Designing Work Organizations

Group 3 AMUL
Submitted to:
Prof. Nishant Uppal
Indian Institute of Management, Lucknow
NAME
NIDHI ABM 11032
AKHILESH CHAUHAN PGP30298
DEVENDRA RAJPUT PGP30308
MOHIT KATARIA PGP30318
PARUL PGP30328
SANGITA NARU PGP30338
TANVI DHANUKA PGP30348

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TASK
Organization Structure
Conclusion and Compilation
Recommendations and Limitations
Recommendations
Employee Details
History of Amul
Problem Statement

Table of Contents
1.1 History of AMUL

1.2 Employee Details3-4

1.3 Organization Structure 5
1.4 Problem Statement

5-7

1.5 Recommendations

7-10

1.6 Limitations

10-11

1.7 Conclusion

11

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1.1 HISTORY OF AMUL

AMUL, the largest food brand in India and the Worlds largest pouched milk brand is managed
by Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF) and was formed and
registered on December 14th, 1946. AMUL has 5250 franchises all over India, and one of the
franchises is present in IIM Lucknow. Since 6 years, AMUL store is present in the campus and
the franchise was taken by different people at different points of time. At present, Harimohan
Gupta is the owner and the franchise holder of AMUL since 2013. He came up with the idea of
selling fast foods to the students and other campus inhabitants like staff and faculty. Previously
he was the owner of a cafe named Apna Cafe and then worked as a partner in Just Tea, both of
which were inside IIM Lucknow campus.
The owner started the store with an investment of Rs.2.5 lacs that was used for creating the
counter, buying fridges and utensils. Along with that, a security deposit was paid to AMUL for
taking franchise. A rent is also paid to the institute for the store space. AMUL store in IIM
Lucknow is open for all 7 days of the week and on all occasions. In the month of April and May,
students are unavailable because of their summer internship so AMUL cannot generate enough
revenue. Hence, the shop remains closed for these 2 months. AMUL was started with 4
employees and at present it has 9 employees. Employees are divided in 2 shifts of 12 hours each.
The 8 am to 8 pm shift has 4 employees and the 11:30 am to 11:30 pm shift has 5 employees.
1.2 EMPLOYEE DETAILS
After interviewing all of the employees we observed the following things:

All of them live in Lucknow mostly within the radius of 7 to 15 km.

They are all unmarried.
They have no motivation or commitment to work in long term.
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Reason for Joining: Poor financial health.

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Details of employees working at present:

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1.3 ORGANISATION STRUCTURE

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Currently, Amul has a flat organization structure. There is no middle management between the
owner and the employees. The organization structure is more like an organic one. The employees
work together and coordinate tasks. The integrating mechanism in organization is direct contact.
Employees contact face-to-face for coordination.

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The owner controls four divisions of roles under it. The four types of roles are Manager, Cook,
Helper and Delivery boys. There exists flexibility among the employees. If delivery boy is not
available, the helper takes up the charge of delivering. Similarly, if Manager gets overloaded, the
delivery boy, who has some knowledge of mathematics, keeps account of orders. Also, the
horizontal differentiation is low as the flexibility of roles among the employees is frequent.

1.4 PROBLEM STATEMENT

Amul operates on a total of more than 900 accounts including those of students, staff and faculty.
The problem faced by Amul that we are addressing is that of credit. The table below shows the
current credit system and the outstanding balances of Amul:

Particulars
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Total number of Accounts

Receivables Outstanding Amount
Number of people with unpaid balance >Rs.10000
Average Collection Period All Accounts
Average Collection Period Major Accounts
Suppliers Credit:
Groceries
Milkman
Amul
Other Products

More than 900

Rs.1000000
30
30 days
2 Months
Monthly
Daily Payment
Zero credit
Weekly Payment

It shows that they are facing a huge problem of credit as they have unrecovered balances of
about Rs.10 lacs. They allow a credit of a month to all customers and customers with heavy
balances a credit of 2 months. Also the customers with big balances do not make full payment in
2 months. On the other side, they get limited credit from suppliers as mentioned above.
Due to this credit system, the following problems are being faced by the organization:

The owner has to invest Rs. 60000 to 70000 as working capital to keep the operations of the
organization going. This includes paying for salaries of employees, electricity and other

miscellaneous expenses.
The organization is unable to invest in items of infrastructure like new chairs and tables that can
help increase the footfall. The entire amount invested is used in sustaining the business by

making payments to vendors and employees.

Amul is unable to think on lines of expansion because the heavy outstanding balance makes it

difficult to manage regular expenses leave alone the idea of expanding.

Finally, all competitors of Amul like Gossip n Bite and Guptaji have regulated credit facilities to
minimize losses. Hence it becomes imperative for the organization to also step up and follow a
stricter credit policy.

1.5 RECOMMENDATIONS
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I.

Credit Card Swipe:

Credit card swiping machine needs to be purchased from a merchant or to be taken on
lease which can be used along with a merchant account.
A monthly fee is charged for the merchant account.
The steps for implementing the credit card machine is as follows:
A current account of the organization is required. Since the business is already few
years old, this account already exists.
Next step is to apply for the swipe machine. The documents required are:
Merchant application form duly filled
Identity proof
Address proof
Business Establishment proof
Set up a checkout system and decide which cards will be accepted.
Pay for the merchant account if required. Currently some banks are offering no initial

II.

and zero rental PSTN service which could be utilized.

Benefit will be derived from cashless transactions, which is getting popular

nowadays.
It will also be helpful in keeping track of transactions in better way since transactions

will be recorded in current account.

Training of account manager on Excel:
In present system, account manager is not having knowledge of Excel because of which
he cannot update anything in soft copy. Training account manager will have following
benefits:
More frequent updates possible on the account information of each individual so that

III.

update could be provided on demand.

Better account management to find out the accounts with huge amount of debt.
Students with high debt can be identified with ease and can be given notice for

payment.
Provision of Pre-paid:
The provision of pre-paid will enable some of those who want to pay but cannot
because the account is not updated, to pay upfront.
It will also enable the business to reduce its account receivables.
This might even result in some unearned revenue which will improve health of
business which is currently in jeopardy.
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It can be done by without changing things much and just maintaining a record of
those who pay without getting latest account.

IV.

Regular Maintenance of Outstanding Bills in Microsoft Excel every 15 days

In order to ensure that there is a regular collection of outstanding money from the students, there
should a regular up gradation of records in the Excel files every 15 days. This would ensure that
the records are regularly updated and the latest outstanding dues can be communicated to the
students for the payment.
Present System
At present the owner of Amul, HariMohan himself enters the bill records. Since he is occupied in
other different tasks related to Amul, he is not able to maintain the records in Excel at a regular
interval.
Proposed System
The team proposes that the Account Manager in Amul should be given training in basic Excel so
that he can regularly maintain the records. These records should be updated on a daily basis in
the Excel sheets by the EOD. Also, the Account Manager can utilize the time when there is
relatively lesser load on the shop to fulfill this task.
V.

Displaying a Copy of the Bill Outside the Shop Counter for Reference by Students

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At present the copy of the record of the outstanding bills is kept with the Manager and only when
a student asks for the records, he is informed about his outstanding dues. The team proposes that
the bill should be displayed outside the shop counter so that the students can actively look for
their outstanding dues. This would act as a constant reminder to the students and thus increase
their pro-activeness in clearing the dues.
Also sometimes at the peak hour the Account Manager is busy and therefore he asks the students
to come back later to know their dues. Thus the proposed system would ensure that students
dont have to bother the Account Manager every time to know the dues.
VI.

Blocking of Accounts whose Outstanding Dues exceeds INR 3,000

At present there is no mechanism for the Account Manager to actively track the accounts that
have their outstanding dues on the higher side since the records are not updated on a regular
basis. The updating of records in the Excel Sheet at a regular interval would ensure that the
updated information is maintained. The team proposes that the accounts that have outstanding
balance greater than INR 3,000 should be blocked and no further sales to be made on these
accounts on credit basis. Only cash sales will be allowed once the account gets frozen. This will
ensure that the exposure is limited.

VII.

Regular Tracking of Accounts with Higher Outstanding Dues

The team proposes that there should be a mechanism to regularly track the accounts that have
higher outstanding dues. These accounts should be tracked on a weekly basis by sending
personnel to the rooms. This should be done by taking permission from Students Affairs
Chairman and it would ensure higher recovery.

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1.6 LIMITATIONS
1. Training of account manager for frequent Excel updates:
Training of account manager is needed to make frequent updates on Excel. It will require effort
from the accounts manager side and investment from owners pocket. It might affect business
adversely if care is not taken about manager leaving the organization because of availability of
better job options.
2.
Permission for collection from hostel:
Currently employees of the organization are not allowed to visit hostel hence there is difficulty in
collection. Many a time, students forget keeping money to pay to organization while going to eat.
While collection from hostel was the option available in past and used to enable business to
collect lots of payments as students used to keep money with them, now the option is not
available. This has resulted in rise in non-payments. Permission to visit hostel premises is
necessary for better collection.
3. Loss of customers:
Presently most of the students are habitual of going to the shop and eating while paying all at
once. If some person has not paid for some time, and he/she will be asked to pay for new
transaction, it may happen that the person does not have money that time and may decide not to
buy stuff at that time. It might result in bad customer relation. Since better customer relation is
advantageous with respect to the competition, such action may result in losing that advantage
and business opportunities.
1.7 CONCLUSION
Hence, we conclude by recommending the above alternatives and would closely monitor the
changes proposed to track the effectiveness of the same. The changes proposed will not take
effect immediately but will help improve the credit system to a great extent and there will be less
blockage of funds.
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