CASE – 1 Dabur India Limited: Growing Big and Global

Dabur is among the top five FMCG companies in India and is positioned successfully on the specialist herbal platform. Dabur has proven its expertise in the fields of health care, personal care, homecare and foods.
The company was founded by Dr. S. K. Burman in 1884 as small pharmacy in Calcutta (now Kolkata), India. And is now led by his great grandson Vivek C. Burman, who is the Chairman of Dabur India Limited and the senior most representative of the Burman family in the company. The company headquarters are in Ghaziabad, India, near the Indian capital New Delhi, where it is registered. The company has over 12 manufacturing units in India and abroad. The international facilities are located in Nepal, Dubai, Bangladesh, Egypt and Nigeria.
S.K. Burman, the founder of Dabur, was trained as a physician. His mission was to provide effective and affordable cure for ordinary people in far-flung villages. Soon, he started preparing natural remedies based on Ayurved for diseases such as Cholera, Plague and Malaria. Due to his cheap and effective remedies, he became to be known as ‘Daktar’ (Indianised version of ‘doctor’). And that is how his venture Dabur got its name—derived from Daktar Burman.
The company faces stiff competition from many multi national and domestic companies. In the Branded and Packaged Food and Beverages segment major companies that are active include Hindustan Lever, Nestle, Cadbury and Dabur. In case of Ayurvedic medicines and products, the major competitors are Baidyanath, Vicco, Jhandu, Himani and other pharmaceutical companies.

Vision, Mission and Objectives

Vision statement of Dabur says that the company is “dedicated to the health and well being of every household”. The objective is to “significantly accelerate profitable growth by providing comfort to others”. For achieving this objective Dabur aims to:
• Focus on growing core brands across categories, reaching out to new geographies, within and outside India, and improve operational efficiencies by leveraging technology.
• Be the preferred company to meet the health and personal grooming needs of target consumers with safe, efficacious, natural solutions by synthesising deep knowledge of ayurveda and herbs with modern science.
• Be a professionally managed employer of choice, attracting, developing and retaining quality personnel.
• Be responsible citizens with a commitment to environmental protection.
• Provide superior returns, relative to our peer group, to our shareholders.

Chairman of the company

Vivek C. Burman joined Dabur in 1954 after completing his graduation in Business Administration from the USA. In 1986 he was appointed Managing Director of Dabur and in 1998 he took over as Chairman of the Company.
Under Vivek Burman’s leadership, Dabur has grown and evolved as a multi-crore business house with a diverse product portfolio and a marketing network that traverses the whole of India and more than 50 countries across the world. As a strong and positive leader, Vivek C. Burman has motivated employees of Dabur to “do better than their best”—a credo that gives Dabur its status as India’s most trusted nature-based products company.

Leading brands

More than 300 diverse products in the FMCG, Healthcare and Ayurveda segments are in the product line of Dabur. List of products of the company include very successful brands like Vatika, Anmol, Hajmola, Dabur Amla Chyawanprash, Dabur Honey and Lal Dant Manjan with turnover of Rs.100 crores each.
Strategic positioning of Dabur Honey as food product, lead to market leadership with over 40% market share in branded honey market; Dabur Chyawanprash is the largest selling Ayurvedic medicine with over 65% market share. Dabur is a leader in herbal digestives with 90% market share. Hajmola tablets are in command with 75% market share of digestive tablets category. Dabur Lal Tail tops baby massage oil market with 35% of total share.
CHD (Consumer Health Division), dealing with classical Ayurvedic medicines has more than 250 products sold through prescription as well as over the counter. Proprietary Ayurvedic medicines developed by Dabur include Nature Care Isabgol, Madhuvaani and Trifgol.
However, some of the subsidiary units of Dabur have proved to be low margin business; like Dabur Finance Limited. The international units are also operating on low profit margin. The company also produces several “me – too” products. At the same time the company is very popular in the rural segment.

Questions

1. What is the objective of Dabur? Is it profit maximisation or growth maximisation? Discuss.

Consumer focus:
In order to fulfill the needs of consumer, we have better understanding of their needs and offer them the best product.
Innovation:
Its saga of success lies in its continuous exploration and developing new products and following processes.
Ownership:
Family driven business, which accepts the accountability and responsibility of every strategic move that company makes.
Employee development: company focuses its interest around employee development, training , rewarding and achieving excellence.
Passion to succeed: The Company is determination lies in focusing on what they do and deliver the best that’s is required, committing to its objectives and result driven processes.
Teamwork:
Mutual trust and the transparency are the foundation .
However, Dabur in regard to its operational paradigm is coping with its little area of concerns at this point of time. Following are the targets of the organization to be achieved through organizational development :
Retaining premier position:
The short term revenues are generated through focusing on short term projects that would just gather short term revenues and long term activities are ignored( such as building human potential and knowledge), though
Dabur,has built relationship with consumers but they are required to design proactive solutions to align to long term objectives of consumer.
Selecting on innovative product:
The tension between the revenues generation department and organizational strategies, on the basis of technological advancements has hampered the selection process for the right innovative product. In fact, the increasing competition and switching moods of customer have intensified the pressure on future planning process.
Focus on Specialization:
The increased pressure on revenue generation and the highlighted focus on consumers needs in comparison to voice of employee, employees were bound to be rotated across different departments and there is a shift from building strategic expertise in individual areas is causing the diffusion of expertise.
Rewards and Recognitions:
The reward system at Dabur primarily focus on the individual performance and evaluated as individual contribution, where there is an ur gent need to introduce team based rewards resulting in institutionalization at the company level. Knowledge sharing and inter group collaboration:
The multiple groups and projects have caused replication of many common avoidable tasks because knowledge sharing at Dabur is very limited to the immediate group, whereas there should a formal system that would encourage people to share the μbest practices through increased interaction and intergroup coordination.
Brand positioning and public relations:
The management at Dabur has worked hard to align as much close to consumer and market prerequisites at an organization level. The brand positioning also enco urages the performing talents f rom educational institutes to join and work for them that does in a way add to employee pride a nd self-actualization.

2. Do you think the growth of Dabur from a small pharmacy to a large multinational company is an indicator of the advantages of joint stock company against proprietorship form? Elaborate.

Dr. S.K Burman started Dabur in 1884 as a small pharmacy. Initially, he prepared Ayurvedic medicines to treat diseases like malaria, plague and cholera that had no cure during that period. It was his dedication, commitment and empathy that made Dabur a renowned name among the masses. And today, after more than 120 years, Dabur is known for its trustworthiness more than anything else.
During this passage of time, Dabur went through several structural and strategic changes to maintain its market strength. The real mass production started in 1896. Early 1900’s saw Dabur emerge as the first company to provide health care through scientifically tested methods. It achieved significant improvements after setting up Research and Development centers and manufacturing automation. The launch of Dabur’s Amla hairoil and
Chyawanprash was a boon to the expanding business. To keep up with the times, Dabur computerized its operations in 1957. Its Dant Manjan and digestive tablets were widely accepted as well.
However with a large product portfolio in the market, Dabur had to maintain operational efficiency. To make sure it adjusted to the business environment it became a public limited company in 1986 followed by diversification in Spain in 1992. A major change came when Dabur came up with its IPO in 1994.
Because of its position, Dabur’s issue was 21 times oversubscribed. Dabur further divided its business into three separate groups:
•Health Care Products Division
•Family Products Division
•Dabur Ayurvedic Specialties Limited