DABUR’s Global entry strategy |

Strategy Students, IIM Trichy
July 16, 2021
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The manufacturers of Ayurvedic medicine and natural consumer goods, Dabur is one of the largest fast-moving consumer goods (FMCG) companies in India. About 60% of its revenues come from consumer care business, 11% from the food business and the remaining comes from international business units. The company has 20 manufacturing facilities spread across the globe, with 12 of them located in India. With a wide distribution network covering 6 million retail outlets, while also emphasising their international presence in over 120 countries across the globe. As part of their global entry strategy, their decision to set up manufacturing plants overseas (Arab) helped them implement a quick supply chain and also address to the changing needs of the customers. Way back in January 2011, Dabur acquired the US based Namaste Laboratories LLC and its three subsidiary companies for a $100million in an all cash deal. Its strong presence in Africa has thus been strengthened by this acquisition, thereby acting as a gateway for Dabur to enter the US market.

On 26 September 2017, Dabur India announced its alliance with Amazon to take its products to the international markets. This move will help Dabur increase its product penetration into the international markets as Amazon will act as a gateway for Dabur to take around 30 products from its popular range and also offer an exclusive range of products specially created for Amazon's global customers. Amazon, through its Global Selling Program will provide an avenue for Dabur to take its vast range of ayurvedic and natural products to millions of global customers on Amazon.com.

ASSUMING WE ARE IN 2018 -

Assume that Dabur’s shareholders have approved a spend of $1.3 billion for the company’s global expansion plans. How much resources should Dabur commit to each of the three global markets being targeted?

The Market Potential Index (MPI) helps identify the market potential of different economies in the world with the help of 8 dimensional assessments ranging from electricity consumption to the country risk, covering up most of the factors that a firm looks into, while expanding overseas, thereby giving a clear picture of the scenario, from which a firm may or may not choose to enter that particular market based on the inferences.

From the MPI calculations*, the investments in these 3 countries could be planned as follows.

* please refer attached excel for details for MPI calculations and reasons for considering specific parameters

The CAGE metrics, on the other hand, identifies the cultural, administrational, geographic and the economic distances between countries that may be used to understand the way these countries trade while considering the most important factors affecting these values. It provides key differences between the target markets of home and host countries that allows a firm to decide and plan an entry strategy accordingly.

Using CAGE metrics, we could arrive at the below values for investments in these 3 countries.

** Amazon market share taken for 2020 as complete details for 2018 were not available on the web.

b) What additional risks/challenges should Dabur factor into consideration while targeting these markets? How will these risks/challenges affect their global expansion strategy?