Competitor Analysis of ACI Formulations Limited

Competitor Analysis of ACI Formulations Limited
Crop Care and Public Health (CC&PH)

In this competitive world to sustaining in the market and being profitable is necessary. To do so, a company must focus on its marketing strategies and its closest competitors and strategies to generate sales.

ACI Formulations was established in 1995. ACI Agribusiness is the largest integrator in Bangladesh in Agriculture, Livestock and Fisheries and deals with Crop Protection, Seed, Fertilizer, Agri machineries, and Animal Health products. It is also the most profitable business units of ACI Ltd. The secret “Mantra” of being profitable is the efficient use of its Business Strategies and keeping the up to date information about its competitors.

ACI Formulations Ltd. has the full information about the stockiest and retailers in their 11 regions; the information also includes how many products of ACI are they preserving comparing to their competitors. To cope up in such competitive market, ACI CC & PH adopts itself with cost leadership and differentiation strategies. In case of competitor analysis, data collected by the Sales Promotions Officer (SPO) for each region is updated yearly; according to which marketing initiatives are planned.

Objective:

The purpose of this report is to identify and analyze ACI Formulation’s competitors and describe its core competitive advantages.

Methodology:

Primary Data Collection:

• Regional wholesaler and retailer information.
• Face to face conversation with the respective officers and staffs of the corporate office
• Practical work experience of the credit department of ACI Limited

Secondary Data Collection:

• Magazine of ACI Agribusiness
• Website of ACI Limited
• Different text books

Introduction:

ICI Bangladesh Manufacturers Limited was a subsidiary of world renowned multinational ICI Plc and was a listed public limited company under Dhaka Stock Exchange. ACI’s mission is to achieve business excellence through quality by understanding, accepting, meeting and exceeding customer expectations. ACI follows International Standards on Quality Management System to ensure consistent quality of products and services to achieve customer satisfaction. ACI also meets all national regulatory requirements relating to its current businesses and ensures that current Good Manufacturing Practices as recommended by World Health Organization is followed properly. ACI has been accepted as a Founding Member of the Community of Global Growth Companies by the World Economic Forum which is the most prestigious business networking organization.

ACI was so named in 1992. But the history of ACI dates back to 1926, when Imperial Chemical Industries (ICI) was incorporated in the United Kingdom as four companies namely Novel Industries Limited, British Dyestarts Corporation, Brunner Mond and Company Limited and United Alkali Company merged. Since then ICI plc has been operating worldwide as a multinational company.

In the year of formation ICI started operation in the Indian subcontinent in the name of ICI (India) limited. After separation of the India and Pakistan in 1947, the Karachi office of ICI (India) Limited renamed to be ICI (Pakistan) Limited.

Strategic Business Unit:

ACI has diversified into four major strategic business divisions which include Health Care, Consumer Brands, Agribusinesses and Retail Chain.

Strategic Business Units:

• Pharmaceuticals
• Consumer Brands
• Agribusiness (Animal Health, Crop care & Public health, Fertilizer, Cropex, Seeds)

Subsidiaries:

• ACI Formulations Ltd.
• ACI Agrgochemicals
• Apex Leathercrafts Limited
• ACI Salt Limited
• ACI Pure Flour Limited
• ACI Foods Limited
• Premiaflex Plastics Limited
• Creative Communication Limited
• ACI Motors Limited
• ACI Logistics Limited

Joint Ventures:

• ACI Godrej Agrovet Private Limited
• Tetley ACI (Bangladesh) Limited
• Asian Consumer Care (Pvt) Limited

THE PROJECT- COMPETITOR ANALYSIS

Competitor Analysis:

Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. To analyze competitors, ACI Limited generally focused on their competitors of 11 regions and 87 territories.

Barishal Retailer Information

From the information given in this pie chart taken from the survey of total turnover rate of Barisal retailer which represents the turnover rate of Syngenta Limited (29%) is higher than that of ACI limited (16%). So, ACI does not hold the highest retailer share in Barisal region.

Bogra Retailer Information

The above piechart shows the percentage distribution of total turnover rate of ACI comparing to its competitors. Here it represents that ACI could not capture the highest turnover rate which is 11%. Among all competitors, the closest one Syngenta Limited, has performed better with the share of 33%.

Comilla Retailer Information

The above piechart shows the percentage distribution of total turnover rate of ACI comparing to its competitors. Here it represents that ACI has captured turnover rate of 22% which is lower than the total amount of share of other small companies (28%). Second closest competitor Syngenta Limited has the share of 19%.

Dinajpur Retailer Information

The above piechart shows the percentage distribution of total turnover rate of ACI comparing to its competitors. Here it represents that others share has captured the highest turnover rate which is 27%. Whereas, their second closest competitor Syngenta Limited has the share of 15%. ACI limited has fallen behind with a mere share of 18%

Jessore Retailer Information

The above piechart shows the percentage distribution of total turnover rate of ACI comparing to its competitors. Here it represents that ACI could not capture the highest turnover rate which is 20%. Other little companies combined share is 21% and syngenta Limited has 17%. So, ACI limited is clearly not the market leader in this territory.

Rajshahi Retailer Information

From the information given in this pie chart taken from the survey of total turnover rate of Rajshahi retailer which represents the turnover rate of ACI limited (31%) is higher than any other companies. So, ACI does hold the highest retailer share in this region.

Observational analysis:

After analyzing above two given sets of information, it is clear that ACI Crop Care could not hold their leading coverage in various stockist zones as they did in the retailer zones. The pricing strategy and other marketing activities of ACI Crop Care have successfully grabbed the attention of their target customer to reach their horizon. As their products’ demand is superior in the retail market, retailers had to purchase more of their products from the stockists, which ultimately reduced the turnover of stockists at the end of the year. If the company can replenish the empty stocks, retailers will be able to sell more of ACI’s products.

Following production concept would help ACI Crop Care to be the leader in stockist zones.

Competitive advantages:

A firm is profitable if the value it commands exceeds the costs involved in creating the product. Creating value for buyers that exceeds the cost of doing so is the goal of any generic strategy. Value, instead of cost, must be used in analyzing competitive position. To succeed competing with others, ACI Limited keeps bringing technological amendments into the company and makes sure all the employees are delivering the best of their potential by rewarding them

Competitive strategies:

Among four competitive advantages, ACI Crop Care follows only two of them. Following cost leadership and differentiation strategy helps the organization outperform its competitors.

Cost leadership:

Cost leadership is a concept developed by Michael Porter, used in business strategy. It describes a way to establish the competitive advantage. Cost leadership, in basic words, means the lowest cost of operation in the industry. The cost leadership of ACI Limited varies from one business unit to another depending on efficiency, size, scale, scope and cumulative experience of each. ACI Crop Care’s cost leadership strategy aims to exploit scale of production, well defined scope and other economies, producing highly standardized products, using high technology.

Cost leadership is different from price leadership. Among all other competitors, ACI Crop Care’s cost production is one of the lowests, which helps to offer lowest-priced products or services to the target market. So, the company usually has a higher than average profitability than competitors, as already comprehended from the Retailer Information charts. However, ACI Crop Care does compete on price and are very effective at such a form of competition, having a low cost structure and management.

ACI Crop Care’s goal for following cost leadership strategy is to offer products or services at the lowest cost in the industry. The challenge of this strategy is to earn a suitable profit for the company, rather than operating at a loss and draining profitability from all market players.

Companies such as ACI Ltd succeed with this strategy by featuring low prices on key items on which customers are price-aware, Like ACI Salt, Flour, and Mosquito Coil, Spices, Vegetable oil etc while selling other merchandise at less aggressive discounts. Products are created at the lowest cost in the industry. An example is to use space in stores for sales and not for storing excess product.

While working as an Intern in ACI Formulations Ltd, I have identified that ACI mainly follow Cost Leadership and Differentiation strategy.

Logics behind Cost leadership strategy:

1. ACI follows cost leadership strategy to offer products at a cheaper rate than competitors on a consistent basis to achieve loyal customers who would use its products for a long time.
2. ACI use penetration pricing offering a low price for a new product or service during its initial offering.. The reason behind using pricing strategy is that customers will buy and become aware of the new product due to its lower price in the market place related to rivals. For example Floora and Kalion.
3. They are able to keep prices low through a division of labor that allows them to hire and train inexperienced employees rather than trained cooks. It also relies on few managers who typically earn higher wages.
4. Keeps its prices low by sourcing its products in low-wage countries and by offering a very basic level of service. Like the purchase there raw materials from China, Thailand, UK.
5. According to the analysis given from above, the main competitor of ACI Crop Care is Syngenta Limited. To compete with a multinational company, beside many other tactics it is important ACI Crop Care be the price leader.

Differentiation Strategy:

In economics and marketing, product differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. This involves differentiating it from competitors’ products as well as a firm’s own products.

ACI achieve product Differentiation through competitive pricing, enhancements to functional design or features, distribution timing, expanded distribution channels, distributor location, brand reputation, product customization, and enhanced customer support.

• In case of competitive pricing they ACI Crop Care is following competitive based and penetration pricing. So they are enjoying fast mover advantage for some unique products.
• In case of product design “ACI Premiflex” sister concern of ACI help to develop product design and packaging which help to make low cost and customer friendly packaging system.
• Expand distribution channel through 10 region and 87 territory help ACI to meet instantly to its customers in case of marketing or introducing their new products.
• In case of brand reputation ACI is known and accepted to all as a pharmaceutical company. So the acceptance of products is high comparing to other company.
• Allocated Sales Promotion Office (SPO) in each zone to keep track of any updates regarding market demand, competitors and to look for new opportunity.
• Consultancies with farmers help them cultivate their crop more efficiently.

Other Competitive advantages that facilitate ACI’s Growth are:

Core Competency:

A core competency is fundamental knowledge, ability or expertise in a specific subject area or skill set. The starting point for ACI Crop Care’s core competencies understands that businesses need to have something that customers uniquely value if they’re to make good profits…

Core Competency of ACI:

• ACI has access to a wide variety of markets, as it is divide its market into ten regions and 87 territories so it is easy for them to meet potential customers. For extensive market coverage they are going to add another 11 territories in this year.
• ACI is contributing significantly in the end-product benefits. The products offered by ACI Limited are unique. Their actual and perceived factors are fulfilling the needs of customer which is not easily imitable by other competitors.

Value Chain:

Value chain is a high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers. For conventionally produced pesticides, the entire supply chain of ACI Formulations Limited has evolved to serve the large global supply and retail chains had favored large producers and wholesale markets. While Organic Standards on one hand has introduced new production practices and norms, on other hand it also prescribes norms for post production handling, processing, packaging, supply chain management, retail, etc. Since the production itself is coming from small holders, spread over large geographical areas, the entire value chain now also offers the scope for the viability and sustainability of agri-business of ACI.

Value Chain of ACI Formulations Ltd:

In value chain system ACI Formulations Ltd purchases its raw materials from renowned companies such as Debi Crop Pesticide, M-Co Pesticide and Sundad. Currently, ACI Limited is doing business with India, China, Singapore, Taiwan, and Peru.

After ACI gets the raw materials with its formula from the foreign company, it assembles its products in ACI Formulation factory. With assembling the products ACI also do packaging, process and quality control. In case of packaging the products “ACI Premiflex” sister concern of ACI usually provides the materials needed for packaging. In case of choosing other company as a supplier of packaging materials, ACI usually selects the lowest bidder from the suppliers.

Mohammad Electrics has been providing raw materials for a long time as an outdoor supplier. When the products are ready, central warehouse send the products according to the requisition of Territory officer (TO). After the requisition made of TO is processed, products are sent to ACI Depot. Invoices are made in ACI Depot from where the products are sent to the stockiest and analogously, retailer to farmers. Here, SPO and TO work as marketing intermediaries.

Database Marketing:

Database marketing is a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.

ACI CC & PH is vastly focused on customer’s database marketing. They have made farmers card projects of 11000 farmers. Each of the cards presents all the information of a particular farmer. Through this card they identify the particular farmer who is occupying more land in a particular territory and use him for the marketing of the product

The another work of this card is to communicate the end user of ACI CC & PH products, what types of crops they usually produce and prescribe them about the use of the fertilizer and pesticides.

Weaknesses Found:

1. Among various competitive advantages ACI only adopts cost leadership and differentiation strategy.
2. It has access to a wide variety of markets, as it has divided its market into ten regions and 87 territories it is easy for them meet customers but a good amount of potential customers are lost where rest of the territories remain unfocused. For that reason in unfocused areas the competitors are benefitting from ACI Limited’s absence. For example in the stockiest list of Barisal the total turnover of ACI is 117.5 (Taka Million) which is lower than the total turnover of Syngenta is 165 (Taka in Million).
3. The lower number of RSM (Regional Sales Manager),SPO (Sales promotional officers) and their lack of knowledge about dealing farmers is also another factor of this lower turnover rate in some particular areas like Barisal.
4. Lack of research on where to mostly focus on. They do not have any R&D sector.
5. Though physical existence of customers plays a crucial role for commercial transactions, in case of value chain ACI communicate to their suppliers through phone or internet. It can often make a hinder in the smooth process of supply chain.
6. Lack of accountability and verification of data provided by SPO’s.

Recommendation:

1. To do a profitable business ACI CC&PH should adopt its strategies along with the strategies ACI Limited.
2. To increase the total turnover rate they should concentrate more on database marketing. Verification of information that are given in the farmers card can help their marketers imagine the real demand in various territories.
3. Cultivation of crops in varies from one place to another, so the number of territories should be increased to satisfy different array of customers differently.
4. HR people should concentrate on hiring skillful people as SPO or RSM and developing their knowledge time to time, as they are dealing with the final customers.
5. To motivate the SPO’s increment should be increased because SPO is the ultimate person only who is interacting with the customers and making them purchase the products.
6. Using of fertilizer and pesticides may hamper the production power of land and soil fertility. So they should build an R&D sector to come up with better solution.
7. Efficient usage of assets can help the organization make more annual profit.
8. As the demand of products in various zones is different, geographic segmentation can be done to realize how much quantity of a product should be supplied in what region.

Conclusion:

Bangladesh is a country with immense agricultural possibilities where ACI Crop Care has already been playing a vital role augmenting opportunities. The company is competitively in more advantageous situation than others because of its long term involvement in agribusiness. While taking various marketing approaches, ACI Crop Care reaches its voluminous number of customers efficiently.

Competitor analysis in marketing and strategic management is an assessment of strengths and weaknesses of current and potential competitors. This analysis provides both aggressive and defensive strategic contexts to identify market opportunities and unknown threats. Multinational companies such as Syngenta despite being a multinational company can be titled as market challenger, has capability to earn more market share. But nothing is enough for business. There is always something to do in the business field which can keep the business competitive. Despite hard competition among all big competitors ACI CC & PH has made tremendous and remarkable progress practically in every sphere of its activities. This success has been made possible due to dynamic leadership of its management as well as devotion and sincerity of all categories executives.