If Amul has become a successful brand - if, in the trade lingo, it enjoys brand equity - then it is because we have honoured our contract with consumers for close to fifty years. If we had failed to do so, then Amul would have been consigned to the dustbin of history, along with thousands of other brands. For close to fifty years now, Amul has honoured its contract with the consumer. The contract that is symbolized by the Amul brand means quality. It means value for money. It means availability. And it means service." - Varghese Kurien, Chairman GCMMF
The Kaira District Milk Cooperative Union or AMUL in India is an example of how to develop a network of firms in order to overcome the complexities of a large yet fragmented market, by creating value for suppliers as well as the customers. AMUL has led the milk dairy revolution in India that has now emerged as one of the largest milk producers in the world.
AMUL’s journey towards Excellence
AMUL’s journey towards excellence is marked by some critical understanding of the business environment in large emerging economies like India.
•It aimed to provide remunerative returns to farmers and also serves the interest of consumers by providing quality products and value for their money
• It also changed the supply chain paradigm in order to reduce the cost to the consumer while increasing the return to the supplier.
• It also realized that its goal could only be achieved in the long run and this required developing values in people and processes that were robust, replicable and transparent.
• AMUL developed distinct capabilities that would deliver competitive advantage to its operations. This included long term cost containment, world-class deployment of technological resources and R&D, and better leveraging of scarce resources.
Micro and Macro Environmental Analysis of AMUL
Macro Analysis: PEST Analysis
Government policies and acts
•Operation flood and establishment of dairy co-operative in 1970 •Delicensing of dairy sector 1991
•Subsides given to Indian Farmers were lower than compared to farmers of developed nations Political Stability
•Gujarat’s relatively stable political environment favourable for co-operatives and industries Politicisation
•Too much political interference in dairy co-operatives
•Setting up of institutes IRMA
•Establishment of markets
•100% FDI allowed
Export & Import Duties
•Government cutting down on import duties of milk and milk products(especially butter)
•Economic globalization & liberalization
•The consumption pattern of people has changed and they demand for global products. •Due to liberalization the private players are allowed to enter in the market. Competition has been increased. GDP trends have further improvised. • India is a developing nation with high GDP growth rate 8-9%. High growth rates imply increase in per capita income of people therefore more consumption of food products •WTO & international trade SPS & TBT international price fluctuations (especially for edible oils, milk powder)
• Food habits
• Fast food culture
Demand for ice creams, cheese etc is very high so Amul came up with the products like Amul cheese spread and ice creams etc •Improved per capita income
The per capita income of people has increased but still they are price conscious (value for money) and due to that Amul has not increased the price of its products • Culture
Custom of morning tea
Accustomed to milk & milk products
Literacy level in India is going up at a very high rate and due to that product & safety awareness is increasing between them • Demographics composition
Amul came up with products for each target market segment. like for youth : Amul cheese spread and Amul Kool, for health...