The P&G-Godrej alliance failed because P&G neglected Godrej brands and applied their global strategy of targeting all customers uniformly to India, which led to a decline in market share for Godrej brands like Evita, Fresca, and Trilo bar. Production costs also rose, burdening product prices. The alliance ended so both companies could independently pursue new business opportunities from economic liberalization. P&G bought Godrej's 49% share, taking full ownership of P&G Godrej while Godrej regained licensing rights to their soap brands. Reasons for the breakdown included P&G not properly promoting Godrej brands, falling sales causing excess capacity issues, and Godrej's high production costs.

1. Presented By:
Pooja Prakash
Megha Chacko Peter
Jaison Jackson
Antony Tom
Institute Name:
Mar Athanasios CollegeFor Advanced Studies
Tiruvalla, Kerala

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.

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.

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 benefitted by
keeping it’s financial commitments low.

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.