SGMT 6240 Individual Assignment 1

Case Study on the Joint Venture between P&G and Godrej Soaps

Student No.: 212439261

Date: January 28, 2014

Case Overview
In 1992, in order to make a quick entry into Indian market, America giant P&G set up a joint venture (“JV”) with an Indian local manufacturer Godrej Soap. The high-profile JV only lasted four years and was bought out by P&G in 1996. The breaking-up was caused by several reasons including differences in strategy, expectations, management style, and the changes of environment.

Analysis on the Alliance (Motivation-Why, Partner-Who, and Form-How?) * Motivation - At the time, an alliance proved to be the best option for both parties, because: * It helped both parties to gain greater market power in a quicker and cheaper way. P&G at that time was trying to enter into Indian market, but its local resources, brand awareness and market share in Indian were unable to support that strategy. So finding a partner and leveraging its existing capacity to make a quick entry seemed to be the best option for P&G at that point. On the other hand, Godrej, the second largest soap producer, who had already built its brand and distribution network in Indian, was hoping to broaden its product range and extend to international market. Given the risks and uncertainties it might face when going international, partnering with a multinational giant was a less risky way. * The alliance combined complementary resources and therefore minimized entry cost. In this case, each of the parties has resources complementary to the other party (P&G had global market and technology while Godrej has local network and manufacturing capacity). Through combining two parties’ resources, P&G was able to start local manufacture immediately, and Godrej could benefit from increasing manufacturing