amul CASE

Summary
Sardar Patel formed a Union named as ‘Kaira’ which consisted of many farmers who were fed
up from the exploitation which was caused by a British owned monopoly named as ‘Polson
dairy’ under the colonial rule of Britishers. According to them the farmers were forced to sell
the milk at very lower price for which the demand in Bombay which was completely managed
by the British government. The union starred establishing very soon . Between 1955-196-, the
union had changed their name and started operating under the Brand name amul by
expanding it product portfolio from pasteurizing milk to products like milk powder, chees,
ghee etc. Amul was able to attract more and more farmers towards its union as they provide
training which is required for farming cows, feeds for the cattles, mobile veterinary services
to the farmers, Artificial instrument for the milk production which helped the farmers to work
efficiently which ultimately increased their earnings.
Dr Varghese Kurien, General Manager of amul, set up NDBB (National Dairy Development
Board) under which amul started its journey with the White Revolution of India (otherwise
called Operation Flood), which made it the biggest maker of milk and milk items in India. amul,
under the leadership of Mr Kurien, proved that Branding plays a very important role in making
any business successful. The ASP( Advertisement and Sales Promotion Department was
headed by Sylvester Dacunha made a remarkable identity in the history of Indian
advertisement by launching a cute girl child face commonly known as “amul girl” as a
representative of its dairy products. With initiation from 4 billboards to 4000 billboards till
now the girl has grabbed the attention of every Indian consumer.
Amul was charging a comparative less price than its completions in value added products like
butter, cheese etc. but they charge more for milk due to high transportation cost. The most
important aspect is that amul transferred the 80-85% of its profit to the farmers to fulfill
primary objective. They set their prices lower than their prices. Also amul believes in scaling
their distribution rather than giving them high profits so that they can utilise their assets to
the full. They spends only 1% in their advertisement which is very low as compared to their
competitors. They also kept politician and politics far away from its operations to avoid
pressure and disputes in the organisation.
Amul also kept themselves ahead in the field of logistics by initiating the distribution of milk
and adding it as other member in their product portfolio. Now, milk procures 50% of the
revenue of the amul and is recognised as world’s most advanced milk processing unit.They
process under three layered structure with the dairy centre social orders at the town level
under a milk association at the region level and an alliance of part associations at the state
level.
Amul started with 2 village societies and 247 litres of milk collected per day. The movement
grew and currently, in the state of Gujarat, Amul produces 10.16 million litres of milk daily,
which is collected from 2.7 million farmers, processed through 30 dairy plants, and distributed
through 500,000 retail outlets.
Ques.1- What are the sources of competitive advantage in resource based framework?
Competitive advantages of amul:
Price:
1) Amul priced its value-added products slightly lower than its competitors.
2) Distribution costs were kept low due to which their cost of production was low.
Quality:
1) people had faith that the company produced qualitative product.

Rare:
1) The effective and efficient cooperative system is rarity of Amul because they have a
transparent policy which is follow by the organization and even they don’t allow any
political party to enter.

Innovative:
1) Company adopted umbrella branding strategy to reduce their cost.
2) Despite of spending less on advt. amul was able to position itself as a premium brand
in the eyes of customer which the competitors were unable to do

Ques 2. Are the resources /capabilities /competencies threatening due to change in

economic environment?
Ans: Yes, the resources, capabilities and competencies are being threatened due to changes
in the economic environment due to the following reasons:
1) The new generation was moving to urban areas from rural areas for education. The
children of farmers were their careers in the non-farming area. Therefore amul come
up that the young farmers could earn up to $700 per month with a much higher salary
that they could earn in the cities.
2) Meeting the growing demand was the main challenge. Amul needed to secure its
sources of raw milk. As Due to their contacts in Gujrat, procurement from other states
became a problem. Also improving the quality of the existing farmers was a challenge.
3) Expansion procedure by real contenders like settle, Britannia and HUL is extending to
urban areas with seasoned milk.
4) FDI and remote players - after FDI India is enabling 51% outside organizations to put
resources into India. Presently it is compromising many business and brands.
5) Increasing request and obtainment with the expanding population, the interest is
raising day by day and acquirement is less on the grounds that a cow yields 3.40 litre
every day. This yield can't be incremented by increase in population. In this manner is
additionally one of the worry for amul.
6) In terms of resources, people moving towards cities means a significant growth in
demand of their products, but the concern was that if they will not be able to meet
the requirements of raw materials for production then the demand will not be
fulfilled.