BUSINESS ENVIRONMENT AND STRATEGIC

MANAGEMENT

ASSIGNMENT

On

GUJARAT CO-OPERATIVE MILK

MARKETING FEDARATION LTD. (AMUL, INDIA)

For

Internal Evaluation

Submitted to
Prof. R. Bagla
Prepared by
Naina Dholay
MBA-HR (2014) (A08)
AUUP ROLL NO. A0102312159
 Company Overview

India’s Dairy sector is increasing rapidly from the beginning of The White Movement in
India. The pathfinder of this movement is the foundation of India’s largest dairy co-operative
society in the state of Gujarat on 1st December, 1946 just before the independence of India. The
operation initiated on the ground that India is a milk-deficient nation but later on in 1988 it
suppressed the production capacity of USA.
The story of Amul starts from the backdrop of high demand for milk in Bombay. The
major source of income of kaira district in early 40’s, was milk farming and selling. The one and
only private milk supplier, at that point of time was Polson Dairy Limited in that area. Hence a
monopoly was created and the poor farmers were exploited by the private trader. To take a stand
against this unethical practice they collectively approached to Sardar Vallabhbhai Patel (Indian
barrister and statesman and one of the leaders on INC) under the leadership of Tribhubandas K.
Patel. Sardar Vallabhbhai proposed them to stop supplying milk to the traders and start their own
co-operative society and refer them to Shri Moraji Desai (Indian Activist and 4th Prime Minister
of India). He then held a concourse and came to a conclusion that the co-operative society will
collect the milk first then decide the price according to the quality of the milk. As the
government was not reacting to their situation they went on strike for a fortnight and affected the
Bombay Milk Scheme. Then with the help of Tribhubandas Patel and Dr. Verghese Kurien
(Indian Social Entrepreneur) they lay foundation of Kaira District Co-operative Milk Producers'
Union Ltd.in Anand. Farmers started selling their milk to the union. With the help of Dr. H. M.
Dalaya’s innovation of forming skim milk powder from buffalo milk was the first time anywhere
in the world contributed on a commercial scale. Within the short span it grows within the anand
districts the neighboring districts. In 1955 the brand name assigned to the union Amul. It came
from the Sanskrit word “Amulya” which means invaluable and reffered to as Anand Milk Union
Limited. Later on to grow the strength it comes under GCMMF (Gujarat Co-operative Milk
Marketing Foundation) in 1973.
After this movement, Dr. Kurien hailed as ‘Milkman of India’. Later on Amul produce
and supply its products in the USA as well as Canada and Europe.

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 Amul operates under GCMMF; it is India’s largest food products marketing organization
and also the largest exporter of Dairy Products. 17 district co-operative milk producer’s unions
are the members of this organization.

MAJOR MILESTONES
1946 – The first milk union was established
1946 – District Co-operative Milk Producers’ Union
1955 – The brand name selected “Amul”
1973 – Gujarat Co-operative Milk Marketing Federation established
2013 – Kaira District Co-operative Milk Producers Union Limited known as Amul Dairy
Signed an agreement to establish a plant in Waterloo village in New York.

PRODUCT RANGE
Amul produces a large range of milk products. These products individually cover the
largest market share of dairy industry.
 Amul milk – Amul Gold, Amul Taaza
 Bread Spreads – Amul Butter, Amul Lite, Delicius Table Margarine
 Cheese – Amul Processed Cheese, Amul Emmental Cheese, Amul Gouda Cheese,
Pizza
 Mozarella Cheese,
 UHT Milk – Amul Gold Milk, Amul Taaza, Amul Calci, Amul Lite
 Beverage Range – Amul Kool Flavoured Milk, Amul KoolCafe, Amul Kool
Koko, Amul
 Prolife Butter Milk, Amul Prolife Lassee, Amul Kool Lassi, AmulSpiced
Buttermilk,
 Natramul energy drink, Amul Stamina Can, Amul Kool Milk Shake
 AmulPRO – Amul Pro
 Ice Cream – Amul Ice Creams, Amul Flaavyo Frozen Yogurt
 Paneer – Malai Paneer , Fresf Paneer
 Dahi – Masti Dahi, Probiotic Dahi,Flaavyo,

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  Ghee – Amul Ghee, Sagar Ghee, Amul Yello(Cow) ghee,
 Milk Powder – Amul Spray,Amulya, Sagar Akimmed Milk Powder, Sagar Tea
Coffee
 Whitener,
 Nutramul - Nutramul
 Mithai Range – Amul Shrikhand, Gulab Jamoon, Amul Basundi, Avsar Ladoo
 Mithai Mate – Mithai Mate
 Chocolates – Fruit “n” Nut Chocolate Congrats Pack, Amul Chocolates, Amul
Chocozoo,
 Amul Cooking Chocolate, Rejoice, Amul Wafer Chocolates, Chocolate Syrup,
 Fresh Cream – Amul Fresh Cream
 Pouch Butter Milk – Amul Pouch Butter Milk.

TOTAL MARKET CAPITALIZATION & TURNOVER

The parent organization of Amul, GCMMF write-up 85% market share in butter market,
75% in cheese share market, 63% in infant milk in 2011-12. In the year 2012-13 the group
turnover is rupees 19,100 crore ($3.2 bl). In 2011-12 the turnover was 11,668 crore. The UHT
Milk product exposed growth by 53%, cream by 57%, milk beverages by 27% and ghee of 31%
collectively with Amul and Sagar.
In future Amul aimed to grow to 30000 crore which is the jump of three fold. In the
previous accounting year Amul recorded 83% market share of butter market, 63% of infantry
milk, 45% in dairy whitener. In packaged milk market Amul dote on 26% share i.e. 25000 crore.
Amul earns revenue of 450 crore from exports, mainly skimmed milk powder. In the last
fiscal Amul exports it’s milk products worth rupees 140 crore.

MEMBERS OF AMUL
There are 13district co-operative milk producers’ unions who all are members in Amul.
Total 15,322 numbers of village societies are there. There are 750 employees of marketing arm
but the real pool consists of 3 million milk producers.

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 MANAGEMENT TEAM OF AMUL
The Managing Director of Amul Dairy is R S Sodhi. The first Chairman was Dr.
Verghese Kurien. For the selection of the Chairman now there is a conflict between 11 board
members.

COMPANIES HEADQUARTER
The headquarter of GCMMF is located in Amul Dairy Road, Anand, Gujarat, India.
Zonal offices are at Ahemdabaad, Kolkata, Mumbai, Delhi, and Chennai. Sales offices are in
Asansol, Agartala, Bangalore, Boisar, Cochin, Coimbatore, Cuttack, Dhaarwad, Dimapur almost
all over the India. Overseas offices are at Dubai,UAE.

VISION AND MISSION OF AMUL

VISION

Amul’s vision is to provide more and more satisfaction to the farmers, employees and
distributers.

MISSION

“We at GCMMF (Gujarat Co-operative milk Marketing Federation) endeavor to satisfy the taste
and nutritional requirements of the customers of the world, through excellence in marketing by
our committed team. Through co-operative networking, we are committed to offering quality
products that provide best value for money.”
VALUES

 Customer orientation
 Commitment to producers
 Integrity
 Co-operation
 Excellence
 Leadership
 Quality
 Innovation

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  Growth orientation
 Belongingness
 Pride in the organization
 Employee satisfaction

CRITICAL EVALUATION

The vision statement states about the satisfaction of farmers, employees and distributors.
From the vision statement it is derived that the most focus of the co-operative is on their three
important pillars 1. Farmers: who supplies the raw materials i.e. the milk from. 2. The
employees: they are working for the co-operative society to meet the demand of the customers
and to fulfill the needs of the stakeholders. 3. The distributors: they creates link between the
demand and the supply of the milk and milk products all over the India and outside India.

A vision statement should be clear and crisp, aspirations for future, forward thinking. A
vision statement need to inspire and unite the people of the organization and create value for
organization. The vision statement of Amul is created through the Three Tier Model of Amul.
The model talks about these three pillars of the organization. the unity and the aspirational
qualities are there in the vision statement.

At the very beginning of the mission statement “WE” word is used that indicated that the
actor in the organization represents themselves as a group. They are not individuals and they all
jointly moving to fulfill the vision and mission of the organization. They also talks about the
customers all over the world. They will reach to satisfy all the customers through nitrous food
and excellence. The organization also indicates the excellent marketing and networking abilities
of the team. At last they hint about the commitment to deliver the best value for money. It is
therefore can be conclude that the organizations mission statement covers all the major areas of
the organization, the qualities, expertise and the abilities. The mission statement therefore is
appropriate for the biggest co-operative society of India.

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 ENVIRONMENTAL ANALYSIS

PESTEL

 P – POLITICAL
 E – ECONOMICAL
 S – SOCIAL
 T – TECHNOLOGICAL
 E- ENVIRONMENTAL
 L - LEGAL

Political Factors:
The ground of the Amul is on politics. At the beginning Polson (the sole trader) acted
unethical practice of purchasing the milk from the farmers in cheaper rate. Then with the help of
political strength the co-operative society is being established. During the course, Indian Political
leaders of INC encourage and supported the co-operative society. There were no such political
conflict took place till the time with the

Economical Factors:
The year when Amul Co-operative society was formed, India was on growing stage.
From that point of time, Amul foothold the way of economic development for India. Since then it
contributes a major portion of the national income and GDP. The market is still increasing
which will inject more money to the economy. As GCMMF also earn revenue from foreign
countries like USA, UAE it also supports the economy. Due to globalization and liberalization
the consumption pattern and demand for product is increased. India’s rank highest in population
so there is a massive market for economic growth.

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 Social Factors:
The social factors influence most for any organization situated in India. India combines
of different types of cultures and languages so the concurrent effect is different types of lifestyle
and food habits. Education level is also increasing in India; the demographic composition of
India is also a n important factor in social environment. It helps in growing the market.

Technological Factors:
India is a developing country and developing in every sector. The aggressive
development takes place in technology of India. Amul uses this resource to improve the
distribution channel, supply management, enables e-commerce, automation process and value
addition.

Environmental Factors:
The product is not made out of any unnatural composition. The base of every product of
Amul is milk, which is not at all harmful for the environment. So there are no threats for the co-
operative society in respect of environmental factors.

Legal Factors:
The legal factors which work as opportunity for Amul are PFA act, Trademarks,
Industrial Development & Regulation Act. There are threats also like Child Labor (ILO).

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 PORTER’S FIVE FORCES MODEL

BARGAINING BARGAINING
POWER OF POWER OF
SUPPLIERS BUYERS

The unions and Large number

the members of of buyers
GCMMF

THREATS OF
SUBSTITUTE
PRODUCTS

Local milk suppliers,

ice-cream suppliers

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 Rivalry Among Competiting Firms in the Industry:

There are many competitors of GCMMF in every product ranges. In milk the competitors
are Nestle milk, Mother Dairy. In Ice –cream – Kwality Walls Max, Vadilal, Havmor, and Metro
Ice-creams. In Ghree – Nestle, Anik Ghee and regional products. In Milk Powder – Nestle,
Chocolate – Nestle, Cadbury. In Butter – Britannia, Nestle. In Yogurt – Cocoberry, Danone,
Nestle.

Threats of New Entrains:

There are many competitors in the market of Amul’s products. So any new entry of
competitors who provides lesser price or greater quality will be threats. If Nestle will introduce
new products or enlarge the product line it will be the threats for Amul.

Bargaining Power of Customers:

The switch in products like ice creams, curds, milks etc will displays the bargaining
power or increases the bargaining power of the customers.

Threats of Substitute:

There are many substitute products available in the market. Products like ice creams of
Kwality Walls Max, Vadilal, Havmor, milk like Nestle and Mother Dairy etc acts as a substitute.
The local or regional products are also emerging in growing India. To avoid these Amul have to
enrich the quality factor better than these substitutes.

Bargaining Power of Suppliers:

The only suppliers of raw materials for the entire products of GCMMF are milk and it is
collected from the farmers of the unions and the members of the co-operative.

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 SWOT ANALYSIS

POSITIVE NEGATIVE

STRENTHS WEAKNESSES
I Brand Equity Lower market share in
N
Product Image chocolate segment
T
E Lesser advertisement
Trust Factor
R
N High Quality Product failure
A
L Affordable Pricing

Large employment

OPPORTUNITIES THREATS
E
X Value Addition Aggressive Competition
T
E Product Development Product Imitation
R Targeting new segments New Entrance in the
N
market
A More Export
L Localized Suppliers
Diversification

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 Strengths:

1. High Brand Equity and product image

2. Biggest souring of milk and milk based products in India
3. High in quality
4. Trust of Indian people more than 60 years
5. Larger product range and enhanced product lines
6. Maximum market share
7. Affordable price
8. Covers all segments and all class
9. Popular mascot “Amul Girl”
10. Abundant availability of milk
11. Encourages to firm more

Weaknesses:

1. Low market share in chocolate segment ( major share is of Cadbury)

2. Some products fails ( eg. Nutrela )
3. Limited sales of ice-creams ( most selling ice cream is Kwality walls)
4. Lagging for advertisement and promotions than other brands

Opportunities:

1. Scope for value addition

2. Product development
3. Diversification in other than milk and milk based products
4. Improve the weak segment or product
5. Reach to the rural areas
6. More export

Threats:

1. Strong competitors ( e.g. Nestle, Cadbury, Mother Dairy, Britannia)

2. Ice-cream sector is not improved with competition with other competitors (e.g.
Kwality Walls)
3. Economic slowdown and inflation
4. Disease regarding cows and buffalos

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 TOWS MATRIX

INTERNAL STRENGTHS WEAKNESSES

EXTERNAL

SO STRATEGIES WO STRATEGIES

OPPORTUNITIES Value Addition Rural Area

Develop Segmenting Promotion

ST STRATEGIES WT STRATEGIES

THREATS Safety of cattle Product

Development
Hold Position
Market Penetration

SO STRATEGIES:

1. Increase value addition in lagging products

2. Develop ice-cream segment

ST STRATEGIES:

1. Increase safety to avoid diseases of the cattle

2. Hold of quality and brand image that helps to maintains the market share

WO STRATEGIES:

1. Minimizing the effect of less advertisement by reaching out to the rural areas
2. Diversify to increase sales in ice-cream

WT STRATEGIES:

1. Product development and

2. market penetration
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 STRATEGIC ANALYSIS

BCG MATRIX

MARKET
SHARE

HIGH LOW

STARS
QUESTION MARKS
HIGH

UHT Milk, Cheese, Milk

Chocolates
Powders, Flavored Milk

MARKET
GROWTH

CASH COWS DOGS

LOW

Pouch Milk, Ghee, Butter Nutrella

CASH COWS:

The products of Amul mentioned in the cash cow cell are those products that typically generate
excess cash amounts. These products are in their ‘maturity period’. The maximum products
should be in this cell to earn a huge profit.

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DOGS:

Dogs are in low market share. They are products which are growing slowly. There are no such
products in Amul that is growing slowly.

QUESTION MARKS:

Here the products are introduced as they can only frame out the potential market. From this stage
the product became star then cash cows and then dogs.

STARS:

The products UHT Milk, Cheese, Milk Powders, Flavored Milk are the stars products for Amul.
They generate maximum growth in the industry. These are the market leaders.

ANSOFF MARKETING STRATEGIES

PRODUCT

EXISTING NEW

MARKET PRODUCT
PENETRATION DEVELOPMENT
EXISTING

Fresh Milk, Ghee, Fat Free Dessert,

Milk Powders, Ice- Cooking Chocolates,
creams Soups, Lassi, Diabetic
and Healthy Products

MARKET

MARKET DIVERSIFICATION
DEVELOPMENT
South East Asia,
NEW

South East Asia, Middle East with

Middle East With Products like Paneer,
Products like Paneer Cow Ghee,
& Butter Confectioneries

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MARKET PENETRATION:

The products mentioned in that cell imply that the organization tries to expand its sales in the
existing market. Here the products are not modified in compared with the competitor’s products.

MARKET DEVELOPMENT:

Amul is increasing its revenue by introducing its products to the South East Asia and in Middle
East countries. These products are also not modified, but are going to sold in those areas.

PRODUCT DEVELOPMENT:

Amul developing the products mentioned in the cell, but for the existing market to increase sale
and customer satisfaction.

DIVERSIFICATION:

The new products are introduced to the new market here. Amul introduces the new products like
paneer, cow ghee and confectionery items into new markets mainly foreign countries.

VRIO FRAMEWORK

V – VALUE

R – RARENESS

I – INIMITABILITY

O – ORGANIZATION

VALUE: The organization exploits its resources fully as there are huge numbers of products
range.

RARENESS: The most important resource is milk and it is available to others also. But the
quality they preserves it is not available to the other competitors as Amul covers the large
number of suppliers.

INIMITABILITY: The resources and the organization is inimitable as Amul is the largest
organization with huge amount of farmers and cattle.

ORGANIZATION: Amul’s three tier model which is followed by worldwide specially in milk
producing industries replies that the organization is well organized to exploits the competency.

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 GE NINE CELL MATRIX

BUSINESS UNIT
STRENGHT

STRONG MEDIUM LOW

INVESTMENT & INVESTMENT & SELECTIVE

HIGH

GROWTH GROWTH EARNING

UHT Milk, Butter Cheese, Ghee Amulspray

ATTRACTIVNESS
INDUSTRY

INVESTMENT & SELECTIVE HARVEST

MEDIUM

GROWTH EARNING
Pouched milk, Bread spread,
Milk Powder Dahi, paneer mithai range

SELECTIVE HARVEST HARVEST

EARNING
LOW

Ice-creams Beverage ranges

Fresh cream,

Products mentioned in the cells are placed according to industry attractiveness and business
strengths. Products mentioned in the investment and growth cell will take investment to grow
more. Products in selective earnings need to monitor performance, sales and then select strategy
to grow. Products in harvest cell needs investment they are not growing accordingly. They need
divestment.

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 PORTER’S VALUE CHAIN

INFRASTRUCTURE: Head offices, Zonal Offices, Depot, Overseas offices

HUMAN RESOURCE MANAGEMENT: Total Quality Management, open culture,

leadership, ERP

TECHNOLOGY: Implementation of more integration from farmers to customers, B2B model,

PROCUREMENT:

INBOUND OUTBOUND
LOGISTICS LOGISTICS MARKETIN
OPERATIONS G & SALES SUPPORT &
Milk Village Dairy
Production by Milk Co-operative Distributors SERVICES
co-operative Processing, Society.Dictrict ,Retailer
and member packing, Milk Union,
unions State Milk Kiosk,
Union,

Inbound Logistics: considering the three-tier model given by Amul the primary source of
collection the material is from the village farmers. They are those farmers who are the member
of the union, co-operatives of the same.

Operations: operations took place after collection is to deliver the milk to the district level from
village level and from there it is served to the state level and to the market.

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Outbound Logistics: To store the finished products it is packed and packaged and store in cold
storage. Products like UHT milk, pouch milk could not be stored for long time so they are
distributed and the products like ice-creams, milk powder, ghee, cheese are stored for longer tie
than liquid milk.

Marketing & Sales: The distribution channel has 700 points from where the product is
distributed to the retailers and shops and to small areas. It has 5000 dealers and 10 lakhs retailers
with 48 sales offices.

Service: Amul provides after sales services in maintaining grievance cell of retailers, distributors
and customers.

Infrastructure: It works on cattle maintenance, transports and has processing units. Covers all
over India through head offices, zonal offices and regional offices.

HRM: human resource is a must part of this organization to maintain the distribution and
employees of IT and marketing they maintains TQM, ERP system.

Technology: Amul receives many awards due to using and implementing innovative IT systems
and processes.

Profit Margin: In the year 2012-13 the group turnover is rupees 19,100 crore ($3.2 bl). In 2011-
12 the turnover was 11,668 crore.

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 STRICKLAND’S GRAND STRATEGY

OVERCOME WEAKNESS

QUADRANT 1
QUADRANT 2
TURNAROUND OR
RETHENCHEMENT VERTICAL INTEGRATION

DIVESTURE CONGLOMERATE
DIVERSIFICATION

EXTERNAL( ACQUISITION
INTERNAL(REDIRECTED

LIQUIDATION

& MERGER)
RESOURCES)

QUADRANT 3
QUADRANT 4
CONCENTRATED GROWTH
HORIZONTAL INTEGRATION
MARKET DEVELOPMENT
CONCENTRIC DIVERSIFICATION
PRODUCT DEVELOPMENT
JOINT VENTURE
INNOVATION

MAXIMIZE STRENGHTS

QUADRANT 1:

This includes market development, market penetration, product development, forward

integration, backward integration, horizontal integration and concentric diversification. Here
Amul follows product diversification, market penetration the synergy strategies.

QUADRANT 2:

This includes vertical integration and conglomerate diversification. Amul follows the
vertical integration with suppliers and buyers.

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 QUADRANT 3:

This includes concentrated growth, market development, product development and

innovation Amul is following all the strategies here.

QUADRANT 4:

This includes horizontal integration, concentric diversification and joint venture. Amul
follows horizontal integration and concentric diversification in products.

WAY FORWARD

GCMMF is the oldest and most trusted brand in India as well as outside India. Since
1946 Amul is serving tirelessly with its huge range of products and new innovative products. The
current revenue of Amul in 19100 crores and at the end of 2020 it is targeting to 30000 crores.
The exports have risen from Rs 95 crore in 2011-12 to Rs 140 crore in 2012-13 and targeting the
exports to rise up further of Rs 300 crore in FY 2014, out of which Rs 90 crore has already been
achieved. The outcome of a 63 per cent rise over four years was paid to the farmers, who are the
backbone of Amul. Farmers are currently paid at the rate of Rs 487 per kg of fat in the milk.
GCMMF's turnover for 2012-13 was Rs 13,735 crore, up 18 per cent compared to Rs 11,668
crore the year before and the net profit was Rs 35 crore.

Amul expanded its distribution footprint to reach 1,200 new geographical markets with
addition of 306 new distributors, 65 new super-stockiest and 900 new sub-stockiest. Amul
further consolidated its status as the largest single-brand retail in the country by adding 3 Amul
Parlors almost every day during 2012-13. The goal is to establish total number of exclusive
stores to 7000. Another goal for future is to reach 200 lakh liters per day over the next two
years and the current capacity is 160 lakh liters per day. It is set to manage to achieve 20 per cent
growth in milk procurement during 2012-13.

Amul may even launch "gajar ka halwa". Amul want to transform every Indian kitchen
to an “Amul kitchen”. From the daily glass of milk or butter milk to butter and cheese for
breakfast to paneer and curd in meals. Amul is keen to penetrate such markets with aspirational
products like cheese, butter and ice-cream and urban markets with daily-consumption food items
such as lassi, curd and paneer.

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