Name: Shruti Nagmote StudentID: 2018hb74071

Strategic Management and Business Policy

Assignment 1:
Case Study on Amul India:
India is the largest producer of milk in the world and accounts 21% of the world’s production.
India is with highest livestock populations in the world, it accounts 50% of the buffaloes and 20%
of the world’s cattle population, most of which are milch cows and milch buffaloes. India’s dairy
industry is considered as one of the most successful development industry in the post-
Independence era. In 2005-06 total milk productions in the country was over 90 million tones with
a per capita availability of 229 gms per day. During 1993-2005, the dairy industry recorded an
annual growth of 4%, which is almost 3 times the average growth rate of the dairy industry in the
world. The total milk processing in India is around 35%, of which the organized dairy industry
accounts for13% while remaining is either consumed at farm level, or sold as fresh, non-
pasteurized milk through unorganized channels. The milk surplus states in India are Uttar Pradesh,
Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu.
The manufacturing of milk products is very much concentrated in these states due to the
availability of milk in huge quantity. According to the Ministry of Food Processing Industries,
exports of dairy products have been growing at the rate of 25% per annum in terms of quantity and
28% in terms of value since 2001.Significant investment opportunities exist for the manufacturing
of value-added milk products like milk powder, packaged milk, butter, ghee, cheese and ready-to-
drink milk products.

1. Product Portfolio Analysis:

Product portfolio analysis matrix is a technique by which business are classified as low or
high performers based on their market share and relative growth rate.

The matrix has four classifications:

• Stars: Leaders in market. Consumes a lot of cash and generates a lot of revenue.
• Cash cows: Generates a lot revenue for the company. Strong product line of the
company in a mature environment which is not growing anymore.
• Dogs: Low growth and low market share. Consumes a lot of cash and does not have
much potential of desired earnings.
• Question marks: Business usually at startups and can consume a lot of cash. With
proper focus they can become stars or cash cows or with poor strategy might fall to
dogs.

Cash cows:
• There are three products of Amul that fall under cash cow category, the first
being Amul Milk and the second being Amul Butter and third is Amul Cheese.
• The products hold high market share in these not so fast-growing industries.
• Owing to the limited chances of industry growth, Amul is introducing a number of
new product variations for different customer segments so as to maintain its market
leadership.
• For Example: Apart from its basic version of Butter and Milk, Amul also launched,
Amul Butter Lite, Amul Tazza Milk and Amul Gold Milk to target customers who
are more health conscious.

Stars:
• Amul Ice cream and Amul Ghee are two products that can be considered as Stars
of the company. These are the products which have a high market share and holds
a good potential to grow in the future as well.

Question mark:
• Amul lassi has been marketed with the aim to increase the market share and
compete with the other beverages available to the market.
• Considering the increasing interest and demand for healthy products and beverages,
the healthy milk from Amul poses a great potential to grow in the near future with
a condition that it is marketed well.

Dogs:
• Dogs are those products that have low growth or market share and have a very
limited chance of growing into a profitable business unit for the company.
 • Amul Chocolates, Amul Cookies, and Amul Pizza are few products which can be
considered as Dogs for Amul.
• Due to the heavy competition and limited innovation that these product categories
face, it’s becoming difficult for Amul to gain market share for these products and
make them a viable revenue generator.

2. Corporate Strategy:
India is the largest producer of milk in the world and accounts 21% of the world’s
production.
India is with highest livestock populations in the world, it accounts 50% of the buffaloes
and 20% of the world’s cattle population, most of which are milch cows and milch
buffaloes. India’s dairy industry is considered as one of the most successful development
industry in the post-Independence era. In 2005-06 total milk productions in the country
was over 90 million tones with a per capita availability of 229 gms per day. During 1993-
2005, the dairy industry recorded an annual growth of 4%, which is almost 3 times the
average growth rate of the dairy industry in the world. The total milk processing in India
is around 35%, of which the organized dairy industry accounts for13% while remaining is
either consumed at farm level, or sold as fresh, non-pasteurized milk through unorganized
channels. The milk surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan,
Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The manufacturing of
milk products is very much concentrated in these states due to the availability of milk in
huge quantity.According to the Ministry of Food Processing Industries, exports of dairy
products have beengrowing at the rate of 25% per annum in terms of quantity and 28% in
terms of value since 2001.Significant investment opportunities exist for the manufacturing
of value-added milk productslike milk powder, packaged milk, butter, ghee, cheese and
ready-to-drink milk products.
 3. Competitors Analysis:
Private competitors and small dairy cooperatives (In an organized dairy industry, dairy
cooperatives account for the major share of processed liquid milk marketed in India. Milk
is processed and marketed by 170 Milk Producers‟ Cooperative Unions, which federate
into 15 State Cooperative Milk Marketing Federations. Over the years, several brands have
been created by cooperatives Amul (GCMMF) these are like Vijaya (AP), Verka (Punjab),
Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur).

Products Competitors
Butter Britannia , Nestle
Cheese Britannia
Baby Food Nestle, Heinz
Dairy Whitener Segment Britannia, Nestle
Ice Cream HUL
Chocolates and Confectionaries Cadbury, Nestle
Pizza Pizza Hut, Dominos, Narulas Frozen Pizza
Curd Nestle, Mother Dairy
Ultr High Treated Milk Nestle
Paneer Britannia
Sweet condensed milk Nestle
Milk Additives Cadbury, Smichkline Beecham
Flavoured Milk Britannia, Nestle
 4. SWOT Analysis:

Strengths:
• Largest food brand in India and Asia
• High Quality, Low Price
• Introduced TQM
• World’s largest pouched milk brand
• Annual turnover of 4500 crores(2006-
07)
• Highly Diverse Product Mix
• Robust Distribution Network
Opportunities:
• Penetrate international markets
• Diversify product portfolio to enter
new product categories and expand
existing categories like processed food,
chocolates etc.
• Use internet to sell its products
Weaknesses:
• Strong dependency on weak
infrastructure & completely dependent
on villages for its raw material
• Risks of highly complex supply chain
system.
• Short self life of its Product
• Alliance with third parties who do not
belong to organized sector
Threats:
• Competitors: Hindustan Liver, Nestle,
Britannia and local players.
• Stiff competition from MNCs in butter
• Growing price of Milk and Milk
products.
• Ban on export of milk powder.
• The yield of India cattle still much
lower than other dairy countries

Strengths

• Demand Profile: Absolutely optimistic. Milk being a necessity product, the demand will
stay and the sales at GCMMF are bound to increase over a period of time.
• Margins: Quite responsible, even on packed liquid milk. The margins are enough to limit
the entry of potential entrants.
• Flexibility of product mix: Tremendous. With balancing equipment, GCMMF has kept
adding a wide array of products to its product line.
• Availability of raw material: Abundant. Presently, more than 80 percent of
milk produced is flowing into the unorganized sector, which requires proper
channelization. Amul & GCMMF have leveraged this and has got itself a strong base of
suppliers
• Technical Manpower: Professionally trained, technical human resource pool, built over
last 30 years is the strength that GCMMF has. The employees of GCMMF are highly
recognized in the industry and have earned name for themselves as well as the federation.
 • Enhanced Milk Production: Increase in the milk production with consequently increased
availability of milk processing has led to increase in consumption and faster access to the
consumers through effective distribution. The technology is brought from Denmark and
the production of milk has benefitted from that.
• Transportation: The transportation facilities and the easy availability of the special trucks
have provided a boost. Cold refrigerated trucks are there in place and the warehouses also
have the cold storage facilities that facilitates the transportation.
• Vast Resources: Country has vast natural resources which offer immense potential growth
and development for dairying. Moreover the financial resources available for the federation
are immense and the reputation is such that in case of any further requirements, it can
approach any institution and raise any form of capital.
• Increasing Purchase Power and changing tastes of the consumers: The purchasing
power of the residents is increasing. As a result a lot of products are being consumed.
Moreover, the consuming habits are changing. As a result, the demand for products such
as butter and cheese
is increasing at a very rapid rate.

Weaknesses:
• Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long
life. Still perishability is there at the milk vendors end. This does result in loss of some
production. But Amul Dairy is taking steps to store milk at the vendors end. Surely, many
new processes will follow to improve milk quality and extend its shelf life.
• Lack of control over yield: Theoretically, there is little control over milk yield. A lot
depends upon the monsoon in the country. This is because of the quality of cattle feed
Amul that would be available will not have the required nutritional content. Steps are taken
to provide awareness regarding these and the penetration of quality feed is being increased.
• Logistics of procurement: Woes of bad roads and inadequate transportation facility make
milk procurement problematic. All these factors lead to perishability of the procured milk.
But with the overall economic improvement in India, these problems would also et solved.
• Erratic power supply: The erratic power supply would cause harm in the processing
of milk.
• Underdeveloped systems: There still exist underdeveloped raw milk collection systems
in some parts of the country. However steps are being taken such as setting up of cold
storage points at key collection centers to combat the situation.
• Lack of proper implementation: Dairy development programmes have not been fully
implemented as per the needs of the region in different agro-climatic zones.
• Infrastructure: The infrastructure that is available is not upto the current world standards.
Also lack of infrastructure for offering dairy business management prorammes to the
trained personnel is creating a hindrance.
Opportunities:

“Failure is never final, and success never ending”. Dr Kurein bears out this statement perfectly.
He entered this industry when there were only threats. He met failure head-on, and now he clearly
is an example of never ending processes. If dairy entrepreneurs are looking for opportunities in
India, the following areas must be tapped.
• Competition: With so many newcomers in this industry, competition is becoming tougher
day by day. By then competition has to be faced as a round reality. The market is large
enough for many to carve out their niche. Moreover due to competition, there is a chance
to better serve the market with innovative products.
• Value Addition: There is a phenomenal scope for innovations in product development,
packaging and presentation. Given below are potential areas of value addition: Steps should
be taken to introduce value-added products like shrikhand, ice-creams, paneer,
khoa, flavoured milk, dairy sweets etc. This will lead to a greater presence and flexibility
in the market place along with opportunities in the field of brand building. Addition of
cultured products like yoghurt and cheese lend further strength both in terms of utilization
of resources and presence in the market place. Yet another aspect can be the addition of
infant foods, eiatic foods and nutritional.
• Export Potential: Efforts to exploit export potential are already on. Amul is exporting to
Bangladesh, Srilanka, Nigeria, and the Middle East. Following the new GATT treaty,
opportunity will increase tremendously for the export of agri products in general and dairy
products in particular. There is a strong basis of cost efficiency, which GCMMFcan
leverage in the world market.
• Markets: The market for traditional as well as processed dairy products is expanding both
at domestic and international front.
• IT Support: Software is now available for project formulation for dairy enterprise. It has
also computerized its production processes. Mother Dairy was the first fully computerized
dairy in India. In its Anand plant all products are processed and computerized which does
not have any hand touch during any stage of process.

Threats
• Milk vendors, the un organized sector: Today milk vendors are occupying the pride
of place in the industry. Organized dissemination of information about the harm that they
are doing to producers and consumers should see a steady decline in their importance.
• Infestation: there are increasing incidents of chemical contaminants as well as residual
antibiotics in milk.
• Quality: the quality of the milk is found to be poor as to the international standards. One
of the reasons for these according to the EU and America is the method of milched with
the help of machines, while in India.
• Exploitation: the liberalization of the Dairy Industry is likely to be expoited by the
multinational. They will be interested manufacturing the milk products, which yield high
profits. It will create milk shortage in the country adversely affecting the consumers.
• Subsidy by Western Nations: there have been incidences wherein in the Western nations
subsidizing the dairy products by a few means like transportation. Because of such reasons
the final price of the product goes below the price prevailing in the Indian Market. Hence
it proves a threat to GCMMF‟s and other Indian dairy products.
• Creation of Nontariff Barriers by Developments Nations: The Developments Nations
have created Non Tariff Barriers related to Quality of the milk specifically. They want that
the milk be processed with potable Air and Water. They want the milching of cattle done
with the help of machines. However this types if system is yet to evolve in India. Because
of there reasons they are reducing the market potential of Indian made products, where
GCMMF holds a lions share.

• The study of this SWOT analysis shows that the Strengths and Opportunities far outweigh
Weaknesses and Threats . Strengths and Opportunities are fundamental and Weaknesses
and Threats are transitory, Entrepreneurship (The ability to take risk), innovative approach
(in product lines and marketing and values (of quality/ethics)
5. Porter’s Five Force Analysis:

1. Competitive rivalry:
Amul Butter enjoys significant market share. It has market share of 79.1% in the
domestic market of size $459 million. So as much, the competition current is not threatening
the position of Amul in the butter industry. But when it comes to low fat butter. Amul is in a
battle. Zydus Wellness Nutralite is gaining market share in the low fat, low cholesterol butter
category, a category where Amul has not been able to establish itself as yet. It has two product
in this category. Amul Delicious and Amul Lite.
2. Threat of substitutes:
Threat of substitutes is high. There is increasing awareness about the potential health
concerns around consumption of certain dairy products, especially butter. The fact that Amul’s
own low fat, low cholesterol butter variants have not been able to gain significant market share
leaves the door open for other companies to take advantage of this potential weakness. Also,
margarine, cheese spreads and jams are being used instead of butter as table spreads and the
options in the market are plenty.
3. Threat of new entrants:
Threat of new entrants is medium. The barriers to entry are low and as such there is a
probability that some big player might want to enter the market. That being said, the significant
market share that Amul holds means its position is quite secure.
The established distribution network is an advantage for amul. The biggest plus for Amul is
the supplier base it enjoys. It has a strong connection with rural milk producers.
4. Bargaining power of suppliers:
Bargaining power of the suppliers is low. Amul is a co-operative society. It runs for
the benefit of producers of milk and milk products, who serve as the suppliers.
5. Bargaining power of customers:
There are already other co-operatives existing in India, having their own established
brands, which reduce the loyalty of current customers, thereby increasing their bargaining
power.