Success Story

Amul

PART – I
Organizational Structure can improve the working condition of an organization and a poor
structure can ruin all the possibilities of openness, dynamism and decision-making.
Organizational effectiveness on the other hand, is the extent to which an organization, given
certain resources and means, achieves its objectives without placing undue strain on its members.
Another important role is played by the technology. More an organization is able to adapt itself
to the changing technology the better will be its efficiencies. In this paper a relationship
between the designs of an organization with its operational efficiency indicators has been
examined in the context of Amul. The factors were studied in context to a cooperative form of
organization and while comparing with the corporate form, it was found that the design of the
basic structure is somewhat different as it believes in the federal form of structure each unit is
independent of each other. It is a popular belief that co-operatives are a failure, but Amul with
Co-operative Structure is a grand success. Amul has an appropriate blend of policy makers,
technology and a support system to the milk producers without disturbing their agro-economic
system and plugging back the profits, by prudent use of men, materials and machines.

Organizational Model:

Organizational design is a formal, guided process for integrating the people, form of the
organization as closely as possible to the purpose of an organization. It is used to match the
organization seek to achieve. Through the design process, organizations act to improve the
probability that the collective efforts of members will be successful. Organizational design
involves the creation of roles, processes and formal reporting relationships in an organization.

Amul’s Organization Model after Change:

Amul has a Co-operative form with a blend of professionalism. In the corporate form of an
organization the shareholders are non-participative members whereas in this form the members
are the participative owners of the organization. There are basically three tiers a dairy
cooperative viz., the village society- procurement unit, the union- which is the processing unit
and the federation which is the marketing unit all being an institution in itself. The institutions at
each tier have the bond of organic and inter-institutional linkages and obligations which provide
sense of purpose and directions in their activities. To manage these units efficiently the leaders
felt a need of the professionals. These professionals have a hierarchy similar to that of the
corporate structure with the managing director as their head. The Managing Director of all these
units is appointed by the board of directors. The board of directors comprises of the farmers
members who come from the respective societies. So, at each level the decision making lies in
the hands of the producers only, which give them a feeling of ownership to them.

What effect did these changes have on the behavior of people and functions :
After this Change GCMMF (AMUL) has seen growth in its Business, Employees Motivation as
well as Amul as an Organization Rated as most Attractive Organization of Gujarat. Riding on a
sharp rise in exports and entry to new markets, homegrown Amul has achieved its highest ever
growth of 32% during this financial year.
It has also achieved the $4.4 billion turnover milestone this year. The Gujarat Cooperative Milk
Marketing Federation (GCMMF) that markets brand Amul has crossed Rs 18,000 crore
turnovers, turning the federation into a $3.1 billion co-operative society.
The projected group turnover of Amul family including unduplicated sales by GCMMF's
member unions has touched nearly Rs 26,000 crore (nearly $4.4bn).
The country's largest FMCG brand could have well achieved the $4bn milestone last year but the
plunging value of rupee ensured that it stayed at $3.2bn in financial year 2012-13 when the
federation had a turnover of Rs 13,735 crore.
"We have achieved 32% growth in our annual turnover which is the highest ever growth since it
was set up in 1973. For nearly five years straight, we had achieved 20% growth in our turnover,"
GCMMF's managing director R S Sodhi told TOI.
GCMMF will declare results of the financial year 2013-14 after holding its 40th annual general
meeting at its headquarters in milk city Anand.
In the last financial year, its exports were worth Rs 140 crore which has now touched Rs 525
crore during this Financial Year.
While liquid milk — Amul is Asia's largest milk brand — remains the main contributor of its
growth with nearly 45% share in GCMMF's turnover, 55% share in turnover comes from other
value-added products marketed by GCMMF.
Amulspray, India's largest selling infant food has emerged as second biggest category for
GCMMF while Amul butter is the third largest category in Amul's portfolio.
Gujarat's industry has reason to cheer as as many as eight Gujarat-based brands have made it to
the India's Most Attractive Brands list of 2015 as category leaders in attractiveness.
Amul (owned by the Gujarat Cooperative Milk Marketing Federation) has been listed as India's
most attractive dairy-diversified (F&B) brand and Amul Butter is the only reigning brand in the
butter sub-category. Other Gujarat brands that featured on the list this year include Sintex,
Ajanta, Symphony, Fortune Foods Products from Adani Wilmar, Vadilal and Rasna.
India's Most Attractive Brands 2015 Report is based on primary research based on the
proprietary 36 traits of attractiveness. A Comniscient Group ccompany TRA (formerly Trust
Research Advisory) that conducts primary research with consumers and other stakeholders to
give brands insights on solutions to consumer behavior is the publisher of The Brand Trust
Report, India's Most Attractive Brands Amul, however, has dropped 45 ranks from last year and
became India's 63rd Most Attractive Brand this year.
N. Chandramouli, chief executive officer, TRA, said, "Gujarat has a deep and long tradition of
business. Having eight Gujarat brands as category leaders in attractiveness shows how these
brands have now begun to pervade the national consciousness. Gujarat is a place that everyone
looks up to, not just for governance or quality of life, but also for the quality of brands that
emerge from here. The brands from the state too are in a high point of the evolutionary cycle in
terms of perception."
Sintex (all-India 355th rank) leads as India's Most Attractive Brand in the Manufacturing-
Diversified Category followed by Finolex (All-India 924th rank). Ajanta is a forerunner in the
Home Care Category and correspondingly is the lone leader in the Clocks Sub-category.Yet
another brand from the region, Symphony (All-India 643rd rank) has been ranked as the Most
Attractive Brand in the Coolers Sub-category of the Durable list.Gujarat's love for food is
reflected in the number of brands in the F&B Category. This has subsequently boosted the
ratings of the category and has made it the largest in Gujarat. Fortune Food Products from Adani
Wilmar ranks 316th in its All India Rankings and is the sole leader in the F&B- Diversified
Category. Vadilal (All-India 213th rank) ice cream is India's Most Attractive ice cream brand
and is followed by Kwallity Walls, Havmor and Cornetto among others. Rasna (All-India 369th
rank) is the ruling brand in the Powdered Drink Category and is followed by Glucon D and Tang.
This year's study involved 15,000 hours of fieldwork covering 2312 consumer-influencers across
16 cities in India and generated 5 million data-points and 17,000 unique brands from which the
top 1000 brands have been listed in this year's report.
"In all the product categories, be it the traditional ones like butter, ghee, cheese or the new ones
like beverages, ice cream, chocolates, cream, tetra pack packages, we have witnessed double-
digit growth in volume," – Amul’s Top Management Says.

Company Structure and Control System :

Control System

Company Structure:

Operational Efficiency of an organization is based upon the nature of a firm’s operations

strategy. This comes from the mission of the firm itself and is tied to the notion of achieving
competitive advantage through operations. A key subsequent decision is what type of process a
business needs. Design must follow strategy; so given priorities from the strategic plan, a process
can be designed that will support these priorities. There should always be flexibility in the
strategy adopted by an organization. Strategies ensure organizational effectiveness and efficiency
because with the help of strategies the resource can be put to the best of their efficiency and
maximum contribution to organizational objectives. Thus, strategies ensure that resources are put
in action in a way in which they are specified. The strategies can be implemented only when we
have a proper organizational design.
Amul Organizational Culture:

Compensation Policy at Amul:

The success of any sales organization depends on the achievement of the sales goal
set for theshort-term as well as long ±term periods of time. While other
programmes like sales force recruitment training and motivation are a cost to the
company,sales force compensation deals with the management of the performance
of the sales people for generating revenue for the firm. Sales people tend to
increase and manage their performance by linking it to the compensation they
receive from the sales organization.
In AMUL, compensation generally comprises of the cash payments which include
Salary bonus and shared profit. Good compensation plan have a salutary effect on
sales people. They are happier in the work; co operative with management and
productivity is up. There can be both monetary and non monetary forms of
compensation too. Wages in the widest sense mean any economic compensation
paid by the company under some contract to his sales force for the services
rendered by them. They are basic salary and allowances. The basic wage is the
remuneration, which is paid or payable to the sales person in terms of his contract
of employment for the work done by him. Allowance includes dearness allowance,
bonus, Overtime Pay etc.

PART – II
 1. How large is the company as measured by the number of its employees?
How many levels in the hierarchy does it have from the top to the
bottom? Based on these two measures and any other information you
may have, would you say your company operates with a relatively tall
or flat structure? Does your company have a centralized or
decentralized approach to decision making?

Answer: Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India.

Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Co-operative Milk
Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk
producers in Gujarat, There are many Different grades and Level of Employees which is
Presented Below.

Authority No. of Employees/ Workers

Manager 048

Assistant 101

Officers 180

Workers 846

TOTAL 1175

Mainly there are Three Level of Employees in Amul which are Subdivided into Grades.

Top Level Management:

M . D 1
G . M 2
A . G . M 2
M a n a g e r 1 4
T o t a l 1 9

Middle Level Management:

Deputy Manager 04
Assistant Manager 22
Superintendent 36
Deputy Superintendents 47
Senior Officer 101
Total 210

Lower Level Management:

Assistant 70
Junior Assistant 36
Grade “A” 66
Grade “B” 72
Grade “C” 206
Grade “D” 239
Grade “E” 174
Grade “F” 090
Grade “G” 096
Total 1049

Decision Making in Amul :

Amul which is Another Name of GCMMF Acronym for “Gujrat Co-operative Milk Marketing
Federation” is an Organization having More Than Thousands Stake Holders and Decision
Making at Amul is of Decentralized Type and it has Tall Organization Structure.
2. What changes (if any) would you make to the way the company
allocates authority and responsibility

Answer: Amul has already achieved the top Position in Milk Marketing, Dairy industry
Amul Having Leadership from more than 25 years.

At Different- Different time Amul has achieved many Awards and Positions in Industry, Some
of which are Pointed below.

During the pre-independence era, public and private agencies dominated the dairy industry,
although government policy did not favour any one organizational form. Early efforts to organize
dairying along cooperative lines were made immediately after the enactment of the Cooperative
Societies Act, 1912. The present day Anand Pattern dairy cooperatives trace its origin to the
establishment of a dairy cooperative at Anand in 1946 under the direction and guidance of Sardar
Vallabhbhai Patel. The dairy farmers of the then Kheda District of Gujarat organized themselves
to form a dairy cooperative in order to directly undertake sale and processing of milk collected
from member dairy farmers of the district.

The government of India took some steps to improve the quality of milch animals and their
productivity through the Key Village Scheme, launched as part of the First Five-Year Plan
(1951-56) and the Intensive Cattle Development Plan, launched under the Third Five-Year plan
(1961-66). However, in the absence of a stable and remunerative market for milk, production
remained more or less stagnant. During the two decades between 1951 and 1970, milk
production grew by barely 1 per cent annually, while per capita milk availability declined by an
equivalent amount.

During the 1960s, various state governments tried different strategies to develop dairying,
including establishing dairies run by their own departments, setting up cattle colonies in urban
areas, and organizing milk schemes. Almost invariably, dairy processing plants were built in
cities rather than in the milk sheds where milk was produced. This urban orientation to milk
production led to the establishment of cattle colonies in Mumbai, Calcutta, and Madras. The
objective was to meet the demand for milk and milk products in big cities through improvements
in milk collection, processing, and distribution.

The Operation Flood (OF) programme implemented by the National Dairy Development Board
(NDDB) from 1970 to 1996 played the key role in bringing about the transformation in dairy
development in the country. The OF programme established milk producers cooperatives in
villages and made modern technology available to them. The broad objectives were to increase
milk production ("a flood of milk"), augment rural incomes, and transfer to milk producers the
profits of milk marketing that were hitherto enjoyed by well-to-do middlemen.

The importance of Operation Flood lies in its focus on small rural producers. Lucrative alternate
employment opportunities are often not available in Indian villages, making dairying an
attractive option for many villagers. Low capital intensity, a short operating cycle, and steady
returns make dairying a preferred activity among marginal (less than one hectare of

land holding) and small farmers (those having 1-2 hectares of land holding), who make up about
57 per cent of rural households in India. Dairying is feasible even for the landless, who depend
for fodder on common grazing and forest lands. Nearly 70 million Indian households hold a total
of 98 million cows and buffaloes. A majority of milk producers have one or two milch animals,
and these small producers account for some 70 per cent of the milk production. On average, 22.5
percent of the income of rural households is contributed by milk.

The Operation Flood programme is based on what are known as Anand Pattern dairy
cooperatives, referring to their origin in Anand District in the state of Gujarat. Starting in 1970,
NDDB replicated the Anand Pattern cooperatives through the OF programme all over India.
 Under the Anand Pattern structure, individual farmers are joined in village-level dairy
cooperative societies (DCS), which are joined to form district-level unions, which in turn are
joined in state-level marketing federations. In each state, the Anand Pattern features:

 decentralized milk production by the small milk producers;

 milk procurement by the village-level dairy cooperative societies;
 centralized milk processing by the district-level unions; and
 marketing of milk and milk products by the state-level federation.

The primary milk producers democratically govern this entire federal cooperative structure to
ensure that the higher-tier organizations serve the purpose of the lower levels and that the gains
at all levels flow back to the milk producers in significant measure. The core feature of the
Anand Pattern model is farmer control of the three stages following production, that is,
procurement, processing, and marketing of milk and milk products.The value added at the
procurement and processing stages can be realized by the cooperatives only through control over
marketing, which is therefore an essential requirement for success. In contrast, many dairy
cooperatives worldwide end up as suppliers of raw material to private companies that own the
brands and control marketing. By cutting out the need for middlemen in procuring and selling
milk, the Anand Pattern cooperatives have helped to reduce seasonal price variations and have
enabled the farmers to enjoy the fruits of their labour instead of surrendering most of the profit to
corrupt and exploitative middlemen.

Consumers too have benefited. In 2003, dairy cooperatives accounted for the major share of
processed liquid milk marketed in India. Milk reaches consumers in 750 towns and cities through
the National Milk Grid network. Over the years, brands of dairy products created by the
cooperatives have become known for quality and value.

But Our Group like to see some Changes in area of Products

which is not generating more revenue, Amul Should also keep Control on Expenditure since it
will directly added to Revenue Generation, Since Organization is already doing an excellent job
from long time and growth can easily estimated that within 5 years Production level became
doubled so we would like to Conclude our remark by Statement of Mr. R.S Sodhi (M.D of
GCMMF) that “We we need to do more and more Changes when Everything is going fine, on
place of doing big changes we should take care of every small error so our Customer Stick to
ourself.

Organizational Chart (Basic Activities Flow):

We can say Amul which is Another Name of GCMMF Acronym for “Gujrat Co-operative Milk
Marketing Federation” is an Organization having More Than Thousands Stake Holders and
Decision Making at Amul is of Decentralized Type and it has Tall Organization Structure.
 The Group would like to illustrate Amul’s Start and it’s Processes for making understand why
GCMMF has chosen this Structure and how it has helped the GCMMF in getting Market Leader

Position in Relative Industry.

The Birth of Amul

 It all began when milk became a symbol of protest

 Founded in 1946 to stop the exploitation by middlemen
 Inspired by the freedom movement

The seeds of this unusual saga were sown more than 65 years back in Anand, a small town in the
state of Gujarat in western India. The exploitative trade practices followed by the local trade
cartel triggered off the cooperative movement. Angered by unfair and manipulative practices
followed by the trade, the farmers of the district approached the great Indian patriot Sardar
Vallabhbhai Patel for a solution. He advised them to get rid of middlemen and form their own
co-operative, which would have procurement, processing and marketing under their control.

In 1946, the farmers of this area went on a milk strike refusing to be cowed down by the cartel.
Under the inspiration of Sardar Patel, and the guidance of leaders like Morarji Desai and
Tribhuvandas Patel, they formed their own cooperative in 1946.

This co-operative, the Kaira District Co-operative Milk Producers Union Ltd. began with just
two village dairy co-operative societies and 247 litres of milk and is today better known as Amul
Dairy. Amul grew from strength to strength thanks to the inspired leadership of Tribhuvandas
Patel, the founder Chairman and the committed professionalism of Dr Verghese Kurien,who was
entrusted the task of running the dairy from 1950.

The then Prime Minister of India, Lal Bahadur Shastri decided that the same approach should
become the basis of a National Dairy Development policy. He understood that the success of
Amul could be attributed to four important factors. The farmers owned the dairy, their elected
 representatives managed the village societies and the district union, they employed professionals
to operate the dairy and manage its business. Most importantly, the co-operatives were sensitive
to the needs of farmers and responsive to their demands.

At his instance in 1965 the National Dairy Development Board was set up with the basic
objective of replicating the Amul model. Dr. Kurien was chosen to head the institution as its
Chairman and asked to replicate this model throughout the country.

The Amul Model:

The Amul Model of dairy development is a three-tiered structure with the dairy cooperative
societies at the village level federated under a milk union at the district level and a federation of
member unions at the state level.
 Establishment of a direct linkage between milk producers and consumers by eliminating
middlemen

 Milk Producers (farmers) control procurement, processing and marketing

 Professional management

The Amul model has helped India to emerge as the largest milk producer in the world. More than
15 million milk producers pour their milk in 1,44,500 dairy cooperative societies across the
country. Their milk is processed in 184 District Co-operative Unions and marketed by 22 State
Marketing Federations, ensuring a better life for millions.

The primary milk producers democratically govern this entire federal cooperative structure to
ensure that the higher-tier organizations serve the purpose of the lower levels and that the gains
at all levels flow back to the milk producers in significant measure. The core feature of the
Anand Pattern model is farmer control of the three stages following production, that is,
procurement, processing, and marketing of milk and milk products.The value added at the
procurement and processing stages can be realized by the cooperatives only through control over
marketing, which is therefore an essential requirement for success. In contrast, many dairy
cooperatives worldwide end up as suppliers of raw material to private companies that own the
brands and control marketing. By cutting out the need for middlemen in procuring and selling
milk, the Anand Pattern cooperatives have helped to reduce seasonal price variations and have
enabled the farmers to enjoy the fruits of their labour instead of surrendering most of the profit to
corrupt and exploitative middlemen.

Consumers too have benefited from this model. In Recent Years, dairy cooperatives accounted
for the major share of processed liquid milk marketed in India. Milk reaches consumers in 750
towns and cities through the National Milk Grid network. Over the years, brands of dairy

GCMMF Uses Marketing Integration for betterment of Society as well as Organization. Amul
has done Forward as well as Backward Integration (Means Acquired Whole seller as well as
Retailer both).

During the pre-independence era, public and private agencies dominated the dairy industry,
although government policy did not favour any one organizational form. Early efforts to organize
dairying along cooperative lines were made immediately after the enactment of the Cooperative
Societies Act, 1912. The present day Anand Pattern dairy cooperatives trace its origin to the
establishment of a dairy cooperative at Anand in 1946 under the direction and guidance of Sardar
Vallabhbhai Patel. The dairy farmers of the then Kheda District of Gujarat organized themselves
to form a dairy cooperative in order to directly undertake sale and processing of milk collected
from member dairy farmers of the district.

The government of India took some steps to improve the quality of milch animals and their
productivity through the Key Village Scheme, launched as part of the First Five-Year Plan
(1951-56) and the Intensive Cattle Development Plan, launched under the Third Five-Year plan
(1961-66). However, in the absence of a stable and remunerative market for milk, production
remained more or less stagnant. During the two decades between 1951 and 1970, milk
production grew by barely 1 per cent annually, while per capita milk availability declined by an
equivalent amount.
During the 1960s, various state governments tried different strategies to develop dairying,
including establishing dairies run by their own departments, setting up cattle colonies in urban
areas, and organizing milk schemes. Almost invariably, dairy processing plants were built in
cities rather than in the milk sheds where milk was produced. This urban orientation to milk
production led to the establishment of cattle colonies in Mumbai, Calcutta, and Madras. The
objective was to meet the demand for milk and milk products in big cities through improvements
in milk collection, processing, and distribution.

The Operation Flood (OF) programme implemented by the National Dairy Development Board
(NDDB) from 1970 to 1996 played the key role in bringing about the transformation in dairy
development in the country. The OF programme established milk producers cooperatives in
villages and made modern technology available to them. The broad objectives were to increase
milk production ("a flood of milk"), augment rural incomes, and transfer to milk producers the
profits of milk marketing that were hitherto enjoyed by well-to-do middlemen.

The importance of Operation Flood lies in its focus on small rural producers. Lucrative alternate
employment opportunities are often not available in Indian villages, making dairying an
attractive option for many villagers. Low capital intensity, a short operating cycle, and steady
returns make dairying a preferred activity among marginal (less than one hectare of

land holding) and small farmers (those having 1-2 hectares of land holding), who make up about
57 per cent of rural households in India. Dairying is feasible even for the landless, who depend
for fodder on common grazing and forest lands. Nearly 70 million Indian households hold a total
of 98 million cows and buffaloes. A majority of milk producers have one or two milch animals,
and these small producers account for some 70 per cent of the milk production. On average, 22.5
percent of the income of rural households is contributed by milk.

The Operation Flood programme is based on what are known as Anand Pattern dairy
cooperatives, referring to their origin in Anand District in the state of Gujarat. Starting in 1970,
NDDB replicated the Anand Pattern cooperatives through the OF programme all over India.
Under the Anand Pattern structure, individual farmers are joined in village-level dairy
cooperative societies (DCS), which are joined to form district-level unions, which in turn are
joined in state-level marketing federations. In each state, the Anand Pattern features:
 decentralized milk production by the small milk producers;
 milk procurement by the village-level dairy cooperative societies;
 centralized milk processing by the district-level unions; and
 marketing of milk and milk products by the state-level federation.

The primary milk producers democratically govern this entire federal cooperative structure to
ensure that the higher-tier organizations serve the purpose of the lower levels and that the gains
at all levels flow back to the milk producers in significant measure. The core feature of the
Anand Pattern model is farmer control of the three stages following production, that is,
procurement, processing, and marketing of milk and milk products.The value added at the
procurement and processing stages can be realized by the cooperatives only through control over
marketing, which is therefore an essential requirement for success. In contrast, many dairy
cooperatives worldwide end up as suppliers of raw material to private companies that own the
brands and control marketing. By cutting out the need for middlemen in procuring and selling
milk, the Anand Pattern cooperatives have helped to reduce seasonal price variations and have
enabled the farmers to enjoy the fruits of their labour instead of surrendering most of the profit to
corrupt and exploitative middlemen.

Consumers too have benefited. In 2003, dairy cooperatives accounted for the major share of
processed liquid milk marketed in India. Milk reaches consumers in 750 towns and cities through
the National Milk Grid network. Over the years, brands of dairy products created by the
cooperatives have become known for quality and value.

Amul is using below mentioned kind of Control system which was developed by
DR. KURIEN after 1950 and after some controversy amul is able to implement changes made by him and
successes till yet.

A. Team Work

At the beginning, there is a team that greatly influenced the development of cooperatives Kaira. The members
of the team is Kurien Vergeshen, the man who become educated professionals in engineering and dairying, in
agricultural and veterinary sciences. The second is Mr. Tribhuvandas Kishibhai Patel (October 22, 1903 –
June 3, 1994) was the founder of the Kaira District Co-operative Milk Producers' Union Tribhuvadas became a
follower of Mahatama Gandhi and Sardar Vallabhbhai Patel during the Indian independence movement, and
especially the civil disobedience movements, which led to his repeated imprisonment in 1930, 1935 and 1942.
By the late 1940s, he started working with farmers in Kheda district, with the guidance of Sardar Vallabhbhai
Patel, and after setting it the Union Mr Tribhuvadas has hired a young manager named Verghese Kurien in
1950. the third person is H.M. Dalaya the man who became Kurien assistance of manager. His background is a
technologist who created innovation of making skim milk powder from buffalo milk for the first time
anywhere in the world and a little later. The initiative and dynamism shown by Verghese Kurien-a professional
manager, Tribhuvandas Patel-a visionary farmer, H.M.Dalaya- technologist to fight against all the odds is quite
commendable. The extrovert Kurien, the introvert Dalay and the equable Tribuvindas, in consequence of
sharing a single minded commitment to the cooperative movement, made a harmonious and effective team

B. Defining Problems with the Community

Some argued that Amul’s system which involves participation of people on such a large magnitude does not
confine itself to an isolated sector. The ripples of its turbulence affect other
areas of the society as well.” This is certainly true and Amul has impacted the transformation of
the Indian communities in many ways. For example, Indians are drinking three to four times more milk than
they did four decades ago. This has immeasurable impact on the health, nutrition,
and life expectancy of the Indian population.
However, the greatest impacts were experienced by the villages that participated in the Amul program. Dr.
Kurien described in an interview how Amul has effected social change at the village level in multiple ways
.For example, people stand in line to deliver their milk without trying to take short cuts. They do not complain
if they have to stand behind an untouchable in the line. Hence, the cooperative has thus given a deathblow to
the caste system in
its own way. Another example is that Amul provided women an opportunity to have a voice in
the “home economy” as they are the major participants in the program.
In an interview, Dr. Kurien had remarked that there was no way to replicate Tribhuvan Das Patel, the farmer
leader who started the cooperative in 1946. However managers like himself could be developed through
education and training. Thus, recognizing the importance of both managerial professionalism and the specific
challenges of rural management, Dr. Kurien advocated the creation of the Institute of Rural Management,
Anand (IRMA) to train young aspirants to become professional rural managers. One of its main missions is to
“educate a new
breed of professional rural managers having appropriate values and ethos to help rural organizations and
institutions in professionalising their management and empower rural people
22 through self-sustaining processes.” Community building requires allowing leaders to emerge
from the community who understand the needs of the community. This is not to downplay the
role of the expert, which clearly in this partnership is represented by Dr. Kurien, a mechanical
engineer by training.

C. Democratic model.

Under the AMUL 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 KDCMPUL, which conducts
market surveys on aspects including the costs of milk, labour, processing, packaging, advertising,
transportation and taxes

D. Using Multiple Methods and Perspectives

Amul has many times gone against the expert wisdom, and yet succeeded because of its willingness to try
multiple methods and perspectives. Dr. Kurien related that, “in the early days
of Kaira Union there was no dearth of cynics. Could natives handle sophisticated dairy equipment? Could
Western-style milk products be processed from buffalo milk? Could a humble
farmers’ cooperative market butter and cheese to sophisticated urban consumers? The Amul team—farmers
and professionals—confounded the cynics by processing a variety of high-grade
dairy products, several of them for the first time from buffalo milk, and marketing them
nationally against tough competition”
Amul has not only installed more than 4000 Automatic Milk Collection System Units (AMCUS) at the level
of Village Societies, but also proved the cynics wrong by successfully producing powder milk from buffalo
milk. In fact, in 2005, the total annual production of milk product from buffalo milk was higher than cow’s
milk and its contribution in terms of financial value was twice as large as the contribution of cow’s milk. This
is despite the fact that many years ago the expert from New Zealand advised Dr. Kurien that they should not
try to make powder milk from buffalo milk because it would not work. Amul went ahead and did it and now
makes more powder milk than New Zealand and is the largest producer of milk in the world
(Roger, 2007).
E. Conducting Collaborative Implementation

Dr. Kurien is a true believer of collaborative implementation. Between 1970 and 1996, he established a
national dairy program popularly known as “Operation Flood.” Through this program, he made possible for
dairy farmers to own and operate milk production in urban areas
of India. Not only was this program a huge success that helped dairy farmers to improve their
financial well-being, it also contributed to the improvement of the infrastructure of rural areas
that were involved in it. Endowed with decision-making capacities, some leaders in cooperative-member
communities have built facilities like libraries and healthcare centers with their profits. The success of the
Operation Flood management model led to its application to other commodities. Fruits and vegetables are now
produced and marketed through a cooperative system involving a network of over 250 farmer owned retail
stores in Delhi. When Dr. Kurien was awarded the World Food Prize in 1989, Dr. Norman Borlaugh, the
founder of World Food Prize honored Dr. Kurien as “one of the world’s great agricultural leaders of this
century” for his dedication “to streamlining management and distribution strategies with the 24 skills and
knowledge of rural and small-scale producers.” Hence, what Dr. Kurien achieved in Amul was not a scientific
discovery but rather a result of working closely with the dairy farmers

F. Being a Flexible Change Agent

As proposed in the model above, the experts have to be passionately involved, yet be flexible in allowing the
community to take its own course, sometimes painfully slowly, to decide how they would like to
develop. Community transformation is a slow process and cannot be managed like profit-oriented
organizations that are hungry for quarterly growth. Dr. Kurien faced an uphill task in the initial years of
Amul, but he was flexible to seek remedies. For example, the rapid growth of the Amul movement resulted in
overcapacity of milk in winter months when the production of milk was on average 2.5 times higher than other
months. Farmers again were forced to sell at lower rate to middlemen. Dr. Kurien among others sought the
assistance from the Central Food Technological Research Institute (CFTRI) in Mysore to produce baby food
and cheese from buffalo milk. This was the world’s first commercial cheese and baby food production from
buffalo milk.12 His skillful handling of challenges and moving forward earned him the praise of Prime
Minister Lal Bahadur Shastri on many occasions in the sixties, and he commended his "extraordinary and
dynamic leadership."

ANALYSIS OF DR. KURIEN LEADERSHIP BY USING LIKERT MODEL and illustration how it is
motivating the society as an Organization.
Amul under the leadership of DR. Kurien tends to develop participative system (System 4) of Likert model.
This model are characterized by complete confidence and trust in their employees, open communication flows
and the employee participation in the decision process. Subordinates freely express their views and teamwork
exists. There is collective responsibility for meeting organisational goals and objectives and collaborative team
work exists. Employees are offered achieving collectively determined goals. The three basic concepts of
Likert’s system 4 are the principle of supportive relationsips, group decision-making and methods of
supervision, and high performance goals for the organization.
The reason why DR, Kurien leadership classified in the fourt system of Likert Model : First,AMUL
organization based on cooperative model. That we know, coöperative ("coöp") is an autonomous association
of persons who voluntarily cooperate for their mutual, social, economic, and cultural benefit. Cooperatives
include non-profit community organizations and businesses that are owned and managed by the people who
use its services (a consumer cooperative) or by the people who work there (a worker cooperative) or by the
people who live there (a housing cooperative), hybrids such as worker cooperatives that are also consumer
cooperatives or credit unions, multi-stakeholder cooperatives such as those that bring together civil society and
local actors to deliver community needs, and second and third tier cooperatives whose members are other
cooperatives. The form of cooperative that requires participation of member in decision making
process. Second, Team work in developing built by Dr. Kurien showed that he was not alone in deciding
organizational policy. Third, Under the AMUL model procurement, processing and marketing – is controlled
by the farmer’s cooperative, which is directly linked to the final customer 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. Fourth, the highlight of Dr. Kurien leadership in AMUL is
how the organization can encompass community building. As we know, Community building is a field of
practices directed toward the creation or enhancement of community among individuals within a regional area
(such as a neighborhood) or with a common interest. It is sometimes encompassed under the field of
community development. The leader should defining problems in organization with the community. On the
other word, we can say Community building requires allowing leaders to emerge from the community who
understand the needs of the community. That is why participation in decision making process being important
in organization.
Dr. Kurien returned from America in 1948 and joined the Dairy Department of the government of India. In
May 1949, he was posted as Dairy Engineer at the Government Research Creamery, a small milk powder
factory in Anand. His job was to ensure continuance of milk supply to Bombay. A gregarious person, it did not
take him long to befriend locals, mainly farmers who owned buffaloes and sold milk to earn their livelihood. It
was at this juncture that a fortune teller predicted that he would leave his monotonous job within a month.
“…Your career is set for a phenomenal rise-the kind you can never imagine”
Around this time, the newly formed cooperative dairy, Kaira District Cooperative Milk Producers Union
Limited (KDCMPUL), was facing stiff challenges from the privately owned Polson Dairy, a giant in the field.
KDCMPUL had been formed in 1946 under the initiative of Sardar Patel. Enthused by the challenge of doing
something for the milk farmers, Dr. Verghese Kurien resigned from his government job and volunteered to
help Shri Tribhuvandas Patel, the Chairman of KDCMPUL. Tribhuvandas Patel wholeheartedly set about
developing the Kaira District Cooperative Milk Producers' Union. As Manager, Dr. Kurien provided the
administrative and scientific direction to the dairy union. The Kaira Union was encouraged by the then
Bombay State Government and the contract for its entire supply of pasteurized milk was given to the Union.
Veterinary and technical aid was extended to villagers and the Public Works Department built new roads to
facilitate collection of milk from outlying villages. Dr. Kurien’s unstinted efforts led to rapid expansion of the
Union. By 1962, the Cooperative which was organized in 1948 by combining two village milk producers'
societies and a dairy processing around 230 kgs of milk per day, stood transformed. Dr. Kurien’s efforts had
brought into the Milk Producers’ Union 219 farmer societies with 46,400 members.

Dr. Kurien described his humble beginnings in the town of Anand in 1949, “a dusty small town of 10,000
people,” which was anything but pleasant. He narrated his story in an interview : “I was compelled to come
here because my education was paid for by the government, then British government. Therefore, my obligation
to the British government was transferred to the Indian government. So I was sent to Anand. People were not
modern. Road, communication, everything was bad. There was no bathroom. Three corrugated sheets made
my bathroom. That is how I started.” He could not find a decent rental place because he was “Christian, and
outsider, and above all a bachelor.”[10] So he lived in the garage of the dairy plant. He had to construct his
own lavatory. He lived in the same modest condition as that of the community he represented. But he stayed
back because of the warmth he received from the farmers. And he states, “It is here that I found myself, and I
am glad that I stayed here.”The world-renowned social entrepreneur who created a world-class organization,
and led India to become the largest milk producer in the world in his senior year claims to have found himself
in Anand. This shows the power of mutual transformation. When a change agent stays committed to the
community, the transformation is bidirectional, and the change agent transforms with the
community.
It is plausible that the farmers could relate to him as he was no different from them in his living conditions
despite his elitist education. In the interview, he further noted: “I could have gotten a high paying salary in a
city. But I could not have received the warmth, affection, and the love of the people that I worked with, and
people for whom I worked in those environments.”

VI. CRITICISM OF DR. KURIEN LEADERSHIP IN AMUL

Singh, Kelley, and Shanti George[12] criticizes the local leadership of Kaira District was instrumental in
mobilizing milk producers in the village to form and operate a network of cooperative societies. The formation
of AMUL in 1946 and its subsequent expansion can be attributed to the efforts of local leaders, most of whom
belonged to the dominant Patel caste. The dominance of Patel community in the management of cooperative
negates the very spirit of cooperation. They accuses AMUL of retaining caste affiliations with the Patel
community and discouraging lower castes from enrolling in the membership of the cooperatives. Shanti
George also criticizes the role of women . She assert, on the basis of as survey in Kaira district, that woman are
marginal participants in dairy cooperatives. The low numbers of women on dairy cooperative on dairy
cooperative membership rolls reflects an inequity in the distribution of the benefits of cooperative dairying.
She attributes the lower participation of women in dairy cooperative societies to a regulation that restricts
member to one person per family. the ontribution of females to dairying is restricted by this practice. Speaking
more generally, women ar not significant part of the cooperative structure.

A strategy is a route to the destination viz., the “objectives of the firm”. Picking a destination
means choosing an objective. Objectives and strategies evolve as problems and opportunities are
identified, resolved and exploited. The interlocking of objectives and strategies characterise the
effective management of an organisation. The process binds, coordinates and integrates the parts
into a whole. Effective organisations are tied by means-ends chains into a purposeful whole. The
strategies to achieve corporate goals at higher levels often provides strategies for managers at
lower levels. Managers must have strategic vision to become strategic managers and thereby to
manage the organisation strategically. Strategic vision is a pre -requisite of the strategic
managers. Strategic vision implies a profound scanning ability of the environment in which the
company is in i.e., knowing the objectives and values of the organisation stakeholders and
bringing that knowledge into future projections and plans of the organisation. The managers
strategic vision involves:
 The ability to solve complex and more complex problems;
 The knowledge to be more anticipatory in perspective and approach,
 and The willingness to develop options for the future.
Strategic management can be defined as the art and science of formulating,
implementing, and evaluating cross-functional decisions that enable an organisation to
achieve its objectives. As this definition implies, strategic management focuses on
integrating management, marketing, finance/accounting, production/operations, research
and development, and information systems aspects of a business to achieve
organisational success. The term “strategic management” is used at many colleges and
universities as the title to the capstone course in business administration, “business
policy,” which integrates material from all business courses. The strategic-management
process consists of three stages: strategy formulation, strategy evaluation. Strategy
formulation includes developing a business mission, identifying an organisation’s
external opportunities and threats, determining internal strengths and weaknesses,
establishing long-term objectives, generating alternative strategies, and choosing
particular strategies to pursue. Strategy-formulation issues include deciding what new
businesses to enter, what businesses to abandon, how to allocate resources, whether to
expand operations or diversify, whether to enter international markets, whether to merge
or form a joint venture, and how to avoid a hostile takeover. Chapter 1 Strategy
implementation requires a firm to establish annual objectives, devise policies, motivate
employees, and allocate resources so that formulated strategies can he executed; strategy
implementation includes developing a strategy-supportive culture, creating an effective
organisational structure, redirecting marketing efforts, preparing budgets, developing and
utilizing information systems, and motivating individuals to action. Strategy evaluation
monitors the results of formulation and implementation activities and includes measuring
individual and organisational performance and taking corrective actions when necessary.
Although making good strategic decisions is the major responsibility of an organisation’s
owner or chief executive officer, managers and employees both must also be involved in
strategy formulation, implementation, and evaluation activities. Participation is a key to
gaining commitment for needed changes. Peter Drucker says the prime task of strategic
management is thinking through the overall mission of a business: . . . that is, of asking
the question “What is our Business?” This leads to the setting of objectives, the
development of strategies, and the making of today’s decisions for tomorrow’s results.
This clearly must be done by a part of the organisation that can see the entire business;
that can balance objectives and the needs of today against the needs of tomorrow; and
that can allocate resources of men and money to key results. The strategic-management
process must be a people process to be successful! People, including all managers and
employees, make the difference! The chief executive officer of Rock Well International
explains, “We believe that fundamental to effective strategic management is fully
informed employees at all organisational levels. We expect every business segment to
inform every employee about the business objectives, the direction of the business,
progress towards achieving objectives, and customers, competitors and product plans.”
The strategic-management process can be described as an objective, logical, systematic
approach for making major decisions in an organisation. It attempts to organise
qualitative and quantitative information in a way that allows effective decisions to be
made under conditions of uncertainty. Yet, strategic management is not a pure science
that lends itself to a nice, neat, one-two-three approach. Based on past experiences,
judgment, and feelings, intuition is essential to making good strategic decisions. Intuition
is particularly useful for making decisions in situations of great uncertainty or little
precedent, or when highly interrelated variables exist, there is immense pressure to he
right, or it is necessary to choose from several plausible alternatives. These situations
describe the very nature and heart of strategic management. Some managers and owners
of businesses profess to have extraordinary abilities for using intuition alone in devising
brilliant strategies. For example, Will Durant, who organised General Motors
Corporation, was described by Alfred Sloan as “a man who would proceed on a course
of action guided solely, as far as I could tell, by some intuitive flash of brilliance. He
never felt obliged to make an engineering hunt for the facts. Yet at times he was
astoundingly correct in his judgment”. Albert Einstein acknowledged the importance of
intuition when he said, “I believe in intuition and inspiration. At times I feel certain that I
am right while not knowing the reason. Imagination is more important than knowledge,
because knowledge is limited, whereas imagination embraces the entire world.” Strategic
Management – An Introduction 7 Although some organisations today may survive and
prosper because they have intuitive geniuses managing them, most are not so fortunate.
Most organisations can benefit from strategic management, which is based upon
integrating intuition and analysis in decision making. Choosing an intuitive or analytical
approach to decision making is not an either-or proposition. Managers at all levels in an
organisation should inject their intuition and judgment into strategic-management
analyses. Analytical thinking and intuitive thinking complement each other.
And Kurien has helped Amul in Achieving these all which is required for better
work place for employee and to be well known in society…..
Amul under the leadership of DR. Kurien tends to develop participative system (System 4) of Likert model.
This model are characterized by complete confidence and trust in their employees, open communication flows
and the employee participation in the decision process. Subordinates freely express their views and teamwork
exists. There is collective responsibility for meeting organisational goals and objectives and collaborative team
work exists. Employees are offered achieving collectively determined goals. The three basic concepts of
Likert’s system 4 are the principle of supportive relationsips, group decision-making and methods of
supervision, and high performance goals for the organization.
The reason why DR, Kurien leadership classified in the fourt system of Likert Model : First,AMUL
organization based on cooperative model. That we know, coöperative ("coöp") is an autonomous association
of persons who voluntarily cooperate for their mutual, social, economic, and cultural benefit. Cooperatives
include non-profit community organizations and businesses that are owned and managed by the people who
use its services (a consumer cooperative) or by the people who work there (a worker cooperative) or by the
people who live there (a housing cooperative), hybrids such as worker cooperatives that are also consumer
cooperatives or credit unions, multi-stakeholder cooperatives such as those that bring together civil society and
local actors to deliver community needs, and second and third tier cooperatives whose members are other
cooperatives. The form of cooperative that requires participation of member in decision making
process. Second, Team work in developing built by Dr. Kurien showed that he was not alone in deciding
organizational policy. Third, Under the AMUL model procurement, processing and marketing – is controlled
by the farmer’s cooperative, which is directly linked to the final customer 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. Fourth, the highlight of Dr. Kurien leadership in AMUL is
how the organization can encompass community building. As we know, Community building is a field of
practices directed toward the creation or enhancement of community among individuals within a regional area
(such as a neighborhood) or with a common interest. It is sometimes encompassed under the field of
community development. The leader should defining problems in organization with the community. On the
other word, we can say Community building requires allowing leaders to emerge from the community who
understand the needs of the community. That is why participation in decision making process being important
in organization.
Dr. Kurien returned from America in 1948 and joined the Dairy Department of the government of India. In
May 1949, he was posted as Dairy Engineer at the Government Research Creamery, a small milk powder
factory in Anand. His job was to ensure continuance of milk supply to Bombay. A gregarious person, it did not
take him long to befriend locals, mainly farmers who owned buffaloes and sold milk to earn their livelihood. It
was at this juncture that a fortune teller predicted that he would leave his monotonous job within a month.
“…Your career is set for a phenomenal rise-the kind you can never imagine”
Around this time, the newly formed cooperative dairy, Kaira District Cooperative Milk Producers Union
Limited (KDCMPUL), was facing stiff challenges from the privately owned Polson Dairy, a giant in the field.
KDCMPUL had been formed in 1946 under the initiative of Sardar Patel. Enthused by the challenge of doing
something for the milk farmers, Dr. Verghese Kurien resigned from his government job and volunteered to
help Shri Tribhuvandas Patel, the Chairman of KDCMPUL. Tribhuvandas Patel wholeheartedly set about
developing the Kaira District Cooperative Milk Producers' Union. As Manager, Dr. Kurien provided the
administrative and scientific direction to the dairy union. The Kaira Union was encouraged by the then
Bombay State Government and the contract for its entire supply of pasteurized milk was given to the Union.
Veterinary and technical aid was extended to villagers and the Public Works Department built new roads to
facilitate collection of milk from outlying villages. Dr. Kurien’s unstinted efforts led to rapid expansion of the
Union. By 1962, the Cooperative which was organized in 1948 by combining two village milk producers'
societies and a dairy processing around 230 kgs of milk per day, stood transformed. Dr. Kurien’s efforts had
brought into the Milk Producers’ Union 219 farmer societies with 46,400 members.

Dr. Kurien described his humble beginnings in the town of Anand in 1949, “a dusty small town of 10,000
people,” which was anything but pleasant. He narrated his story in an interview : “I was compelled to come
here because my education was paid for by the government, then British government. Therefore, my obligation
to the British government was transferred to the Indian government. So I was sent to Anand. People were not
modern. Road, communication, everything was bad. There was no bathroom. Three corrugated sheets made
my bathroom. That is how I started.” He could not find a decent rental place because he was “Christian, and
outsider, and above all a bachelor.”[10] So he lived in the garage of the dairy plant. He had to construct his
own lavatory. He lived in the same modest condition as that of the community he represented. But he stayed
back because of the warmth he received from the farmers. And he states, “It is here that I found myself, and I
am glad that I stayed here.”The world-renowned social entrepreneur who created a world-class organization,
and led India to become the largest milk producer in the world in his senior year claims to have found himself
in Anand. This shows the power of mutual transformation. When a change agent stays committed to the
community, the transformation is bidirectional, and the change agent transforms with the
community.
It is plausible that the farmers could relate to him as he was no different from them in his living conditions
despite his elitist education. In the interview, he further noted: “I could have gotten a high paying salary in a
city. But I could not have received the warmth, affection, and the love of the people that I worked with, and
people for whom I worked in those environments.”

Organizational structure and organizational culture belong among the concepts with the
highest explanatory and predictive power in understanding the causes and forms of
people’s behaviours in organizations. Consequently, these two concepts are often used in
research as independent variables in explanations of numerous phenomena found in companies
and other types of organizations. The influences of organizational structure and culture on other
components of management are usually researched separately and independently from one
another. However, there are examples of research that analyzes the influence on management of
both culture and structure in their mutual interaction (Wei, Liu, Herndon, 2011; Singh, 2011;
Zheng, Yang, McLean, 2010). Unfortunately, although it is intuitively clear that organizational
culture and organizational structure must greatly impact one another, there has been very little
extensive research exploring their direct mutual impact. Exploring the relationship between
organizational structure and culture would be highly beneficial, since both of them determine the
behaviour of organization members. However they do it in different ways. Organizational culture
is an intrinsic factor of organizational behaviour, inasmuch as it directs the way people behave in
an organization by operating from within and by determining assumptions, values, norms, and
attitudes according to which organization members guide themselves in everyday actions in the
organization. On the other hand, organizational structure is an extrinsic factor which influences
people’s behaviour from the outside, through formal limitations set by division of labour,
authority distribution, grouping of units, and coordination. Therefore one’s behaviour in an
organization is the result of the impact of its culture and structure, as well as the influence of
other factors. Therefore studying the mutual impact of organizational culture and structure is
important for a comprehensive understanding of the behaviour of an organization’s members.
Organizational culture can be defined as “a system of assumptions, values, norms, and attitudes,
manifested through symbols which the members of an organization have developed and adopted
through mutual experience and which help them determine the meaning of the world around
them and the way they behave in it” (Janićijević, 2011: 72). As this definition implies,
organizational culture has a cognitive and a symbolic component in its content. The cognitive
component consists of mutual assumptions, beliefs, norms, and attitudes that the organization’s
members share, and which also shape their mental (interpretative) schemes (Alvesson, 2002;
Martin, 2002; Smircich, 1983). Organizational culture Organizational culture and structure 37
therefore determines the way the organization members perceive and interpret the surrounding
world, as well as the way they behave in it. The cognitive content of organizational culture
ensures a unique manner of assigning meaning and a unique reaction to phenomena within and
around the organization. Hence, if a strong culture exists in an organization, all the members of
the organization will make decisions, take actions, or enter interactions in a similar and
foreseeable fashion. Symbols are a visible part of organizational culture, and they manifest its
cognitive component. Semantic, behavioural, and material symbols strengthen, transmit, and also
modify organizational culture (Alvesson, Borg, 1992; Dandridge, Mitroff, Joyce, 1980). The
significance of organizational culture emerges from the fact that, by imposing a set of
assumptions and values, it creates a frame of reference for the perceptions, interpretations, and
actions of the organization’s members (Schein, 2004). In this way it influences all the processes
that take place in an organization, and even its performance. Through managers’ and employees’
mental maps, organizational culture influences the dominant leadership style, organizational
learning and knowledge management, company strategy, and also the preferred style of changing
the management, employee reward system, commitment, and other aspects of connections
between individuals and the organization. It would, therefore, be rational to assume, as this paper
initially postulates, that organizational culture impacts on a company’s organizational structure.
With its assumptions, values, and norms, the culture influences top management’s frame of
reference that shapes organizational structure. Organizational structure is, therefore, a sort of
cultural symbol and it mirrors key assumptions and values dominant in an organization.
Organizational structure is defined as a relatively stable, either planned or spontaneous, pattern
of actions and interactions that organization members undertake for the purpose of achieving the
organization’s goals. This understanding of organizational structure is based on a fundamental
assumption of it being purposeful, i.e., on the idea that organizational structure has its purpose
(Dow, 1988). Purposefulness of structure implies that it is a rational instrument in the hands of
those governing the organization, used for directing the course of activities in the organization
towards realizing its objectives. Rationality of the organizational structure is ensured by its
differentiation and integration of organization members’ individual and collective activities
(Lawrence, Lorsh, 1967). The differentiation process involves differentiation of operational and
managerial activities. Differentiation of operational activities is realized through division of
labour, or in other words, job design, and it results 38 Economic Annals, Volume LVIII, No. 198
/ July – September 2013 in the organization’s specialization level. Differentiation of managerial
activities determines who decides on what, and results in a certain level of centralization or
decentralization of authority within the organization. Integration is realized in unit grouping and
coordination. Unit grouping, or departmentalization, implies structuring of activities and tasks
into organizational units, and it can be based on input (functional), output (market or project), or
a combination of the two (matrix). Individual and group activities and tasks in an organization
are harmonized by coordination, in order for it to function as a unified whole. Coordination can
be achieved through five basic mechanisms: direct supervision, mutual communication, process
standardization, output standardization, and knowledge standardization (Mintzberg, 1979).
Differentiation and integration in organizational structuring therefore imply four essential
dimensions of organizational structure: job design, delegation of authority, unit grouping, and
coordination. These dimensions of organizational structure are congruent, which means that
there is harmony or concordance between them. Presumption of congruency is fundamental for
the concept of organizational structuring (Miller, 1990; Mintzberg, Miller, 1984; Mintzberg,
1979). It assumes that congruency or harmony as dimensions of the organizational structure
leads to better performance of the organization. In order for an organization to be successful it
has to provide mutual congruency of the dimensions of its own organizational structures. This,
then, leads to the formation of configurations of congruent structural dimensions, which is just a
different name for models of organizational structure. An organizational model is actually a
unique configuration of congruent structural dimensions: a certain level of specialization and
(de)centralization levels, a certain unit grouping mode, and a certain coordination mechanism.
The most prominent classification of models of organizational structure as configurations of
structural dimensions has been provided by Mintzberg, (Mintzberg, 1979), and it will be used in
this paper. Organizational structure models, as a particular configuration of structural
dimensions, direct and shape the manner in which organization members perform their tasks in
the course of achieving the organization’s goals. In different organizational models the
organization members make decisions, take actions, and interact within the organization’s
functioning in entirely different ways. Thus it can be assumed that the model of the
organizational structure influences organizational culture. It is quite possible that the
compatibility of the behaviour determined by the structural framework in an organization, on the
one hand, and the behaviour determined by cultural assumptions and values, on the other hand,
has an impact on strength, i.e., in strengthening or weakening of organizational culture.
Organizational culture and structure 39 Based on the understanding of organizational culture and
structure, a causality of their relationship, or rather their mutual influence, can be postulated as a
reasonable presumption. It can also be assumed that the compatibility of organizational culture
and structure would have a positive impact on an organization’s performance. This paper’s goal
is to explain the mechanism of mutual influence between organizational culture and structure,
but also to operationalize the said relation through developing hypotheses on the compatibility of
particular types of organizational culture and particular models of organizational structure. The
paper is structured as follows. First, we will explain the manner in which organizational culture
influences selection and implementation of organizational structure, as well as the mechanism
through which organizational structure influences strengthening or changing of organizational
culture. Afterwards, we will present classifications of organizational culture types and
organizational structure models, in order to postulate hypotheses on the compatibility of
particular types of organizational culture and particular models of organizational structure, all
based on similarities between the criteria of their differentiation.
Organizational structure affects the culture of the enterprise and vice-versa. For example, large public
agencies have tall, hierarchical organizational structures with highly-centralized functions. Similarly, the
culture in such organizations is driven by detailed policies and procedures which employees are expected to
follow. In this hierarchical organization, the roles and responsibilities of each employee are clearly delineated.
Another term for this type of organization is mechanistic.

In contrast to this formal structure is a start-up organization. Employees in a startup tend to perform a variety
of functions, particularly when the company is in its early stages of development. Not only do employees in
this organizational structure have more loosely defined roles, there often is considerable fluidity among
individuals in terms of responsibilities with little formality and a very flexible structure. The culture in such an
organization usually is informal with minimal codified rules. Such an organization is an example of an organic
structure.

Although our organizations may fall somewhere between the two examples above, we probably can determine
where the central tendency is based on the structure and culture. In this unit, we examine various structures and
their characteristics. When you explore the materials, you might want to determine where your organization
fits relative to the myriad structural designs presented. Industry, size of the company, mission, and culture are
all drivers of the design.

Organizational culture sometimes is more difficult for us to identify in our own organizations. We may have a
sense of it but just not be able to name it specifically. Not all organizations have the kind of recognizable
culture of Apple, Southwest Airlines, or Starbucks. Nevertheless, organizational culture exists in all companies
even if it is less obvious. Paying attention to the culture is important. If employees do not hold the same values
as those that are associated with a company's culture, operational effectiveness can be impacted negatively.
Similarly, if an organization experiences a culture shift, this too can affect the workplace. When new leaders
assume their positions, this often is a time when the culture can be tested, especially if the new leader wants to
shift direction of the company significantly.

With the technology revolution in the last couple of decades, it is a fact that considerable changes have taken
place across all industries in terms of structure, business models, and processes. Whether the innovations have
been disruptive (transformative) or sustaining (incremental) ones, we have discovered that effecting such
change requires both organizational flexibility and adaptability.

Although flexibility and adaptability are key attributes for the survival of our organizations, these are not
necessarily the most important attributes. Enron provides a good example of why organizations need more than
flexibility and adaptability. They also need to reflect strong core values of ethical conduct at all levels. So,
although we consider flexibility and adaptability as important, we also acknowledge that many factors
contribute to the success of an organization.

Some would even argue that failure can breed success. An article on this topic appeared in the July 10, 2006
issue of BusinessWeek ("How Failure Breeds Success"). Some examples of flops that ultimately led to
successes discussed in the article included the original manually-operated Xerox (Model A, circa 1949) that
led to the automated version 10 years later, the 1957 introduction of the Ford Edsel which was reborn as the
Mustang in 1964, and McDonald's "Hula Burger," a "cheese-topped grilled pineapple on a bun for Chicagoans
who avoided eating meat on Fridays" that was reinvented as the Filet-o-Fish we know today. You probably can
think of some examples from your own workplaces where an initial idea was modified and became successful
over time.

Innovation requires taking chances, but many organizational cultures do not support the freedom of failure. So,
how do we design workplace environments so we are able to ensure accountability by measuring performance
while, at the same time, allowing employees to make mistakes? This is a delicate balancing act but one that is
necessary if our organizations are going to take risks and innovate.

Throughout the 1990s, we often thought of innovation as the use of technology to control quality and cost.
Using the example of higher education, colleges and universities recognized that 21st century learners needed
technology fluency and sought ways to achieve this while, at the same time, ensuring the integrity of the
curriculum and trying to keep the cost of the new model affordable.

Some argue that innovation today is less about technology and more about rewiring our organizations so they
are focused on creativity and growth, through innovations in process, product and/or business model. We no
longer have a choice to use technology or not because, as the saying goes, we cannot "walk the cat back.
The three-tier "Amul 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 federated into a milk federation at
the state level. Milk collection is done at the village dairy society, milk procurement and processing at the
District Milk Union and milk products marketing at the state milk federation. The structure was 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.

The main functions of the VDCS are:

 Collection of surplus milk from the producers of the village and payment based on quality and quantity,
 Providing support services to the members like veterinary first aid, artificial insemination services, cattle-
feed sales, mineral mixture sales, fodder and fodder seed sales, conducting training on animal husbandry
and dairying,
 Selling liquid milk for local consumers of the village,
 Supplying milk to the District Milk Union.

State Cooperative Milk Federation

The main functions of the federation are as follows:

 Marketing of milk and milk products processed/manufactured by Milk Unions,

 Establish a distribution network for marketing of milk and milk products,
 Arranging transportation of milk and milk products from the Milk Unions to the market,
 Creating and maintaining a brand for marketing of milk & milk products,
 Providing support services to the Milk Unions and members like technical inputs, management support
and advisory services,
 Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions,
 Establish feeder-balancing dairy plants for processing the surplus milk of the Milk Unions,
 Arranging for common purchase of raw materials used in manufacture/packaging of milk products,
 Decide on the prices of milk and milk products to be paid to Milk Unions,
 Decide on the products to be manufactured at Milk Unions and capacity required for the same.
 Conduct long-term milk production, procurement and processing as well as marketing planning.
 Arranging finance for the Milk Unions and providing them technical know-how.
 Designing and providing training in cooperative development and technical and marketing functions.
 Conflict resolution and keeping the entire structure intact

In popular culture
The establishment of Amul is known as White Revolution.

The White Revolution inspired the notable Indian film-maker Shyam Benegal to base his film Manthan (1976)
on it. It starred Smita Patil Girish Karnad, Naseeruddin Shah and Amrish Puri The film was financed by over
five lakh rural farmers in Gujarat who contributed Rs 2 each to its budget. Upon its release, these farmers went
in truckloads to watch 'their' film, making it a commercial success. Manthan was chosen for the 1977 National
Film Award for Best Feature Film in Hindi.

How This Structure Supports.

Operational Efficiency of an organization is based upon the nature of a firm’s operations

strategy. This comes from the mission of the firm itself and is tied to the notion of achieving
competitive advantage through operations. A key subsequent decision is what type of process a
business needs. Design must follow strategy; so given priorities from the strategic plan, a process
can be designed that will support these priorities. There should always be flexibility in the
strategy adopted by an organization. Strategies ensure organizational effectiveness and efficiency
because with the help of strategies the resource can be put to the best of their efficiency and
maximum contribution to organizational objectives. Thus, strategies ensure that resources are put
in action in a way in which they are specified. The strategies can be implemented only when we
have a proper organizational design.

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 federated into a milk federation at
the state level. Milk collection is done at the village dairy society, milk procurement and processing at the
District Milk Union and milk products marketing at the state milk federation. The structure was 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.

The main functions of the VDCS are:

 Collection of surplus milk from the producers of the village and payment based on quality and quantity,
 Providing support services to the members like veterinary first aid, artificial insemination services, cattle-
feed sales, mineral mixture sales, fodder and fodder seed sales, conducting training on animal husbandry
and dairying,
 Selling liquid milk for local consumers of the village,
 Supplying milk to the District Milk Union.

Organisational Structure/ Customer Support and Matrix Structure:

 Organizational structure and organizational culture belong among the concepts
with the highest explanatory and predictive power in understanding the causes
and forms of people’s behaviours in organizations. Consequently, these two
concepts are often used in research as independent variables in explanations of
numerous phenomena found in companies and other types of organizations. The
influences of organizational structure and culture on other components of management
are usually researched separately and independently from one another. However, there
are examples of research that analyzes the influence on management of both culture
and structure in their mutual interaction (Wei, Liu, Herndon, 2011; Singh, 2011;
Zheng, Yang, McLean, 2010). Unfortunately, although it is intuitively clear that
organizational culture and organizational structure must greatly impact one another,
there has been very little extensive research exploring their direct mutual impact.
Exploring the relationship between organizational structure and culture would be
highly beneficial, since both of them determine the behaviour of organization
members. However they do it in different ways. Organizational culture is an intrinsic
factor of organizational behaviour, inasmuch as it directs the way people behave in an
organization by operating from within and by determining assumptions, values,
norms, and attitudes according to which organization members guide themselves in
everyday actions in the organization. On the other hand, organizational structure is an
extrinsic factor which influences people’s behaviour from the outside, through formal
limitations set by division of labour, authority distribution, grouping of units, and
coordination. Therefore one’s behaviour in an organization is the result of the impact
of its culture and structure, as well as the influence of other factors. Therefore
studying the mutual impact of organizational culture and structure is important for a
comprehensive understanding of the behaviour of an organization’s members.
Organizational culture can be defined as “a system of assumptions, values, norms, and
attitudes, manifested through symbols which the members of an organization have
developed and adopted through mutual experience and which help them determine the
meaning of the world around them and the way they behave in it” (Janićijević, 2011:
72). As this definition implies, organizational culture has a cognitive and a symbolic
component in its content. The cognitive component consists of mutual assumptions,
beliefs, norms, and attitudes that the organization’s members share, and which also
shape their mental (interpretative) schemes (Alvesson, 2002; Martin, 2002; Smircich,
1983). Organizational culture Organizational culture and structure 37 therefore
determines the way the organization members perceive and interpret the surrounding
world, as well as the way they behave in it. The cognitive content of organizational
culture ensures a unique manner of assigning meaning and a unique reaction to
phenomena within and around the organization. Hence, if a strong culture exists in an
organization, all the members of the organization will make decisions, take actions, or
enter interactions in a similar and foreseeable fashion. Symbols are a visible part of
organizational culture, and they manifest its cognitive component. Semantic,
behavioural, and material symbols strengthen, transmit, and also modify
organizational culture (Alvesson, Borg, 1992; Dandridge, Mitroff, Joyce, 1980). The
significance of organizational culture emerges from the fact that, by imposing a set of
assumptions and values, it creates a frame of reference for the perceptions,
interpretations, and actions of the organization’s members (Schein, 2004). In this way
it influences all the processes that take place in an organization, and even its
performance. Through managers’ and employees’ mental maps, organizational culture
influences the dominant leadership style, organizational learning and knowledge
management, company strategy, and also the preferred style of changing the
management, employee reward system, commitment, and other aspects of connections
between individuals and the organization. It would, therefore, be rational to assume, as
this paper initially postulates, that organizational culture impacts on a company’s
organizational structure. With its assumptions, values, and norms, the culture
influences top management’s frame of reference that shapes organizational structure.
Organizational structure is, therefore, a sort of cultural symbol and it mirrors key
assumptions and values dominant in an organization. Organizational structure is
defined as a relatively stable, either planned or spontaneous, pattern of actions and
interactions that organization members undertake for the purpose of achieving the
organization’s goals. This understanding of organizational structure is based on a
fundamental assumption of it being purposeful, i.e., on the idea that organizational
structure has its purpose (Dow, 1988). Purposefulness of structure implies that it is a
rational instrument in the hands of those governing the organization, used for directing
the course of activities in the organization towards realizing its objectives. Rationality
of the organizational structure is ensured by its differentiation and integration of
organization members’ individual and collective activities (Lawrence, Lorsh, 1967).
The differentiation process involves differentiation of operational and managerial
activities. Differentiation of operational activities is realized through division of
labour, or in other words, job design, and it results 38 Economic Annals, Volume
LVIII, No. 198 / July – September 2013 in the organization’s specialization level.
Differentiation of managerial activities determines who decides on what, and results in
a certain level of centralization or decentralization of authority within the
organization. Integration is realized in unit grouping and coordination. Unit grouping,
or departmentalization, implies structuring of activities and tasks into organizational
units, and it can be based on input (functional), output (market or project), or a
combination of the two (matrix). Individual and group activities and tasks in an
organization are harmonized by coordination, in order for it to function as a unified
whole. Coordination can be achieved through five basic mechanisms: direct
supervision, mutual communication, process standardization, output standardization,
and knowledge standardization (Mintzberg, 1979). Differentiation and integration in
organizational structuring therefore imply four essential dimensions of organizational
structure: job design, delegation of authority, unit grouping, and coordination. These
dimensions of organizational structure are congruent, which means that there is
harmony or concordance between them. Presumption of congruency is fundamental
for the concept of organizational structuring (Miller, 1990; Mintzberg, Miller, 1984;
Mintzberg, 1979). It assumes that congruency or harmony as dimensions of the
organizational structure leads to better performance of the organization. In order for an
organization to be successful it has to provide mutual congruency of the dimensions of
its own organizational structures. This, then, leads to the formation of configurations
of congruent structural dimensions, which is just a different name for models of
organizational structure. An organizational model is actually a unique configuration of
congruent structural dimensions: a certain level of specialization and
(de)centralization levels, a certain unit grouping mode, and a certain coordination
mechanism. The most prominent classification of models of organizational structure
as configurations of structural dimensions has been provided by Mintzberg,
(Mintzberg, 1979), and it will be used in this paper. Organizational structure models,
as a particular configuration of structural dimensions, direct and shape the manner in
which organization members perform their tasks in the course of achieving the
organization’s goals. In different organizational models the organization members
make decisions, take actions, and interact within the organization’s functioning in
entirely different ways. Thus it can be assumed that the model of the organizational
structure influences organizational culture. It is quite possible that the compatibility of
the behaviour determined by the structural framework in an organization, on the one
hand, and the behaviour determined by cultural assumptions and values, on the other
hand, has an impact on strength, i.e., in strengthening or weakening of organizational
culture. Organizational culture and structure 39 Based on the understanding of
organizational culture and structure, a causality of their relationship, or rather their
mutual influence, can be postulated as a reasonable presumption. It can also be
assumed that the compatibility of organizational culture and structure would have a
positive impact on an organization’s performance. This paper’s goal is to explain the
mechanism of mutual influence between organizational culture and structure, but also
to operationalize the said relation through developing hypotheses on the compatibility
 of particular types of organizational culture and particular models of organizational
structure. The paper is structured as follows. First, we will explain the manner in
which organizational culture influences selection and implementation of
organizational structure, as well as the mechanism through which organizational
structure influences strengthening or changing of organizational culture. Afterwards,
we will present classifications of organizational culture types and organizational
structure models, in order to postulate hypotheses on the compatibility of particular
types of organizational culture and particular models of organizational structure, all
based on similarities between the criteria of their differentiation.
Organizational structure affects the culture of the enterprise and vice-versa. For example, large
public agencies have tall, hierarchical organizational structures with highly-centralized functions.
Similarly, the culture in such organizations is driven by detailed policies and procedures which
employees are expected to follow. In this hierarchical organization, the roles and responsibilities
of each employee are clearly delineated. Another term for this type of organization is
mechanistic.