A case study on THE P&G FIASCO

1. A case study on :
THE P&G FIASCO
Presented By:
Megha Chacko Peter
Jaison Jackson
Pooja Prakash
Antony Tom
MACFAST
THIRUVALLA

2.  The P&G – Godrej Alliance seemed to hold great promises but it failed miserably.
 P&G’s global strategy was that they would target all customers with a similar
product which was going to be huge failure as India’s customer base was
homogeneous and thus P&G neglected Godrej brands & their global strategy.
Therefore brands like Evita, Fresca, Trilo bar faced a decline in their market share to
an extreme low. Rising cost of production was putting a burden on the pricing of
the products.
A GIST OF THE CASE

3. The reason cited by the management for the breakdown of this alliance was that it
would enable both the companies to pursue the business opportunities thrown
open by liberalisation. P&GG was going to become a fully owned subsidiary of
P&G with Godrej selling it’s 49% share to P&G and it would retain most of the
sales force acquired from godrej soaps, while the soap brands which were licensed
to P&G would revert to Godrej soaps.

4. Ques 1 : What according to
you, are the factors that
favored the alliance between
P&G and Godrej?

5. The factors that favoured P&G and Godrej alliance were as follows :
Godrej was able to utilise its excess capacity which it had installed in
wake of higher demand for its good, while on the other hand P&G
was able to enter into Indian markets using the distribution channel
of Godrej.
 Godrej required financial and marketing restructuring which was
provided by this P&G - Godrej alliance. P&G also benefited by
keeping it’s financial commitments low.

6. Ques 2 : What went wrong
with the joint venture? Why
did it break up within four
years of it’s formation?

7. Reasons for breakdown of alliance :
( 1 ) Godrej brand were not properly promoted by P&G
( 2 ) Fall in the sales which lead to underutilisation of excess
capacity installed by godrej.
( 3 ) Godrej’s processing cost was very high as compared to
other brands.

8. Case:"The P & G fiasco" - Page 468 - "International
Business" by K Aswathappa, 6th Edition, Mc Graw
Hill - New Delhi

10. MACFAST THIRUVALLA