AMUL INDUSTRY ANALYSIS

A PROJECT REPORT
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE
AWARD OF MBA
SUBMITTED TO

Dr. A.P.J ABDUL KALAM

TECHNICAL UNIVERSITY

UTTAR PRADESH, LUCKNOW

SUBMITTED BY;
VIPIN KUMAR YADAV 2020MBA009
UNDER THE SUPERVISION OF
Asst, Prof. Mr. MANISH KATIYAR

AXIS INSTITUE OF PLANING & MANAGEMENT

ROOMA, KANPUR
 ACKNOWLEDGEMENT

I would like to express the deepest and most sincere appreciation to my mini project

supervisor Mr. MANISH KATIYAR, CO-ORDINATOR of MBA Department, AXIS

INSTITUTE OF PLANING & MANAGEMENT for her nonstop guidance, stimulating

suggestions and encouragement throughout the course of this work, without  his

supervision and constant help this dissertation would not have been possible. We would

also like to express our sincere thanks to Mr. KRISHNA PAL SIR, Assistant Professor of

MBA Department for his helpful suggestions and invaluable guidance throughout the

ideation of the MINI PROJECT.

 CONTENT

 PREFACE

 EXECUTIVE SUMMARY

 INTRODUCTION AND HISTORY

 ACHIEVEMENTS

 AWARDS

 AMUL PLANTS AND AMUL IN ABROAD

 PRODUCT PROFILE

 INDUSTRY PROFILE CURRENT SCENARIO

 OBJECTIVE OF RESEARCH

 AMUL JOURNEY TOWARD’S EXCELLENCE

 AMUL LEADERSHIP

 INFORMATION REQUIREMENT

 SWOT ANALYSIS OF AMUL

 AMUL SECRET OF SUCCESS

 AMUL THREE TIER MODEL

 MANAGING COMPETITION AND CHALLENGES

 ADVERTISEMENT OF AMUL

 AREAS OF OPERATION

 LIST OF AMUL PRODUCTS

 TECHNOLOGY AND EFFECTIVENESS

 GROWTH AND CHALLENGE

 CONCLUSION

PREFACE

Today the business environment is rapidly changing in this competitive

environment the popular trend is also striving for maintaining its positions
therefore it become essential for the companies that they should know about
their preference & taste. Regarding a particular product it is of almost necessary
to know the consumers satisfaction to the value offered by the company in case
of dissatisfactory result it is essential to ascertain whether the dissatisfaction is
for entire product or part of it is and what value do the consumers expect from
it.

The research will provide the relevant information to the organization about
consumer’s attitude towards their products & services.

The research work is sincere effort to find out the ultimate requirement of
consumers for the betterment of research as well as the organization.
 EXECUTIVE SUMMARY
This final project was undertaken with the objective of “CONSUMER BUYING
PATTERN TOWARDS AMUL MILK”

In the year 1946 the first milk union was established. This union was started with
250 liters of milk per day In the year 1955 AMUL was established. In the year
1946 the union was known as KAIRA DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION. This union selected the brand name AMUL 1n 1955.

The brand name Amul means “AMULYA”. This word derived from the Sanskrit
word “AMULYA” which means “PRICELESS”. A quality control expert in Anand
had suggested the brand name “AMUL”™. Amul products have been tn use in
millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee,
Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream,
Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India
(According to GCMMF The total turnover of AMUL in 2021-22 is 39,200
crore). Today Amul is a symbol of many things like of the high-quality products
sold at reasonable prices, of the genesis of a vast co-operative network, of the
triumph of indigenous technology, of the marketing savvy of a farmers’
organization. And have a proven model for dairy development (Generally known
as “ANAND PATTERN”).
 INTRODUCTION AND HISTORY
In the year 1946 the first milk union was established. This union was started with
250 liters of milk per day. In the year 1955 AMUL was established. In the year
1946 the union was known as KAIRA DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION. This union selected the brand name AMUL in 1955.

The brand name Amul means “AMULYA”. This word derived from the Sanskrit
word “AMULYA” which means “PRICELESS”. A quality control expert in Anand
had suggested the brand name “AMUL”. Amul products have been in use in
millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee,
Amulspray, Amul Cheese, Amul Chocolates, Amul Shnkhand, Amul Ice cream,
Nudamul, Amul Milk and Amulya have made Amul a leading food brand in India.
Today Amul is a symbol of many things like of the high-quality products sold at
reasonable prices, of the genesis of a vast co-operative network, of the triumph of
indigenous technology, of the marketing savvy of a farmers’ organization. And
have a proven model for dairy development (Generally known as “ANAND
PATTERN”).

In the early 40's, the main sources of earning for the farmers of Kaira district was
farming and selling of milk. That time there was high demand for milk in Bombay.
The main supplier of the milk was Polson dairy limited which was a privately
owned company and held monopoly over the supply of milk at Bombay from the
Kaira district. This system leads to exploitation of poor and illiterates’ farmers by
the private traders. The traders used to beside the prices of milk and the farmers
were forced to accept it without uttering a single word.

However, when the exploitation became intolerable, the farmers were frustrated.
They collectively appealed to Sardar Vallabhbhai Patel, who was a leading
activist in the freedom movement Sardar Patel advised the farmers to sell the milk
on their own by establishing a co-operative union, Instead of supplying milk to
private traders. Sardar Patel sent the farmers to Shri Morarji Desai in order to
gain his co-operation and help. Shri Desai held a meeting at Samarkha village
near Anand, on 4 January 1946. He advised the farmers to form a society for
collection of the milk.
These village societies would collect the milk themselves and would decide the
prices at which they can sell the milk. The district union was also form to collect
the milk from such village co-operative societies and to sell them. It was also
resolved that the Government should be asked to buy milk from the union.
However, the govt. did not seem to help farmers by any means. {t gave the
negative response by turning down the demand for the milk. To respond to this
action of govt., the farmers of Kaira district went on milk strike For 15 whole
days not a single drop of milk was sold to the traders. As a result the Bombay milk
scheme was severely affected. The milk commissioner of Bombay then visited
Anand to assess the situation. Having seemed the condition, he decided to fulfill
the farmers demand.

Thus their cooperative unions were forced at the village and district level to collect
and sell milk on a cooperative basis, without the intervention of Government. Mr.
Verghese Kurien showed main interest in establishing union who was supported
by Shri Tribhuvandas Patel who lead the farmers in forming the Co-operative
unions at the village level. The Kaira district milk producers union was thus
established in ANAND and was registered formally on 14 December 1946 Since
farmers sold all the milk in Anand through a co-operative union, it was commonly
resolved to sell the milk under the brand name AMUL.

At the initial stage only 250 liters of milk was collected everyday But with the
growing awareness of the benefits of the cooperativeness, the collection of milk
increased Today Amul collect 11 lakhs liters of milk every day Since milk was a
perishable commodity it becomes difficult to preserve milk flora longer period.
Besides when the milk was to be collected from the far places, there was a fear of
spoiling of milk. To overcome this problem the union thought out to develop the
chilling unit at various junctions, which would collect the milk and could chill it,
so as to preserve it for a longer period. Thus, today Amul has more than 150
chilling centers in various villages. Milk 1s collected from almost 1073
societies .With the financial help from UNICEF, assistance from the government
of New Zealand under the Colombo plan, of Rs 50 millions for factory to
manufacture milk powder and butter was planned Dr.Rajendra Prasad, the
president of India laid the foundation on November 15, 1954 Shri Pandit
Jawaharlal Nehru, the prime minister of India declared it open at Amul dairy on
November 20, 1955.
 ACHIEVEMENTS
Amul: Asia’s largest dairy co-operative was created way back 1n1946 to make the
milk producer self reliant and conduct milk business with pride. Amul has always
been the trend setter in bringing and adapting the most modem technology to door
steps to rural farmers.

Amul created history in following areas.

a) First self motivated and autonomous farmers" organization comprising of More

than 5000000 marginal milk producers of Kaira District.

b) Created Dairy co-operatives at village level functioning with milk collection

centers owned by them.

¢) Computerized milk collection system with electronic scale and computerized

accounting system.

d) The first and only organization in world to get [SO 9000 standard for its
farmer’s co-operatives.

e) First to produce milk from powder from surplus milk.

Amul is the live example of how co-operation amongst the poor marginal farmers
can provide means for the socio-economic development of the under privileged
marginal farmers.
 AWARDS
Amul a co-operative society and its co-operation has led many different awards in
its favor.

Magsaysay award for community leadership presented in manila, Philippines to

Shri Tribhuvandas Patel, Shri D N Khurody and Shri V. Kurien

1964: “Padmabhusan” award given to Shri T.K. Patel

1965: “Padmshri awarded was given to V. Kurien, general manager, by the

president of India

1987: “Best Productivity” awarded by national productivity council for the year
1985-86 awarded to Amul dairy.

1988: “Best Productivity” awarded for the second successive year 1986-87 by the
president of India, Mr. R. Venkatrao to kaira union.

1993: “ICA” Memenoto towards genuine and self sustaining cooperative

worldwide ICA regional office for Asia and pacific, New Delhi, 1996.

1999: G.B. Birla award.

Moreover the Amul union has achieved the prestigious ISO 9001 2000 and
HACCP Certificate and effects are got to obtain ISO 14000.
 AMUL IN ABROAD
Amul is going places. Literally, After having established its presence in China,
Mauritius and Hong Kong, Gujarat Cooperative Milk Marketing Federation

(GCMMF), India’s largest milk cooperative, is waiting to flood the Japanese

market.

Then, GCMMF is also looking at Sri Lanka as one of its next export destinations.
Amul products are already available on shelves across several countries, including
the US, China, Australia, West Asian countries and Africa.

GCMMF recorded a turnover of Rs 2,922 crore last fiscal. Its products include
pouch milk, ultra heat treated (UHT) milk, ice-cream, butter, cheese and
buttermilk.

AMUL PLANTS
First plant is at ANAND, which engaged n the manufacturing o milk, butter, ghee,
mi k powder, flavored milk and buttermilk.

Second plant is at MOGAR, which engaged in manufacturing chocolate,

nutramul, Amul Ganthia and Amul lite.

Third plant is at Kanjari, winch produces cattelfeed

Fourth plant is at Khatraj, which engaged in producing cheese.

Today, twelve dairies are producing different products under the brand name
Amul. Today Amul dairy is no. 1 dairy in Asia and no. 2 in the world, which is
matter of proud for Gujarat and whole India.
 PRODUCT PROFILE
S N0. NAME TYPE FAT SOLID NATURAL
FATS

1. Tazaa Toned Milk 3.0% 8.5%min.

2. Slim & Trim Double Toned 1.5% 9%min.

Milk
3. Gold Full Cream 6% 9%min.
Milk
INDUSTRY PROFILE CURRENT SCENARIO
 OBJECTIVE OF RESEARCH
 To know awareness of people towards Amul products

 To know the preference of Amul products with comparison to other

competitive brands.

 To know the factors which affects consumer's buying behavior while

purchase milk.

 SWOT analysis of Amul

 To study various factors such as quality, price, easy available etc. Is

influencing lot and influences positively

 Ideas about to increase the sale of the “Amul’’

 AMUL JOURNEY TOWARD’S EXCELLENCE
 AMUL's journey towards excellence is marked by some critical
understanding of the business environment in large emerging economies
hike India where markets have to be developed by combining efficiency
related imitative with increasing the base of marginal suppliers and
consumers. The essences of AMUL’S efforts were as follows:
 It combined market and social development in an emerging economy. It
recognized the inter-linkages between various environments that governed
the lives of marginal milk farmers and the unmet needs of consumers. It also
changed the supply chain paradigm in order to reduce the cost to the
consumer while increasing the return to the supplier.
 It realized that in order to achieve their objectives, it had to benefit a large
number of people — both suppliers and consumers. While large scale had
the danger of failure due to poor control and required more resources, it also
had the advantage of creating a momentum that would be necessary to bring
more People into the fold and thereby help more suppliers and consumers.
 It also realized that its goal could only be achieved in the long run and this
required developing values in people and processes that were robust,
replicable and transparent. It also realized that the cooperative would not be
independent and viable in the face of competition if it were not financially
sound. This implied that AMUL had to develop distinct capabilities that
would deliver competitive advantage to its operations.
 AMUL LEADERSHIP

While Kaira Union (or AMUL) had the support of national leaders who were
at the forefront of the Indian independence movement, its local leaders were
trained in Gandhian simplicity ' and had their feet rooted firmly amongst
people whom they had mobilized -the poor farmers of Anand. The foremost
amongst them was Tribhuvandas Patel * who had led the movement for the
formation of cooperatives of small and marginal farmers in order to compete
against investor owned enterprises on one hand, and keep bureaucracy away
on the other hand Tribhuvandas was the first Chairman of the cooperative
His skills lay in organizing the village producers, in making them believe in
the power of cooperation and their nights towards improvement of human
condition. He 1s remembered as fair and honest person whose highest sense
of accountability to the members of the union laid the foundation of trust
between network members *. Another important aspect of his remarkable
management style was his gentleness and ability to repose trust in people he
gave complete autonomy to managers of the union and earned complete
commitment from them”. Verghese Kurien™ was one such manager who
would, first, shape the destiny of the Union and then the milk movement
throughout the country.
 INFORMATION REQUIREMENT
 First, I had to know about all the competitors present in the Milk
segment (Reputed and well established brands as well as Local
brands)

 Before going for the survey I had to know the comparative packs and
prices of all the competitors existing in the market.

 Since Milk is a product that used daily hence I had to trace the market
and segment it, which mainly deals with people of various age groups.

 The main information needed is the various types of brands available

in the market, their calorific value and various other facts.

 As Amul milk advertisements are nearly done through hoardings but

on

 Television the advertisement 1s being telecasted timely and on the

proper time or not
 SWOT ANALUSIS OF AMUL

STRENGTHS
The company is having Indian origin thus creating feeling of oneness in the
mind of the customers. It manufactures only milk and milk products, which
is purely vegetarian thus providing quality confidence in the minds of the
customers. It is aiming at rural segment, which covers a large area of loyal
customers, which other companies had failed to do. People are quite
confident for the quality products provided by Amul. Amul has its base in
India with its butter and so can easily promote chocolates without fearing of
loses,
WEAKNESSES

There are various big players in the chocolate market, which acts major
competitors restricting their growth.
Lack of capital invested as compared to other companies.
Improper distribution channel in India.

OPPORTUNITIES

There is a lot of potential for growth and development as huge population

stay in rural market where other companies are not targeting.
The chocolate market is at growth stage with very less competition so by
introducing new brand and intensive advertising there can be a very good
scope in future.

THREATS

The major threat is from other companies who hold the majority share of
consumers in Indian market i.e. Cadburys and Nestle.
There exists no brand loyalty in the chocolate market and consumers
frequently shift their brands.
New companies’ entering in Indian market like Fantasie fine poses lot
problems for Amul.
 AMUL SECRET OF SUCCESS
The system succeeded mainly because it provides an assured market at
remunerative prices for producers’ milk besides acting as a channel to
market the production enhancement package. What's more, it does not
disturb the agro-system of the farmers. It also enables the consumer an
access to high quality milk and milk products. Contrary to the traditional
system, when the profit of the business was cornered by the middlemen, the
system ensured that the profit goes to the participants for their socio-
economic upliftment and common good.
Looking back on the path traversed by Amul, the following features make it
a pattern and model for emulation elsewhere.

Amul has been able to:

 Produce an appropriate blend of the policy makers farmers board of
management and the professionals: each group appreciating its rotes
and limitations.

 Bring at the command of the rural milk producers the best of the
technology and harness its fruit for betterment.

 Provide a support system to the milk producers without disturbing

their agro-economic systems.

 Plough back the profits, by prudent use of men, material and

machines, in the rural sector for the
 common good and betterment of the member producers
 Even though, growing with time and on scale, it has remained with
the smallest producer members. In that sense, Amul is an example par
excellence, of an intervention for rural change.
 The Union looks after policy formulation, processing and marketing
of milk, provision of technical inputs to enhance milk yield of
animals, the artificial insemination service, veterinary care, better
feeds and the like - all through the village societies. Basically the
union and cooperation of people brought Amul into fame. AMUL
{ANAND MILK UNION LIMITED), a name which suggest THE
TASTE OF INDIA.
 Amul (Anand milk union ltd.) is based on four hands, which are
coordinated with each other. The actual meaning of this symbol is co
 Ordination of four hands of different people by whom this union is at
the top position in Asia.
 First hand is of farmers, without whom the organization would not
have exist
 Second hand is of processors, who process the row material (milk)
into finished goods.
 Third hand is of marketer, without whom the product would have not
reached the customers.
 Fourth hand is of customers, without whom the products would have
not carried on.
 AMUL THREE TIER MODEL

The Amul Model is a three-tier cooperative structure. This structure consists of a

Dairy Cooperative Society at the village level affiliated to a Milk Union at the
District level which in turn is further federated into a Milk Federation at the State
level. The above three-tier structure was set-up in order to delegate the various
functions, milk collection 1s done at the Village Dairy Society, Milk Procurement
& Processing at the District Milk Union and Milk & Milk Products Marketing at
the State Milk Federation.

This helps in eliminating not only internal competition but also ensuring that
economies of scale are achieved. As the above structure was first evolved at Amul
in Gujarat and thereafter replicated all over the country under the Operation Flood.

Programme, it is known as the ‘Amul Model’ or ‘Anand Pattern’ of Dairy

Cooperatives.

Responsible for marketing of Milk & Milk Products Responsible for Procurement
& Processing of Milk Responsible for Collection of Milk Responsible for Milk
Production.
 MANAGING COMPETITION OR CHALLENGES

The Indian market is dominated by a large number of small local and regional
players. There are an estimated 150 manufacturers in the organized segment, which
accounts for 30-35% of sales and about 1000 units in the unorganized segments of
the market. In the organized segment the significant brands are Kwality Walls,
Vadilal, Amul, Havmor, Mother dairy and Baskins & Robbins. GCMMF is
facing very tough competition from both in and outside India.

Amul combats competition from its competitors by providing quality products at a

price which its customers value. Along with good quality products and reasonable
price the packaging is also very good. Most of its products are available in many
flavors. Excellent advertising backs its products and helps GCMMF (AMUL) to
leave its competitors a tough time. Also Amul has come out with Amul Parlours to
cater to various segments of customers. Amul has a very strong Brand Image in the
Domestic market. Many products are exported by GCMMF.
 ADVERTISING OF AMUL

Amul has two agencies that look after its entire range of products namely:

FCB Ulka and Da cuna

FCB Ulka looks after a broad range of products namely, Amul Lite Breadspread,
Amul Shrikhand, Amul Chocolates, Amul Paneer, Amul SnowCap Softy Mix Ice
cream, Amul/Sagar Ghee, Amul Infant Milk Formula 1 & 2, Sagar Tea and Coffee
whitener, Amul Spray Infant Milk Food, Amul Mithaee, Amul Gulab Jamun,
Amulya Dairy Whitener, Mithaimate Sweetened Condensed Milk, Amul Ice
cream, Sagar Skimmed Milk Powder and Amul Whole milk Powder
 AREAS OF OPERATION

Besides India, AMUL has entered overseas markets such as Mauritius, UAE, USA,
Bangladesh, Australia, China, Singapore, Hong Kong and a few South African
nations. Other potential markets being considered include Sri Lanka.

LIST OF AMUL PRODUCTS

BREAD SPREADS

 Amul Butter
 Amul Lite Low Fat Breadspread
 Amul Cooking Butter

CHEESE RANGE

 Amul Pasteurized Processed Cheddar Cheese

 Amul Processed Cheese Spread

 Amul Pizza (Mazarella) Cheese

 Amul Shredded Pizza Cheese

 Amul Emmental Cheese

  Amul Gouda Cheese

 Amul Malai Paneer (cottage cheese), Frozen, Refrigerated and Tinned

 Utterly Delicious Pizza

MITHAEE RANGE (Ethnic sweets)

 Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

 Amul Amrakhand
 Amul Mithaee Gulabjamuns
 Amul Mithaee Gulabjamun Mix
 Amul Mithaee Kulfi Mix
 Avsar Ladoos

PURE GHEE

 Amul Pure Ghee

 Sagar Pure Ghee
 Amul Cow Ghee

UHT MILK RANGE

 Amul Shakti 3% fat Milk
 Amal Taaza 1.5% fat Milk
 Amul Gold 4.5% fat Milk
 Amul Lite Slim-n Trim Milk 0% fat milk
 Amul Shakti Toned Milk
 Amul Fresh Cream
 Amul Snowcap Softy Mix

INFANT MILK RANGE

 Amul Infant Mitk Formula 1 (0-6 months)

 Amul Infant Milk Formula 2 (6 months above)
 Amulspray Infant Milk Food

MILK POWDERS

 Amul Full Cream Milk Powder

 Amulya Dairy Whitener
 Sagar Skimmed Milk Powder
 Sagar Tea and Coffee Whitener

FRESH MILK

 Amul Taaza Toned Milk 3% fat

 Amul Gold Full Cream Milk 6° o fat
 Amul Shakt Standardized Milk 4 5% fat
  Amut Slim & Tom Double Toned Milk 1.5% fat
 Amul Saath Slammed Milk 0%fat
 Amul Cow Milk

SWEETENED CONDENSED MILK

Amul Mithaimate Sweetened Condensed Milk

CURD PRODUCTS

 Yogi Sweetened Flavored Dahi (Dessert)

 Amul Masti Dahi (fresh curd)
 Amul Butter Milk
 Amul Lassee

AMUL ICE CREAMS

 Royal Treat Range (Rajbhog, Cappuchino, Chocochips, Butterscotch, Tutt

Frutti)
 Nut-o-Mania Range (Kaju Drakshi, Kesar Pista, Roasted Almond, Kesar
 Carnival, Badshahi, Badam Kulfi, Shista Pista Kulfi)
 Utsav Range (Any, Roasted Almond)
 Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose, Chocolate)
 Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh Strawberry,
BlackCurrant)
 Sundae Range (Mango, Black Currant, Chocolate, Strawberry)
 Millennium Ice cream (Cheese with Almonds, Dates with Honey)
  Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam Kulfi,
ShahPista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi)
 Cool Candies (Orange, Mango)
 Cassatta
 Tricone Cones (Butterscotch, Chocolate)
 Megabite Almond Cone
 Frostik 3 layer chocolate Bar
 Fundoo Range exclusively for kids
 SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango, Pineapple)
 Health Isabcoal

CHOCOLATE AND CONFECTIONARY

 Amul Milk Chocolate

 Amu Fruit & Nut Chocolate

BROWN BEVERAGE

 Nutramul Malted Milk Food

MILK DRINK

 Amul Kool Flavoured Milk

HEALTH BEVERAGE

 Amul Shakti White Milk Food

READY TO SERVE SOUPS

 Masti Tomato Soup

  Masti Hot & Sour Soup

TECHNOLOGY AND EFFECTIVENESS

Service to customers required the following: better and newer “products”,

“processes” that would deliver the low cost advantage to the network and
“practices” that would ensure high productivity and delivery of the right product at
the right time. Thus technology or knowledge that was embodied in products,
processes, and practices became an important factor in delivering effectiveness to
the network of cooperatives, One distinguishing feature of AMUL (in comparison
with other similar cooperatives globally) is the large variety in their product mix.
Producing them not only requires diverse skills but also knowledge of different
types of processes. AMUL dairy led the way in developing many of these products
and establishing the processes for other member Unions.
Equally impressive are the achievements on process technology. While several
continuous innovations to equipment and processes have been done at AMUL, the
most significant one has been the development of processes for using buffalo milk
to produce a variety of end products. Gujarat (and most of India) is a buffalo
predominant area. As more farmers joined the cooperatives, the need to develop a
mechanism for storage of increasing quantities of milk became intense. Moreover,
the cooperative was established on the promise that it would buy any quantity of
milk that a member farmer wanted to sell. The need to store milk inpowder form
increases as excess milk quantities in winter seasons could then be used in lean
summer seasons. Moreover, demand for liquid milk was not growing along with
growth in milk production. No technology, however, existed worldwide to produce
powder from buffalo milk. Engineers at AMUL successfully developed a
commercially viable process for the same __ first time in the history of global
diary industry. Subsequently, it also developed a process for making baby food out
of this milk powder. It has also developed a unique process for making good
quality cheese out of buffalo milk thereby converting a perceived liability into a
source of comparative advantage the task was done through process technology
research. Most of its plants are state of art and automated. Similar efforts in the
area of “embryo transfer technology” have helped create a high yield breed of
cattle in the country AMUL’s innovations in the areas of energy conservation and
recovery have also contributed to reduction m cost of its operations’ AMUL also
indigenously developed a low cost process for providing long shelf life to many of
its perishable products.

TQM at the grassroots has been a strong movement to develop leadership,

Operational and strategic capabilities in the entire network farmers, village
cooperatives, dairy plants, distributors and wholesalers and retailers. Key elements
of this TQM movement have been:

 Friday Departmental Meetings: Each Friday, at a prescribed time, every one

in the network (from the farmers to the carry & forwarding agents) soins
their respective departmental meeting to discuss quality initiatives and share
policy related information.
 Training for Transformational Leadership so that individuals are able to
control their thoughts, feelings and behavior and take more responsibility in
one’s life and surrounding environment.
 Application of Hoshin Kanri principles to bring about a bottom-up setting
of objectives aligning policies for effective management of Unions & village
societies on hand with those of channel member on the other hand
ISO/HACCP certification was obtained for all the Unions and each village
society is in the Process of obtaining the same.
 Training for farmers and their families emphasizing the need for good health
care for not only cattle doing its pregnancy and feeding but also for
expecting and feeding mothers and the whole family. This effort has brought
about a significant social change towards such issues in villages that have
cooperative milk societies.
 Retail Census. GCMMF undertakes a census of all retail outlets (over
500,000) to evaluate customer perceptions and distribution efficacy of their
network. Interestingly, this 1s being done by wholesalers in their respective
territories at their own cost This information is used for policy deployment
exercise.

The extent of IT usage includes a B2C ordering portal, an ERP based supply
chat planning system for the flow of material in the network, a net based dairy
kiosk a some village societies (for dissemination of dairy related information),
automated milk collection stations at village societies and a GIS based data
network connecting villages societies to markets. Milk collection information at
more than 10,000 villages is available to all dairies (or Unions) to enable them
make faster decisions in terms of production & distribution planning, and
disease control in more than 6,700,000 animals. Similarly, this is linked with
information at all 45 distribution offices and 3900 distributors. This network is
being extended to caver all related field offices in the network. The GCMMF
cyber store delivers AMUL Products at the doorsteps of the consumers in 125
cities across the country.

What is remarkable about the above is implementation of very contemporary

Practices in rural areas where both education and infrastructure are generally
low. One of the key sources of competitive advantage has been the ability of the
cooperative to continuously implement good practices across all elements of the
network — the federation, unions, village societies and the distribution channel.
Whether it is implementation of small group activities or quality circles at the
federation or SPC and TQM at the Unions or housekeeping and good
accounting practices at the village societies level, the network has developed
very interesting ways of rolling out improvement programmes across different
entities While these Programs may not be very unique, the scale 1s impressive.
One of the key strengths of GCMMF & AMUL can surely be characterized as
development of processes that allow them to implement these practices across a
large number of members.
 GROWTH AND CHALLENGES

From its inception with the formation of its first milk cooperative, AMUL network
has sustained an impressive growth rate for more than 50 years culminating in the
emergence of Indian dairy industry as the world’s leading milk producer. However,
it is unclear whether AMUL’s strategy and practices that have worked well for
long, can maintain this growth trajectory in a changing environment with
globalization and increased competition. In this section we describe some of
AMUL’s initiatives and discuss briefly opportunities for growth and challenges
that need to be overcome.
AMUL's growth during the past five decades has been fuelled primarily by
growth in milk supply with corresponding pricing strategy to generate demand.
This growth has been sustained by a two-pronged strategy-(a) growth in the
number of member farmers by widening its coverage with more village
societies and increasing the membership in each society, and (b} growth in per
capita milk supply from its members. This growth is achieved by increasing
milk yields and by helping members raise their investments in cattle. It is worth
noting that AMUL has funded these support activities from its earnings (instead
of repatriating them to the members either as dividends or with a higher
procurement price). It is expected that AMUL’s growth in the immediate future
will continue to rely on this strategy. However, in the new emerging
environment, several challenges have become apparent and AMUL network
needs to evolve proactive mechanisms to counter these threats. First,
competitors are cutting into milk supply by offering marginally higher
procurement prices thereby challenging the practice of provision of services for
long term growth in lieu of higher prices in the short term. Second, for a section
of its membership, dairy activity is a stepping-stone for upward mobility in the
society. Typically, such members on to other occupations after raising their
economic position through milk production. As a result, AMUL is unable to
realize the full benefits of its long-term strategy, and finds new members
(mostly marginal farmers) to replace those who have higher potential and
capacity.

By progressively increasing the share of higher value products AMUL has been
able to grow at a faster rate than the growth in milk supply. AMUL has been
rather cautious in implementing this strategy and has always ensured retention
of its customer base for liquid milk and low value products. With slowdown in
the growth of milk supply this strategy is likely to come under pressure and
AMUL will be forced to make some hard choices. More important, it is fairly
clear that its low price, cost efficient strategy may not be appropriate for the
high value segment.

Thus, AMUL may have to adopt a dual strategy specific to its target markets,
which in turn may lead to dilution in focus. A part of AMUL’s growth has
come from diversification into other agri-products such as vegetable oils,
instant foods etc. In some of these initiatives AMUL adapted its successful
cooperative organization structure, but the experience to date has been
somewhat mixed. More recently, the network is exploring conventional joint
venture arrangements with suitable partners for diversification into areas such
as fast food and specialty chocolates. While it is too early to assess the success
of these ventures, challenges involved are becoming quite visible. For example,
diversification has resulted in expansion of the network with disparate elements,
each motivated by their own objectives. This in turn has led to a lack of focus
within the network and dilution in the commonality of purpose. These
developments are likely to have serious implications for coordination and

control in the network. More important, shared vision and common goal was
one of the main planks of AMUL's growth during the past 50 years, and its
dilution is likely to adversely impact the network performance.
 CONCLUSION

It is well recognized that markets that are fragmented or producers that are too
small to build competitive infrastructures or those who are unable to manage
technological changes in their operational processes would benefit the most
through a cooperative organization. Consequently a large number of cooperatives
have taken foots amongst producers of food (especially those that are perishable).
However, there are interesting cooperative formations m India and China that are
starting to emerge amongst small producers in auto-components (especially those
serving the replacement markets), amongst small scale dyeing communities and the
power-loom operators in the textile industry. In these cases, the producers are
coming together to develop a common brand. that is based on stringent quality
certifications that would distinguish them from other small producers and for usage
of common property resources The example of AMUL provides a number of
lessons for such organizations to compete successfully in the face of increasing
globalization and competition More generally, the AMUL case presents a
successful model for operating in emerging economies characterized by either
large under-developed suppliers and/or markets with high potential.

The largest segment of the market in emerging economies desires value for
money from its purchases. Development of such markets requires careful
nurturing and a long-term approach. initial success in these markets is typically
based on a low price strategy (providing value for money) supported by cost
leadership This strategy helps to grow the market exponentially by focusing on
the largest segment of the population, the middle and the lower middle class. In
this context, it is Important for global players to note that the value proposition
perceived by consumers ts influenced to a large extent by the state of markets
and the economy and cultural factors. Development of an appropriate value
proposition suitable for large mass markets in India requires a thorough
understanding of the environment and a focus on costs. This in turn, requires
designing the organization structure and practices in a manner that it delivers
continued market share through cost leadership. AMUL is a good example of
this strategy. Firms that are able to develop control processes through better use
of operational practices and supply chain coordination are the ones that are able
to serve large volumes and enjoy top line growth in revenues.

Development of suppliers likewise requires nurturing with a long term

perspective. It is interesting to note that this was achieved by AMUL through a
process of education and social development activities that are not usually
considered to be standard business practices. This type of ‘out of the box’
vision is essential for developing innovative mechanism in new, unfamiliar
environments where building of relationship with consumers goes much beyond
marketing messages and useful product offerings

Environments with underdeveloped markets and suppliers (as in the case of

AMUL) add one more dimension of complexity relating to the relative pace of
growth of these two areas. Through its pricing strategy, AMUL has been able
balance the growth in markets and suppliers and has achieved some degree of
synchronization. Otherwise, gaps between demand and supply would require
complementary strategies

The AMUL example is also instructive for multinational companies and others
contemplating operations in emerging markets by taking advantage of the local
small and medium enterprises. In such cases large businesses are built by
forging linkages with these enterprises thereby changing the boundaries of the

entering firm. Such a partnership reduces the operational risk while providing a
credible source of understanding the behavior of the consumer through the
experience of partners. It also provides operational flexibility and makes the
network responsive to changes within and outside; to be effective it is important
that decision-making be decentralized to the extent possible, with appropriate
coordination mechanisms to ensure consistency in the system. The leadership of
such organizations have always been larger than life and have been seen to play
an important role in the building of the society even today.

Firms that are able to overcome the hesitation of deploying IT for achieving
operational excellence m emerging economies gain considerably from its
network effect Most firms either automate decision making to such an extent
that it eliminates local initiatives (as many SAP implementations in India are
finding out that it has added more rigidity in decision making as opposed to
using it in conjunction with a more flexible “telephone” mode of
communicating) or use manual systems that lead to inaccurate data based
decision-making.