The Godrej Group_Updated

| THE GODREJ GROUP

Group 6 | Section CPresented By:

Agenda

Evolution of Godrej Group

• The oldest and most diversified business group in India

today.

• Started in 1880 by Ardeshir and Pirojsha Godrej; who

started by making locks and steel cupboards – later

venturing into soaps (during the Swaraj movement)

• They created India's first toilet soap from locally

available vegetable oil. Till then soap was made from

imported animal fats.

• They also added a biscuit making unit. The next

generation, including Naval Godrej diversified the

business into related sectors like engineering and

consolidated the consumer goods division.

Evolution Of The Godrej Group

• The fourth generation led by Adi and Jamshyd joined

the fray in the 1970s and have led the company

overseas with acquisitions and foreign partnerships.

• Ever since the liberalization of 1991 they have brought

their considerable expertise to bear and bring the

business into the 21st century.

• Although a family business, its completely managed by

professionals and it continues to grow and diversify, in

India and elsewhere.

Evolution Of The Godrej Group

Vision• Godrej in every home and work place.

Mission• Enriching quality of life Everyday and Everywhere.

Values• Integrity| Trust| To Serve Respect| Environment

Vision, Mission & Values

• Extremely diversified product portfolio ranging from FMCG to IT services,

Agro-based industries and real estate development.

• The group has made it its stand to solidly establish existing products and

product lines before going on to any more diversification or acquisitions.

• International acquisitions have picked up in the last decade.

• The group has now a presence in 40 countries across 5 continents. Most of

these are in the fast-packaged food and consumer products sphere.

• The group aims to have 50% of total revenue from its international

business by 2020.

• The family holds approximately 30% - 40% stake in all the different group

companies, so diversification is not always possible.

The Godrej Group Today

Few Interesting Facts About the Group

Agenda

Group Structure


Group Structure

Product team structure is a cross between the product division structure, in which the support functions are centralized, and the multidivisional structure, in which each division has its own support functions

In the case of Godrej, few support functions like Recruitment and Business Development happen in a centralized manner whereas each group also has specific support functions like Finance, Operations and Marketing.

A product team structure is more decentralized than a functional structure or a product division

structure, and specialists in the various product teams are permitted to make

on-the spot decisions.

Godrej‘s divisional structure and decentralization efforts were targeted at achieving this goal by delegating decision making authority to managers at the grassroots levels.

Product Team Structure

Key Success Factors of the Group

TRUST HELPS IN REDUCING COSTS AND ATTRITION

Trust can be a source of significant competitive advantage to a family business. It has been found out that 'trust' lowers transaction costs, corruption, and bureaucracy. It also serves as a strong retention factor.

SMALL, NIMBLE, AND QUICK TO REACT

By virtue of the fact that there are fewer decision-making gates to deal with, family businesses, both small and large, tend to be quick to react to threats as well as opportunities.

GODREJ CONTEXT

Godrej has survived in the open economy, when most other local businesses have closed down, primarily because they never allowed majority ownership to any of their foreign partner.

Agenda

Business Model

Group Structure


Areas Of Business

Post Liberalization Transformation

Group companies started acting more like a SBU, chaired by

family members.

Each group has independent decision making power.

The organization small, nimble and quick to react due to fewer decision making gates to deal

with.

Family Owned Business. Family owns majority share in the business (>51%)

Godrej Family still holds Senior Management Positions.

Entry of younger generation at lowest executive level.

Succession Plan for the future generation

Godrej Group : Business Model

• consumer insight based innovation across all its brands.

Ideas and Innovation Our search for constant innovation and a quest for empowering knowledge mean that we’re not only open to big ideas on brighter living we’re also creating the climate for transformation to flourish. So, at Godrej we regularly bring on board the best minds to inspire your mind to be the best it can be.

Expression

Think Bright. Express Big. And big at Godrej takes on authenticity of vision, honoring the truth, and a drive to satisfy our customers. Our every product is the language with which our consumers manifest their aesthetic, signal their status, and announce their taste. By expressing our ideals freely we comunicate not only what is special in ourselves but also encourage our customers to feel what is defiantly unique

.

Consumer insight based innovation

across all its brands. Experience By shedding fresh new light on tradition we transform every ordinary moment into an extraordinary experience at Godrej. The distinctive blend of past knowledge and a hunger for expansion means that the Godrej experience is one of discovering purpose in work and meaning in existence, of reflecting your personal truth, and of inspiring the change you wish to see. For our consumers we are the architects of experience who enable them to rejoice in life’s radiance

Growth At 111 years, Godrej is an old company learning - and relishing –being rejuvinated. Join us in the elevator up. Learn the ropes. The possibilities of growth are endless, and exciting. Your innovation, energy, dynamism and desire will shape the next hundred years of the company synonymous with trust and reliability in India.

Core Competencies

3 x 3 Strategy

Agenda

Analysis of Business Environment

Business Model

Group Structure


Competitor: Includes all FMCG’s namely HUL,P&G,Dabur,Colgate Palmolive to name a few

Social Environment and Responsibility:25% of the group is owned in a trust that invests in the environment, health and education. It’s a conscientious leadership philosophy that when you shine at Godrej others will glow because of you

Economic : depends completely on the import/export and manufacturing policies of the government. However,yearly GCPL revenues are heavily dependent on the budget of that financial year

Technological : leads in technological innovation by joint venture and MOU with Japanese and US firms like Emerson Electric, Ring Techs

Ethical : Adi Godrej, Chairman designate of Godrej and CII President has formulated a code of business ethics to serve as a self-regulatory benchmark for transparent and clean corporate governance for its member companies.

External Environment Of Business

In the FMCG Industry, rivalry among competitors is very fierce. There are scarce customers because the industry is highly saturated and the competitors try to snatch their share of market. Hence the intensity of rivalry is very high

FMCG Industry does not have any measures which can control the entry of new firms. The resistance is very low and the structure of the industry is so complex that new firms can easily enter and also offer tough competition due to cost effectiveness. Hence potential entry of new firms is highly viable.

There are complex and never ending consumer needs and no firm can satisfy all sorts of needs alone. There are plenty of substitute goods available in the market that can be re-placed if consumers are not satisfied with one. The wide range of choices and needs give a sufficient room for new product development that can replace existing goods. This leads to higher consumer’s expectation.

The bargaining power of suppliers of raw materials and intermediate goods is not very high. There is ample number of substitute suppliers available and the raw materials are also readily available and most of the raw materials are homogeneous. There is no monopoly situation in the supplier side because the suppliers are also competing among themselves.

Bargaining power of consumers is also very high. This is because in FMCG industry the switching costs of most of the goods is very low and there is no threat of buying one product over other. Customers are never reluctant to buy or try new things off the shelf

Rivalry among Competing

Potential Entry of New Competitors

Potential Development of Substitute Products

Bargaining Power of Suppliers

Bargaining Power of Consumers

Porter’s Analysis Of Forces

Agenda

Structural Reforms in the group


Business Model

Group Structure


Top Manageme

nt

•Each group company had a CEO or a President (not necessarily from the family) .

•Full freedom was given to these leaders to devise strategy for the companies and lead Godrej in the liberalized and open economy.

Decision

Making

Process

•Each division acted as a profit centre

•Decentralization of decision-making and empowerment of managers at the grassroots level

Adhocracy

•Considerable amount of freedom given to each employee to conceive and implement improvements (kaizen) continuously in the organization

Structural Reforms

Organizational culture

•Organizational culture is also not same across the group companies as the very nature and life cycle of each company dictates its style of functioning.

•For example, the manager-employee relation in a relatively new co like Godrej Infotech is very informal while in a traditional manufacturing based company like Godrej & Boyce, the relation is be a more formal one

Bridging the gap

between Top

Management and

Employee

•There exists a clear differentiation across various levels in the organization with a hierarchy of authority and reporting relationships.

•The mechanism which Godrej adopts to mitigate this differentiation is by informal interactions between the top management and the employees.

Structural Reforms

Agenda

Key Competitors



Business Model

Group Structure


• Godrej Consumer Products Ltd. (GCPL) is a major player in the Indian FMCG market and faces competition from Hindustan Unilever Ltd, Reckitt Benckiser and P&G.

• Godrej Infotech Ltd. is in the business of software Development, e-solutions Development, ERP Implementation, Customisation & ERP Consulting Services, Database Outsourcing & Consultancy services and shares the market with big players like Oracle, SAP and several other smaller players like Artech.

• Godrej & Boyce Mfg. Co. Ltd has various products like Electrical appliances (Refrigerators, Washing Machines, Air Conditioners, Microwaves and DVD players) where it faces competition from foreign majors like LG, Whirlpool, Samsung and Videocon.

Key Competitors

HUL is the market leader with market share of 53% followed by Godrej with 10% market share. Godrej No.1 is a 700 crore brand.

Again a market leader in detergents with 38% market share. Godrej doesn’t compete in this segment.

HUL occupies 54% market share in skin care as compared to just 3% share by Godrej.

In food segment HUL again leads the rankings.

Key Competitors - FMCG

It is the leader in the Indian durables

market with market share that is worth

$292 million.

In refrigerators Godrej has a 18 % market share next to LG which is at

23 %.

In rest of the segments LG and

Samsung have dominated.

Key Competitors – Consumer Durables

Agenda

International Operations

Key Competitors



Business Model

Group Structure


More than 35 percent of revenue comes from international operations.

Godrej Sara Lee gives them an edge in south Asian market.

GCPL has bought majority stake in Cosmetica Nacional, further expanding its leading presence in hair colors in

attractive markets in Latin America.

Already has good presence in Africa.

Key Aspects of international operations

GCPL International Business

Agenda

SWOT & Recommendations


Key Competitors



Business Model

Group Structure


SWOT Analysis

Strength• Respectable and believable brand name• Strong R & D• Focus on innovation• Diversified business house• The company has got wide range of branches

with in the country.• Strong distribution

Weakness• Me-too products• Godrej has no premium products• Lower scope of investing in technology and

achieving economies of scale, especially in small sectors

• Low exports levels

Threats• Integration risks for acquired companies• Removal of import restrictions resulting in

replacing of domestic brands• Inflationary pressures and other factor

affecting demand• Highly Competitive market conditions • New entrants to the market• Labour shortages and attrition of key staff • Political risks associated with unrest and

instability in countries where the company has a presence or operates

Opportunities• Recent acquisitions present strongintegration

opportunities• Large domestic market- a population of

overone billion.• Export potential• Untapped rural market• Rising income levels

•Godrej & Boyce doesn’t have a specialized marketing department. So, it becomes difficult to collect market research and competitor strategy related information

Setting up a Specialized Marketing

Department

•GPL is a Project based company.

•So a decentralized structure would help the company in making quick decisions.

Introducing Decentralized

structure in GPL

•Finance department centralized, whereas marketing department is product based.

•Introducing a uniform structure, i.e. decentralized structure in finance department, to make the decision making synchronized.

Uniform structure at GIL

Recommendations

•In GIL, Union is very strong and interferes with the decision making process of the company.

•We recommend to reduce the authority level of the unions, by giving the middle management more power.

Getting rid of the Union Structure

•In Godrej Agrovet the staff salary at the center is very high.

•However for a low margin business like this it must actually be employing lesser no of people and at lower salaries.

Reducing the employee

strength and average salary.

Recommendations

U111150 Nitin Srivastava U111166 Saurav Ganguly

U111154 Rachna Bagaria U111170 Smruti Ranjan Mallick

U111158 Ravish Kumar U111174 Sushant Berry

U111162 Sampat Patnaik U111178 Vedabrata BasuGro

up C

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The Godrej Group_Updated

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