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Category: Business

Autor: anton 12 January 2011

Words: 7915 | Pages: 32


Working on this report has been a rich and rewarding experience, thanks to the camaraderie, generous guidance and encouragement of our teacher Syed Mateen Ahmed.

Our sincere gratitude to the Naseer Ahmed, Controller Purchase – Berger, we interviewed for this term report, for his generous time and insights, especially for granting us the permission to collect first hand information about the company itself and allows us to carry on with our research on their business strategies. And how the business world truly runs and promotes its products.

In the end we would like to thank God in helping us accomplish this task, and our teacher who gave us the opportunity to experience the dynamic world in person.


This report examines the competitive position of Berger Paint Pakistan. Various industry sectors in which Berger in active are described to give a feel of the business. The starting point of this report was the analysis of the mission and vision statements. The vision statement had room for improvement and we have suggested a more strategic vision statement.

Financial analysis of the past 3 years was done to uncover the profitability and health of the business. Highlight of the financial information have been presented in our report. The number crunching was done by taking into account industry averages and expert opinion. This helps understand how secure the business is.

Different matrices we constructed to understand how Berger Paints challenges its competitors. These matrices focus on internal strengths and weaknesses as well as external opportunities and threats. The rating for each matrix is based both on industry standards and company performance on each measure. These matrices aid comprehension and are very useful in presenting company strategic success.

This report then goes on to highlight a real issues that is currently being faced by the Berger management. The problem is identified and a solution has been proposed.


The history of BERGER is as old as the history of organized paint manufacturing. The first company to introduce premium quality paints in the country. BERGER started its operations in 1950. Initially the paints were imported from the United Kingdom. It was in 1955 that a local manufacturing facility was established at Karachi. Ever since, the Company has met the growing demand through regular extensions in its products range, which has continued to attract a healthy market share and has maintained a high reputation for consistent quality.

BERGER PAINTS PAKISTAN became a public limited company in 1974, when 49.38% of the shares were acquired by Pakistani investors with the remaining 50.2% being held by the U.K. parent company, Jenson & Nicholson Limited. Soon afterwards, Jenson & Nicholson Limited were taken over by Hoechst, one of the world's major manufacturers of chemicals and allied products.

Berger alternatively is a brand which apart from being extremely popular amongst the household segments enjoys unquestionable loyalty of the institutionalized segments. Its wide product range and its growth with respect to the innovation it keeps bringing to the market marks its stature as the most solid and vicious threat to ICI. Some of the characteristics that make Berger equally popular amongst many is its distribution coverage with a network of 13000 dealers that is very close to that of ICI and its wide product range.

3.1. Strategic Intent

Berger Paints team intends to become the market leader in the Paints Business. We wish to be recognized for offering the best products and excellent customer service. We will stay in the forefront of innovation and tech development, run a high quality, profitable and growth oriented business in an exciting and safe environment.

3.2. Our Vision

"Pakistan’s dominant manufacturer and marketer of paints, coatings and allied products and services."


I believe the mission and the vision statements of Berger are completely out of sync. Whilst the vision statement is clear about the business Berger is in the mission statement only contains the paints and leaves out the coating and allied products and services.

The vision statement is supposed to give the employees something to look forward to attain. The word dominant is very vague. Does this mean that Berger wants to be number one in the industry or does it want to be one of the majority market share holder. The vision statement of the company should be crystal clear of what the company wants to attain in the long term rather than having vague terms which hold no value for the employees.

Whilst the vision statement breaks down Berger into 2 departmental wise functions, namely manufacturing and marketing, the mission statement does not have anything related to these functions mentioned.

The mission statement should have the what, who and how for these departments as they are the backbone of Berger.


“To be Pakistan’s number 1 manufacturer of paints, coatings and allied products and services by attaining the highest levels of quality and customer satisfaction”


The company's employees are constantly encouraged to pursue the fulfillment of the Corporate Mission Statement.

We will stay in the forefront of innovation and technological development in the paintindustry.

We will achieve corporate success through an unwavering commitment to provide our customers high quality products to their ultimate satisfaction.

We will vigorously promote and safeguard the interests of our employees, our shareholders, our suppliers and all our others business associates.

3.3.1. Analysis of mission statement

Berger is a partially integrated firm meaning that it has to rely heavily on suppliers for the completion of its manufacturing process. That is one of the reasons why the mission statement of Berger clearly seeks to involve the stakeholders of the company. Through its mission statement it tries to build a harmonious environment to work with its suppliers and business associates.

The mission statement fails to really justify the companies’ competencies and whilst it mentions innovation and technology, it fails to give a specific development. This mission statement could apply generally to all the players of the paint industry.

The mission statement of Berger is also very broad in nature. The second and the third point of the mission statement could apply to any kind of company from any industry.

The mission statement of Berger on the whole fails to incorporate the 3 basics which are WHAT, WHO and HOW.


To focus on the varying requirements of diverse groups of customers, BERGER's range of products has been assigned to six different Divisions.

3.4.1. Decorative Division

The Decorative Division brings BERGER in close contact with a large number of people for whom top of the line brands like Robbialac VIP Emulsion, Robbialac VIP Super Gloss Enamel and Robbialac VIP Allrounder have become household names.

BERGER's concern extends beyond the commercial or even the aesthetic aspects. The Company remains aware of the Environmental and health impact of its products. BERGER became the first company in Pakistan to modify its formulations to ensure that all its decorative paints are LEAD-FREE.

BERGER decorative also includes exclusive products such as Aquasafe for water tanks, Roof shield and Tartaruga.

3.4.2. Buildings Chemicals Division

The Building Chemicals Division offers products that are suitable for all stages of construction the ones, which enhance the life of the structure itself and others that add visual appeal. The Division makes a variety of products designed to perform specific functions such as:

• Filling cracks, holes and gaps to cover imperfections in plaster, wood and other building materials.

• Providing an impervious coat to prevent the staining of walls through moisture penetration.

• Improving the adhesion of paint to different surfaces.

• Protecting the interior of water tanks with non-toxic coatings.

3.4.3. General Industrial Division

The General Industrial Division markets a wide range of products, many of which are custom-made to meet the exact specifications of individual industrial buyers. These products are designed and offered in light of specifications and demands of each customer based on their products and market. Besides offering painting solution, BERGER also provides technical back-up & support when & where needed. By virtue of this customized service & close technical relationship, many leading customer goods are now consider as leading brands including transformers, sewing machines fans, washing machines, gas appliances, light fixtures, fans, bulbs, canes, tubes, auto parts and crown caps.

3.4.4. Protection Division

The Protecton Division makes heavy duty protective coatings and anti corrosion paints for specialized structures such as barrages, dams, bridges, pipelines, boilers, and a wide range of metal fabrications which are exposed to the hostile environmental elements.

Protective Coating serves the dual purpose of protecting surfaces from chemical reactions as well as improving the visual appeal. These protective paints conform to international standards of quality and are designed to resist the severity of extreme environmental as well as corrosive effects of atmosphere, oil and other decaying agents.

BERGER also formulates sophisticated and high technology protective systems for ships and offshore installations where corrosion is endemic.

3.4.5. Automotive Division

The Automotive Division specializes in paints for the motor vehicle industry, which demands an extremely high quality finish coupled with durability and absolute consistency of colors.

The automobile industry uses heat treatment processes for painting of vehicles, and it is therefore necessary that the colour and other attributes of the paints remain stable even at extremely high temperatures.

BERGER supplies paints to tall the leading manufactures of cards, motorcycles, buses, trucks and tractors in the country. There is a marked sense of achievement in knowing that the Company's paints are used on more than 80% of all the motorcycle assembled in Pakistan, while the three leading car manufacturers are exclusively using BERGER products.

BERGER's collaboration with Nippon now enables the automobile industry to obtain locally manufactured paints specially formulated for the electro deposition process.

3.4.6. Vehicle Refinishes Division

Vehicle Refinishes Division caters to touch-up or complete repainting of automobiles. For such types of coatings, conformance with original color is essential and BERGER's technical experts ensure this in our laboratories.

BERGER offers three different systems for refinishes designed to enable application without heat treatment. These finishes are high glossed, durable, quick drying and exactly matched with OEM colors. Along with finishes, ancillaries are also included in refinishes range such as primer, putty, all kinds of thinners and COB Lacquer. This makes BERGER's products a complete repainting system for vehicles, which is highly demanded across the nation.


• Only two major players in the market – ICI and Berger

• 35% of the market share belongs to ICI and Berger and the rest is seized by mushrooms.

• Mushrooms are of two types - organized and unorganized.

• Organized mushrooms are small companies who have improved their manufacturing style. These companies are ISO certified and cater to lower socio-economic classes. They tend to spend money on advertising and make their presence felt through the media.

• Unorganized mushrooms are small companies, whose operation is restricted to their respective localities only, they lack quality assurance and quality control measures and do not provide after sales service.

• Only one other major player, a company by the name of JOTUN which is a UAE based company and imports directly from Dubai but only targets architects and interior designers.

• Another big player , Nippon Paints has recently started setting up its operations in Pakistan. It will be a while before Nippon becomes a major threat for Berger.


Development of human resource is of key importance for Berger. This is done through continuous training programs that are conducted the year around. The Purpose of these programs is to upgrade and improve professional and technical skills of executive and staff.

A number of monthly and annual employee incentive programs also help building the motivational focus of the work force and maintaining it at the optimum level. The good work of outstanding employees is duly rewarded.

A number of recreational and entertainment activities are also recognized for Berger employees throughout the year and all staff members participate in these events with enthusiasm and interest.


The BERGER name has been associated with paint manufacturing for almost two centuries. The BERGER group has worldwide affiliations, with companies operation in 46 counties. In Pakistan, the history of BERGER is as old as the history organized paint manufacturing. The first company to introduce premium quality paints in the country. BERGER started its operations in 1950. Initially the paints were imported from the United Kingdom. It was in 1955 that a local manufacturing facility was established at Karachi. Ever since, the Company has met the growing demand through regular extensions in its products range, which has continued to attract a healthy market share and has maintained a high reputation for consistent quality.

Slotrapid Limited, a. U.K. based company with diversified business interests, acquired the management of BERGER PAINTS PAKISTAN in 1991.

An associated undertaking, J&N Pakistan Limited, was established at Mirpur in Azad Kashmir early in 1993 to supplement the existing production capacity of the main Factory at Karachi.

Also in 1993, BERGER entered into a technical collaboration agreement with Nippon Paint Company of Japan. Nippon is acknowledged as one of the most sophisticated paint manufacturers in the world, and ranks among the leaders of the paint industry. This collaboration has enabled BERGER to develop automotive and industrial paints conforming to exacting international standards.

With its Head Office at Karachi, BERGER PAINTS PAKSITAN has regional offices at Lahore and Islamabad as well as a wide network of distributors / dealers and sales personnel at all major urban centers of the country.

4.1. Past performance of Berger

The previous years sales values are presented in the snapshot below.

A preview of the financial profits is as follows


Performance Statistics (Million Rupees)


Balance sheet


30 June 2006 2005


Share Capital Paid-up: 57.81 46.25

General Reserve & Surplus: 309.36 257.32

Shareholders Equity: 367.17 303.57

Surplus on Rev. Of F/A: 180.79 186.64

Deferred Tax Liability: 19.29 15.72

Current Liabilities: 1,187.83 875.10

Tangible Fixed Assets: 560.80 426.85

L.T. Investments: 17.95 17.95

L.T. Loans: 10.11 9.99

L.T. Deposits: 7.06 6.30

Current Assets: 1,159.16 919.94

Total Assets: 1,755.08 1,381.03

Sales, Profit & Pay Out:

Net Sales: 2,761.71 2,122.50

Gross Profit: 721.48 515.94

Other Operating Income: 46.77 36.95

Operating Profit: 207.07 123.41

Finance (Cost): (56.58) (20.79)

(Depreciation): (26.47) (20.73)

Profit Before Taxation: 141.47 95.40

Profit After Taxation: 87.47 57.01

Earnings Per Share (Rs): 15.13 9.86

Dividend Cash Per Share 7.00 6.00

Dividend Bonus Share: 1:5 1:4

Share Price (Rs) 165.50 -

Financial Ratios 2006 2005

Price/Earning Ratio: 10.94 -

Book Value per Share (Rs): 63.51 65.64

Price/Book Value Ratio: 2.61 -

Debt/Equity Ratio: 0:100 0:100

Current Ratio: 0.98 1.05

Asset Turn Over Ratio: 1.57 1.54

Days Receivables: 63 61

Days Inventory: 81 98

Gross Profit Margin (%): 26.12 24.31

Net Profit Margin (%): 3.17 2.69

R.O.A (%): 4.98 4.13

R.O.C.E (%): 15.42 11.26

Production Capacity (Lit 000)

Actual Production: 26,127 23,498


As regards financial and operating performance, the company's sales revenue reached Rs 2.762 billion in FY06 from Rs 2.123 billion in FY05, preceding year, registering 30% growth YoY. Sales revenue of FY06, is its historic best. Its FY06 export sales at Rs 66.13 million registered 36% growth over FY05 export sales of Rs 48.63 million.

It has been reported that the Decorative Division is Berger’s flagship division which was major player in making Berger Paints at Rs 3 billion company in terms of sales turnover in 2005-06.

Its automotive division has moved in step with the automotive industry of Pakistan and provides high quality finishes coupled with durability and consistency of colours. Berger became the first company to offer its electro depositing (ED) paint system to the 2-wheeler segment and it is already providing the ED system to its prestigious clientele in the 4-wheeler segment.

Berger’s technical collaboration with PCS Powers, UK for powder coatings is an example of the company acquiring leading edge technology to meet market needs with high quality products.

During the year under review, the company posted gross profit at Rs 721.48 million (FY 2005: Rs 515.94 million) and operating profit at Rs 207.07 million (FY05: Rs 123.41 million) showing 40% and 67.7% increase respectively YoY.

Finance cost shot up by 172%. Profit after taxation at Rs 87.47 million translates into earning per share of Rs 15.13 showing Rs 5.27 increase over previous year's EPS of Rs 9.86 which is quite impressive performance. The directors declared hefty cash dividend at Rs 7 per 10 rupee share and bonus stock dividend in the proportion of 1:5.


Performance Statistics (Mln Rs)

Balance Sheet



Share Capital Paid-up: 69.38 57.81

Reserves & Surplus: 301.09 309.36

Shareholders Equity: 370.47 367.17

Surplus on Revaluation

of Fixed Assets-Net: 176.19 180.79

Deferred Liability: 24.29 19.29

Current Liabilities: 1,432.64 1,187.83

Fixed Assets Tangible: 637.83 560.80

L.T. Investments: 18.46 17.95

L.T. Loans: 13.69 10.11

L.T. Deposits: 8.68 7.06

Current Assets: 1,324.93 1,159.16

Total Assets: 2,003.59 1,755.08

Profit & Loss A/c

Net Sales: 2,040.65 2,002.27

Gross Profit: 524.43 524.13

Other Operating Income: 28.06 27.81

Operating Profit: 125.21 135.43

Finance (Cost): (63.86) (43.49)

Profit Before Taxation: 57.14 85.50

Profit After Taxation: 37.84 60.04

Earnings Per Share (Rs): 5.45 8.65

Share Price (Rs) 153.00 -

Price/Earning Ratio 28.07 -

Debt/Equity Ratio: 0:100 0:100

Current Ratio: 0.92 0.97

Gross Profit Margin (%): 25.70 26.18

Net Profit Margin (%): 1.85 3.00

R.O.A. (%): 1.88 3.42

R.O.E. (%): 10.21 16.35

As regards financial health of the balance sheet, its paid up capital was higher whereas reserves were higher but un appropriated profit were much lower which produced shareholders amount slightly higher than same period last year's. On the other hand there is no non-current liability on account of debts but the current ratio needs further improvement to show better liquidity profile.

The company's "other" operating income were marginally higher but operating profit went down by about Rs 10 million. At the same time, increase in the finance cost by about Rs 20 million further trimmed its profitability. Resultantly pre-tax profit showed decline by Rs 28.4 million to Rs 57.14 million as compared to Rs 85.50 million in 9M 05-06. Despite lower tax provisioning in 9M 06-07, the bottom line showed erosion in post tax profit by Rs 22.2 million to Rs 37.84 million from Rs 60.04 million in 9M 05-06.


5.1. OBJECTIVES – Short Term

• To get the Lahore plant on the same operational level as the previous level at Karachi plant

• To setup the administration at the Lahore plant

• To migrate the employees and all other resources from Karachi to Lahore

• To ensure no loss of business due to the loss of Karachi plant

• To ensure customers maintain a high recall for Berger’s products till the Lahore plant becomes fully operational

• To focus on the distributor network to overcome the shortages in supply due to the fire at the Karachi plant.

5.2. OBJECTIVES – Long Term

• To challenge the market leader ICI by growing our market share to at least 25% in the next 5 years.

• To redesign packaging to a more portable and convenience oriented form.

• To promote model shops of Berger mainly through ATL advertising to create mass awareness of this service

• To establish Berger’s reputation as the pioneer of spray cans before ICI steps in. this should be done immediately to capitalize on this advantage.





The paint industry can be characterized as a fragmented industry divided into the organized and unorganized sector. The organized sector has the following brands:


• Berger

• Jotun

• Nelson

• Happilac

• Master

• Silver Sand

• Black Horse

• Gobi

• Diamond

• Rainbow


The unstructured market, which consists of the organized as well as the unorganized mushrooms, generates 65% of the sales of the paint industry. Berger and ICI on the other hand have a combined share of 35%, with Berger having a share of 15% and ICI being the market leader with a share of 20%

Competition among competitors is low in the decorative segment of the paint industry. The first and foremost reason for this is that the competitors are more diversified rather than specialized.

Another important reason is that the industry is growing rapidly with increased demand especially in the decorative segment, whereas the existing companies are already operating at full capacity.

Also, the reason for lack of intense competition is that a very low portion of costs is tied up in fixed costs and no long term contracts are required which results in low exit barriers.


With regard to the paint industry in Pakistan, there is a high threat of new entrants. The main reason for this being low entry barriers, as there is no requirement of high capital investment to enter the paint business.

Also, there are no proprietary product differences and low switching costs which puts the phrase “brand loyalty” into jeopardy.

What makes the paint industry attractive for newcomers is also the ease of acquiring skilled people, material and supplies. Moreover, lack of long term contracts also contributes towards the attractiveness of the industry for the newcomers.

However, there are established brand identities as well as consolidated distribution channels to be accessed which would result in strong retaliation to be faced by the newcomers.


In this regard the industry seems to be attractive as there are no real substitutes available.

Although products such as distemper (choona), wallpaper, tiles etc. are available but customers are not likely to substitute them for paints as it would compromise on quality and at the same time would not serve the purpose.


Bargaining power of intermediaries is high because the industry is divided into the structured and unstructured market and does not act as a unified whole to leverage the bargaining power in its favour. Therefore the more the channel sells each product, the higher the margin they keep for the company.

The bargaining power of end users however, is low because there are a large number of buyers, each with relatively small purchases.

In addition to this, the organized paint sector has also accepted branding which creates loyalty and decreases the price sensitivity, resulting in low bargaining power of buyers.


Bargaining power of suppliers is low in the decorative segment as inputs required are commodities and there are a number of suppliers available who are fighting for a small market.

Take natural gas for example, a precursor to many ethylene-based and vinyl-acetate-based paint resins. The other raw materials, phthalocyanine crudes, propylene, the starting point of many acrylic paint emulsions, and Acrylic binder are also easily available as either a liquid or gel.

However, since big companies fight on the “quality” dimension and cannot switch suppliers quickly, suppliers are in a position to negotiate their terms upon providing the desired raw material which makes the overall bargaining power of suppliers moderate.


7.1. CPM- Competitive Profile Matrix

This Competitive Profile Matrix compares Berger paints to its major competitor ICI and its particular strengths and weaknesses in relation to Bergers strategic position. Only these two companies are compared as no other paint manufacturer offers a full range of products. This matrix shows that ICI has is performing better than Berger. We can infer from this matrix that Berger paints lags behind ICI in marketing and customer satisfaction. Thus these are the areas of improvement.

Berger ICI

Critical Success Factors Weight Rating Weighted Score Rating Weighted Score

Market Share 0.15 3 0.45 4 0.6

Product range 0.1 4 0.4 3 0.3

Customer Satisfaction 0.1 2 0.2 3 0.3

Quality 0.15 4 0.6 4 0.6

Brand Franchise 0.1 3 0.3 3 0.3

Relative Cost 0.15 2 0.3 2 0.3

New Product Activity 0.15 3 0.45 3 0.45

Advertising 0.1 1 0.1 3 0.3

1 2.8 3.15

7.2. EFE-External Factor Evaluation Matrix

The weighted average score is 2.375 which is less than 2.5. Any score above 2.5 signals that the company is responding in an outstanding way to existing opportunities. The 2.375 score means that Berger is not effectively using strategies to exploit market opportunities and is not able to mitigate threats. The difference is not much but this signals an area for improvement in Berger Paints strategy.

7.3. IFE- Internal Factor Evaluation Matrix

The weighted average score is 2.78 which is greater than 2.5. This result signals that Berger Paints is internally very strong. These strengths are the reason for Berger market power. This result of this matrix is expected from the market challenger. But there is room for improvement and Berger can capitalize more on existing strengths and try to reduce weaknesses. Berger needs to improve the value for money offered to customer.

7.4. SWOT-Strengths, Weaknesses, Opportunities, Threats


• Robbialac established Brand Name.

• Strong Distribution network In North and Quetta

• Targeting both the upper and lower market (2 sister concern brands Buxly and Jensolin)

• Wide product range

• Good value for money (The Buxly series of the Berger Paints has been especially manufactured for customers who expect superior quality performance at an affordable price)

• Well equipped R&D labs

• Exports to Afghanistan, number 1 brand there

• Few Exclusive products and range as Texture Paints, Multi Color Paints and Timber coat range

• Very experienced and qualified technical and sales team


• Confine Marketing Budget

• No regional marketing team

• Not capitalizing on technological partnerships to meet the needs of the growing market.

• Widening product mix puts strain on production distribution, accounting and administration.

• It does not have the technological competence as ICI paints have.


• Start exports to Middle Eastern countries.

• Growth in market due to increase in repainting frequency.

• Introducing innovative features such as fragrance-based paints.

• Regional Marketing Plan, according to each region’s target audience

• Berger is at growth of 135%, best time to build brand equity by focused advertising and promotional mix.

• Increase in exports to Afghanistan due to stabilized conditions

• Setting up of model shops for colour consultancy and customized paint.

• Start manufacturing of chemicals.


• Mushroom’s penetration especially in Center regions, many DOBs (Dealer Own Brands) exists

• Fictitious products

• Human Resource Turnover. Competitors could hire them at better packages especially from technical side.

• The ratio of Premium and Non Premium products category is quite disturbed.

7.5. SPACE- Strategic Position and Action Evaluation Matrix

This matrix defines Berger Paints as Competitive. This matrix uses 2 internal and 2 external dimensions to classify firms. The strategies that can be perused by Berger Paints to exploit opportunities are backward integration, market penetration and market development.



Liquidity 2

Net Working Capital 2

Increasing revenues (upto 5 times last year) 5

Leverage 1


AVE: 2.50


Capital intensity 3

Technological know-how 4

Growth potential of lubricants 3

& refinery products TOTAL: 10

AVE: 3.33


Regulated geographic territory -3

Barriers to entry -2

technological changes -4


AVE: -3


Superior quality -1

Market share -4

Distribution control -3


AVE: -2.66

Y-axis = FS + ES

= (2.5) + (- 3)

= (-0.5)

X-axis = CA + IS

= (-2.66) + (3.33)

= 0.67

Y-axis= -0.5

X-axis= 0.67

7.6. BCG – Boston Consulting Group Matrix

The organization has the best long-run opportunities for growth and profitability. It has a high relative market share and a stable industry growth rate, so they should be receiving substantial investment to maintain and strengthen their dominant position. Market penetration, market development and product development are appropriate strategies to ensure long run success.

7.7. IE- Internal – External Matrix

This is a very powerful tool as it encompasses the EFE and IFE i.e. the internal and external variables that affect company performance. Berger lies in cell V, which suggests that it should adapt hold and maintain strategies (hold and maintain strategies apply to those positions that lie in cells III, V, and VII). Through the comparison of the internal and external weighted scores, we can see that Berger has an above average internal position and a good external position. The most suitable strategies for positions in these cases are market penetration and product development.

7.8. GRAND – Grand Strategy Matrix

Berger Paints is located in the 1st quadrant of the Grand Strategy Matrix. This is a very good position to be in. Berger should continue concentration on current markets and keep current products. Berger should not shift from its already established competitive advantage. The company should try to nurture new products and categories while concentrating on current products. This will help spread the risk over multiple areas.

8. Problem Identification

Berger Paints has been expanding its product offering by acquiring other small paint related manufacturers. Thus the concept of related diversification was used by Berger when it acquired a lower tier paint manufacturer Buxly. But the synergy was not what was expected. Berger further went into different types of related businesses like glue manufacturing and printing ink. The skill set required to manage these various operations was not present in Berger. Although the diversification was related but there was no strategic-fit.

Berger has always differentiated itself from the low quality paint manufacturer and this has enabled Berger to become a challenger to the market leader ICI, with no one else in competition. Berger should continue this generic strategy, but with slight modifications. Berger has not been able to manage these ventures to the expected level as the thinking process required to run a 2nd tier company is very different from the skill set required to run a 1st tier company.

Thus Berger is in a fix as in how to handle this situation. With the new expansions in potentially lower tier markets, Berger is finding it hard to develop the expertise to run these diverse companies. Due to these strategic mistakes Berger’s operations were hit hard in 2007 in which it faced decreased sales and increased costs. Even though the investor relations were not hurt we feel Berger needs to consolidate its efforts to have a sustainable growth in a highly volatile environment.

The solution

Berger should continue to focus on the high quality image and products that are the reason for its success. It should not get distracted by these new acquisitions. Instead of lowering Berger Paints selling and marketing strategy to suit the business needs the company standard should be raised.

To achieve its objectives Berger will consolidate on its ability to offer buyers something different from competitors. Creation of value for buyers is the criterion for a successful broad differentiation strategy as long as the product includes features or attributes that customers are willing to pay for. These would include emphasis on value added services like models shops, and proactive colour advisory services rather than offering low cost alternatives.

In the decorative segment, Berger will have to offer many product variations, wide selection of colors, and strong emphasis on differentiating features like customer advisory and fragrance-based paints. Involving the customer is essential to maintain the pristine image of Berger. This will again help give Berger a reason to change premium prices.

Targeting the segments mentioned above will increase the chances of Bergers success.

Berger’s products and promotional activities will be focused towards the following groups:-

• Actualizers- the purchases of this group often reflect cultivated tastes for relatively upscale products. Therefore Berger should target this category to fulfill their embellishing needs, because these people would more readily pay for the premium because of factors such as; status, esteem etc.

• Fulfillers- these people favor durability, functionality and value in products, which is exactly what Berger provides. Therefore they would be an imperative part of the target market because they would be ready to pay a higher price to ensure long lasting protection.

• Makers- Practical, self-sufficient, traditional, family-oriented people who favor products with practical or functional purpose. Thus they would go for products which would help in protection of their homes and since they are traditional as well, they would want to beautify their homes in a traditional manner.

• Achievers- this group favors established prestige products that demonstrate success to their peers. They would be responsive to Berger image stores and concept of spray paints.

• Believers- though this group is fewer in resources it would be a good target market because of its inclination to buy familiar products and established brands. Berger being the oldest and the second largest player in the industry will be able to gauge a favorable response from this segment.

To summarize the strategy Berger must follow

• Focus on offering customer high quality products

• Do not diversify into lower priced paints

• Consolidate acquisitions for the next few years

• Only diversify when a strategic fit exists


We feel that Berger should incorporate the following long term performance measures.


At the center of Berger Paints business operations is the very special relationship that has evolved between the Company and millions of customers across Pakistan. From the housewife to the industrial user customer satisfaction is Berger’s uppermost concern. With this objective in mind, Berger has created highly responsive customer services.

пѓ? Color bank facilitates instant customized shade mixing at over 1300 retail outlets across the country.

пѓ? DГ©cor Service Color Consultancy helps people to paint their homes easily and attractively.

пѓ? Prolinks is Berger reaching out to architects, designers and builders to develop personalized requirements and choices.

� Protecton’s service is a specialized painting resource valued across Pakistan industry, a powerful ally in the battle against loss prevention.

Berger Color bank introduces to the global way to paint with an unlimited choice of shades to match customer’s taste-instantly. The shade cards in Berger Color bank stores are merely indicative of the amazing choice Berger Color bank can give to its customers. The rest is up to customer’s imagination and fingertips. Every Berger Color bank store has a computerized color-tinting machine to help customers choose and take home their own shades from the world-class range of paints. Availability of chosen shades is always ensured as the paint is created and dispensed by the machine before customers’ very own eyes.

High level of customer satisfaction will ensure that Berger stays at par with ICI but Berger has to keep in mind that even though things like color banks are nice but consumers could do without it. What they want is an amazing product backed up with amazing service.


All Berger customers should be communicated that by staying with Berger, they get the benefits of the latest technology and impeccable quality. From raw material to final production, at each stage the product is put through a series of strict quality controls and tests. Sophisticated testing and analytical instruments, color computers and accelerated weathering equipment should be used for developing and standardizing products to maintain optimum quality.


The image that is to be portrayed of Berger is that of a successful and well-managed company. They have won many accolades and awards for various achievements which should be communicated to the stakeholders. With decades of experience and acknowledged expertise, BERGER is trusted throughout the country for making quality paints, coatings and allied products for institutional use. The Company is known for its uncompromising standards in production quality and innovative improvements of its product range and this should be used in its media communications.


Berger’s cost is somewhat in line with that of ICI. One area in which Berger can reduce its cost to gain a competitive edge over its competitors is to make more sales through model shops. The concept of a model shop and other attempts to strengthen dealer networks will enhance Berger’s distribution spread, bringing it in competition with ICI in terms of distribution costs.


Berger paints keep on adding products to their portfolio from time to time, in the form of new shades or variations to current products. It should keep a benchmark percentage which should compel it to introduce innovative products before its competitors do. This would keep Berger thinking ahead and flexible. The day Berger becomes complacent another competitor may put up a bid for its number 2 position in the market place.

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