Grace Castings Ltd.: Contemplating Backward Integration

In August 2018, the managing director of Grace Castings Ltd. (GCL) was preparing for an upcoming board meeting. At the meeting, which was expected to take place at the company’s head office in Ahmedabad, India, he planned to present the strategic plan for GCL’s future expansion as well as chart the company’s direction. GLC was a small mill that manufactured steel products, including structural bars, thermomechanically treated bars, angles, and channels. In fiscal year 2017–18, the fully family-owned business had a financial turnover of US$33.85 million. With the recent growth in India’s steel industry, the managing director was considering various options for expansion. The first option was backward integration, which meant increasing the capacity of billet manufacturing by adding a 30-metric-ton induction furnace. The second option was to expand the business by adding a new power plant. The managing director had to decide whether to recommend one or both of these options or simply maintain the status quo and grow the company at a slow pace.

The case is intended for first-year graduate students or for business executives. It can be used in the business strategy module of a strategic management course. It is also suitable for various specialized courses on family businesses or small and medium-sized organizations. By working through the case and assignment questions, students will have the opportunity to do the following:<ul><li>Understand industry analysis by using Porter’s five-forces framework at the strategic group level.</li><li>Link industry analysis to strategy formulation.</li><li>Evaluate business strategy formulation and decision-making using both qualitative and quantitative aspects.</li><li>Build a strategic plan for GCL for the next five to 10 years by evaluating various growth options available to the company.</li></ul>

• Strategy, Industry Analysis, Family Business, India, Steel Industry