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CASTROL CASE STUDY

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About Castrol Company

Castrol India Limited is considered to be an automotive and industrial lubricant manufacturing company. However, it should be noted that Castrol, is a British company which markets industrial as well as automotive lubricants and offers a wide range of oils, greases and other similar products that are used for lubrication applications. Castrol India, is one of the second largest manufacturer of both industrial lubricants as well as automotive lubricants. The organization has five manufacturing plants and the company are also networked with approximately 270 distributors which serves in more than 70,000 outlets.

In the year of 1910, Castrol India had started to import some automotive lubricants from CC Wakefield and Company and thereby made an entry into the Indian market. In the year of 1979, Castrol India Limited was included under the name of Indrol Lubricants and Specialities Pvt Ltd and after 1983 became a public limited company and by the year of 1990, the company name changed to Castrol India Ltd. The company aimed at manufacturing telephone cable jellies, pharmaceutical jellies and other types of industrial waxes in the technical collaboration with Dussek Campbell, UK. Another important thing to note is that Castrol manufactures products on a global basis, supplying customers in more than 150 countries across the globe and is wholly-owned subsidiary of BP PLC.

Market Leadership

Despite rigorous competition from lubricants industry in the last decade, Castrol has been successful to create and come up with appropriate value through adept market segmentation strategy. The primary market of the organization is the premium personal mobility automobile segment, where the organization is successfully able to leverage its trusted brand, innovative service attributes along with track record of product performance. The organization has been successful in continuously investing approximately 6-7% of the sales in brand building, and the company enjoys high pricing power. Castrol has also made use of differentiation strategy which helps in providing tremendous pricing power and high profit margins. Castrol Pvt Ltd is different from its competitors, that is, they have been making low to negligible investments in their brands.

At the same time, it should also be noted that Castrol has been successful in maintaining an effective and strong competitive advantage as the organization leverages its technological strength along with product development capabilities by working closely with the global OEM’s. They also work closely with mechanics, who play a key role in the final decision-making process and has decided to expand its distribution channel to semi-urban as well as rural areas. The organization has also been successful in communicating its value proposition to their customers and one of the key advertisement plank of the organization is Liquid Engineering.

Growth for Castrol

In the last decade, the distribution regarding the automotive lubes has witnessed a significant transition from the traditional public sector petrol pumps to the bazzar trade, that has a positive impact on the private players like Castrol, Shell, Gulf Oil and others. Another type of transition is also under way from shops to workshops. It should be noted that the engine technology has been advancing and maintenance is becoming sophisticated with the onset of workshop channel. Due to these changes, Castro can witness some emerging trends which will help them to grow as well as develop effectively as well as efficiently. Some of these trends include, increase in the share of market, higher polarization which increases at the cost of mid-size and non-niche smaller players. Along with this, there are some other trends like technological innovation, quality along with value-addition.

Therefore, it should be noted, that these trends will help Castrol to leverage its premium positioning and thereby helped in enhancing as well as establishing relationship with the local as well as global OEM’s (original equipment manufacturer). Anticipating these types of trends, Castrol has launched a range of products as well as service support for their key OEM partners like Tata Motors, Volkswagen, BMW, Jaguar Land Rover, Skoda and others which will help in driving effective growth of volume for their premium lubricants.

Sustainability Strategy of Castrol

Castrol Pvt Ltd has successfully come up with an effective and efficient sustainability strategy where they are planning to transform from being an International Oil Company who are focused on producing different types of resources, to Integrated Energy Company that is focused on offering effective solutions for the customers. The organization now aims to build scales in renewable as well as bioenergy, which will help in establishing its position on hydrogen and carbon capture and build a customer gas portfolio so that it can be complemented with low carbon energies. The ambition of the organization is to become a net zero company by the year of 2050, and also effectively help the world to get net zero and at the same time, have also come up with different aims that would help in improving the lives of people and thereby also take care of the planet. If you choose our assignment writing help, we will make sure you stay at the top of the class. Students urgently need expert assignment help when they are facing problems with understanding difficult concepts. Our writers are available for 24*7 so you can ask for help anytime you wish.

Some of these aims include more clean energy, sustainable livelihood, enhancing the wellbeing of people. Providing greater equity and making use of just transitions. Some of the aims for the planet includes enhancing the biodiversity of the region, coming up with programs of sustainable purchasing, unlocking circularity, coming up with resolutions of championing solutions based on nature and saving water.

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Code of Conduct

There are well explained and detailed code of conduct which are followed by Castrol in every country in which it operates. For instance, the code of conduct of the organization strongly prohibits every type of bribery and corruption and does not support any kind of anti-money laundering and includes various measures to assess risks and for this the organization have come up with training opportunities for the employees. The organization closely communicate with their suppliers and other business partners to ensure that they are not engaged in any type of money laundering and bribery activities. They also promote revenue transparency and payments to government and at the same time, also promote tax transparency within their organization.

SWOT Analysis

Strengths

The financial statement of Castrol is quite strong that is it has a strong balance sheet.

The management team of the company and talented and skilled and have been successful in understanding predicting trends in the external market.

Weakness

One of the weaknesses of the organization is that 5-7% of Castrol profitability can lead to shortage of funds to invest into new projects.

The organization does not have much experience in the international market and therefore needs international talent to enter into developing markets.

Opportunities

Castrol can make use of artificial intelligence that will help in predicting better demands of consumers, will help in catering to the niche market and thereby help in making better recommendation engines.

E-commerce business model is another growth opportunity for Castrol, will help them to tie up with local suppliers and logistics suppliers internationally. The model will also give an opportunity to the company to enter new markets with lower marketing budget.

Threats

The company has not been able to enter into the millennial market.

Customers are moving towards mobile first that will hamper the growth of the company.

 

PESTEL Analysis

Political Factors

  • Political environment of Castrol is stable and there is consistency within economic and foreign policies.
  • The taxation rate and investment policies have political consensus, which has helped in lowering the barrier and thereby helped in streamlining their tax structure.

Economic Factors

  • Castrol needs to consider the inflation rate before entering a new market.
  • Foreign exchange movement is also considered to be an indicator of economic stability where the organization considers forex inflow along with outflow.

Social Factors

  • The organization needs to analyse why consumers purchase their products in both existing as well as segment categories.
  • They also need to consider the leisure activities, social attitudes and buying behaviour of their customers in different regions because customers in different countries have different preferences. For instance, the culture of saving is different in China and the US like 30% and 15% respectively which has an impact on both consumption and magnitude of consumption.

Technological Factors

  • Castrol is a company that can effectively assess whether it can live up to fast paced technological disruption. Most of the countries in which Castrol operates, have strong technological infrastructure that will help in speeding up the manufacturing and delivery process of the organization.
  • The organization also need to evaluate the e-commerce infrastructure of different countries before entering a new market.

Environmental Factors

  • Castrol can face different types of difficulties while operating in different countries since different countries have different waste management and CSR policies. Needs to maintain different environmental standards and regulations which can pose a challenge for the organization.
  • The organization therefore, needs to come up with an effective CSR plan that will help in adhering to different environmental standards to different countries.

Legal Factors

  • Castrol maintains complete transparency and thereby are able to follow legal regulations of every country.
  • Similarly, they also effectively follow health as well as safety laws which has helped them to effectively operate in different countries in an ethical manner. The organization follows different health and safety laws for different countries which has helped them to sustain themselves in the external market.

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