STRATEGIC MANAGEMENT

Table of Contents
Sr. No. TOPIC Pg. No.

1. Company Introduction 03

2. Business Level Strategy 04

3. Corporate Level Strategy 06

4. Conclusion 11

5. References 12
 COMPANY INTRODUCTION – AMUL
Amul Milk Union Limited or Amul owned by the Gujarat Co-operative Milk Marketing Federation Ltd.
(GCMMF), India got established on 19 December 1946 in the town of Anand in Gujarat with the aim of
creating a sustainable market for milk and milk products in India while also ensuring fair prices for milk
producers. Amul was founded by Tribhuvandas Patel under the direction of Sardar Vallabhbhai
Patel, the first deputy prime minister of India.

The White Revolution and Amul's role in it have had a significant impact on the Indian economy and
society, helping to improve the livelihoods of millions of milk producers and creating a sustainable
market for dairy products in India. The "White Revolution" is a term used to describe the dairy
development program that was launched in India in the 1970s with the aim of increasing milk
production and making the country self-sufficient in milk production. The program was a response to
the challenges faced by the Indian dairy industry, which was characterized by low productivity, poor
quality, and inefficient marketing. Amul played a pivotal role in it with its innovative cooperative model
becoming a benchmark for dairy cooperatives across India. The cooperative helped to increase milk
production by providing milk producers with access to modern production techniques, veterinary care,
and other support services.

Amul is well known for its innovative marketing campaigns, including its iconic "Utterly Butterly
Delicious" tagline and the Amul girl mascot. The company operates in the FMCG sector. The
cooperative produces a wide range of milk and milk products, including butter, cheese, ice cream, and
milk powder, which are sold in India and exported to over 60 countries worldwide.

Amul meant different things to different people :

To a Milk Producer - A life enriching experience
To a Consumer - Assurance of having wholesome milk
To a Mother - A reliable source of nourishment for her child
To the Country - Rural Development and Self Reliance

The success of Amul's cooperative model has inspired the creation of similar organizations across India
and in other countries around the world. Amul's focus on quality, innovation, and customer satisfaction
has helped it to build a strong brand image and a loyal customer base. The cooperative is also
committed to social responsibility, and has undertaken various initiatives to promote education, health,
and sustainable development in the communities it serves.

Amul's success in increasing milk production and improving milk quality helped to transform the Indian
dairy industry, making it one of the largest and most successful in the world. The cooperative's focus
on quality and innovation also helped to create a strong brand image, which helped to increase
consumer demand for milk and milk products.

Today, Amul is one of the largest milk producers in the world, with an annual turnover of over USD 5
billion. Amul has a strong distribution network, with over 3.6 million retail outlets across the country.
The brand has also been expanding its presence in international markets. In recent years, Amul has
launched several new products, such as flavored milk, lactose-free milk, and camel milk, to cater to
changing consumer preferences. Overall, Amul is a well-established and respected brand in the Indian
dairy industry, with a loyal customer base and a strong market position.
 BUSINESS LEVEL STRATEGY

Amul is a brand for the entire family. Their target audience is very broad it starts from toddlers all the
way to aged people. They cater to all income groups. A taxi driver is as much a target for Amul as
anybody from the upper class of society, their target audience are huge as their products caters to
needs of different audiences. The segmentation of Amul is the mass population and in general, you will
find people of all different age groups and demography enjoying Amul products. This is because Amul
is not only present in Ice cream, but also in Milk, Butter, Cheese and other such products.

As it has a very deep product portfolio, it does not differentiate in its customers but uses a mass
marketing principle. And till date, this principle has worked very well for the marketing strategy of
Amul. Similarly, the target audience are the regular middle class people.

It incorporates customer based segmentation :

KIDS – Amul Milk, Amul Kool, Chocolate, Nutramul, Energy Drink etc.

WOMEN – Amul Calci+Youth, Amul Cheese spread calorie conscious, Sugar skimmed milk powder etc.

All age groups – Amul Pizza cheese, Amul Shakti, Amul lite butter etc.

Industry based market segmentation : Strong B2B and B2C presence -

 Milk – Ice Cream manufacturers, Restaurant/Fast food chains, coffee shop chains etc.
 Butter/Cheese/Ghee – Bakery and Confectioneries, Pizza and Snack retailers etc.

Overall, Amul has diversified its market hence successfully targeting many segments!

Q. Identify one Business Level Strategy that worked. Why it was a success ?
Amul has been successful in implementing a business level strategy known as "Low-Cost Leadership."
This strategy focuses on producing and delivering high-quality products at a lower cost than
competitors. Amul competes

Amul's success can be attributed to a few key factors. Firstly, Amul has a strong distribution network
that allows them to reach customers in even the most remote parts of India. This has enabled them to
sell their products at a lower cost than competitors who may have higher distribution costs. Secondly,
Amul has focused on reducing waste and increasing efficiency in their operations, which has helped
them to keep costs low. Finally, Amul has consistently focused on product innovation, which has
allowed them to stay ahead of competitors and maintain their market share.

AMUL achieves its cost leadership strategy through various means, such as:

# Procurement: AMUL procures milk directly from the farmers, which helps in reducing the procurement
costs.

# Processing: AMUL uses advanced processing techniques that help in reducing the wastage of milk and
other resources, which results in cost savings.
# Packaging: AMUL uses simple and cost-effective packaging methods that help in reducing the packaging
costs.

# Distribution: AMUL has a strong and efficient distribution network that helps in reducing the
transportation costs.

Hence, AMUL's low-cost leadership strategy has been a success because it has allowed them to
produce and sell high-quality products at a lower cost than competitors. This has enabled them to
reach a large customer base and maintain their position as a market leader in the Indian dairy industry.
India being a price sensitive market and while competing in Indian market, the cost-value trade off
becomes really important and Amul has successfully delivered on it hence the company reaching to
where it is now!
In order to achieve success Amul followed good Business Systems such as – Greater efficiency, tasks
provided were consistent, adopted streamlined processes, it controlled without micromanaging and it
scaled at faster rate!
Although the main USP of the Amul brand is its low pricing but the way through which it hits the
transnationals is by reducing the prices on its product portfolio by incorporating forward integration.

Q. Identify one business level strategy that failed. Why it was a failure ?
One business level strategy that Amul implemented in the past that did not yield the desired results
was their foray into the fast food industry through the launch of the "Amul Fast Food" chain in the
early 1990s.

The company invested heavily in establishing a chain of fast food restaurants across the country,
hoping to tap into the growing demand for quick service meals. However, the venture failed to take off,
and most of the outlets were eventually shut down.

There were several reasons for the failure of the Amul Fast Food chain, some important ones are as
follows –

 The company's lack of experience in the fast food industry. The management did not have a
proper understanding of the market dynamics, customer preferences, and operational
requirements of running a successful fast food business.
 The company's focus on low-cost products, which had been a key success factor for its dairy
business, did not translate well into the fast food industry. The quality of food served at the
Amul Fast Food outlets was perceived to be inferior to that of other fast food chains, and this
affected the customer experience and brand image.
 Another reason for the failure was the intense competition in the fast food industry. Established
players such as McDonald's and KFC already had a strong foothold in the market, making it
difficult for Amul to gain traction.

In conclusion, Amul's foray into the fast food industry was a failure primarily due to a lack of
experience in the industry, an overemphasis on cost-cutting, and intense competition. The
company eventually exited the business, focusing on its core strengths in the dairy sector.
 CORPORATE LEVEL STRATEGY
Mission of Amul - “We the motivated and dedicated workforce at Amul are committed to
produce wholesome and safe foods of excellent quality to remain market leader through development
of quality management system, state of art technology, innovation and eco-friendly operations to
achieve delightment of customers and milk producers”.

Vision of Amul – Amul has a vision to provide more and more satisfaction to the farmers,
employees and distributors.

Q. Identify one Corporate Level Strategy that worked. Why it was a success ?
One corporate level strategy that worked for AMUL is their "Anand pattern" cooperative model, which
is a unique model of organization and management for the dairy industry. The Anand pattern model is
based on a cooperative structure that aims to empower farmers by giving them control over the
procurement, processing, and marketing of milk and dairy products.

This model has been successful for several reasons. First, it has helped to increase the bargaining
power of farmers by bringing them together under a common umbrella organization. Second, it has
ensured that farmers receive a fair price for their milk, as the cooperative is able to negotiate with
processors and distributors on behalf of its members. Third, it has enabled farmers to benefit from
economies of scale, as they are able to pool their resources and invest in modern equipment and
technology.

The success of the Anand pattern cooperative model can be seen in the growth of AMUL. From its
humble beginnings in 1946, AMUL has grown to become one of the largest dairy cooperatives in the
world, with over 3.6 million members and an annual turnover of over $5 billion. The cooperative model
has also been replicated in other parts of India, leading to the development of a thriving dairy industry
in the country.
The value proposition for their customers are - ‘value for money to the customers and protect the
interests of farmers simultaneously’

There are two major competitive advantages of Amul over other brands. First and foremost is the
supply chain. Because of the large numbers of dairy suppliers, Amul has a tremendous strength and
reliability in its supply chain. Hence it is able to produce such high volumes. The second competitive
advantage is the wide product portfolio due to which it can run Amul shoppe’s and also have its
products present in retail. The product portfolio is such that products like Butter and Ice cream are cash
cows for the company.

Overall, the success of the Anand pattern cooperative model for AMUL can be attributed to its ability
to empower farmers, increase their bargaining power, and enable them to benefit from economies of
scale. By giving farmers control over the entire value chain, from procurement to marketing, the model
has created a sustainable and profitable business model for the dairy industry.

The company is targeting to expand in near future. R S Sodhi, MD, Gujarat Cooperative Milk Marketing
Federation said they have set a target of doubling turnover to Rs 1 lakh crore by 2024 from Rs 52,000
crore by procuring more, processing more and eventually marketing more. “This year we will be
investing Rs 1,000 core and we will be investing around Rs 5,000 crore in the next five years in
expanding milk processing infrastructure,” Sodhi said.

Value Chain of Amul – Profits goes to Farmers and not the middle man!

Amul PESTLE Analysis assesses the brand on its business tactics across various parameters. PESTLE
Analysis of Amul examines the various external factors like political, economic, social, technological
(PEST) which impacts its business along with legal & environmental factors.

 Political Factors : Due to favorable political factors, the Amul company achieved a growth of
11.35% across their operations units in Kolkata, Pune and Mumbai. The company focuses on
developing long lasting relationships with their milk producers by ensuring that they pay them higher
prices. The company has set its milk procurement operation in West Bengal under “Amul Pattern”.
In Maharashtra, Punjab and Gujarat the company has established and maintained new milk societies.
The union has established milk societies outside Gujarat under “Anand Pattern”. They provide high
quality feed and veterinary services to the cattle owned by the milk producers of such societies. For
the international dairy industry, the latest years have been quite difficult due to import and export
hurdles faced in Russia. Lower demand for dairy products in Chinese market, other upheavals in
European countries and product regulations leading to lower level of demand in Germany has proved
to be a barrier in company’s growth.
 Economic Factors : In many countries Amul has received significant benefits in terms of lower
milk procurement rates by almost 30 to 60 %. This further benefits the company in
 terms of reduction in the price of its products such as milk powder and butter by 30%. The price of
the milk powder in India improved substantially from Rs.130 to Rs.150 which affected the milk
procurement prices by Rs.4 to Rs.5 per litre. The national as well as the international markets are
facing recessionary conditions. Increase in transportation costs can significantly affect the ability of
the company to deliver its products to the end consumer.
 Social Factors - The individual buying decision is mainly the output of social factors like
culture and society. Friends, peer groups, families, reference groups can have a major
influence on the consumption pattern and buying behavior of the consumer. Amul has
taken advantage of these factors and has successfully targeted women and children. It
has created a strong and vital presence in the dairy segment. Vegan lifestyle is being
increasingly adopted by a large number of consumers. Increase in the number of vegans
would negatively influence the dairy industry as the lifestyle itself doesn’t permit
consumption of dairy products obtained from animals. The overall picture for the
company looks in a beneficial position as the Indian households are more accustomed to
morning tea and the people are in general more accustomed to milk and milk products.
The culture of fast food also promotes a certain type of lifestyle that increases the
consumption of ice creams.
 Technological Factors - The entire industry in general in adapting to a variety of latest
technology that helps in supervising the productivity of milking animals and dairy
farmers. The idea is to identify any faulty practices and take corrective steps in order
to meet the market demand. The latest technologies are equipped with smart chips of
unique identities that are tagged, which help such companies in registering the
productivity and health records of individual animals.
 Legal Factors - The company has faced a lot of problems with regard to infringement
malpractices adopted by the local players in the market. In 1998, Amul noticed that
Naroda based Shri Shakti Dairy, was involved in manufacturing milk pouches under
similar names to Amul brands. This was a distressing situation for the company as the
names were quite similar with its own brand names “Amul Shakti” and “Amul Taaza”. The
brands were being advertised by a firm. The private dairy was making use of similar
packaging as well as brand name of Amul and selling them to the rural markets thus
creating a confusion in the minds of the customers. The company fought a 20-year, long
battle against the defaulters, finally winning the case from the private dairy. Such factors
can disrupt the market of the products of the company by capturing the untapped
potential and selling fraudulent products to such customers.
 Environmental Factors - Due to the effects of global warming that have been
experienced by everyone, the company understands that it is their moral responsibility to
protect the environment. The adoption of automization and the increasing use of
modern technologies in its everyday processing activities like water, fuel, gas and
electricity has resulted in substantial reduction in conservation of national resources. This
has further led to savings in electricity and fuel. On 14th December, 2018 the company,
by the government of India was awarded National Energy Saving Award for coveting the
first position in Food Processing Sector for energy conservation.

All these factors combined gives us an insight on the factors of influence and Amul Pattern strategy
that became a huge success and eventually resulted in AMUL become the market leader.
Q. Identify one Corporate Level Strategy that failed. Why was it a failure ?

Over the years, Amul has implemented various corporate strategies to grow its business, some of
which have been successful, while others have failed. Here are some of the corporate strategies that
failed for Amul:

• Failed Joint Ventures: In the early 1990s, Amul entered into a joint venture with an Irish dairy
company, but the partnership failed to take off. Similarly, a joint venture with a Saudi Arabian company
for producing and exporting dairy products also failed to materialize.

• Overdependence on a Single Product: Amul's main product is dairy milk, which accounts for a
significant portion of its revenue. However, this over-reliance on a single product can be a weakness
for the company, as any disruption in the milk supply or changing consumer preferences could
adversely affect its business.

• Limited International Presence: Despite being a well-known brand in India, Amul has limited
international presence, which limits its growth potential. The company has tried to expand its
international footprint in the past but hasn't been very successful.

• Inadequate Marketing: In the past, Amul has been criticized for its lack of marketing efforts, especially
compared to its competitors. The company has often relied on word-of-mouth and its iconic 'Amul girl'
advertising campaigns, but in recent years, it has started investing in more conventional marketing
strategies.

• Inefficient Supply Chain Management: Amul is a cooperative society, with thousands of farmers as its
members. The company has struggled with supply chain management, including quality control and
ensuring timely payment to farmers. These issues have sometimes led to supply chain disruptions and
affected the company's bottom line.

Amul is facing several challenges, but one of the biggest challenges it is currently facing is the
competition in the market. With the liberalization of the Indian economy, the dairy industry has
become increasingly competitive, with several national and international players entering the market.

Amul, being a cooperative, has a unique business model that has been successful for several decades.
However, it is facing increasing pressure from private players who are offering innovative products and
services to consumers. These companies are investing heavily in marketing and distribution, and are
aggressively expanding their presence in the market.

To stay competitive, Amul needs to continue innovating and introducing new products that appeal to
consumers. It also needs to improve its marketing and distribution strategies to reach a wider
audience. Additionally, it needs to address issues related to the quality of its products and services to
maintain customer trust and loyalty.

To improve its current products, AMUL should consider the following suggestions:

 Expand the product range: Amul can introduce new dairy products to cater to the changing
preferences of consumers. For example, it can consider launching lactose-free milk, plant-
based milk, or vegan cheese to attract customers who are looking for dairy alternatives.
  Focus on product packaging: Packaging plays a significant role in attracting consumers. Amul
can explore eco-friendly and sustainable packaging options to appeal to environmentally
conscious customers.

 Enhance product quality: Amul can focus on improving the quality of its dairy products by using
premium ingredients and adopting strict quality control measures. This will help the brand to
retain its loyal customers and attract new ones.

 Incorporate innovative technology: Amul can consider adopting innovative technologies like
artificial intelligence and machine learning to enhance its production process and improve
product quality. This can also help to reduce production costs and increase efficiency.

 Promote health benefits: Amul can highlight the health benefits of its dairy products to attract
health-conscious consumers. For example, it can promote the high protein and calcium content
in its milk and cheese products to position itself as a healthy food brand.

By implementing these suggestions, Amul can improve its current products and appeal to a wider
range of consumers, ultimately leading to increased sales and profitability.
 CONCLUSION
The Amul case study highlights the success story of the cooperative movement in India. The
cooperative model helped farmers gain control over the production, processing, and marketing of milk,
leading to increased profits and improved living standards for farmers.

Amul's success can be attributed to its focus on quality, efficiency, and innovation, as well as its ability
to adapt to changing market conditions. The cooperative has diversified its product portfolio and
expanded its operations to become one of India's leading dairy companies.

The segmentation of Amul is the mass population and in general, you will find people of all different
age groups and demography enjoying Amul products. When we plot the BCG matrix, Amul has certain
products which are stars whereas others are cash cows. And in fact, Amul chocolates are question
marks because they have very low market share in a growing market. Amul ice cream and Amul butter
can clearly be said to be a cash cow because they have very high market share and the market in itself
is growing with the increase in population. On the other hand, Dairy products like Milk, buttermilk,
cheese, lassi, amul kool etc have a lot of direct and indirect competition in their niche. However, when
compared with the same type of product, then Amul has a high market share. Thus, these products are
stars for Amul.

Because of the excellent products, the top of the mind positioning, the fantastic distribution and supply
chain channels and finally the point of purchase branding and advertising of the Amul girl, Amul finds
itself in a very strong position where its brand equity is concerned. Amul brand is worth $3.2 billion as
per the 2013 brand equity report. Furthermore, most analysts say that Amul would have touched the
$4 billion mark, but the dropping value of the rupee is what caused the difference.
The FMCG market is highly competitive in nature and is known to have a combination of organized
players as well as unorganized players. Similarly, in FMCG, direct competition is equally important as
indirect competition. For example – During winters, ice cream and cold milk products will not sell,
whereas butter and cheese will sell equally well. But on the other hand, during summers the demand of
ice cream shoots up so much so that companies are not able to meet demands. Thus, when we analyse
the market of Amul, in some cases Amul is the clear market leader, whereas in other products it is a
competitor in the market.

Amul as it has positioned itself as the national butter and consumers’ first, and sometimes the only
choice. Campaigns like “The Taste of India” have added an emotional quotient to its marketing, and
vouches for itself as a family product in every household. Value for money, quality, and availability are
other crucial attributes that have positioned Amul to where it stands today.

In financial year 2022, Amul reported a sales turnover of 610 billion Indian rupees compared to about 392 billion
Indian rupees in the previous year in India. With the boom in the consumption of dairy sector and ever
growing population the future of AMUL is really bright with great opportunities and some good
competition.

Overall, the Amul case study provides valuable insights into the potential of the cooperative model in
transforming rural economies and empowering farmers.
 REFERENCES
amul.com (2012) 38th Annual General Body Meeting held on 31st May 2012 :: Amul - The Taste of India. [online]
Available at: http://www.amul.com/m/38th-annual-general-body-meeting-held-on-31st-may-2012

amul.com (1946) About Us - The Amul Model :: Amul - The Taste of India. [online] Available at:
http://www.amul.com/m/about-us

amul.com (2009) Organisation :: Amul - The Taste of India. [online] Available at:
http://www.amul.com/m/organisation

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Chandra, P. (2006) Managing complex Networks in Emerging Markets: The Story of Amul. MBA. Indian Institute of
Management, Ahmedabad.

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