pp castrol
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ITS MORE THAN JUST OIL.ITS MORE THAN JUST OIL.
ITS LIQUID ENGINEERING.ITS LIQUID ENGINEERING.
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CIL: Managing in challenging
Times The Indian branch of Castrol was set up in
1919 and the name was changed toCastrol Ltd. in 1944.
Before 1991 they were governed byIndian Oil Corporation so they focused onmanaging within the availability of baseoil.
After 1991 due to liberalization theyfocused on volume growth and marketshare.
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Due to liberalization, MNCs encouraged tocome in India which result in increasing
competition but CIL was only focused onvolume growth and due to that their salesdeclined.
CIL focused on strategically important andgrowing segments namely:
1) Engine oil for cars.
2) Two wheelers.3) New Truck.
So, the overall sales volume continued todecline.
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PROBLEMPROBLEM
They focused on volume growthThey focused on volume growthignoring cost efficiency and costignoring cost efficiency and costeffectiveness, so the sales waseffectiveness, so the sales was
declined.declined.
SubSub--problem :problem :
In the year 2001In the year 2001--02 the02 thecommercial vehicle sales declined.commercial vehicle sales declined.
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20012001--acquistion of CIL by Britishacquistion of CIL by BritishPetroleumPetroleum--focus in efficient supplyfocus in efficient supplychain management.chain management.
ThreeThree broadbroad segmentssegments ofof lubricantlubricant--
automobile,automobile, industrial,industrial, marinemarine..
PublicPublic sectorsector oiloil companycompany dominatesdominatesthethe indianindian lubricantlubricant industryindustry byby aamarketmarket shareshare ofof 9090%%-- beforebeforeliberalizationliberalization..
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MNCs set up their plant in IndiaMNCs set up their plant in India--Due toDue to
deregulation ( shell, Mobil, Gulf Oil, BP )deregulation ( shell, Mobil, Gulf Oil, BP )
ThreeThree PhasesPhases ofof CILCIL--
SurvivalSurvival PhasePhase--BeforeBefore 19911991
GrowthGrowth PhasePhase--19911991 toto 19961996
CostCost--effectivenesseffectiveness PhasePhase--19971997
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Functional strategiesFunctional strategiesH
SSEH
SSEProduct market and positioningProduct market and positioning
strategystrategy
Procurement policyProcurement policy
Rationalization of distributionRationalization of distribution
systemssystemsResponsive cost management systemResponsive cost management system
Performance management systemPerformance management system88
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HSSEHSSE
Health safety security andHealth safety security and
environmentenvironment
ISO 14000ISO 14000
Social investment programmesSocial investment programmes
Focus on health hygiene educationFocus on health hygiene educationPartnership with 750 droughtPartnership with 750 drought
affected villagesaffected villages99
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Product market andProduct market and
positioning strategypositioning strategy
The customer, the serviceThe customer, the service
organization and the individualorganization and the individual
service provider.service provider.
BP communication strategyBP communication strategy-- savingssavingsof diesel.of diesel.
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Product market andProduct market and
positioning strategypositioning strategy
Mass media , direct consumerMass media , direct consumer
contact, BP health mediacontact, BP health media-- aimed ataimed atreaching 250000 customers.reaching 250000 customers.
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Procurement policy: criticalityProcurement policy: criticality
and scaleof
spendingand scaleof
spending
Managerelationships
base oil
Partnershipsand profitsharing
outsource Do deals
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Rationalization ofdistributionRationalization ofdistribution
systemssystemsInnovative workshopsInnovative workshops
Assurance and satisfaction to theAssurance and satisfaction to the
involved automotive customersinvolved automotive customers
Programme to make customerProgramme to make customer
management process best in themanagement process best in theworldworld
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Responsive costResponsive cost
management systemmanagement systemDone through cultural change fromDone through cultural change from
chasing production volume targets tochasing production volume targets todeveloping competitiveness through totaldeveloping competitiveness through total
quality management, business processquality management, business process
reengineering, and a change in mindset.reengineering, and a change in mindset.
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11stst PhasePhase -- Survival PhaseSurvival Phase
Manage within the limitedManage within the limited
availability of resources.availability of resources.
Company unable to invest or earnCompany unable to invest or earn
money.money.
Under investment and underUnder investment and underutilization of plant capacity.utilization of plant capacity.
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22ndnd PhasePhase-- GrowthGrowth
PhasePhaseThe strategic thrust on creatingThe strategic thrust on creating
capacity, modernizing infrastructure,capacity, modernizing infrastructure,improving quality and hiring people toimproving quality and hiring people to
manage change.manage change.
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33rdrd PhasePhase-- Cost effectiveCost effective
PhasePhase
The supply chain in CIL geared to makeThe supply chain in CIL geared to make
this whole change happen. i.e., thethis whole change happen. i.e., thestructure was changed.structure was changed.
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How organizations goHow organizations go
international..?international..?Global sourcingGlobal sourcing
Licensing or franchisingLicensing or franchising
Strategic alliancesStrategic alliances
Importing or exporting ( adopted byImporting or exporting ( adopted by
lubricant industry in 2003)lubricant industry in 2003)
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Management byManagement by
objectivesobjectivesMBO programs have 4 elements:MBO programs have 4 elements:
goal specificity, participativegoal specificity, participativedecision making, an explicit timedecision making, an explicit time
period and performance feedback.period and performance feedback.
Castrol followed MBO as it hadCastrol followed MBO as it hadobjectivityobjectivity..
1919
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PLANPLAN
They should also concern about costThey should also concern about costefficiency and cost effectiveness.efficiency and cost effectiveness.
ACTIONACTIONThe major focus of CIL should be onThe major focus of CIL should be on
the value of the market rather thanthe value of the market rather than
on the volume of the market.on the volume of the market.They should make supply chain moreThey should make supply chain more
effective by focusing on chasingeffective by focusing on chasinggrowth to cost effectiveness.growth to cost effectiveness.
2020