Dabur Case Study

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DABUR INDIA LTD. - GLOBALIZATION

CASE ANALYSIS

ECONOMIC ANALYSIS FOR BUSINESS DECISIONS (EABD)

CASE SYNOPSIS
Set in June 2007, the case is about an Indian enterprise attempting what few other consumer packaged goods (CPG) companies from emerging markets have attempted to do i.e., move beyond national geographical boundaries to the global arena. In most emerging markets, including India, CPG is a local business characterized by indigenous players aspiring to rule at provincial levels. Very few graduate to national status. Having acquired a place among the top 10 CPG companies in India, Dabur India Ltd. (Dabur) has taken the next step forward. The case examines whether global expansion, uncommon among its genre, is logical for Dabur. It looks at the issues not only in the context of Dabur’s unique positioning in the domestic market, which itself is growing, but with particular reference to the ongoing expansion in Nigeria.

CASE ISSUES
Should Dabur build scale first in India before investing in global operations? Does global expansion detract the company from its core market? What are the reasons why Duggal and his team are expanding globally?

What are the domestic competencies that Dabur can leverage in a global market? Is the company’s template for globalization workable? Why is the template not working in Nigeria? How should Dabur address the Nigeria market?

1.
Yes

Should Dabur build scale first in India before investing in global operations?

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. 3. Scale lowers the cost of entry into a new market. 4. Building scale in the home market should be central to Dabur’s growth strategy because the Indian market is becoming competitive. Retaining market share (and its ranking among the top 10 in India) would be difficult unless Dabur builds scale locally.

1.
No

Should Dabur build scale first in India before investing in global operations?

1. Domestic scale offers a platform for the next leap forward for global expansion, but it is not a prerequisite. 2. Neighbouring markets are expanding. There is an opportunity cost to letting go of growth possibilities outside India. 3. There is nothing like countries as markets. In an increasingly global world, the perception of a market cuts across geographical boundaries. 4. Dealing with competitors in markets outside India provides better insights to dealing with competitors within India, particularly when the competitors in both local and global markets are the same.

2.
Yes

Does global expansion detract the company from its core market?

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...
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