HR Restructuring - The Coca Cola & Dabur Way
|
|
ICMR HOME | Case Studies Collection
Case Details:
Case Code : HROB003
Case Length : 08 Pages
Period : 1995-2001
Organization : Coca Cola India Limited, Dabur
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Food, Beverages & Tobacco
To download HR Restructuring - The Coca Cola & Dabur Way case study
(Case Code: HROB003) click on the button below, and select the case from the list of available cases:
Price:
For delivery in electronic format: Rs. 200;
For delivery through courier (within India): Rs. 200 + Shipping & Handling Charges extra
» Human Resource and Organization Behavior Case Studies
» HRM Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Area Specific Case Studies
» Industry Wise Case Studies
» Company Wise Case Studies
Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Chat with us
Please leave your feedback
|
|
<< Previous
"We had grown but we hadn't structured our growth."
- Dabur sources in 1998.
"Three major strands have emerged in Coke's mistakes. It
never managed its infrastructure, it never managed its crate of 10 brands, and
it never managed its people."
- Business World in 2000.
The Leader Humbled
|
It all began with Coca Cola India's (Coca-Cola) realization that something was
surely amiss. Four CEOs within 7 years, arch-rival Pepsi surging ahead, heavy
employee exodus and negative media reports indicated that the leader had gone
wrong big time. The problems eventually led to Coca-Cola reporting a huge loss
of US $ 52 million in 1999, attributed largely to the heavy investments in India
and Japan. Coca-Cola had spent Rs 1500 crore for acquiring bottlers, who were
paid Rs 8 per case as against the normal Rs 3. The losses were also attributed
to management extravagance such as accommodation in farmhouses for executives
and foreign trips for bottlers.
|
|
Following the loss, Coca-Cola had to write off its assets
in India worth US $ 405 million in 2000. Apart from the mounting losses, the
write-off was necessitated by Coca-Cola's over-estimation of volumes in the
Indian market. This assumption was based on the expected reduction in excise
duties, which eventually did not happen, which further delayed the company's
break-even targets by some more years.
Changes were required to be put in place soon. With a renewed focus and
energy, Coca-Cola took various measures to come out of the mess it had
landed itself in.
The Sleeping Giant Awakes
In 1998, the 114 year old ayurvedic and pharmaceutical products major
Dabur found itself at the crossroads.
|
|
In the fiscal 1998, 75% of Dabur's turnover had come
from fast moving consumer goods (FMCGs). Buoyed by this, the Burman
family (promoters and owners of a majority stake in Dabur)
formulated a new vision in 1999 with an aim to make Dabur India's
best FMCG company by 2004. In the same year, Dabur revealed plans to
increase the group turnover to Rs 20 billion by the year 2003-04. To
achieve the goal, Dabur benchmarked itself against other FMCG majors
viz., Nestle, Colgate-Palmolive and P&G. Dabur found itself
significantly lacking in some critical areas. |
While Dabur's price-to-earnings (P/E) ratio1
was less than 24, for most of the others it was more than 40. The net working
capital of Dabur was a whopping Rs 2.2 billion whereas it was less than half of
this figure for the others. There were other indicators of an inherently
inefficient organization including Dabur's operating profit margins of 12% as
compared to Colgate's 16% and P&G's 18%. Even the return on net worth was around
24% for Dabur as against HLL's 52% and Colgate's 34%...
Excerpts >>
|
|
