A strategic balance of tradition and technology: An ayurvedic firm in modern India

A Strategic Balance of Tradition and Technology: An Ayurvedic Firm in Modern India

Bernard Arogyaswamy and Deepak Manchanda

C entral to the debate over health care in the United States is the cost and effec- tiveness of the delivery system. Not only

is dispensing health care expensive, it may not always achieve the desired results. The cost of research, whether conducted at universities or at corporate facilities, is immense and growing fast. Marketing-publicity and promotion to physi- cians, advertising, and packaging-often adds up to almost as much as R&D does. All of this means consumers pay exorbitant prices for drugs, par- ticularly the recently developed ones.

In addition to high product costs, other mala- dies afflict the health care industry, particularly in the United States and Europe. Fragmentation and dependence are two of the more troublesome ones. Fragmentation results from excessive spe- cialization in illnesses or parts of the body. As Capra (1982) says, medicine has become illness- or disease-oriented rather than patient-oriented. Although a professional dedication to curing a specific disease or abnormality is laudable, it tends to induce impersonality. Worse, it reduces the responsibility the physician feels for the well- being of the patient.

Even patients fortunate enough not to fall between the cracks of an overspecialized system are apt to feel totally dependent on it for their well-being. Complete reliance on a seemingly impersonal system is not an ideal state of affairs. But the choice between a narrow focus, efficiency, and outside control, on the one hand, and holism, concern for the patient, and self-control, on the other, has apparently been made.

Some alternative medical systems have evolved independently of-and often predate- Western science. One of these is Ayurveda, which originated in India and has been nurtured there

over the past 3,000 years. Loosely translated as “knowl- edge of life,” Ayurveda is not just a curative system, but a system that prescribes how one could live in harmony with nature and oneself in order to remain healthy. To achieve these harmonies, three forces combining functions of body and mind need to be in equilibrium: Pitta, or the con- trol of biochemical processes; Kapha, or the formative force controlling the balance of flu- ids in the body; and Vita, or the principle of movement, which provides energy and includes the nervous system. The balance among these forces is fine- tuned by adopting a diet (or corrective medica- tion) whose tastes @asa) and properties (Guna) result in the desired effects (Karma).

The lesson here makes a case for ffuifful synergies when CY business aitfblly, astute& and selecfively blends the old with the new,

The focus in Ayurveda is on the person, not on the disease. Even if someone is ill with spe- cific symptoms, the treatment seeks to redress the lack of balance in the three forces. The cure, as Deepak Chopra (1989) points out, lies in restor- ing equilibrium and not necessarily in addressing the symptoms. The mental and spiritual dimen- sions of imbalance are considered in evaluating a person’s ideal route to well-being. Chopra speaks from a position of strength. Using terms and con- cepts his Western audience can relate to, he has done more than anyone else in modern times to popularize the practices of Ayurveda. A qualified physician himself, his ability to weave allopathy and Ayurveda together resonates strongly with both his patients and his audience.

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A Strategic Balance of Tradition and Technology: An Ayurvedic Firm in Modern India 41

42

Notwithstanding its holism and patient orien- tation, Ayurveda is not the dominant medical system anywhere-not even in India, the land of its birth. Although it remains reasonably popular in rural India, the availability of allopathic medi- cines at affordable prices in cities and small towns has tended to moderate its appeal. The low pur- chasing power and inadequate diets of the rural poor sets limits on Ayurveda’s growth potential even among those most in tune with its practices and prescriptions.

Among city dwellers in India, Ayurveda has to overcome a credibility problem. The apparent precision, objectivity, and speed of Western medi- cine are held in high regard. An inability to abide by Ayurveda’s dietary requirements, the shortage of physicians, the lack of efficient distribution, and inadequate supply lines of herbal ingredients are some of the problems confronting ayurvedic firms. The recent entry of multinational pharma- ceutical firms and the expansion of domestic ones further compound the troubles.

Dabur is in the business of Ayurveda, para- doxical as that might sound. Established in 1884, the company has its headquarters and a large manufacturing facility in Sahibabad, which lies just beyond the outer boundaries of metropolitan Delhi. Driving from South Delhi to Sahibabad offers not only a picturesque ride through India’s capital but also a living metaphor for the country itself.

When the British moved the capital from Calcutta to New Delhi in 1911, it was to a city designed by Edward Lutyens and quite unlike predominantly Muslim Old Delhi. As one drives along Shanti Path (“Peace Road”), past the em- bassies of most of the nations with which India has diplomatic relations, it seems the tree-lined avenues could well be in Washington, Buenos

Table 1 Dabur’s Financial Performance Statistics, 1994-1995 (in Millions of Rupees)

Year Ended Year Ended Particulars March31, 1995 March31, 1994 Net sales/income from operations 4,029 3,160 Other income 180 52 Total expenditure 3,712 2,826 Interest 111 117 Gross profit/loss after interest but before 386 270

depreciation & taxation (1+2-s-4) Depreciation 68 56 Provision for taxation 69 72 Net profit/loss 249 142 Paid-up share capital 285 282 Reserves excluding revaluation reserves 1,042 844

(as per balance sheet of previous accounting year)

Aires, or Mexico City. Proceeding further north brings one to the remains of the Purana Qila (Old Fort), which was built by the Moghal Emperor Babar in the twelfth century. A little farther on, outlined against the cloudless sky, stands the tomb of the Sufi mystic, Nizammuddin. During this millennium, Delhi has been ruled primarily by Muslim invaders from Central Asia and by British colonists-Christians from even farther away.

Despite its predominantly Hindu population, India too has been ruled by invaders of diverse extractions and alien beliefs. This underlies the resentment felt by some Indians toward foreign- ers and their multinational corporations (MNCs)- an emotion most vociferously articulated by a revivalist Hindu party presently in power. This resentment has become a force to be reckoned with in national politics as well.

India partly opened its economic doors to the world in 1991 after having been somewhat of a recluse among nations for more than 40 years. Import reduction and substitution were installed as national goals, perhaps as an impulsive reac- tion to years of subjugation. Though much infra- structure creation and development had taken place during the years of isolation, the absence of foreign competition encouraged the growth of a subsidized, unwieldy public sector and a coddled private sector. Businesses were raised on a diet of licenses, permits, and quotas awarded by bureau- crats and politicians, the real powers controlling the corporate world. The departure of the British left a power vacuum that was filled by the new colonists and rulers-the politicians and bureau- crats at the state and central levels and the corpo- rate beneficiaries of their largesse.

Dabur has been a steady, consistent per- former in India’s health care industry. Although its size cannot compare to the likes of Merck, Hoechst, or Bristol-Myers-Squibb, its achieve- ments have been respectable, if not spectacular. Its sales grew from Rupees (Rs) 1.2 billion in 1989-90 to Rs4 billion in 1994-95, and its after- tax profits rose from Rs38.5 million to Rs250 mil- lion during the same period. (One dollar was worth about 36 rupees in 1997.) Relevant finan- cial performance statistics for 1994 and 1995 are shown in Table 1. Obviously, Dabur has made great strides in recent years, even more so in the last two years. Profits and sales have risen sharply over the 1992-1994 period, largely be- cause of the firm’s aggressive reactions and initia- tives in an increasingly turbulent marketplace.

Despite such financial gains in recent years, it may be too early to pronounce the set of strate- gies adopted and deployed by Dabur as an un- qualified success. Radical and imaginative as these strategic moves have been, the uncertainty inherent under conditions of changing govern-

Business Horizons / November-December 19%

ment policies, multinational entry, and shifting consumption patterns is compounded by strate- gies that, though ostensibly aimed at moderating one type of risk, in effect intensify another.

The strategic keys to Dabur’s financial and market success of late are product divers@cation andproliferation, market expansion andpenetra- tion, technology development and communica- tion, and managerial capability. These strategic thrusts, as well as the interactions among them and their significance for Dabur, are explored next.

Product Diversification and Proliferation

Dabur’s major product offerings fall into four distinct groups: health care, beauty care, bulk drugs and chemicals, and veterinary products. Its diversification, on the whole, appears to be driven by strategic rather than portfolio considerations. In other words, Dabur’s core capabilities in ayur- vedic medication/herbal formulations are the thread running through the various product lines.

Because of its century-plus experience in the field, Dabur has acquired a reputation for its expertise in preserving, applying, and even im- proving the traditional knowledge handed down through the ages. Although its synergistic diversi- fication is driven by its ability to distill and apply both ancient and modern medical knowledge, Dabur has attained other economies of scope as well. The image and reputation it enjoys in many parts of India for its herbal remedies helps in selling such products as shampoos, hair oils, and processed foods, The widespread demand for herbal formulations has no doubt fueled the sales of Dabur’s nonmedical products.

Another facilitating factor is the relatively recent phenomenon of department stores opening and becoming popular at an accelerating rate in metropolitan areas of more than 5,000,OOO people: Delhi, Bombay, Madras, Bangalore, Calcutta, Hyderabad. The emergence of these outlets has begun to change the nature of competition, since self-service enables consumers to examine sham- poos and other personal care items personally before buying them. Other consumer products Dabur has introduced include honey, which the company has promoted extensively as a healthful food with therapeutic value; toothpowder, with a view to making a dent in Colgate’s dominant position; and a coconut-oil-based hairdressing that promises to prevent premature graying and hair loss.

Veterinary products targeted primarily at owners of farm animals comprise a highly lucra- tive Dabur diversification. Since it was established in 1992, the veterinary group has enjoyed sales growth of around 25 percent per year in a market in which total sales were around Rs6 billion in

1994. The demand for products designed to pre- vent and treat disease, maintain good health, and improve productivity among farm and dairy ani- mals is huge and nowhere near saturation. India is the fifth largest producer of eggs and has the second largest output of dairy products in the world. Dabur is just beginning to tap this market, using as a launch pad its distinctive image as a dispenser of traditional and reliable remedies. Retailers of animal care products provide the channels needed to reach this far-flung market, moderating somewhat the pressure on resources that diversification inevitably imposes.

The bulk drug and pharmaceuticals group is charged with making and processing products and ingredients required for the manufacture of Dabur’s ayurvedic formulations as well as such allopathic drugs as penicillin. Customers in the latter category include both MNCs and domestic pharmaceutical firms.

In addition to being a commodity producer with routine undifferentiated offerings, the phar- maceuticals group is also responsible for doing much of the preliminary processing associated with a drug that is anything but commonplace- an anticancer formulation called Intaxel. The leaves and twigs of the Asian yew tree are the raw materials. They arrive in truckloads year- round, from which a few milligrams of the poten- tially lifesaving pharmaceutical are extracted. Dabur claims that its process based on the leaves and twigs is more eco-friendly than that of firms that derive a similar drug from the bark. At pres- ent, Dabur is installing facilities for large-scale production of Intaxel, following successful clini- cal trials at hospitals in India. A joint venture agreement with a Canadian firm is in the works to synthesize Intaxel in North America and gain access to that lucrative market. An application for FDA approval is pending. Although it might seem quite a stretch for Dabur to even contemplate entering such a technology-intensive field, the diversification provides logical synergies, such as nurturing and gathering plants and herbs as well as processing and refining them.

Market Expansion and Penetration

Chyawanprash is an over-the-counter tonic for mental and physical health. Introduced in 1969, its great success created a generic demand that Dabur’s competitors were quick to cash in on. An emphasis on the product’s ayurvedic lineage (by associating it with a rishi, or sage, in advertising) helped the other companies in the industry- Baidyanath and Zandu, both ayurvedic firms- while increasing total sales. Market research con- ducted in the mid-1980s concluded that consum- ers, particularly in urban areas, needed more than scriptural reassurance about the efficacy of a

A Strategic Balance of Tradition and Technology: An Ayurvedic Firm in Modern India 43

product. Ingredient listing and instructions in how the medication worked were becoming consumer requirements. Dabur also changed its advertising, based on feedback received, to assert the prod- uct’s suitability for all age groups, its uniqueness, and its relevance to modern societal needs (under conditions of pollution, stress, and so on>. Market

share has since been recovered and stands at

W The growing atiructiveness of the lndian urban market

about 70 per- cent. Packaging has been rede-

for consumer product firms has led to more rapid entry

signed to reflect, even initiate, the

by dOmestiC and fOfGigf3 firms change in brand image. In add-

in Dabur’s prime markets. N tion to such technological improvements,

attempts are also under way to enlarge the geo- graphic scope of Chyawanprash’s appeal from the north and east of the country to include the south and west. (Ingestible ayurvedic medications, unlike ointments, have never been very popular in southern India, and Dabur is trying to change that.)

The rural market has long provided the bulk of the sales for “traditional” medicine in India. But urban sales, historically pegged at 30 to 40 percent of national sales, are starting to show a healthy upward trend. This is undoubtedly a cause for optimism among all industry competi- tors. It has also set a few alarm bells ringing. The growing attractiveness of the Indian urban market for consumer product firms has led to more rapid entry by domestic and foreign firms in Dabur’s prime markets. Pharmaceuticals, beauty and per- sonal care products, and processed foods are among the fields in contention. Multinationals such as Parke-Davis, Hoechst, Merck, Procter Sr Gamble (a relative newcomer). and Unilever (through its durable and highly successful subsid- iary Hindustan Lever) are mixing it up with local players like Dabur and Ranbaxy, both of whom are in the thick of the fray.

The high growth potential of the urban mar- ket-particularly in health and beauty care prod- ucts, accentuated by increasing industrialization and more women joining the work force-calls for more innovative strategies by established com- panies. Rather than go into a defensive shell, Dabur has given every indication of taking ag- gressive action. The introduction of ‘*table” honey, a coconut-oil-based hair dressing, and an old reliable “new” product are cases in point.

Honey has long been a popular health food in rural India, its therapeutic value widely ac- cepted there. But it has never been quite so popu- lar a product among city dwellers. Dabur tried to

change that by introducing the first branded honey, hoping it would appeal to the urban con- sumer and provide an alternative to the un- branded honey available in rural areas. The hope was short-lived. Just because the product was available at retail stores in metropolitan areas did not mean consumers would buy it. In fact, the strategy seemed to recoil on Dabur when, in the late 198Os, competing brands began appearing on retailers’ shelves and cutting into Dabur’s share of sales, minuscule as the latter was.

In 1991. Dabur finally woke up. The com- pany began to advertise honey’s nutritional value and purity, making it a natural extension of its medical line and targeting towns with popula- tions in excess of 100,000. It altered the product’s position to focus on its taste and its attributes as a breakfast table food, rather than on its curative properties. (Focus groups had identified the lack of a sensory appeal and the overwhelming asso- ciation of Dabur honey with medicine-a good but dull image.) It raised advertising expenditures to Rs5 million from Rsl.5 million, sponsored food and cuisine sections in magazines, turned to us- ing plastic bottles, made the label more attractive and printed with food value descriptions, and aggressively pursued and obtained shelf space. Initial results were encouraging. Sales jumped by about 60 percent in early 1995 over the previous year’s figures, with particular increases noted in the newly introduced, larger 500-gram jars.

A strategy shift is also evident in the beauty care area. The flagship product of this group used to be a perfumed hair oil that capitalized- like honey-on its ayurvedic capabilities. Al- though this “core” capability has been preserved and continues to be important, other factors are now being emphasized as well. Vatika, the brand name for a line of personal care products, is seeking to establish an image in addition to that of serving functional needs. Targeted toward the urban working woman in the upper and middle income ranges, Vat&a’s initial offering is a “natu- ral” hair oil. The south, west. and east are the geographic areas in which the product has been launched, accompanied by advertising on radio and television and in print. A budget of Rs9 mil- lion has been allocated toward marketing expen- ditures for the first quarter.

There are some well-entrenched competitors in this Rs3 to 4 billion market for natural hair dressings. The degree of consolidation in the industry is high, with the top three rivals enjoying over 80 percent of industry sales. Although mar- ket research has indicated that Dabur can gain market share at the expense of rivals like Para- chute (which has a nearly 60 percent share), its success will depend on how well it transfers re- sources and capabilities from its existing lines while building new ones.

Business Horizons / November-December 1998

Pudin Hara is a green, mint-based medication for minor digestive and gastric ailments. In its original liquid form, sales stalled at the RslOO million level, while its allopathic rivals (such as Digene) enjoyed combined sales of more than 20 times that magnitude. Again, the product did not appeal to the time- and convenience-conscious urban consumers, Diluting it with water and gulping down a slightly bitter-tasting liquid made the product less than attractive to consumers with easier-to-use options.

So Dabur decided to repackage Pudin Hara. The formulation was reintroduced in the form of capsule “pearls.” The light green color made the pearls more attractive to the urban buyer at whom they were targeted. Respecting the distinct iden- tity of its various market segments, Dabur did not introduce the pearls in the rural areas of northern India, where its traditional formulation enjoyed a strong market presence. In the cities, however, the pearls are now being packaged in shrink packs, just like the competing allopathic brands.

The combination of scriptural tradition and modern packaging technology exemplifies an- other effort to make the ancient both relevant and appealing to the modern-day user. In the office of the Manager of Packaging Development, one can see shelf upon shelf of competitors’ prod- ucts packaged in diverse ways using a range of materials, all enhancing the marketability of their products. They serve as benchmarks for Dabur to measure up to and, where possible, exceed.

Constant attempts are under way to improve the packaging for existing products as well as design innovative packaging for new ones. The latter category includes both the Vatika line and Dabur honey, both of which come in plastic con- tainers. Vatika coconut oil, for instance, is sold in attractive light green bottles with an aesthetically designed label aimed at holding the buyer’s at- tention as well as providing information on the benefits it affords. Without altering the product, packaging helps bridge the divide neatly between the needs of rural and urban India.

Technology Development and Communication

In the past, ayurvedic firms maintained that be- cause the processes by which their system of medicine worked were so different from those of the allopathic system, the same standards of vali- dation could not be applied to both. Ayurveda works on different levels, the argument went, and its formulations could not be compared one- on-one with allopathic medicines used to treat the same illness. For instance, Ayurveda attempts to treat associated factors, not just the observed symptoms. A wide range of medication, custom- ized according to body type for the individual

patient, is used over the long term to help pre- vent disease. When combined with the cultivation of the appropriate philosophy of life, it makes for a healthier person,

Because tradition often does not travel well across time, space, and belief systems, Dabur decided to enlist science and technology in the service of tradition. Although the differences between the ayurvedic and allopathic systems are clear, urban consumers and regulatory agencies need reassurance about what a product contains, how it works, its side-effects, and so on. It may be a modest beginning, but for Dabur it has been a break from the past (and a successful past at that) to display the composition of products on labels. The practice is now a matter of routine, whether the product in question is a cure for yeast infection or a hair dressing.

Another scientific dimension Dabur has intro duced is the practice of clinical testing using double-blind experimentation. The tests are car- ried out at both allopathic and ayurvedic medical institutions. Products such as Lipistat, to be used in treating arteriosclerosis, and Tricawin, a medi- cation for yeast infections, have been put through a battery of tests to establish their efficacy. Toxic- ity studies are also conducted as a matter of course.

Through the use of modern science, Dabur is trying to counter the impression many urban Indians have that Ayurveda is little more than a source of aphrodisiacs. Chromatographic analysis, controlled and randomized experiments, and the use of statistical process control all contribute to the firm’s reputation for integrity and consistency. Recruiting and retaining people qualified in biochemistry, genetics and genetic engi- neering, mo- lecular chemis- try, and other related disci- plines provides the solid foun- dation on which

“Through the use of modem science, Ddxfr is trying to counter the impression many urban Indians have thaf Ayurvedu is little more fhun a source of aphrodisiacs. u

Dabur’s recently expanded capabilities in R&D are built. The days are long gone when people bought medication because it offered a cure rooted in tradition. Even rural buyers are becom- ing more savvy and less reluctant to switch to products that claim to be more effective without showing evidence to support their assertions.

The popularity of allopathic medicines and beauty care products is unquestionably on the rise. If Dabur (and other domestic firms) want to stay competitive, they must not only adopt the methods employed by their successful rivals, they

A Strategic Balance of Tradition and Technology: An Ayurvedic Firm in Modern India 45

must do so clearly and unequivocally. As far as possible, the enlistment of science and technol- ogy in the service of Ayurveda must be highly visible. Packaging innovations that make the product not only more aesthetically appealing and durable but also convenient to use are an effective tool for communicating the firm’s trans- formed mission. The change in image is rein- forced further by providing the ingredient listing and a description of the product’s functions on the label itself. Given the nature and extent of the technological advantage enjoyed by allopathic drug firms in the consumer’s mind, Dabur must begin to publicize its scientific methods and achievements that hitherto have remained an internal, procedural matter. Current and potential users could derive additional reassurance from the fact that the manufacturer knows what a product contains, bow it works, when it is most effective, and u~hy they should use it. This is even more true for a product with an ancient, respected lineage.

Figure 1 Positioning of Dabur’s Businesses in BCG Matrix

Examining Nike’s experience in the athletic footwear industry could prove instructive. Al- though the two companies and their industries might appear highly dissimilar, there are parallels between Dabur and Nike within their respective contexts. Nike, too, was preeminent in an indus- try whose growth it had partly helped fuel. It had achieved its position through an adroit application of design and materials technology, combined with production in low-wage areas, to make foot- wear first for the dedicated athlete and subse- quently for the casual user. But Nike, says Miller (1990). in using its technical capabilities, almost fell prey to the Icarus paradox. Its capability nearly became its undoing, just as Icarus’s exhila-

ration at being able to fly took him too close to the sun, with disas- trous consequences. Nike‘s continued pre- occupation with the product technology on which its reputation and runaway success were based allowed rival Reebok to steal big chunks of its mar- ket (aerobics, style- conscious users) by stressing a sneaker’s appearance rather than its technology alone. So instead of throwing more technology at customers, Nike re- sponded by deciding to meld technology and styling. Even bet-

Tradition

High

ter, the technology (such as the “Air Pump”) was made visible and obvious. It was not only built into the shoe, it was conveyed to the customer through the product itself, as well as through any promotion undertaken.

Dabur’s skills lie in maintaining, strengthen- ing, and perhaps extending a traditional school of thought and practice. But like Nike’s preoccupa- tion with technology, Dabur’s fascination with tradition, which historically has been its claim to fame, could prove to be its undoing. Its ability to wean itself away from an exclusive and excessive recourse to tradition, combine that tradition with technology, and communicate this transformed capability to the marketplace may well determine its success in a rapidly changing industry.

As shown in Figure 1, Dabur’s original posi- tion was at Dl and its present situation lies at D2. Now it must further differentiate itself both from foreign and domestic rivals by moving toward D3. Most MNCs are located around M, so Dahur can gain a distinct edge in markets that favor bringing the ancient and the modern together in one product. The technology-tradition mix will vary among the products; anticancer drugs and medication to treat yeast infections will obviously need different proportions and types of technol- ogy than. say, honey or digestion-aiding candy. The high-tech intensity and marketing effort (marketing expense as a ratio of sales) required in most of Dabur’s lines tneans that large outlays are needed every year on both counts.

Management

As in most other Asian countries (mainland China and North Korea might be the only exceptions), the dominant organizational form in India is the family-ownecl business, both in terms of numbers and revenues. Whether the enterprise is the cor- ner newsstand, a mid-sized manufacturer, a large consultancy, or a giant conglomerate like those under the Birla, Tata. or Reliance umbrellas, its direction and control rest firmly with the found- ing or acquiring family. Undoubtedly these firms have been the backbone of. and a springboard for, the meteoric growth of some of the econo- mies of East and Southeast Asia. The Chinese family business (CFB), for example, has made overseas Chinese a force to be reckoned with in countries like Malaysia, Indonesia, Thailand, and the Philippines, as well as in countries where ethnic Chinese are in the majority, such as Singa- pore, Hong Kong, and Taiwan. The Chinese and their CFBs may not necessarily be liked or ad- mired in their adopted nations, but the guanxi or network of implicit understandings that prevail in their business deals make them formidable rivals.

Although guarzxi in Indian business is not as pervasive as it is in Chinese-dominated societies,

the influence of the family is no less significant. Family-centered firms count among their assets the individual loyalty of the extended family and a cohesive group implementing monolithic poli- cies. But as Khandwalla (1995) asserts, success brings in its wake potentially grave deficiencies. The family’s resources may be limited, thereby restricting growth; employees can become restive if they feel they are not being treated as well as family members; the latter might not rise to the level of their assigned responsibility; and so on.

Dabur was established in 1884 as a propri- etorship by Dr. Shikast Burman and has contin- ued since then as an enterprise controlled by the Burman family. The current managing director, G.C. Burman, joined the company in 1964 after obtaining a pharmacy degree in the United States. He has been instrumental in expanding Dabur’s horizons and undertaking many of its recent am- bitious moves. His younger brother Pradip, an M.I.T. graduate, took charge of production and is credited with making Dabur’s manufacturing more efficient, as well as starting up the veterinary unit, Charge of the R&D group has been entrusted to another member of the extended family, A.C. Burman, who holds a doctorate in chemistry- also from an American university. He helped get the bulk drug unit off the ground, employing the mass production techniques introduced into the firm earlier.

India has changed a great deal in the recent past, and so has the Burman family. As foreign companies become more commonplace in the Indian industrial landscape and governmental intrusion diminishes, companies have to develop other capabilities in technology, marketing, and production. The Burman family has demonstrated an awareness of the many dangers and opportu- nities it faces and the ability, thus far, to deal with them. The boldness of the strategies charted, the qualifications possessed by most, if not all, of the family members in positions of authority, and the willingness to invest 15 percent of profits in R&D and spend such large amounts on advertising that it ranks within the top 20 for advertising expendi- tures in India-all are proof of this. The family’s ownership has been diluted recently with the public issue of shares, showing that the Burman family is willing to trade off control against re- source inflows to benefit the firm.

In sum, family control has become increas- ingly enlightened and inclusive, both in its vision and strategic management and in nurturing the capabilities to succeed in the new environment it confronts. If problems arise in the future, they are likely to involve issues of how much control the family is willing to give up versus the amount of capital needed, as well as in the area of human resources. The extent, nature, and boundaries of family control will shift as long as resource pres-

sures exist. Dabur appears to be moving in the direction of enhancing the competence of its people (whether they belong to the founding family or not), even at the expense of mitigating family control Retention and motivation of its human resources are, obviously, central to the success of this strategy.

The top HR manager at Dabur believed that almost as serious as the market threat posed by MNCs to Dabur and other domestic firms was the inducement they seemed to offer to employees to leave their current jobs. MNCs offer higher sala- ries and perks, promise superior training and career advancement, and possess the glamour associated with an international presence. Dabur perhaps cannot match them in the material re- wards it offers its employees. But it certainly can strive to create a sense of mutual loyalty and belonging that, in the long run, might help recre- ate the family atmosphere that characterized the time of its inception.

The HR department is trying to build a cohe- sive, cooperative culture in several ways: periodi- cally issuing communications and holding semi- nars on where the company is heading and how employees can best be motivated; continuously upgrading skills through training; and recruiting managers with relevant outside experience. En- couraging employees to work in groups and offer ideas and suggestions, demonstrating empathy for the employees’ needs, and communicating the firm’s mission and strategic intent to them could make for more congenial working relation- ships and a motivated work force.

The attractiveness of an MNC to local em- ployees often fades with the passage of time. Relations between expatriates and local people often turn sour, promotion opportunities and rewards generally dry up as one rises in the firm, and the loyalty of an MNC to a host country typi- cally lasts only as long as the outlook remains rosy. Given time, then, the charm of the MNC might fade. Until that happens, Dabur must find ways to retain its talented people and firmly rein- force the capabilities it is trying to build in di- verse products and markets with its amalgam of tradition and technology.

A s if the intensifying rivalry in the Indian environment were not enough of a challenge, Dabur has decided to look

abroad for new markets. For a relative newcomer to internationalization, the company has done remarkably well, Its sales were on the order of Rs250 million in 1993-94, nearly 8 percent of the total revenues for that year. Manufacturing plants have been established in the Middle East and Nepal, and more are on the way. Of course, the initial appeal of ayurvedic products is to Indians abroad, a substantial diaspora that extends to

A Strategic Balance of Tradition and Technology: An Ayurvedic Firm in Modern India 47

many countries in Africa, Europe, Southeast Asia, and North America. Many expatriate Indians are glad to establish even a tenuous context with the land of their ethnic origin. Movies, books, and food are among the offerings that currently serve this purpose. Ayurvedic products could do like- wise. In recent years, Ayurveda has received a lot of publicity in Western countries through the work and efforts of people like Deepak Chopra. The possibility of firms such as Dabur capitalizing on the favorable attention Ayurveda has gained is far from remote, expensive though it may be to implement.

Global ambitions make it imperative to gar- ner ever-increasing resources-financial, human, material, and informational. Decisions must be made on how financing will be raised to achieve the company‘s ambitious goals and the extent to which the Burman family’s role-financial and managerial-will, if necessary, be diluted. Rising revenues also mean herbal materials will be needed in greater quantities in the future. Strate- gies to teach and encourage people in villages all over India to grow the plants needed for Dahur’s various herbal products must be expanded and refined if continuity in raw material supplies is to be maintained. Information is as critical as any other resource at this stage in Dabur’s growth trajectory. Collecting and processing market intel- ligence as well as maintaining free-flowing com- munication within the firm are essential if re- sources are not to be duplicated-which is all too easy during periods of growth. Organizing tech- nical and market research to be accessible to all users could be as vital as formulating the appro- priate strategies.

Greater use of computers and computer- based information systems-a process already under way at the firm-is therefore entirely ap- propriate. The pervasive reliance on modern information technology at Dabur might appear paradoxical, but it is just one more way in which ancient traditions and cutting-edge technology are being combined by successful firms in India and, indeed, in other emerging nations. 0

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Bernard Arogyaswamy is a professor and chairman of the Department of Business Administration at Le Moyne College in Syracuse, New York. Deepak Manchanda is the senior manager of marketing at Oriflame Limited in New Delhi, India.