as such and move on to another razor), and customers of

Mach 3 razors are not price sensitive. However, the only thing the customer can do is to revert to

lower versions by compromising on technology or switch over to barber shaving.

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Power of Substitutes

As of date there are no close substitutes to any of the Gillette razors. The only close substitute

could be the American Safety Razor entering the Indian market soon. But then again that would

depend on the marketing strategies of the company.

Power of New Entrants

The Indian shaving razor market is completely dominated by Gillette. Any new entrants should

very carefully launch themselves because they would be directly pitting against a monopolist

kind of market giant. Also the barriers to entry are

notmany except minimum size requirements for economies of scale, high initial investments and

above all the retaliation by Gillette which could be anything .However, there is news that the

American Safety Razor would be soon entering the Indian market. We can only wait and watch

what would happen then.

Competitive Rivalry

There is virtually no competition in most of the segments except in the flat blades segment, low

income segment, traditional double edged users (laggards), and technology-illiterates. Only

Malhotra Group competes in flat blade segment and Gillette has taken a step to takeoverMalhotra Group. This shows that there is no rivalry in the business.

3.4 PESTLE Analysis

PESTLE Dimension Current situation Likely changes in the future

Political

Economic

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Social

Technological

Legal

Ecological

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4. RESOURCES & COMPETENCIES

4.1 What are the resources of the business?

a) Tangible Assets Physical Resources Human Resources

b) Intangible Assets Reputation

4.2, Undertake VRIN Analysis to the Resource you think is most important.

Comments

Valuable Organizational reputation brings value to the firm and can be source

of competitive advantage. Gillette has acquired good reputation

among the customers Because

It offers high quality products and services

It is ethical in doing its business

It constantly focuses on the consumer preferences Financial performance of Gillette are stable over the years

These factors have led Gillette to gain the competitive advantage.

Also Gillette sometimes uses its reputation to neutralize the threat of

new entrant by creating the global product awareness, since it offers

high quality products and services it charges premium price for someof its products which helps to increases revenues.

Rare Rarity is when firm has valuable resource i.e. absolute unique among

the different set of the competitors. Organizational reputation of the

Gillette is been increasing over the years since its inception, because

of its ability to provide innovative products to cater the needs of the

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consumer. The reputation built by the Gillette in blade market is rare

enough such that till now perfect competition has not set in in that

segment it is clear market leader because of its innovative

capabilities. This distinctive Capability has made Gillette to continue

its function over the years and hence achieve sustainable competitive

advantage.

Inimitable Intangible Resource are usually more costly to imitate than tangible

resources. Strategies ,style of functioning can be copied but Gillettes

reputation cannot be copied from its compete ting firm, because

Gillettes reputation is built in the basis of first mover advantage and

getting access to the patents, licenses, trademarks for their products

which adds substantial value to the Gillette development.

Non-substitutable Gillette has created the brand name in the global market because of

its Reputation. It has built a reputation with the consumers for

quality and reliability, reputation with suppliers for the fairness all

these have paved a way for a Gillette to attain sustained competitive

advantage hence it is difficult to be substituted by competitive firms.

4.3 Resources as Capabilities

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4.4 SWOT Analysis

Strengths

Long Standing History"Long Standing History" has a significant impact, Gillette has got very good reputation all

over the world. Most of its customers are loyal towards to this brand because of quality and

long history of establishment.

High Market ShareHigh Market Share" has a significant impact. "High Market Share" will have a long-term

positive impact on the entity, which adds to its value.

Innovative TechnologyThe company has a team of experts who have been designing to ways to improve products

over the years. The innovation allows for them to test out new products to customers and

gains market share.

Market LeaderGillette has been around for a while and has become a market leader in the industry.

"Market Leader - Gillette" will have a long-term positive impact on the entity, which adds to

its value. This qualitative factor will lead to a decrease in costs.

Weaknesses

Male Products onlyPresently Gillette has product which satisfies the needs of men. Company is not ventured into

any products such as its competitor has in their female category.

Environmental IssuesAfter the product reaches the end of its life cycle it is disposed of. A waste of material into

our environment is always harmful to us and the environment in which we live.

Costlier than other RazorsGillette razors are costly as compared to its competitors. Everyday use item is required to be

cheaper. Therefore it cannot meet the expectation of all classes of people.

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Opportunities

Importance of Personal HygieneAs more people learn about the importance of personal hygiene, the company may benefit for

the fact that they provide the products necessary. Gillette could profit tremendously as more

people become aware and educated on the importance of personal hygiene. "Importance of

Personal Hygiene" has a significant impact.

Fashion LookGillette has been noted in fashion magazines as to," how to look" in different seasons. Being

a tool for the clean shaved look promoted by the fashion guru's. This gives the company free

publicity to use their products. Its an opportunity for the company to attract new customers.

Increasing DemandNow days people are very price sensitive. They are ready to pay maximum for the best

quality products which are available in market. .Increasing demand for high quality products

with different technology.

Threats

Manufacturing Prices IncreaseIf price of commodities increased this would increase cost for the company to manufacture

goods. When cost rises this would lower profits for the company.

Lower Cost ProductsThe company has to deal with other competitors charging a much lower price for products.

This will cause Gillette to lose market share and this could lower profits.

Competitors for GilletteThe company has competitors that it has to deal with. Any time competitors are on the scene

this takes away market share from the company.

Rivalry between Firm and Competitors

1) Male Products

2) Gillette products are more costly than its competitors

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4.5, Rivalry Anticipated

What rivalry can you anticipate between the firm and the competitors