You are on page 1of 10

What is strategic management?

Strategic management can be used to determine mission, vision, values, goals, objectives, roles and responsibilities, timelines, etc.

What is the purpose of project management? To provide management with valid, auditable status on which to base management decisions. Top of Category What is strategic planning? Strategic planning is a management tool, period. As with any management tool, it is used for one purpose only: to help an organization do a better job - to focus its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization's direction in response to a changing environment. In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. (Adapted from Bryson's Strategic Planning in Public and Nonprofit Organizations). Introduction Dabur India Limited (DIL) is the fourth largest FMCG Company in India w i t h business interests in Healthcare, Personal care and Food products. It has revenueof about US$600 Million (over Rs 2834 Crore) & Market Capitalization of overUS$2.3 Billion. Dabur India is a 126 years old company and is the world leader inAyurveda with a portfolio of over 250 Herbal/Ayurvedic products. Dabur since itsinception has focused on manufacturing and selling Ayurvedic products targetedat the mass consumer segment. There are number of personal care products,Ayurvedic tonics and oral care products which it launched between 1940 and1970 have become leading brands today. Daburs top nine brands had 65% orm o r e m a r k e t s h a r e i n t h e i r r e s p e c t i v e p r o d u c t c a t e g o r i e s . T h e s e i n c l u d e t h e health tonic Chyawanprash, Hajmola digestive tablets and candy, digestive PudinHara, Dabur Lal Dant Manjan and Dabur Amla hair oil. Dabur manufactures over450 products, covering a wide range in health and personal care.Dabur India has 14 manufacturing locationseight in India and six in contries likeN e p a l , E g y p t U K e t c . I t h a s t h r e e S u b s i d i a r y G r o u p c o m p a n i e s - D a b u r International, Fem Care Pharma and new u and 8 step down subsidiaries: DaburN e p a l P v t L t d ( N e p a l ) , D a b u r E g y p t L t d ( E g y p t ) , A s i a n C o n s u m e r C a r e (Bangladesh), Asian Consumer Care (Pakistan), African Consumer Care (Nigeria),Naturelle LLC (Ras Al Khaimah-UAE), Weikfield International (UAE) and JaqulineInc. (USA). It has wide and deep market penetration with 50 C&F agents, morethan 5000 distributors and over2.8 million retail outlets all over India.Dabur India limited is divided into three SBUs. 1) Consumer Care Division: This SBU caters to the consumer n e e d s pertaining to Personal Care , Health Care , Home Care & Foods. The majorBrands under this SBU are Dabur, Vatika, Hajmola, Real and Fem. 2) Consumer Health Divison: This SBU pertains to the Ayurvedic medicinesand ayurvedic OTC. Major categories in traditional formulations includeAsav Arishtas, Ras Rasayanas, Churnas, Medicated Oils.3 ) I n t e r n a t i o n a l B u s i n e s s Division: It c a t e r s t o t h e h e a l t h a n d p e r s o n a l c a r e needs of international consumers in middle east, north and west Africa, EU3

and US. This division has high level of localization of manufacturing andsales & marketing. Phase I Dabur was set up by in 1884 by Dr. S K Burman in West Bengal as a proprietaryfirm for manufacturing of ayurvedic drugs .Dabur is an acronym of the name DAktar BURrman, its founder. In the year 1896 a small manufacturing plant wass e t u p n e a r C a l c u t t a f o r m a s s p r o d u c t i o n o f A y u r v e d i c D r u g s a n d C h e m i c a l s . Dabur started its operations in 1896 with the manufacture of drug called Plaginto counter the wide spread plague at that time. In the 1900s next generation of Burmans took the firm further and they believed that Ayurveda was the mantrawhich can be sustainable and can meet the needs of low income countrymen. Asa result a research laboratory was formed in 1919, followed by manufacturingu n i t s a t K o l k a t a ( t h e n C a l c u t t a ) a n d B i h a r . I n 1 9 3 6 , D a b u r I n d i a P v t L t d . w a s incorporated which took over the business from the proprieta ry firm. Daburexpanded its distribution network in the next two decades. It launched DaburA m l a H a i r O i l i n 1 9 4 0 a n d D a b u r C h y a w a n p r a s h i n 1 9 4 9 . I n 1 9 6 9 t h e r e w a s unrest and business uncertainity in calcutta which led the family to expand itsmanufacturing operations in Delhi. The next product came out in 1970 in theform of Dabur Lal Dant Manjan followed by the Hajmola Tablet in 1976. Throughthe 80s and 90s Dabur performed well but was established as a brand for theelderly because of its image of an Ayurvedic Company Although later in 1989 itlaunched Hajmola candy which was targeted towards the children segment.In 1986, Dabur became a public limited company through a reverse mergerwith Vidogum Ltd. and was renamed as Dabur India Limited. A reverse merger isacquisition of a public company by a private company which allows the privatec o m p a n y t o b y p a s s t h e l e n g t h y a n d c o m p l e x p r o c e s s o f g o i n g p u b l i c . I n t h e following year to cater to the global markets needs it set up a facility at NoidaExport processing Zone. In 1991,Dabur Overseas Ltd. was set up in CaymanIslands to cater to the needs of overseas investment and this later funded the setup of Dabur Egypt Ltd., in Cairo, which was set to manufacture personal carea n d food products. In 1992, Dabur entered into 49:51 joint venture with the4 Spanish confectionery major Agrolimen group under the name General De Confeteria India Ltd. (GCI) by investing an amount of INR 92.3 Million. Also Daburentered into a biscuit joint venture named Excelcia Foods with Nestle. In 1993Dabur decided to go to public and came up with an initial public offer in 1994 with Rs 10 face value share at a premium of Rs 85. The issue was oversubscribed21 times and total amount raised was Rs 541.5 million. The reasons for tappingthe equity markets were: Additional funds were required to expand production and set u p n e w factories Launch diversified range of products and compete against FMCG MNCsI n 1 9 9 4 , D a b u r r e o r g a n i s e d i t s b u s i n e s s i n t h r e e s e p a r a t e d i v i s i o n s o f S a l e s , Marketing and Operations.In 1995, Dabur launched Vatika and hoped to changethe perception in the consumers, and was successful to a certain extent too. In 1 9 9 7 , F o o d s d i v i s i o n was carved out which consisted of Real Fruit Juice andHomemade cooking pastas. Also in the same year the company launched aunique initiative called STARS (Strive to Achieve Re c o r d S u c c e s s ) t o a c h i e v e accelerated growth in the future years. Phase-II (1998-2003) In 1997, Dabur had started facing issues as two out of its four flagship brands -C h y a w a n p r a s h a n d H a j m o l a - w e r e s l i p p i n g d u e t o p r o d u c t l i f e c y c l e i s s u e s . Another of its flagship brand Dabur Amla Hair Oil was also growing at a less-t h a n - s a t i s f a c t o r y r a t e , a t f i v e p e r c e n t . P o s t - l i b e r a l i z a t i o n , w i t h t h e I n d i a n economy opening up and foreign players entering Indian markets, Dabur realizedthat competition will be picking up very soon.In April 1997, Dabur hired the leading management consulting firm McKinsey &Co. for mapping out a comprehensive restructuring plan for its varied businessesand strengthen its competitive position. McKinsey

primarily offered the followingadvices:1)To improve profitability, stay focused on core competencies i.e. ayurvedaand health care products5 2)Advised Burman family to lay off fro m the day-to-day operations and leavethe company in the hands of professionals.D a b u r p a i d a f e e o f R s 1 0 c r o r e t o McKinsey & Co. and started following itsadvice religiously. In 1999, It off loaded its entire 49 per cent stake in thec o n f e c t i o n e r y j o i n t v e n t u r e G e n e r a l D e C o n f i t e r r i a t o i t s S p a n i s h p a r t n e r Agrolimen for Rs 35 crore. The Rs 100 crore GCI product portfolio comprised of t w o c a t e g o r i e s - - B o o m e r b u b b l e g u m a n d s o f t f i l l e d c a n d i e s , B o n k e r s a n d Donaldo. While setting up the confectionary jointventure GCI in 1994, DIL hadestimated that the booming candy and bubble gum market would provide it withample opportunity to turn the venture into a profit maker. The Spanish partnerw a s r o p e d i n c o n s i d e r i n g t h e h i g h l y i n t e n s i v e t e c h n o l o g y n a t u r e o f t h e confectionery market. However, the joint venture has not worked out accordingto the plan as only a handful of products saw the light of the day.Dabur India limited also scaled down its stake in Excelsia Foods to 40 per cent,h a n d i n g o v e r c o n t r o l t o i n f a v o u r o f N e s t l e S A t o b e c o m e a m i n o r i t y p a r t n e r . Dabur sold its 20 per cent stake in Excelcia Foods Ltd for Rs 10.6 crores. The company also reduced its exposure to Dabur Finance, where it held 90 per centstake. The finance arm sold its retail business to Birla Global Finance in 1999. Italso discontinued its Samara line of herbal cosmetics that it introduced in early1997. The Burman family handed over management of the company to a professionalC E O a n d l i m i t e d t h e i r r o l e t o s t r a t e g i c i n p u t s a t t h e B o a r d l e v e l i n 1 9 9 8 . T h e decision was taken in response to the changing dynamics of business and toi n c u l c a t e a s p i r i t o f c o r p o r a t e g o v e r n a n c e w i t h i n D a b u r I n d i a . P o s t - 1 9 9 8 , t h e Burman family has receded from the day-to-day operations of the Company andhas strength of 4 members in Board of Directors.In 2001, Family Council was constituted for formalizing the promoter familys rolein managingt h e b u s i n e s s i n t e r e s t s e n c o m p a s s i n g a l l g r o u p c o m p a n i e s . D a b u r r o p e d i n Accenture to define clear roles and responsibilities of its board of directors andt h e c h i e f e x e c u t i v e o f f i c e r t o p r e v e n t a n y o v e r l a p . T h e r o l e s o f M a n a g e m e n t Committee, Board of Directors and Family Council were defined and formalized.I n 2 0 0 2 , D a b u r a g a i n r o p e d i n A c c e n t u r e to study its sales a n d d i s t r i b u t i o n system. As per its6 recommendations, Dabur restructured its Pharmaceutical busines s a n d separated it from its FMCG business.Dabur tried to reposition itself as a herbal specialist rather than flogging itsayurvedic lineage alone. Confining itself to the ayurvedic platform would havebeen restrictive as the domain could only be stretched to a certain level and notbeyond.D I L a l s o d e c i d e d t o h a v e f i v e m a i n b r a n d s D a b u r , V a t i k a , A n m o l , R e a l a n d Hajmola, and every product was to be migrated to one of these. Not only would ith a v e h e l p e d D a b u r t o f o c u s b u t a l s o i t w o u l d h e l p i t t o a g g r e g a t e i t s m e d i a spend. 3.1 Phase#2 IT perspective In Dabur knowledge and technology were the key resources which had helpedthe company to achieve higher levels of excellence and efficiency. Towards thisoverall goal of technology-driven performance, Dabur started to utilize IT. Thishelped in integrating a vast distribution system spread all over India and acrossthe world. It also helped to cut down the costs and improve profitability.Dabur leveraged information technology to drive supply chain efficiencies andh a d i n v e s t e d t o t h e t u n e o f R s . 1 2 c r o r e s b y 2 0 0 4 f o r t h e I T b a c k b o n e o f t h e organisation. The company started to work on two ERP systems - Baan and MfgPro in 2001, in production and distribution respectively. This was a good move tocut down the operational costs, reduce redundancies and errors and increaseefficiency, all contributing to increase in the bottom-line. Dabur a 114 year oldf i r m - s h o w e d a n e w p a t h t o t h e i n d u s t r y b y s u c c e s s f u l l y o u t s o u r c i n g t h e complete IT infrastructure. Many other companies followed the suit thereafter. 3.2 Phase#2 Marketing perspective

As discussed earlier, during this phase Dabur wanted to reposition its image of a n A y u r v e d i c c o m p a n y t o a m a j o r F M C G p l a y e r w i t h d i v e r s i f i e d p r o d u c t categories. Dabur concentrated n differentiated product offering and meticulousbrand building initiatives. The company concentrated on differentiating the brandin all aspects, right from positioning to packaging. The biggest example is DaburVatika which it positioned as value-added hair oil that contained pure coconut oil7

Dabur Real Juice BCG MatrixREFERENCES http://findarticles.com/p/articles/mi_m0DQA/is_1999_June_17/ai_55041071/ http://www.dailyexcelsior.com/99june10/busi.htm44

http://www.business-standard.com/india/news/12-swap-for-dabur-firms-demerger/133410/ http://www.chillibreeze.com/articles_various/Dabur-story.asp http://www.rediff.com/money/2005/sep/06spec.htm http://www.thehindubusinessline.com/2007/03/10/stories/2007031002540500.htm http://www.neytri.com/fem-care-gives-dabur-a-facelift http://www.livemint.com/2009/06/25183508/Dabur-India-completes-acquisit.html http://www.business-standard.com/india/news/12-swap-for-dabur-firms-demerger/133410/ http://www.fingad.com/review/show/dabur_india http://www.moneycontrol.com/company-facts/daburindia/history/DI http://profile.iiita.ac.in/pchand_mba05/pom/dabur.pdf http://www.authorstream.com/presentation/purushotamsati-103204-strategic-planning-marketingdabur-ppt-education-powerpoint/ http://www.pressreleasepoint.com/dabur-appoints-dr-ajay-dua-independent-director http://www.dabur.com/About%20Dabur-Corporate%20Governance http://www.tribuneindia.com/1998/98sep10/biz.htm#9 http://www.expressindia.com/news/ie/daily/19990421/ibu21098.html http://www.domain-b.com/companies/companies_d/dabur/19990512dabur.html http://www.financialexpress.com/old/fe/daily/19990225/fma25053.html http://profile.iiita.ac.in/pchand_mba05/pom/dabur.pdf http://www.scribd.com/doc/18435906/Dabur-Herbal-Promise45

http://www.scribd.com/doc/22107413/Entrepreneurship-Project http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization %20Behavior/HR%20Restructuring-Coca%20Cola%20&%20Dabur-Case%20Studies.htm http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization %20Behavior/HR%20Restructuring-The%20Coca%20Cola%20&%20Dabur %20Way.htm#The_Leader_Humbled http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization %20Behavior/HROB003.htm http://www.businessworld.in/index.php/NO.-10-DABUR-INDIA.html http://www.dabur.com/Suppliers-Access%20to%20Supply http://www.networkmagazineindia.com/200312/events05.shtml 46