Dissertation project report ON

Business strategy of

(Project Report submitted in partial fulfilment for the degree of PGDM) Prepared By Rajesh Kumar Nayak Roll No: - IBS10PGDM012 Under the guidance of
Name of Internal Guide:

Mr. Bhagbat Barik Professor Marketing Innovation-The Business School, Khurda

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Muktapur Khurda 752055

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OBJECTIVE OF RESEARCH

To analyze the business strategy of Marico with respect to various strategically tools. To understand the logistic & value chain in case of Marico.

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SCOPE
By this study, it helps to understand the theoretical aspect. To know the strategy of Marico and position of Marico in market

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INTRODUCTION
Marico is a leading Indian Group in Consumer Products & Services in the Global Beauty and Wellness space. Marico is present in more than 25 countries across Asia

and the African continent. The company recorded a turnover of Rs. 31.3 billion (~USD 695 Million) in 2010-11. Our vast portfolio of enduring brands such as Parachute Advansed, Saffola, Hair & Care, Nihar, Mediker, Revive and Manjal are leading household names today. Marico's international portfolio includes brands like Fiance, Haircode, Camelia, Aromatic, Caivil, Hercules, BlackChic, Code 10 and Ingwe Marico's
brands and their extensions occupy leadership positions with significant market shares in most categories- Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment, Premium Refined Edible Oils, niche Fabric Care etc. Marico is present in the Skin Care Solutions segment through Kaya Skin Clinics (101 in India, Middle East and Bangladesh) and its soap franchise.

Marico's branded products are present in Bangladesh, other SAARC countries, the Middle East, Egypt, Malaysia and South Africa. The Overseas Sales franchise of Marico's Consumer Products (whether as exports from India or as local operations in a foreign country) is one of the largest amongst Indian Companies and is entirely in branded products and services.

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HISTORY
The company was originally a join venture between a Lever group company and Nissin of Japan, and its products were distributed through HLL's channels. In 1988 The Company was incorporated on 13th October, under the name of Marico Foods Ltd. It obtained the Certificate of commencement of business on 22nd November. In 1989 The name of the Company was changed to Marico Industries Limited w.e.f. 31st October. In December, the Company entered into an agreement with M/s. Rasoi Industries Limited for purchase of its unit located at M.I.D.C Industrial Estate, Jalgaon. Saffola won the Most Outstanding `Brand of the Year' Award instituted by the Advertising Club of Mumbai in 1993. In March 1996, the Company made a fresh issue of 10,00,000 equity shares of Rs.10/- each, at a premium of Rs.165/- per share, simultaneously with an offer for sale by the promoters of 26,25,000 equity shares of Rs.10/- each, at a premium of Rs.165/- per share. In 2002 Marico Industries Ltd has informed BSE that the Board approved the Issue of bonus redeemable preference shares of aggregate face value of Rs 290 million. Ratio -- 1:1 on equity enhanced after bonus issue of equity shares made by the Board on April 18, 2002 and approved by shareholders on July 18, 2002. The rate of dividend is 8% p.a.Increase in authorised share capital of the Company from Rs 300 million to Rs 600 million. Marico acquires HLL`s Nihar for Rs 216 cr in 2006 In 2007 Marico Ltd has appointed Mr. Anand Kripalu as an Additional NonExecutive Director on the Board of Directors of the Company.

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PRODUCTS

Saffola

Hot Oil

Hair & Care

Nihar

Shanti Badam Amla

Mediker

Caivil

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VISSION AND MISSION

'COME WIN' ---- their vision and mission is captured in this acronym, which when
bifurcated means the following: -

Consumers: For they are the reason we exist.

The primary focus of our efforts will be to not only understand what adds greatest value to the consumer but also change and reinvent ourselves if need be. We will translate the consumer's needs and desires into marketable products and an everexpanding base of loyal consumers, with speed and a quality of response that surpasses the competition.

Membership: For a sense of ownership empowers us.

Wholesome membership is when a person brings his/her entire being into the organization. It also gives each member a role in articulating and shaping the destiny of the organization, which in turn, builds commitment and ownership.

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Excellence: For it unleashes our potential.

We will focus on policies and practices where people produce consistently superior performances and where people are encouraged to discover their untapped potential.

Wealth: For on it hinges our growth.

All our efforts must culminate in the creation of wealth. We will do so by continuously adding value in everything we do through a variety of methods. We will use sources productively, eliminate waste, reduce cycle times and costs and enhance the consumer base.

Innovation: For it gives wings to ideas.

The future of our organization rests on our willingness to experiment, push in new and untested directions, think in uncommon ways and take calculated risks. Continuous improvement should be a part of everyday work. We acknowledge that failure is inherent in any new initiative. We will commit resources for experimentation and invest in processes for reviewing and sharing of learning.

Marico's Goals and objectives (which they wish to achieve by 2010)

We commit ourselves to improving the quality of people's lives in several parts of the world, through branded fast moving consumer products and services.

SWOT ANALYSIS

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Before going to the Marico Companys SWOT Analysis we must understand which things are included in the SWOT analysis;

SWOT Analysis of Marico Ltd.

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ENVIRONMENT THREAT AND OPPORTUNITY PROFILE (ETOP)

Environmental scanning usually refers just to the macro environment, but it can also include industry, competitor analysis, marketing research (consumer analysis), new product development (product innovations) or the company's internal environment. Macro environmental scanning involves analysing: Economy Government Legal Technology Potential Suppliers Socio-cultural

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Economy

GDP per capita economic growth unemployment rate inflation rate consumer and investor confidence inventory levels currency exchange rates merchandise trade balance financial and political health of trading partners balance of payments future trends

Government

political climate - amount of government activity political stability and risk government debt budget deficit or surplus corporate and personal tax rates payroll taxes import tariffs and quotas export restrictions restrictions on international financial flows

Legal

minimum wage laws environmental protection laws worker safety laws union laws Sunday closing laws municipal licenses laws that favour business investment

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Technology

Efficiency of infrastructure, including: roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc. industrial productivity new manufacturing processes new products and services of competitors new products and services of supply chain partners any new technology that could impact the company cost and accessibility of electrical power

Potential suppliers

Labour supply
o o o o o o o

quantity of labour available quality of labour available stability of labour supply wage expectations employee turn-over rate strikes and labour relations educational facilities

Material suppliers
o o o o

quality, quantity, price, and stability of material inputs delivery delays proximity of bulky or heavy material inputs level of competition among suppliers

Service providers
o o

quantity, quality, price, and stability of service facilitators special requirements

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Socio-cultural

Demographic factors such as:

o o o o o o

population size and distribution age distribution education levels income levels ethnic origins religious affiliations

Attitudes towards:
o o o o o o

materialism, capitalism, free enterprise individualism, role of family, role of government, collectivism role of church and religion consumerism environmentalism importance of work, pride of accomplishment

Cultural structures including:

o o

diet and nutrition housing conditions

Scanning these macro environmental variables for threats and opportunities requires that each issue be rated on two dimensions. It must be rated on its potential impact on the company, and rated on its likeliness of occurrence. Multiplying the potential impact parameter by the likeliness of occurrence parameter gives a good indication of its importance to the firm.

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Financial capability factors of MARICO Company

Cash management Centralized payment Decentralized collection Low investor confidence

Marketing capability factors of MARICO Company

Distribution channel Wide variety of product Low company image Low promotion Fixed price

Operation capability factors of MARICO Company

Plant location as per raw materials availability Absorb imported technology R & D system is so good MIS system of operation and control system

Personnel capability factors of MARICO Company

Good personnel system Good industrial relation with other company

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THE BOSTON CONSULTING GROUPS GROWTH-SHARE MATRIX (BCG)

BCG Matrix Include; 1. Stars are high market share/high growth businesses. The preferred strategy is growth.
2. Question Marks are low market share/high growth businesses. The preferred

strategies are growth for promising question marks and restructuring or divestiture for the other question marks. 3. Cash cows are high market share/low growth business. The preferred strategy is stability or modest growth. 4. Dogs are low market share/low growth businesses. The preferred strategy is retrenchment by divestiture.

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BCG MATRIX OF MARICO

STAR
It is represented by a SBU or a product having high relative market share and high market growth rate. It need capital over and above its cash flow to maintain its market share. However in may be self sustained in terms of cash flow when it is established and beginning to mature ultimately it becomes cash cow, on maturity, because it cannot absorb further cash. It cannot absorb further cash; it provides cash for growing stars. It suggested Expansion Strategy for STAR E.G. KAYA SKIN CARE AND PERACHUTS COCONUT OIL IN MARICO AND IN THE INDUSTRY HLL AND GODREJ COMES IN THIS CATEGORIES. These product is in STAR but there cash flow will be less it will be become cash cow because there use full all over the world.

QUESTION MARK
It represented by a SBU /Product having low relative market share and high market growth rate I.E low market share in a growing market. It requires large cash due to market growth, but generates less cash due to low market share.It requires additional investment to increase its competitive advantage or divestment.

E.G NIHAR, SAFFOLA (FUNCTIONAL OIL) AND IN THE WHOLE INDUSTRY DABUR COMES IN IT. These product company given more advertisement. Because these product not more popular in the market. So company given more cash to these product.

CASH COW

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It represent by a SBU/Product having high relative market share and low market growth rate. It generates substantial cash over and above its investment requirement. It may be a SBU/Product in maturity life cycle stage. It is not attractive in long ran due to less market growth rate to meet the investment need of stars on question marks, over heads and growth strategy is suggested. E.G SAFFOLA (EDIBLE OIL), SILK N SHINE AND IN THE ABOVE EXAMPLE ITC COMES. These product market share is high but there market growth rate is low because there competitor is so much in market. In the market SAFFOLA OIL competitor is so much like as FORCHUN OIL , DARA OLI etc.

DOG
It represents a SBU/Product having low relative market share and low market growth rate. It has very low competitive position due to high costs, poor quality ,poor marketing etc.It also has low growth potential due to low market growth rate. It does not generate enough cash even for its own continuity. So Retrenchment Strategy usually by divestment or liquidation is suggested. It may be in the declining stage of its life cycle. Government policy may retain a dog artificially.

E.G MAHA THANDA AND IN THIS EXAMPLE MARICO COMES

These product in market so very people know and there marketing is so less to other product of company. This product competitor is NAVRAT COLL DABAR Etc.

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GE NINE-CELL MATRIX McKINSEY & Co

This matrix follows two dimensions;

Industry Attractiveness
Market Size and growth rate Industry profitability Seasonality Political Factors Capital requirements etc.

Business Strength
Relative Market Share Relative price, service Knowledge of Customers & Markets Financial Resources

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Cell 1:
It has high business strength and strong Industry attractiveness. It is suggested the growth strategy. In long run other players may be attracted and Industry attractiveness reduces. E.G: Like as parachute is more attractiveness but now there competitors are so much but there attractiveness is same as earlier.

Cells 2:
It shows average business strength and high industry attractiveness. So it suggested growth strategy by building up of business strength. But if it does not happen it is dangerous. E.G: Like as Parachute Advanced Oil attractiveness is high but there competition of

this product strength is average because in the market parachute Oil is sold. So that here, only company change name. The product attractiveness is so much but here product strength is average.

Cells 3:
It has High Business Strength and attractiveness is medium. Here growth Strategy suggested. E.G: Like as NIHAR and SILK N SHINE strength is high but there attractiveness is medium because their competitors is so much in these product.

Cell 4:

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It has business strength is average and attractiveness is medium. It will be hold and continue to earn. It say Suggested Stability Strategy. E.G: Like as SAFFOLA (OIL) there both are average but in the market there are

many products is strong to compare to SAFFOLA.

Cells 5:
It has high business strength and Low attractiveness of Industry can grow by neither vertical integration nor diversification where its strength can be utilized. Otherwise, it should be continued to harvest profit.

Cells 6:
It has high attractiveness of industry but low business strength. It suggested stability and growth for business strength. It may continue to earn in attractive industry or improve its strength and grow or if it is not possible its divest.

Cells 7 & 8:
In the res zone suggest harvestmen or turnaround strategy .

Cells 9:
It is least attractive and weak, so immediate is suggested.

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STRATEGIC BUSINESS UNIT

Maricos Strategic Business Unit

Consumer Products Business:

Over the past 17 years, Marico has been continually improvising and building new brands. Marico's Consumer Products Business houses well-known brands such as Parachute, Saffola, Sweekar,Hair & Care, Nihar, Shanti, Mediker, Revive, Manjal, among others, which occupy leadership positions with significant market shares in most categories- Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment, Premium Refined Edible Oils, niche Fabric Care etc. Every month, over 70 Million consumer packs from Marico reach approximately 130 Million consumers in about 23 Million households, through a widespread distribution network of more than 2.5 Million outlets in India and overseas.

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International Business Group:

The International Business Group of Marico operates in more than 20 countries spread across Asia, Middle East and Africa and has manufacturing facilities in Egypt, South Africa & Bangladesh. The International Business group has witnessed phenomenal growth over the years and contributes to 25% of Maricos turnover. The company has full fledged operations in Egypt, South Africa, Middle East and Bangladesh. In addition, the International Business group is actively involved in creating opportunities for future growth and has enabled our brands to be present in many other markets across the globe.

Kaya:

Kaya Ltd (erstwhile Kaya Skin Care Ltd.) was an entrepreneurial leap of faith marking Marico's entry into skin care solutions business. It was a true reflection of uncommon

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sense for a company in hair care products to move, instead of merely logical product extensions, straight into skin care services. It attempted to leverage Marico's strengths in the Personal Care business and in-depth understanding of the needs of the Indian consumer and her/his desire to enhance her/his natural beauty with the best cosmetic dermatology procedures available internationally.

Kaya Ltd. has been focused on meeting the emerging needs of the modern day consumers by providing useful and effective services in the beauty and wellness space. The pioneering effort has been in the area of skin care with Kaya Skin Clinic. Over the last 7 years Kaya Skin Clinic has refined the standards and professionalisms of the skin care industry through innovative, world class treatments and services that have been tailor made to suit Indian skin.

Kaya Skin Clinic

The philosophy at Kaya is governed by the single value of placing the customer first at all times. The emphasis, therefore, is to offer personalized, world-class skincare treatments and services, most suited for Indian skin, in a zen like, state-of-the-art clinic. Since its first prototype in Bandra in 2002, Kaya Skin Clinics has grown at an unprecedented pace, with over 100 clinics in India, Middle East and Bangladesh.

Kaya Services
Kaya has a host of services that will help you attain, regain, preserve and protect the intrinsic beauty of your skin. All this is offered in serene, zen like ambience, under the reassuring care of dermatologists and experienced skin practitioners, to aid you to easily look your best, always.

Skin Beauty Services:

Skin polishing and brightening Kaya Glow Kaya Back shine Meso Glow

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 Skin Lightening Peel Kaya Advanced Facial Kaya Express Glow

BUSINESS LEVEL STRATEGIES

1. Cost Leadership Business Level Strategy

In company attains there competitive advantages & Increased their market share by offering products and services. Company offering product and services having the same utility, utility features as competitors products and services. Company substitute products and services; but the price lower than their competitors. Because of its core competence in engineering, design, manufacturing, distribution etc.When there is price elasticity of demand i.e. positive co-relation between price reduction and demand.

Cost leadership is achieved by Marico Company

Early entry in business. Accurate demand forecasting.

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 High capacity utilization. High level of standardization of products and uniform services packages. Aiming at average customer by giving generalized set of utilities & thereby attracting more customers. Conditions For Cost Leadership Being Successful Are As Price based competition is so severe that cost becomes an important factor. Buyers are price sensitive and low price attracts more buyers. Buyers are many and have bargaining power for price reduction There are very few ways of differentiation and it is not important to customers.

Advantages of Cost Leadership Are As Following:

In company it protection against competition if a company make lower structure of products. There is less effect because powerful suppliers bargain for high price so that such price rise to better absorbed in low cost structure. It serves as entry barrier to new company which can not produce at lower price.

Company has so many products so that company use these strategy for there product market share increase in market. If company not use these strategy for there product company not sell there product in market because companys so many competitors. So many products growth is so much as compare to there anther products.

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2. Differentiation Business Level Strategy

Company make such product/services is differentiating from there competitors. Which are not offered by competitors. Company see the which customers are ready & willing to pay premium price which can compensate additional cost of differentiation.

Company Make Differentiation at These Point

By enhancing the quality i.e. offering stronger, bigger, better, vastly, improved products. By enhancing versatility, safety, utility and convenience for customers to match their tastes and preferences.
By changing size, weight, materials. Accessories of products i.e. from of

products.

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 By style improvement by increasing aesthetic appeal, by symbols, by media, by atmosphere, by new packaging etc. By improving the quality of inputs i.e. raw materials. By better durability, reliability, design, process of manufacturing, modern, technology, collaboration with valued partner, unique location etc. By lower operational cost of using the products/services. By offering complete range of products /services etc. By coverage, expertise and performance of channels. Company make product for Skin is KAYA Skin Care these is so much differentiation to other. Company make for night crme is PARACHUTE NIGHT REPAIR CREME.

GROWTH STRATEGY
Growth is a way of life. Almost all organizations plan to expand. This strategy is followed when an organization aims at higher growth by broadening its one or more of its business in terms of their respective customer groups, customers functions, and alternative technologies singly or jointly in order to improve its overall performance.

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There are five types of expansion (Growth) strategies Expansion through concentration Expansion through integration Expansion through diversification Expansion through cooperation

Growth through Acquisitions

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Marico has acquired five companies in the last 18 months to expand its product lines and business. The company acquired a number of brands such as Aromatic soap in Bangladesh, Manjal toilet soap and Nihar hair oil in India, and Fiance hair care brand in Egypt. The Ready Group's Fiance hair care brand has captured 20 per cent of the Egyptian market. Marico is leveraging the popularity of the Fiance brand to expand its business in Egypt and other parts of the Arab world.

VALUE CHAIN ANALYSIS OF MARICO

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Concept
A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. It is important not to mix the concept of the value chain with the costs occurring throughout the activities.

Activities
The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), , marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity.

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Support activities

Administrative Infrastructure Management Human Resource Management Technology (R&D) Profit Procurement Profit margin

Margin
Inbound logistics Operation Outbound logistics marketing & sales services

Primary activities

Primary activities of MARICO

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Inbound logistics These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm. Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. MARICO purchase their raw material from all around the world.
In order to maximize their availability of raw material MARICO maintain good

relationship with their suppliers.

MARICO use JIT (Just in Time) approach for handling of raw material.

Operations These are the activities related to the production of products and services. This area can be split into more departments in certain companies. For example, the operations in case of a hotel would include reception, room service etc. This is where goods are manufactured.
Operations could include organizing the parts to make final FMCG Product. MARICO are known for their reliability which comes from efficient operations.

Outbound logistics These are all the activities concerned with distributing the final product and/or service to the customers. For example, in case of a hotel this activity would entail the ways of bringing customers to the hotel. The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. MARICO manage their Distributor and Super Distributor in different rural and urban area.
MARICO make their product easily assessable.

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Marketing and sales This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firms products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products. MARICO given TV ads and magazine for a marketing. This area focuses strongly upon marketing communications and the promotions mix.

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MARICOs Supply Chain

Service There is often a need to provide services like pre-installation or after sales service before or after the sale of the product or service.
This includes all areas of service such as final checking, after-sales service

Like quality, quantity, packaging, weight etc.. MARICO values their customers.

Support activities of MARICO

Procurement

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This function is responsible for purchasing the materials that are necessary for the companys operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices.

This function is responsible for all purchasing of goods, services and materials. The aims to secure the lowest possible price for purchases of the highest possible quality.
MARICO will be responsible for outsourcing and e-Purchasing (using IT and

web-based technologies to achieve procurement aims). Human Resource Management This is a function concerned with recruiting, training, motivating and rewarding the workforce of the company. Human resources are increasingly becoming an important way of attaining sustainable competitive advantage. Employees are an expensive and vital resource. MARICO manage recruitment and selection, training and development, and rewards and remuneration. MARICO consider their employees as HUMAN CAPITAL. Equal support comes from our HRD team, which expends its energies, formulating and building strategies to build a stable and high - talent organisation. The innovations and the quest for excellence at Marico continue unabated. Even as the success stories continue, the focus from the consumer never shifts. Toyota motors uses following techniques to retain their employs Recruitment Selection Training and development Compensation Maintenance

Technology Development This is an area that is concerned with technological innovation, training and knowledge that is crucial for most companies today in order to survive.

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 Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage.
MARICO implemented production technology, Internet marketing activities,

lean manufacturing, Customer Relationship Management (CRM), and many other technological developments. Firm Infrastructure This includes planning and control systems, such as finance, accounting, and corporate strategy etc. This activity includes and is driven by corporate or strategic planning. MARICO implemented Management Information System (MIS) and other mechanisms for planning and control in different departments.

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