AMUL MILK PRODUCTS

Executive Summary: In todays competitive world while entering in the market it is very necessary to have good knowledge of the potential of a particular market. The growth of a company is invariably determined not just by its strategy, but on how it responds to the challenges it encounters. Over the decades AMUL has successfully countered several challenges that have come its way with innovative responses and continuous improvement, which have enabled it to remain stable and even convert some of these challenges into opportunities. It is the culture of endurance that has accorded AMUL the insight and focus to deal with the current economic environment. Drawing from its inner strength and beliefs, AMUL responded by launching several initiatives across all its operations in various geographies that are helping the group achieve growth even in current times. It is also this very strategic culture that will propel AMUL to continue on its growth in years to come. Company Profile: Amul (Anand Milk Union Limited) formed in 1946, is a dairy cooperative movement in India. It is a brand name managed by an apex cooperative organization, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.6 million milk producers in Gujarat, India. It is based in Anand town of Gujarat and has been a sterling example of a cooperative organization's success in the long term .The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world's biggest vegetarian cheese brand . Amul's product range includes milk powders, milk, butter, ghee, cheese, curd, chocolate ,ice cream, cream, shrikhand, paneer , gulab jamuns, basundi, Nutramul brand and others. In January 2006, Amul

plans to launch India's first sports drink Stamina, which will be competing with Coca Cola's Powerade and PepsiCo's Gatorade. Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million . Currently Amul has 2.6 million producer members with milk collection average of 10.16 million litres per day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China ,Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of flooding the Japanese markets. Other potential markets being considered include Sri Lanka . Dr .Verghese Kurien, former chairman of the GCMMF, is recognized as the man behind the success of Amul. Mission: The mission of Amul is motivate and dedicate workforce at Amul and committed to produce wholesome and safe foods of excellent quality to remain market leader through development of quality management system, state of art technology, innovation and eco-friendly operation to achieve preference of customers and milk producers. Vision: Amuls vision is to be a part of everyones life and provide more and more satisfaction to the farmers, their customers, employees and distributors. Swot Analysis of Amul
Strengths 1. The company is having Indian origin thus creating feeling of oneness in the mind of the customers. 2. It manufactures only milk and milk products, which is purely vegetarian thus providing quality confidence in the minds of the customers. 3. It is aiming at rural segment, which covers a large area of loyal customers, which other companies had failed to do. 4. People are quite confident for the quality products provided by Amul. 5. Amul has its base in India with its butter and so can easily promote chocolates without fearing of loses. 6. The prices of chocolates of Nestles are comparatively cheap as compared to other companies.

Weakness 1. There are various big players in the chocolate market, which acts as major competitors restricting their Growth 2. Lack of capital invested as compared to other companies. 3. Improper distribution channel in India. Opportunities 1. There is a lot of potential for growth and development as huge population stay in rural market where other companies are not targeting. 2. The chocolate market is at growth stage with very less competition so by introducing new brand and intensive advertising there can be a very good scope in future. Threats 1. The major threat is from other companies who hold the majority share of consumers in Indian market i.e. Cadburys and Nestle. 2. There exists no brand loyalty in the chocolate market and consumers frequently shift their brands. 3. New companies entering in Indian market like Fantasie fine poses lot problems for Amul.

PEST ANALYSIS OF AMUL

Political Since the budget range is decontrolled, no political effects are envisaged.

Economical Increasing per capita income resulting in higher disposable income. Growing middle class/urban population increase in demand. Low cost of production better penetration.

Social Per capita consumption expected to increase fashion. Increasing gifts culture increase in demand. Lower cholesterol than Mithais (sweet meat) substitute demand

Technical

Will have to reinforce technology to international levels once India is a free economy New and varied diversified products

Process innovation & Technology

Poters 5 Force Analysis Rivalry among existing firms (HIGH): Cost is perhaps the strongest driver of

company rivalry, which is due to the lack of product differentiation. In short, firms must be continually working to decrease their cost as much as possible. Dairy itself has lots of branches where there is a competitor for each and every product in the market. The major competitors for AMUL are NESTLE and BRITIANNIA, these are strong contenders; however, this is a potential threat as each one of them does not have their own market space in their respective sections. The Indian market is dominated by loads of small local and regional players. Threat of new entrants (HIGH): In analyzing the current Dairy industry, I believe that

the threat by new entrants is relatively high. This is because there are very few entries barriers for the dairy industry. As Amul being more of a local player, the chances are very high for other competitors to barge in.

Amul is defending against Domestic players like Mahananda, Vijay, Milma and other co-operative milk brands. Economies of scale play an important role behind their success. Bargaining power of buyers (LOW): Products like ice cream, curd, milk, powders,

milk additives etc are easily been switched between brands, but under liquid milk category it is comparatively less. Milk being a necessity in a day-to-day life the power of bargaining does not exist. Threat of substitute: (high): Threat of substitute is high as there is availability of other products in the market. There are plenty of substitutes in the market available for each product. Distant substitutes are present in many of the categories of business of GCMMF

(Gujarat Co-operative Milk Marketing Federation). For example in the Masti Buttermilk category it faces competition from cold drinks and Ice cream. Bargaining power of suppliers (LOW): The objective of Amul dairy is non profiting.As it is a part of cooperative society, it runs for the benefit of farmers, who are the suppliers of milk and milk products. According to the concept of co-operative society, a supplier has a bargaining power to have a good return on his/her supply. However supplier has limited rights to bargain with the cooperative society because it is made and run, for the sake of mass and not for individual benefits but it is made sure that the supplier gets his/her fare share of return. There is an appropriate bargaining power of supplier. As the farmers rights are protected under the cooperative rules and regulations ,it ultimately results in moderate power of the bargaining from the supplier.

Relative of other Stakeholders (High): Relative of other stakeholders in the food andbeverage industry is high because the product of this company may affect or works well with another industrys product. If one does not coordinate properly then there is a loss of its value.

Potential entrants

Economies of scale.

Capital requirements. Access to distribution Channels. Government policy.

Other Stakeholders
Government Shareholders Employees

Industry Competitors Rivalry among existing firms

Buyers

Productdifferentiation
Product consumption Switching costs Economies of scale Cost effectiveness

Product characteristics
Number of competitors Growth rate Capacity Size & strengths

Suppliers

Cost effectiveness

Substitutes

Strategic alliances Economies of scale Size of company

Substitute products
Cost ratio Product demand

TOWS MATRIX
INTERNAL FACTORS STRENGTHS (S) WEAKNESSES (W)

EXTERNAL FACTORS OPPORTUNITIES (O) O1 Growing global demands O2 Greater Productivity O3 Export potential O4 Robust economy growth O5 Supply Chain Management

S1 Low cost manufacturing S2 Economies of scale S3 Wide range of products S4 Strong cooperative org. S5 Global player
SO Strategies Increased productivity through cost effective manufacturing. Increase global demand through global exposure. Improve channel of distribution.

W1 Poor management of
logistics W2 low investment W3 Perishability W4 lower yield management W5 Problem in distribution WO Strategies Increase of opportunity through new GATT treaty. Develop new process to improve the quality and shelf life of milk and milk products. Increase awareness of scientific developments. WT Strategies Efficient and economical procurement Control over logistics and yield. Product positioning

THREATS (T) T1 Competitors T2 Rising environmental costs T3 Milk vendors T4 Adulteration T5 Lower cattle yield

ST Strategies Product eliminating and diversification Value marketing Hygienic processing facilities.

ST STRATEGIES (Maxi Mini) Amul must put into action some of these strategic options to meat the threats using its strengths. Product differentiation is very important to differentiate AMUL from the competitors, as it can tackle down the competitors product if Amul products are more outstanding and different from its competitors. Options available can be classifieds as product elimination and diversification strategy, value marketing strategy and also developing hygienic processing facilities. These are some of the main areas of focus under this section. WO STRATEGIES (Mini Maxi) The strategies formulated to overcome the weakness through opportunities are increase

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

WT STRATEGIES (Mini Maxi) The strategies that have been formed to overcome the weakness and threats in AMUL Company and the dairy industry as a whole are to apply efficient and economical procurement of products. Secondly to have control over the logistics and to maintain them efficiently. Lastly, create the right type of product positioning for the various product categories that Amul deals with. NEW STRATEGIES

Product Positioning:

System: Product improvisation-Amul must try and improve on certain products

that

are or as popular as the other products like butter, milk, and ice cream. This does not have to be done only after having a clear marketing research. These are a few common actions that must be taken. Structure: Amul hoardings are successful, but there is a need to advertise by cable channels, newspapers etc to reach the rural areas. For improvisation they must focus on advertising to gain more awareness for those products. Policy: It must include strengthening of liquidity and working capital in order to be more successful while trying to create awareness. Also to maintain the quality of the products as the percentage of perishability is very high for these products.

Objective:

The objective of Amul, the dairy cooperative in India, is to spur the White Revolution in the country and make India the largest producer of milk and milk products in the world. The cooperative is shared between over 2.8 million dairy producers and the three-tier Amul Model
7

has

increased

India's

milk

production

on

an

incredible

scale.

The White Revolution. The Amul Model was the main contributor to the beginning of the White Revolution. The revolution led to India becoming the country with the most milk production in the world. It also helped reduce malpractices carried out by merchants and milk traders. The White Revolution was a huge contribution to the alleviation of poverty and famine levels from levels that were dangerously low.

The Three-Tier Amul Model. The cooperative structure of the Amul Model is three-tier. The Village Dairy Cooperative Society is affiliated with the District Cooperative Milk Producers' Union that, in turn, is linked with the State Cooperative Milk Federation. This structure allows various functions to be delegated across the three tiers. For example, milk collection is carried out at the Village Dairy Society level, milk procurement and processing takes place at the District Milk Producers' Union level and milk and milk products marketing occurs at the State Milk Federation tier. Designating the functions in such a way avoids the problems of internal competition and ensures that the economies of scale are achieved.

Impacts of the Amul Model. This three-tier model has led to India increasing its production of milk by 40 million metric tonnes. The model has been instrumental in improving the economy of India. However, it has also introduced on a much bigger scale, an ingredient that has helped improve the health and nutrition of many within the country.

The Amul model has been very successful in meeting its aim to increase India's production of milk and milk products. The cooperative has had a huge impact on the country's economy and spurred the White Revolution.

Bibliography:

www.amul.com www.etstrategicmarketing.com