On 20 May 2016, the Management team at Patanjali Ayurved Limited (PAL), an Indian fast-moving consumer goods (FMCG) company, had assembled in their Haridwar office, India, to discuss their future growth plans. The team was in a celebratory mood, as their internal reports suggested the annual revenue forecasts for the year 2016-2017 to be INR 10bn, an increase of 100 per cent as compared to the previous fiscal year 2015-2016 that recorded annual revenues of INR 5bn. PAL incorporated in 2006 and co-founded by Acharya Balkrishna operated in four business segments of foods, personal care, home care and Ayurved products. The products sold under the brand name Patanjali were single-handedly promoted by Swami Ramdev (hereafter referred as Ramdev), a popular Yoga practitioner and preacher amongst the Indian masses, as well as PAL’s co-founder. Ramdev recommended PAL’s products in his yoga sessions on television and yoga shibirs which had led to huge positive “word-of-mouth” publicity for their brand Patanjali. Their fast-paced growth in less than a decade had generated a disruption in the Indian FMCG sector, resulting in a negative impact on the sales of established multinational corporations (MNCs) such as Colgate-Palmolive, Hindustan Unilever Limited (HUL), ITC Limited (ITC), besides the domestic players such as Dabur India Ltd. and Emami Ltd. This had led their FMCG competitors to launch plans to strengthen their product portfolios so as to provide a tough competition to PAL. The management team at PAL, though confident of achieving their annual revenue targets, were apprehensive of this new competition from the big players of the FMCG sector. Were they capable of continuing their success story? Going forward what strategic steps would ensure them a sustainable growth and a market leader position? The mood turned reflective as the team pondered on some of these questions.
Expected learning outcomes
The case is structured to enable discussion on: conducting and understanding a general environment analysis and industry and competitive analysis and critically evaluating the firm’s strategic positioning and scope in a competitive environment.
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CSS 11: Strategy.
This case study is published in partnership with Prin. L.N. Welingkar Institute of Management Development and Research, India (www.welingkar.org).
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