Professional Documents
Culture Documents
- GLOBALIZATION
CASE ANALYSIS
Yes
1. Scale enhances the level of resources – financial, human and operational –
with which Dabur could better manage the business uncertainties of global
expansion. Domestic scale reduces the risks involved in global operations.
2. Scale provides a set of internal capabilities and skill sets that the company
could deploy readily in overseas markets.
No
1. Domestic scale offers a platform for the next leap forward for global expansion,
but it is not a prerequisite.
Yes
The company has articulated three routes to building global scale: expanding
geographically, driving alliances and acquiring assets. Expanding overseas is
unlike expanding locally. The markets are alien, relationships are new and
integration is a challenging task. Driving the fit takes considerable managerial
attention, best spent on expanding locally.
No
The Indian economy is on auto-pilot, and growth is assured in the domestic
market over a long period of time. Even at the current levels of resource
deployment, Dabur can be certain of maintaining its rate of growth in the
domestic market. The company should therefore look at new growth options
such as internationalization.
3. What are the reasons why Duggal and his team are expanding globally?
1. The customers that Dabur is dealing with in its overseas markets are similar to its
customers in India. This is particularly true of the Indian Diaspora that the company has
been targeting so far.
2. The multinational competitors that Dabur is dealing with in its overseas markets are
the same as those it is competing with in India.
3. The company has a core value proposition – herbal ingredients providing therapeutic
effects – that can be replicated across diverse geographies. Its products have universal
appeal, requiring only minor adaptations to suit individual markets.
4. The personal ambitions of senior managers who, together, need to prove that a
professionally managed company (where members of the founding family have moved
out of executive responsibilities) can grow, expand and diversify. Dabur is an uncommon
example of a CPG company from among emerging markets going global, itself a
motivation for company managers for whom internationalization also opens up new
horizons of personal and professional development.
5. Investor apprehensions about Dabur’s geographical expansion are more about short-
term fluctuations in stock price than about the company’s intrinsic capabilities.
4. What are the domestic competencies that Dabur can leverage in the
international markets?
Yes
It provides the single largest defence for the CEO favour of global expansion.
Global expansion will proceed on track if the company sticks to it. There are
several elements of the template that ensure success. For example: A new
market for entry should be margin-accretive even in the short run; it should be
in the landscape between Nigeria and China; the company’s herbal platform
will remain the basis for new customer acquisition and brand development;
and overall brand architecture will be limited to four core brands. These
elements eliminate the risks of global expansion.