Inorganic Growth Management at Godrej Consumer Products Limited
This case study deals with the revitalization of Godrej Consumer Products Ltd. (GCPL) by way of significant international acquisitions (inorganic growth). GCPL focused on 3x3 strategy, i.e., to sustain in three business categories (hair care, home care and personal wash) in three geographies (Africa, Asia and Latin America). The company decided to play only in categories where it was the market leader or had the potential to be the market leader. Unlike its rival companies like L’Oreal, which were rushing to give their brands premium status, GCPL took a calibrated approach. To achieve its goal, the company had to gain access to the latest technology in the industry via inorganic route, which required GCPL to go global. In synchronization to its 3x3 strategy GCPL acquired companies abroad, which allowed it to grow its international footprint. Godrej acquired businesses after estimating three core details i.e., firstly, strong growing opportunities, secondly, it concentrates on the bottom-of-the-pyramid products that are priced rationally and of good quality. Lastly, it focuses on the fact that some of these ideas be imported. This showed the company’s willingness and aggression to acquire companies and learn from them. GCPL’s view on inorganic growth is that it would acquire only if a right fit exists with the company’s business strategy, HR strategy and the aim to meet market expectations. For Godrej it was a demand of opportunity that matches with the company’s strategy.
Expected Learning Outcomes
• Understand the three core factors that GCPL estimates, when it acquires businesses in the developing world
• Discuss the factors that lead to success of JVs done by GCPL
• Understand if GCPL benefited by adopting the inorganic route to become number one in the hair color segment
Case Positioning and Setting
The case can be used in Strategy, International Business modules for students pursuing Masters and Executive Masters Business Administration levels for a module on scope expansion as part of corporate strategy. The conceptual framework on inorganic growth can be introduced with this case in a 70-minute session.
Issues for Class Discussion
1. What is your assessment of GCPL’s inorganic growth strategy?
2. GCPL’s 3x3 strategy is the basis for the inorganic growth route adopted by GCPL. Evaluate.