SM Module 6 Case Study and Analysis Amul

Prepared By:Group A

Amit Yadav5AArani Das10AAshish Khola12AKhushit Mehta21ALekha Kamath23ARohit Nadgouda37ASaman Nayyar40ASameeksha Gupta42ASoham Gandhi50AVishwadeep Mishra55A

SM Module 6Case Study and AnalysisAmul

Core competencies and Value Chain AnalysisThe strategic pillars of Amul which enable its excellence and market leadershipAll pervasive supply chainA distribution network to permeate even the remotest villages of IndiaMovement of 5000 trucks , twice a day200 processing plants round the country

Varied product offeringsSkimmed milk specialty products; butter chipletsChocolates and milk supplement for kidsKool koko RTD Coffee and buttermilkPro-biotic ice creamUnmatched technologyAssembly line style productionProcess oriented layoutAutomated and regular (periodic) milk collection mechanismEconomies of scale and scope along with technology leadershipVery strong established network2.12 million milk farmers and milk producersmilk collection from more than 10000 villagesFormidable setup and operationsProcessing done in latest technologically advanced plantsLarge scale and intensive production along with automation for value additionThe most important aspect of the value chainPermeates every corner of the remotest villages in the countryLocal and centralised sourcing complement distributionContemporary, current focus adsKnown for hoarding ads based on current issuesEasily establishes connect with the consumerCompetitive pricing, less than Britannia and other competitorsInbound logistics - Suppliers and InputsOperations -Processing and productionOutbound logistics -Distribution of outputMarketing and sales

Amuls 3-tier Business ModelA unique initiative

SWOT AnalysisA look at the current scenario of AmulQuality : Amul follows TQM to ensure high quality of productsDistribution : Amul has a strong rural and urbandistribution networkEfficient procurement model allows them to source milk at low costsAmul has an excellent brand equity association

Amuls expansion into the Chocolates industry has failedEven after 20 years its share is only 2% in the chocolate industryHas had limited market share in the ice cream segment due to large competitionLack of control over yield of milkIntroduce new products in the chocolate segment as it is growing a at a fast paceRise in purchasing power and standard of living of Indian people will increase the consumption of milk per capitaTo tap the untapped market, increase its reach in the rural marketsHigh competition from local players in the marketDifficult to maintain low costs due to rising environmental costsRisk of diluting brand equity due to diversificationMaintaining quality is difficult because milk is sourced from numerous farmersStrengthsThreatsWeaknessesOpportunities

Amuls generic strategyIntegrated Cost differentiation and leadership strategy

Generic Strategy AMULWhat?How?Why?Amul follows Integrated Cost Leadership Differentiation strategyAmul maintains low costs in its operationsIt creates differentiation by offering products of high quality standards through their TQM and through their marketing strategiesAmul has a unique sourcing and procurement model through which it procures milk from farmers at low costsAble to maintain low costs in their inbound logistics All transactions of Amul are essentially settled quickly and no credit is offered by Amul, this again helps in lowering costsUnique marketing strategies of projecting the brand Amul as the brand of India. Amul - The Taste of IndiaFollowing a cost leadership allows Amul to target the mass population of India which is highly price sensitiveDifferentiation strategy has helped in making a footprint in the value seeking customer baseAmul has been able to create a strong brand equity because of its high quality productsAmul was the first national brand in the dairy products industry of India, thus gaining first mover advantageThe Porters Five Forces AnalysisA look at the dairy and food processing industryThreat of the substitutes (High)Customer switching costs are very low

Substitutes available for different product lines

Quality difference is very minimal. Hence customer is happy with the low priced substitutesThreat of the new entrants (Low)Economies of scale are in favor of the companyRaw material procurement difficult for new entrantsImmense brand loyalty and incredible distribution network prevents new entrants from emergingYet new entrants do come in some specific product lineCompetitive rivalry (High)High competition from competitors like Nestle, Cadbury, Kwality Walls and Britannia.Also, the presence of local vendors and milk grocers are high threat to AMUL.Fear of merger and acquisitions of medium scale companies would pose a threat.Bargaining power of the supplier (Very High)Suppliers of the milk and milk products are the farmers.Controlled by a cooperative society which has considerable bargaining powerAs AMUL works for the best interest of the farmers, they are provided with significant returns.Bargaining power of the buyer (Low)Switching of brand is seen in products like ice cream, curd, milk powders, milk additives etc.As milk is a mass product, customers have insignificant or no bargaining powerProducts are available in majority stores and vending machines. Thus the small scale consumer has little control over the products.

Mission, Vision and Values AnalysisThe activities of the company aligned with its visionMission is to provide long term sustainable growth to its member farmers and serve the customer base by providing milk products at low price

Vision is to provide remunerative returns to the farmers and serve the interest of consumers by providing products which are good value for money

Ethical values are fulfilled by adopting fair pricing, ensuring quality, honestly advertising and marketing and inculcate values in distributors by conducting field trips.Company needs to price the products at such a level so as to retain milk dairy business profitable for the farmers while delivering value for money to customers.Even though the company went through a series of experiments, company reverted back to its genuine product line v.i.z milk and its variants.Company needs to maintain quality of the standards of TQM to serve to its customers.

MISSIONVISIONOTHER VALUESBusiness strategy of AmulThe long term strategy of Amul organisation

Retention of surplus to fund growth and developmentAll transactions are essentially only cash

In 2004, took initiatives to increase the declining share in chocolate industryLaunched CHOCOZOO to attract young childrenAttractive packaging and new promotion strategiesNew products like Trix, ,a wafer biscuitCurrently 5% share in choclate industry, but now its no more a priority for Amul

Mauritius, UAE, Bangladesh, Australia, China, Singapore, Hong Kong, Cambodia, Philippines, Japan, China, Sri Lanka, and a few South American countries.

Amul pizzaAmul ice cream parlourFor co packaging and effective distribution. Amul logo in F1 team race cars as a part of rebranding strategy

Producing powder from buffalo milkEmbryo transfer technologyMergers and acquisitionsAcquire plants of vadilal and Kwality

Double Amul preferred outletsSuper distribution model

Big risks in diversificationPossess ability to keep low pricesEstablished distribution network

Maintaining the finances:Entering new geographic markets:Response to changing market conditionsEntering new product lines: Strategic Alliances: Actions in R&D:Competitiveness StrengtheningCompetitiveness capabilities and correct competitive weaknesses