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PSDA 1 : AMUL

Pranjal Sharma 7
Shalini Agrawal 23
Aastha Singhi 12
Nancy Garg 51
 AMUL ABS

• AMUL stands for Anand Milk Union Ltd.

• Incorporated: 1 December 1946
• It is Indian Diary Co-operative based at Anand in the state of Gujarat.
• Derived from Sanskrit word “Amulya” which means Invaluable.
• Amul spread white revolution in India, it made the country the worlds largest producer of milk and
milk products.
• It is brand managed by Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF)
• GCMMF: Gujarat Cooperative Milk Marketing Federation.
• Its India’s largest food products marketing organization.
• It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative
returns to the farmers.
• Serve the interest of consumers by providing quality products which are good value for money.
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 OBJECTIVE ABS

ective to supply goods with best of quality and purity at very reasonable rates.
ce malpractices carried out by merchants and milk traders.

ed India to increase its production of milk by 40 million metric tonnes and become the country with the most milk produc
foreign exchange of the country by exporting the milk products
ducts according to national priorities
e the health and nutrition of many within the country.

agers associated with Amul to sell their milk products.

d working conditions to the employees
wth opportunities to the backward and unprivileged villagers.
satisfaction to the employees.
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Economic Objective

• Expansion of distribution network.

•  Creative and Unique marketing strategies.
• Optimum utilization of available resources.
• Creation and expansion of loyal customer base.
• Even though the basic objective is not to make profit, some profits are still to be made so as to survive and expand.
 PESTEL ANALYSIS ABS

Political Factors

• Delicencing of diary sector 1991

• Section 4A of NDDB gives exemption for income tax act
• 100% FDI allowed
• Export restriction (Milk powder was banned for exports in 2012)
• Cut in import duties of milk and milk products

 Economic Factors

• NDDB gives loan at 0% interest rate and also developments grants at lower interest rates
• India high GDP growth rate implies increase in per capita income of people and thus more consumption of food items

 Social Factors

• Lifestyle- Fast food carters morw demand for ice-creams , cheese etc.
• Culture- custom of morning tea, more accustomed to milk and milk products
• Demographics- growing youth population, more health consciousness and huge children population
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Technological Factors

• Automation process , technological HACCP & ISO TQM

• Net enabled Kiosks
• Ecommerce GIS
• Innovation in cold chain
• National diary research industries

 Legal Factors

• Prevention of food Adultreration Act

• Child labour
• Cooperative societies Act

Environmental Factor

• Dairy waste management

• Waste to commercial products
 PORTER’S FIVE FORCES MODEL ABS

❖ Bargaining Power of Suppliers

• GCMMF is a cooperative, which means it conducts business by collecting from large number of individual farmers
who rely upon the cooperative to give them better price for their produce.
• Therefore the bargaining power of such suppliers is low.
• 29 lakhs milk producers gain higher profits only through the co-operative which in turn drives down their bargaining
power.

❖Bargaining Power of Buyers

• There are already other co-operatives existing in India, having their own established brands, which reduce the loyalty
of current customers, thereby increasing their bargaining power.

❖Rivalry Among Competitors

• The market is highly competitive, existence of several players which have already established channels and partners
constantly push the envelope.
• The competition exists locally, nationally and internationally.
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❖ Threat From Substitute

• Although no real substitute exist for milk, however competition offers low priced products as well as variety, from
skimmed milk to full cream as well as milk powder.

❖ Barriers To Entry

• The competition among existing players is very intense and grown over the years from collection of more and more
producers.
• The producers only supply to such established brands due to their reach and ability to maximize profits.
• Also the industry is capital intensive along with several legal barriers.
 SWOT ANALYSIS ABS

Strengths
Opportunities
• Investment in Technology
• • High per capita Milk
Production Capacity
• Market Share consumption
• • International Expansion
Strong Brand Value
• • Expansion of Product
Quality
• Large Consumer Base Portfolio

 Weaknesses  Threats

• High Operational Cost • Increasing Competition

• Lack of Success in Certain • Growing trend of Veganism in
Areas of Portfolio expansion India
• Frequent Legal Issues
 TOWS ANALYSIS ABS

SO Strategies (Maxi-Maxi)

• Amul can use the strategies that have been formed after in-depth strategic analysis of the company and its industry.
• Some suggestions in this case would be to increase productivity by using cost effective manufacturing techniques.
• Also, increase demand for their products world over by first gaining more exposure to the global market.
• With the use of expansion strategy, it can overcome the location issue, as Amul can expand more areas and it will
make the distribution of channel areas easier and convenient.

  ST Strategies (Maxi-Mini)

• Amul must put into action some of these strategic options to meet the threats‟ using its strengths.
• Product differentiation is very important to differentiate Amul from the competitors, as it can tackle down the
competitor‟s product if Amul products are more outstanding and different from its competitors.
• Options available can be classified as product elimination and diversification strategy, value marketing strategy and
also developing hygienic processing facilities. These are some of the main areas of focus under this section.
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WO Strategies (Mini-Maxi)

• The strategies formulated to overcome the weakness through opportunities are increase of opportunity through new
GATT treaty, develop new process to improve the quality and shelf life of milk and milk products, this can be
achieved through pasteurization, homogenization and many other processes like producing UHT milk etc. finally to
also increase awareness of scientific developments.

 WT Strategies (Mini-Maxi)

• The strategies that have been formed to overcome the weakness and threats in Amul company and the dairy industry
as a whole are to apply efficient and economical procurement of products.
• Secondly, to have control over the logistics and to maintain them efficiently.
• Lastly, create the right type of product positioning for the various product categories that Amul deals with.
 BCG MATRIX ABS

• The Cash Cows

It is a product or business that continues making more money than you put it for a long time. They
hold high shares in markets that have relatively low growth.

•   The Stars
Stars are leaders in the business.They also require heavy investment, to maintain its market share.
They leads to large amount of cash consumption and cash generation. Attempts should be made to
hold the market share otherwise the star will become a CASH COW.
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• The Question Marks

Products have Low market share and High market growth.Don’t know what to do with opportunities;
decide whether to increase investment.

• Dogs
Products have low market share and low market growth and also weak in market,difficult to make
profit.
 VRIO ANALYSIS ABS

Valuable

• The Amul Dairy VRIO Analysis shows that the financial resources of Amul Dairy are highly valuable as these help
in investing into external opportunities that arise.
• Its local food products are a valuable resource as these are highly differentiated. This makes the perceived value for
these by customers high.
• The Amul Dairy VRIO Analysis shows that Amul Dairy's employees are a valuable resource to the firm.
• A significant portion of the workforce is highly trained, and this leads to more productive output for the organisation.
• The employees are also loyal, and retention levels for the organisation are high.
• Its patents are a valuable resource as these allow the firm to sell its products without competitive interference. This
results in greater revenue for Amul Dairy.
• Amul Dairy’s distribution network is a valuable resource. This helps it in reaching out to more and more customers.
• It also ensures that promotion activities translate into sales as the products are easily available.
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Rare

• The financial resources of Amul Dairy are found to be rare according to the VRIO Analysis of Amul Dairy.
• Strong financial resources are only possessed by a few companies in the industry.
• The local food products are found to be not rare as identified by Amul Dairy VRIO Analysis.
• These are easily provided in the market by other competitors. This means that competitors can use these resources in
the same way as Amul Dairy and inhibit competitive advantage.
• These employees are highly trained and skilled, which is not the case with employees in other firms. The better
compensation and work environment ensure that these employees do not leave for other firms.
• The patents of Amul Dairy are a rare resource as identified by the Amul Dairy VRIO Analysis. These patents are not
easily available and are not possessed by competitors.
• The distribution network of Amul Dairy is a rare resource as identified by the VRIO Analysis of Amul Dairy. This is
because competitors would require a lot of investment and time to come up with a better distribution network than
that of Amul Dairy.
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Imitable

• The financial resources of Amul Dairy are costly to imitate as identified by the Amul Dairy VRIO Analysis. These
resources have been acquired by the company through prolonged profits over the years.
• New entrants and competitors would require similar profits for a long period of time to accumulate these amounts of
financial resources.
• acquired by competitors as well if they invest a significant amount in research and development. These also do not
require years long experience.
• The employees of Amul Dairy are also not costly to imitate as identified by the Amul Dairy VRIO Analysis. This is
because other firms can also train their employees to improve their skills.
Organisation

• The financial resources of Amul Dairy are organised to capture value as identified by the VRIO Analysis of Amul
Dairy. These resources are used strategically to invest in the right places; making use of opportunities and
combatting threats.
• The Patents of Amul Dairy are not well organised as identified by the Amul Dairy VRIO Analysis. This means that
the organisation is not using these patents to their full potential.
• An unused competitive advantage exists that can be changed into a sustainable competitive advantage if Amul Dairy
starts selling patented products before the patents expire.
 VALUE CHAIN ANALYSIS ABS

• Under the model, the entire value chain – from procurement, to processing and marketing – is controlled by the
farmer’s cooperative, which is directly linked to the final customer .
• There are no middlemen; the cooperative collects the milk directly at the producers’ doorsteps.The model envisages
that democratic elections are held every three years, to elect the members of the management committees who, in
turn, elect the chairman. This ensures an active participation of farmers in decision-making, as well as transparency
and democratic management.
• Membership is open to anyone who owns at least one cow and is able to provide at least 700 litres of milk per year.
• The final price of Amul products are decided by GCMMF, which conducts market surveys on aspects including the
costs of milk, labour, processing, packaging, advertising, transportation and taxes.
 GE MATRIX ABS

· Amul milk drink, cheese operate in the green segment giving the organization opportunities to go ahead and grow

& build the product. The green zone pushes an organization for expansion strategies.

· Amul ice-cream, chocolate takes place in yellow category signifying that brand should hold the product for some

time and makes necessary developments. The yellow area suggests making strategies aimed at maintaining

stability.
 COMPETITIVE PROFILE MATRIX ABS
Critical success factors Weight Amul Nestle Britannia

Rating Score Rating Score Rating Score

Product quality 0.15 4 0.60 4 0.60 3 0.45

Price competitiveness 0.15 4 0.60 2 0.30 2 0.30

• Overall, the matrix suggests
that Amul has many strengths
product range 0 2 0.10 4 0.20 3 0.15
in relation to it’s competitors.
Market share 0.05 4 0.40 3 0.30 4 0.40
• Amul does not have an Indian
Global expansion 0.10 3 0.30 4 0.40 3 0.30
competitor who is equal in
Advertising 0.10 4 0.40 3 0.30 3 0.30
terms of product specialisation
Financial position 0.05 3 0.15 4 0.20 3 0.15
or expansion potential.
Value chain and logistics 0.10 4 0.40 2 0.20 2 0.20
• Most of it’s competition comes
Production capacity and sustainable
production practices
0.10 4 0.40 2 0.20 2 0.20 from the unorganised sector
that covers around 80% of the
Indian dairy industry.
Organisation structure 0.05 4 0.20 3 0.15 3 0.15

Research and development 0.05 3 0.15 4 0.20 3 0.15

Total 1.00 3.70 3.05 2.75

 EFE MATRIX ABS
EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE
OPPORTUNITIES
Growing global demands 0.15 5 0.75
Greater productivity 0.10 3 0.30
Export potential 0.05 4 0.20
Robust economy growth 0.10 3 0.30
Supply chain management 0.10 4 0.40
Threats
Competitors 0.15 4 0.60
Environmental costs 0.15 3 0.45
Milk vendors 0.05 3 0.15
Adulteration 0.05 1 0.50
Lower cattle yield 0.10 2 0.20
Total scores 1.00 3.85

• Stands for External Factor Evaluation Matrix

• Used to summarize the information gained from company’s external environment analyses i.e.
simply by analyzing the external environment with the tools like PESTEL analysis, Porters Five
Forces
• The summarized information is evaluated and used for further purposes, such as to build SWOT
analysis.
 IFE MATRIX ABS

▪ Stands for internal factor evaluation.

▪ The main objective of this matrix is to help organization to analyse internal environment.
▪ Sums of weights must be equal to 1.
▪ Weighted score=weights * ratings.
 COMPETITIVE ANALYSIS ABS

BRAND PRICE PER 400 GM INR(curd)

Amul 40

Nestle 55

Danone 55

Britannia 55 STRENGTHS
Mother diary 38 • Strong brand image
Govardhan 55 • Advertisement
Chitale 45 WEAKNESS
• Increasing cost of operations
• Low awareness of product categories
OPPORTUNITIES
• Potential to expand to small towns and other geographies
• Marketing and advertising
• Product line extension
THREATS
• Increased global and local competition
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