Beruflich Dokumente
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60
MASTER OF COMMERCE
SUBJECT:-STRATEGIC MANEGMENT
SEMESTER 1
ACADEMIC YEAR (2014-2015)
UMANG P. PARMAR
SEAT NO.
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M.COM SEMESTER 1
STRATEGIC MANEGMENT
DECLARATION
Signature-_______________
UMANG P. PARMAR
SEAT NO.
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M.COM SEMESTER-I
STRATEGIC MANEGMENT
CERTIFICATE
_______________
_______________
Course coordinator
Internal examiner
_______________
______________
External examiner
Principal
______________
College seal
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ACKNOWLEDGEMENT:-
I wish to thank to Dr. Miss Hasina Sayed, and to the Head of M.Com.
Department Prof. Santosh Ghag for their encouragement and support
throughout the project it is due to their best effort and continued guidance
that I was able to prepare this project.
I would also thank to my parents and friends for their support and cooperation in the course of the project either directly or indirectly involved
in time with their valuable contribution.
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CONTENT
Sr.
Particulars
1.
EXECUTIVE SUMMARY
2.
INTRODUCTION
3.
Page no.
7
10
Introduction of GIL
11
14
SWOT Analysis
16
CONCEPT CONSIST OF
Diversification Strategies Used By GIL
17
4.
CONCLUSION
37
5.
BIBLIOGRAPHY
38
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EXECUTIVE SUMMARY
Objectives
The following are the main objective which has been undertaken in the present study:
1. To determine the various diversification Strategy Used By the Godrej Industries Limited
2.To make an item wise study of the components of the working area of company.
3. To suggest the steps to be taken by the company for the doubled their growth.
Research Methodology
The research was mainly of primary research consisting of descriptive research and
exploratory research.
The secondary research consisted of literature search and Internet search.
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DIVERSIFICATION STRATEGY
INDRODUCTION:
Diversification is related to the concept of risk. A diversified portfolio that has been
structured n such away as to spread risk. In the context of strategy, however, diversification
has a different meaning. In this context, it will consider diversification as doing something
new.
Firms that are successful seek to transfer their winning business know-how to new activities.
For these firms diversification means looking at new industries or new markets as exciting
opportunities for growth and profits. Firms that have been successful but face mature, less
profitable markets, frequently seek to regain old glory in new businesses. For these firm
diversification is about taking risk and venturing into the unknown to seek greater
competitive advantage and/or higher profit.
DEFINITIONS:
A strategy is a unified, comprehensive, and integrated plan that relates the strategic
advantages of the firm to the challenges of the environment. It is designed to ensure that
the basic objectives of the enterprise are achieved through its proper execution by the
organization.
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2. Improves Corporate Image: Diversification can bring name and goodwill in the firm.
This is because; the firm serves to a cross section of consumers in the market.
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07-03 1988
Revenue
Market Cap
Corporate Address
Management Details
Chairperson - AB Godrej
MD - N B Godrej
Directors - A B Choudhury, A B Godrej, AB Choudhury, AB
Godrej, Arun Maira, F P Sarkari, Harpre Singh Kalra, J N
Godrej, J S Bilimoria, Jimmy Bilimoria, K K Dastur, K M
Elavia, K N Petigara, KR Rajput, M Eipe, M P Pusalkar, N B
Godrej, N D Forbes, N S Nabar, Nitin S Nabar, S A
Ahmadullah, Sanjeev Kumar, Satish Kumar, Shyamsundar S
Jaipuria, T A Dubash, V F Banaji, V M Crishna, V N Gogate,
V Srinivasan
Business Operation
Chemicals
Background
Financials
Company Secretary
KR Rajput
Bankers
Auditors
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Godrej Industries is India's leading manufacturer of oleo chemicals and makes more than a
hundred chemicals for use in over two dozen industries. It also manufactures edible oils,
vanaspati and bakery fats. Besides, it operates real estate. GIL is a member of the Godrej
Group, which was established in 1897 and has since grown into a US$1.875 billion
conglomerate. The company was called Godrej Soaps until March 31, 2001. Thereafter, the
consumer products division got de-merged into Godrej Consumer Products, and the residual
Godrej Soaps became Godrej Industries. This led to the formation of two separate corporate
entities: Godrej Consumer Products and Godrej Industries.
Besides its three businesses, Godrej Industries also runs four divisions Corporate Finance,
Corporate HR, Corporate Audit and Assurance and Research and Development which
operate on behalf of the entire Godrej Group.
GIL has built a strong manufacturing base capable of delivering international quality products
at competitive prices. It operates two plants, one at Valia in the Indian state of Gujarat and a
second at Vikhroli in suburban Mumbai. The company's products are exported to 40
countries in North and South America, Asia, Europe, Australia and Africa, and it leads the
Indian market in the production of fatty acids, fatty alcohols and AOS.
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Associate Companies:
Godrej Properties: The Company is Indias leading manufacturers of oleo chemicals and over
hundreds of different industrial chemicals. With its global reach spreading wings across 40
countries, the company was conferred the prestigious exports award by Chemexcil for 3
consecutive years in 1998-99, 1999-00 and 2000-01.The products in its portfolio are used in a
variety of applications: cosmetics, tyres, detergents, pharmaceuticals, cigarettes, toothpaste
and more.
Godrej Consumer Products: Godrej Properties was incepted in 1990 with an aim of providing
ultra-modern townships to discerning customers at affordable prices. It adheres to a simple
philosophy of providing exemplary service based on the optimal use of available resources.
Godrej Hershey: Godrej Hershey is one of the most respected business conglomerates
established in 2006 with a prime focus on the food division. The range of products from the
house of Godrej Hershey covers a number of popular products in the segment of
Confectionery, Non Carbonated Beverages, Cooking Aids, Packet Tea and Edible Oil. Godrej
Agrovet: Godrej Agrovet, formerly a division of Godrej Soaps was reformed in 1971 with a
focus on the agricultural sector. Over the years this division has developed a close
relationship with farmers with its innovative offerings in the form of animal feed, oil palm
plantations, agrochemicals and poultry
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Divisions:
Chemicals-- Godrej continues its century old tradition of innovation with the manufacture of
oleochemicals for the first time in India (Since 1963). Godrej Industries (Chemicals Division)
is the market leader in a range of Oleochemicals in India. It is also the market leader in the
product category of Alpha olefin Sulphonate. It is also a major player in the field of Glycerin
& Surfactants such as Sodium Lauryl Sulphate (SLS) and Sodium Lauryl Ether Sulphate
(SLES). Godrej Industries (Chemicals Division) exports its products to more than 60
countries
Vegoil-The companys vegoil division produces edible oils, vanaspati and bakery fats. The
plant has technology that modifies fat to cater to varied customer tastes and requirements,
from grainy products to votatorised specialty fats. It contributes 17% share in revenue.
The Real Estate division of the company manages and invests in real estate properties, as well
as provides area on lease to corporate customers for business operations. It contributes 7%
share in revenue.
Godrej has joint ventured with The Hershey Company of North America to cater in Foods
and Beverages segment. Under this it has launched brands like Nutrine, Jumpin, Godrej Xs,
Tomato Puree, Godrej Tea, Sofit-Soymilk, etc .
Godrej Industries has recently launched its latest soap variant - Godrej No.1 Saffron and Milk
Cream soap. The latest launch in Godrej No.1 franchise, Saffron & Milk cream soap comes in
a premium white color enriched with richness of Saffron and milk cream combined with
Natural oils to give its users soft skin with a natural glow.
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Our Goal: Training 1 million rural and urban youth in skilled employment.
Our Goal: Achieving zero waste, carbon neutrality, positive water balance and a 30%
renewable energy source.
The Godrej Group has already been working on these goals as we are signatories to the CII
code for Mission of Sustainable Growth (MSG) which is a 10-point program for
ecologically sustainable business growth.
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Our Goal: Having a third of our portfolio revenues comprising good and/or green products
and services defined as products that are environmentally superior or addresses a critical
social issue (e.g., health, sanitation, disease prevention) for consumers at the bottom of the
income pyramid.
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SWOT ANALYSIS
Strengths
*
*
*
*
Agriculture business
Wide variety of products
High volume production
Large market
Weaknesses
*
*
*
*
Opportunities
*
*
*
*
*
Godrej Seeds
Export
Tap rural populations
Find cheaper products from which oils, etc can be made
Increase in population
Threats
* Market controlled by HUL
* Specialized companies existing in the market.
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Outward bound
Godrej is going in for international acquisitions with twin strategies - diversifying
risk and tapping new markets. It expects good synergies from the Keyline acquisition
and a double-digit growth in these brands. It plans to introduce one brand in India in
FY07. Moreover, Keyline outsources half its production, a major chunk of which
could come to Godrej.
"We would use the existing distribution channel of Keyline brands to market Godrej
products, with an eye on the Indian diasporas in Europe and the Caribbean," says
Hoshedar Press, executive director and president.
Analysts believe that Godrej is in the advanced stage of making a couple of
acquisitions this year.
The Keyline brands garnered a revenue of 5.2 million (about Rs 44.08 crore) during
November 2005-March 2006, while PBT was 0.6 million (about Rs 5.09 crore).
Major Keyline brands include Adorn (hair spray), Aapri (skin care), Cuticura (talcum
powder), Erasmic (shaving products) and Nulon (hand creams).
Sunil Sapre, executive vice-president (finance & commercial), says, "Although
exports account for a minuscule 3 per cent of the business, at present, we see a big
opportunity in South East Asia and Africa." Analysts see exports growing to 20 per
cent of the total business, including the Keyline brands.
Segment sense
The company is the leader in hair colorants with 40 per cent market share. It
witnessed a 22 per cent growth in this business in FY06. It is setting up a new facility
in Sikkim with a apex of Rs 10 crore (Rs 100 million).
An analyst at HDFC Securities expects the company to maintain its market share,
even as modern day evils like pollution are likely to create more users. The fashion
segment in hair colours would be another driver.
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Sapre says, "Our focus would be on converting non-users into users, especially in the
hair colour business."
The soaps business of Godrej, which accounts for 63 per cent of its revenues, posted a
17.5 per cent growth in FY06, compared with the industry growth of 3.2 per cent.
The company sees good growth potential in the business and stable vegetable oil
prices (the chief raw material). With a 9 per cent market share in this segment, it
stands second, though way behind the market leader - Hindustan Lever - which has
about 45 per cent share.
Godrej aims to increase its share by 1 per cent every year with focus on freebies,
which, however, could lead to some margin loss. Analysts feel that the high total fatty
matter in Godrej's soaps at 76 per cent, vise-a-visa 60-70 per cent in most other soaps,
is a positive.
In liquid detergents, the company is a market leader with its Ezee brand at over 80 per
cent market share. But this segment may see limited growth, according to analysts. In
the shaving cream category, the company is trying to grow with higher-end products
and improved advertising, while its talcum powder business, where it banks on
freebies, is likely to remain stagnant, according to them.
Competition
The company operates amid stiff competition. HLL is in a resurgent mode and ITC
has plans to enter the soap business. There is competition from regional players as
well. To fight competition, Godrej has been introducing new variants and brands. It
recently launched its age control soap - Evita.
Group chairman Adi Godrej says, "We plan to enter one new category of personal
care segment every year, provided we are able to differentiate our products." In hair
colourants, the company has products at all price points, from the Rs 7 powdered hair
colour to the higher-end Renew and Coloursoft.
Price wars in FMCG will remain and exert pressure on margins. But, Godrej hopes to
maintain margins relying on certain internal economies. For example, it manufactures
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fatty acids, used in soaps, in-house and enjoys economies of scale in buying vegetable
oils. Vegetable oil prices are likely to remain soft this year.
Tax benefits
* The company will get 100 per cent excise exemption for 10 years in the north-east
and Himachal and 100 per cent income tax exemption for five years and 30 per cent
for another five years.
* Sapre says the extent of actual benefit from tax exemption will depend on sales.
Analysts add that some states also offer transport/ power subsidies. To expand
existing facilities and set up new ones, Godrej has earmarked a capex of about Rs 105
crore (Rs 1.05 billion) this year.
Sector story
Of late, the FMCG sector has been moving faster. The sheer size of the market in
India provides good opportunities, despite competition and possible cost pressures if
international raw material prices fluctuate.
The sector is expected to grow to Rs 50,000 crore (Rs 500 billion) by 2010. Adi
Godrej recently said, "Rising demand with higher disposable incomes,
implementation of VAT in more states and tax-free zones would drive growth."
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From being a spin-off of the famous Cinthol making Godrej Soaps to becoming India's
biggest animal feeds and palm oil plantation company, Godrej Agrovet has seen both triumph
and failure.
India's first ever soap brand made sans animal fat Cinthol. That was 1920. The group's
penchant for trying out everything under the sun took
them from animal fat-free soaps to animal feed, a
Turnaround Committee
Causes of Losses
family).
Investigation
Alternative Solutions
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The firm is also displaying an insatiable appetite to expand its Palm Oil business. It has
increased the palm plantation coverage from 38,000 hectare to 40,000 hectare and plans to
produce 40,000 tonnes of crude palm oil this year a y-o-y growth of 30%. The firm has set
an ambitious target of tripling its palm oil topline over the next five years. For the same, it
recently declared investments to the tune of `600-700 million for developing an oil mill in
Andhra Pradesh with a targeted production capacity of 40-60 tonnes of oil/hour. Talking
about the same, Yadav says that the government must bring Palm under the Minimum
Support Price (MSP) regime as against the contrarian belief that this will add to the colossal
MSP bill and that India can save on a huge amount of foreign exchange spent on importing
more than 60% of its palm oil needs. In its core animal feed business, the company recently
declared a `700 million animal feed mill development in the States of Uttar Pradesh, West
Bengal and Bihar. This is an addition to the `400 million invested in setting-up similar mills
near Lucknow and Varanasi in UP. The plan is to have more symmetrically distributed
facilities, as the company owns plants mostly in Southern and Western regions of the country.
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Godrej, which has not used online marketing aggressively as yet, is now trying a new
marketing trick to reach consumers on the Internet.
The company recently launched a computer simulated space or a virtual world called
gojiyo.com. Internet users can sign up and create an avatar on it. Once registered, the
members will get a fixed amount of virtual money - measured in the form of 'Mio', the
currency of GoJiyo - which members can use to purchase items such as clothes, caps, shoes
and accessories in the virtual world.
Apart from shopping, members will have freedom to roam inside the virtual world, which is
actually divided into various zones and sub-zones. For instance, a member can enter a zone
named Solaris, which further consists of various sub-zones comprising sea, beach and a town
area having cafs, showrooms, a sports stadium, mazes, bridges and buildings.
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Members will be empowered to interact with each other through text and voice chat and also
perform various activities such as skydiving, bungee jumping and rope walking.
Interestingly, Godrej will place its products at many locations inside this virtual world so as
to let consumers experience and become aware about its products.
"There has been a perceptible shift in the pivots of a vast array of Godrej brands towards a
younger audience. Godrej brands such as Sofit (soya milk); Cinthol Deo; Good Knight
Naturals; Yummiez (ready to cook snack); Renew (hair colour); Interio (urban furniture); Eon
I-Fresh refrigerators and Eon Mirror Star air conditioners are the vanguard of this youth
centric movement from Godrej. These are the products that will be seen within the GoJiyo
world for the moment," says Ashutosh Tiwari, executive vice-president, strategic marketing,
Godrej.
"We will share a vast product portfolio within the GoJiyo world. However, these products
will be strategically placed so as to allow members to experience them in a non intrusive
manner," Tiwari adds.
For instance, when a member walks down an area called Haze - located near the beach in the
virtual world - he will be attacked by mosquitoes. A member is supposed to find out Good
Knight Naturals to protect himself.
Similarly, members will discover Godrej Interio urban furniture and Yummiez snacks inside
the caf. The showroom or retail outlet named Sho in GoJiyo will showcase Godrej Eon
Mirror Star ACs. As part of the subtle branding, the buildings in the virtual world will bear
the same colours of the Godrej logo.
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Economics Times
Godrej group chairman Adi Godrej has said the diversified Indian conglomerate has begun its
third and final phase of expansion in Africa, covering most key markets in the continent
where it is "heavily invested".
The group is growing at 25-30% in Africa, Godrej said. "In addition, we are growing through
acquisitions. If you add acquisitions, we are growing much faster," said the chairman of the
$3.3-billion group, which employs about 9,000 people in Africa alone.
"The third phase will give the group $70 million (over Rs 375 crore) additional revenues,"
Godrej said, adding that the final phase will take about a year to complete.
The shares of Godrej Consumer Products LtdBSE -3.89 %, the group's flagship company, hit
an all-time high of $13 a share, gaining 25.15 on the Bombay Stock Exchange on Oct 25.
"Africa is clearly the continent of the future," said Godrej, who earlier in October led a
business delegation to Uganda and South Africa in his capacity as president of the
Confederation of Indian Industry, or CII, an industry body representing Indian businesses.
Godrej Consumer Products has acquired companies in Asia, Africa and South America to
expand its presence overseas. Since 2010, it has made at least eight purchases, including its
most recent acquisition of Chile's Cosmetica Nacional. About 40% of the company's sales
came from outside India in the financial year ended March.
Africa contributed $222 million or 5% to the group's turnover. Godrej expects the growth to
accelerate as he scours untapped markets in Africa and Myanmar to grow his hair care and
household products businesses. "We'll continue to grow inorganically," he said, explaining
that through the 'three by three' strategy, the group was eyeing opportunities in the developing
world, particularly in Asia, Africa and South America.
Banking heavily on buyouts, Godrej Consumer has made key acquisitions in Africa. The
Darling Group, a pan-African hair care business that Godrej acquired in 2011 for $222
million and Tura in Nigeria for $50 million have on average contributed about 25% growth
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Analysts Manish Jain and Anup Sudhendranath of Nomura Equity Research, in a research
report dated October 23, said: "Once the company completed the acquisitions, there was
significant scepticism that integration would take a long time and that the actual delivery on
these acquisitions would not be easy."
Through the Darling Group, Godrej is operating in six countries in Africa. When it acquired a
majority stake in Darling, it decided to adopt a three-phase strategy by initially concentrating
only in three countries.
The first phase ended a year ago and the second phase has just been completed. The first and
second phase involved three countries each. The six countries - South Africa, Mozambique,
Nigeria, Uganda, Kenya and Tanzania - account for 70% of Godrej's revenues in Africa.
Godrej has taken big bets in the developing market but has been fairly conservative in
growing its acquisitions.
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Even for a conglomerate that sells everything from soaps and pesticides to houses, this is a
tall task. The group companies are together growing at 30 per cent annually, much above the
required rate, but in the future as the base increases, growth will be hard to come by. So in
recent years, the group has been overhauling its businesses and plugging lose ends. It is
pursuing a strategy of selling off unprofitable businesses and focusing on those that offer
high-returns to ensure above average profits. But will the strategy pay off?
The burden of ambition has fallen squarely on the group's largest company, Godrej Consumer
Products. Godrej Consumers will have to raise revenue from Rs 4,851 crore in 2011-12 to Rs
30,000 to Rs 35,000 crore by 2021. The company hopes to achieve this target by focusing on
core business of hair colour, home care and personal wash; moving up the value chain by
premiumising its products; and deepening its market by becoming a key player in the
international arena. In line with its objective, the company has in recent years taken steps to
widen its presence in Asia, Africa and South America.
It acquired UK's Keyline( the owner of brands like Cuticura, Erasmic and Nulon) in 2005 and
South Africas Rapidol in 2006. In 2010, it acquired Megassri in Indonesia, Tura in Nigeria,
Issue in Latin America, Argencos in Argentina, and followed it up with Africas Darling in
2011, and the 51 per cent stake of its joint venture partner Sara Lee in home insecticides
business Godrej Sara Lee.
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After having secured its place in the international market, moving up the value chain is next
in order for the company. While we have a very strong presence in the mass market, we
believe we have a lot of opportunity in premiumisation of FMCG categories, says Vivek
Gambhir, chief strategy officer for GIAC.
In the last one year, it has launched several products in that category: the Aer brand of air
freshners, a premium Cinthol, and crme hair colour.
For the last two to three years, GCPL's track record has been really good as they have been
successfully executing their strategy, says Srinivasan Viswanathan, an analyst with
Mumbai-based Angel Broking. However, he says it is very difficult to take a call on its future
as it is too longish a call.
Meanwhile, the same two-pronged strategy consolidation and widening the market is
being followed at the groups other large company, Godrej Agrovet. Agrovet was a lossmaking company until 2005. The misstep of chasing too many thingsAadhaar and Natures
Basket, respectively the rural retail chain and gourmet food outlets, along with the processed
chicken business, Real Good Chicken not only drained the company of its capital and
resources, also diluted its focus.
To stem Agrovet's sliding fortunes, Nisaba Godrej, the younger daughter of Adi Godrej and
president human capital and innovation, roped in Gambhir from Bain & Company as chief
strategy officer. She also promoted Balaram Yadav, then the head of chicken business, as
managing director, Agrovet.
The company embarked on a series of divestments as it realised that its core business had a
lot of juice which was being squeezed out by its wider focus. Godrej Agrovet, therefore,
changed its strategy. It began to say no to lot of very attractive things, says Yadav.
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Divesting business
The company sold 70 per cent stake in Aadhaar to Kishore Biyani promoted Future Group
and 51 per cent stake of chicken business to the US- based, Tyson Foods. The Natures
Basket business was also transferred to other group company, Godrej Industries.
With this, the cash burn in these businesses dropped considerably and the money was
ploughed back into the animal feed, agri input and oil palm plantation business, says Yadav.
In order to maintain its competitive edge, Agrovet spends 10 per cent of its profit on
researching products suited for local conditions. In recent years, it has also upgraded its
technology and plans to invest another Rs 200 crore in three years. The turnaround has no
doubt been impressive and the company is now the largest maker of compound feed in the
country. The animal feed business contributed Rs 1,600 crore last year, while the oil palm
plantation and agri input added Rs 240 crore and Rs 200 crore, respectively. The company
expects the animal feed business to grow at 20 per cent annually, while its agri input and oil
palm plantation is expected to achieve over 25 per cent growth.
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The new focus on core business while making GIAC leaner and more profitable has also
made it more attractive to global investors. Singapores sovereign fund Temasek bought a 4.9
per cent stake in Godrej Consumer for Rs 685 crore in 2012, and followed it with a 19.9 per
cent stake in Godrej Agrovet for Rs 5,72 crore the same year.
However, the group's third arm, Godrej Industries, is the weakest link in the chain. Its growth
is expected to be the slowest among all the group companies as its only product which is a
market leader in its segment is oleo-chemicals. Its revenue is expected to grow to Rs 10,000
core from Rs 5,804 crore in 2011-12.
While GIAC's expectations from Godrej Industries may be muted, it is betting big on Godrej
Properties, which is led by Adi Godrejs son, Pirojsha Godrej. From Rs 820 crore in 2011-12,
its revenue is expected to rise to Rs 20,000 crore by March'21more than two and half times
from now.
In the 1990s and early 2000, real estate was not a focused business for us, not one we
thought had the kind of potential, we now believe it has, says Pirojsha Godrej, managing
director and chief executive officer, Godrej Properties.
Until now, the company has followed an asset-light and capital-efficient model and has kept
away from locking in capital in land purchases. However, it is looking at new structures
under the current model.
We are looking at redevelopment space in Mumbai quite a lot, he says. The company is
also looking at creating co-investment platforms where its subsidiary together with their
financial partners will invest in land.
Unlike our other businesses, we do not have to be concerned about competition, market
share or size in properties, as no company even has a 5 per cent market share in properties
business, says Adi Godrej, chairman, Godrej Group, who has now limited himself to giving
only strategic advice to his children while they run the show.
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Functional Upgrade
Services to enhance and extend the existing functionality in line with the features available in
the new releases.
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Pricing Strategies
FMCG
Godrej broke through the dominance by not steeply hiking the prices as some of the
competitors did when commodities prices rose. The company did hair dye sampling through
village barbers and introduced small soap packs for Rs 5 for Godrej No 1; advertisements
were shown only on channels that reach rural India best; Doordarshan and All India Radio.
Real Estate
Consumer products were relatively less vulnerable to the slowdown than the groups
properties business. There too, Godrej has turned to building homes in the Rs 5 lakh to Rs 25
lakh bracket. It has launched low-income housing projects in Kolkata and Ahmedabad and
plans to launch one in a Mumbai suburb. While developers had traditionally preferred to
develop higher margin homes to justify the high cost of construction and buying land banks,
Godrej was one of the first developers to move into low-income housing. Godrej will make
up for the lower profit margins by not be selling flats in 10 or 20, but in numbers of 2,000 and
5,000. As one of Mumbais largest land owners, Godrej is developing the property in
Vikhroli (a large part of central suburban Mumbai) in a bid to reorient towards rural markets
and low income housing. The best product for Godrej is brands connect with the customer
and its distribution system. In the rural market, where local players dominate the Godrej
name can be leveraged more.
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Disruptive innovation
Godrej with its pioneer product ChotuKool has increased its foothold in the rural markets.
The idea was to address the basic refrigeration needs of rural families in India. Innosight, the
disruptive innovation team began its work by imagining living in a home without a
refrigerator. Where electricity is either unavailable or unreliable and where families earning
under Rs 250 day and can't afford major appliances.
Top management including Godrej Vice President G. Sunderraman led trips around rural
India, observing the daily routines of villagers. Top management and the Innosight team
witnessed how rural consumers purchased, prepared and stored food and drinks.
Fig: ChotuKool Refrigerator by Godrej is ground breaking innovation in refrigeration
The finding was that these homes are not in need of cheap refrigerators. The task was very
basic. Denizens of village needed an affordable way to store vegetables, milk leftover food
cool for a one or two days both at home and away. This task is urgent in our country where
33% of all food is lost to spoilage. Godrej developed many prototypes and tried to gain
insight at co development events. In one such event a poll of 600 villagers of Osmanabad
casted their vote to to choose red as product color.
From this effort came the ChotuKool, or "little cool" in Hindi. It does not have traditional
compressors instead Chotukool has a thermoelectric chip that maintains a cool temperature
that runs on a 12-volt DC adapter or an external battery. The unconventional opening makes
sure cold air settles down in the refrigerator to minimize loss to heat and consumption of
power. The unit is portable with a capacity of 45 liters which is inside a fully plastic body
weighing less than 4.5 kgs.
Priced at Rs 3500/-, about 50% of entry level refrigerators, Chotukool creates an innovative
product category, with a new value proposition that serves a different segment of customers.
Fig: Chotu Kool is highly portable and can be loaded on bullock carts as well
Business Standard magazine awarded Godrej the title of most innovative company after
initial successes of Chotukool in a ceremony conducted in presence of the nation's Prime
Minister. BusinessWeek and Fast Company also named Godrej one of the world's "most
innovative companies." ChotuKool was also awarded the 2012 Edison Award Gold prize for
the Social impact category.
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Expectation of subsidies
Another hurdle to be overcome is the expectation of rural consumers for subsidies on solarpowered devices and water purifiers. After-sales service and selecting the right distribution
model is the key to break into any rural market across India.
Focus on Right marketing mix
Barbers as Brand Ambassadors
The company relies on word-of-mouth brand building for its line of hair color products. The
company is able to target 50,000 barbers and salons in 9 states and engages these barbers in a
co-branding initiative. Under this program, the barbers add the Expert tag to their names,
with all infrastructure (including mirrors and chairs) displaying the GCPL brand logo
prominently. This has helped enhance the reach of the company by adding 7,000 villages and
2,000 small towns to its distribution network.
Fig: Rural branding for Godrej
Rural centric advertisements Strategies
Shifting its advertising strategy the Godrej now buys ads more on Doordarshan because the
brand campaign takes care of cable television. This has helped in helped in reducing the
advertising budget for the company in comparison to its competitors. The company is also
using its new brand awareness
Using Buses increases visibility in Rural India
Choosing Celebrities that have rural appeal for brand endorsement
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Company has signed up Mona Singh to promote the usage of Grade I soap by highlighting
the benefits of using Godrej No 1 branded soap over its local competitors. This is expected to
boost sales of the company in rural areas.
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CONCLUSION:
Equal Participation from Employees and Management They believe in action , than words.
The activities of Godrej are spread across all fields. The activities continue from generation
to generation.The philanthropic activities by the chairman Mr.ADI GODREJ and other
family members even before the word CSR was known has made the Godrej group one of the
most trusted business house in India.
Godrej continues its efforts for the betterment of the environment and conservation of scarce
natural resources. They say they touch more consumers than any other Indian company- its
not just with soaps, locks and cupboards. It is because of their determination towards the
helping hand to society and commitment to serve better every time through their
CORPORATE GOVERNANCE & its CORPORATE SOCIAL RESPONSIBILITIES
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BIBLIOGRAPHY:
https://www.google.co.in/search?es_sm=93&sclient=psy-ab&q=+godrej+industry+expansion&btnG=
http://www.indiaafricaconnect.in/index.php?param=news/5168/business-industry/107
http://www.godrejinterio.com/godrej/GodrejInterio/pdf/Interio_Sustainability_Report.pdf
https://www.godrejproperties.com/aboutus/greeninitiatives = accessed on 22/09/2014
Book:
Strategic Management, Author -Michael Vaz, Published by Manan Prakashan, Pp- 70 to 94.
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