CA IPCC/IPCE - Group II : Information Technology and Strategic Management - November 2010

Godrej, still managed by a family board, is a 113–year–old brand and has a great brand value. But younger generation’ reaction has been – “it’ my parent’ or my grandparents’ brand. Hence the Group launched a rebranding exercise in 2008, the most visible part being a new logo, uniform across all group companies. It has well diversified businesses – cyclical (property: owning 3000 acres in Mumbai’ Vikhroli alone, Ahmedabad, Pune and Kalyan), stable (fast moving consumer goods), rural (Agrovat stores0 and urban (organised retail stores–Nature’ Basket, domestic appliances and furniture). The group sells fatty acids to tyre manufacturers; animal feed to 1,00,000 farmers; and premium wine in Mumbai and Delhi. Its customers range from five–years olds (nutrine), ageing man (hari dye), to housewives (soaps & locks), IT companies (renting sprawling spaces), to Government of India (like rockets for Chandrayan), and to 50,000 barbers (Godrej dye). But it abstains in new–age, sunrise industries like health care and information technology.

Godrej Consumer Products Limited (GCPL) has adopted a ‘3 by 3’ strategy, sticking to emerging markets in three regions–Asia, Africa and Latin America as their culture, tastes and even skin colours are quite similar to India and in three categories – personal care, hair– care and insecticides. Since 2005, GCPL has made seven acquisitions, including its biggest acquisition of Indonesia’ Megasari Group for Rs.1200 crore, in 2010. “Acquisitions overseas add status and pedigree to brand–owners in the domestic market’ says an expert. Prashant Goenka (Emami) questions “When Indian companies such as Dabur, Godrej and Marico can make it big in international markets, why can’t Emami?” Anil Chug (Wipro) says, “ by having a presence in multiple markets our risk assessment is neutralized”. Marico’s Harish opines–“the global play has helped Marico expand its footprint and given it another avenue for growth.”. Recently Godrej’ top honchos toured the hinterlands, an indicator of the renewed focus on consumer. To reach out to new customers, especially in rural India, it has gone in for destructive innovation. The group has been manufacturing refrigerators for more than 50 years, but its penetration has been only 18%. It found out that people do not need a 180 litre fridge due to space and cost constraints. It came out with ‘Chotukook’ – a square 45 litre minifridge priced at just Rs.3,250. Another example of destructive innovation is the launch of ‘U & Us’ – a ‘ by appointment’ design studio where customers co–design their furniture as customers see furniture as an extension of their personality. Thus Godrej group is transiting from manufacturing – oriented to consumer oriented.

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