Asian Paints Expansion Strategy in Middle East.Docx

Contents

Asian Paints Expansion in Middle East        

Acquisition of Berger        

Product/Market Mix        

Organizational Structure and Organizational culture        

Divestments        

References        

Appendix        

Asian paints Subsidiaries        

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. [pic 1]

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, AP’s 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 Berger’s 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.