By Mr. ATUL VINAYAKRAO BHOLE Mr. GIBIN GEORGE Miss. DEEPTHI REDDYFOOD AND AGRI BUSINESS MANAGEMENT SCHOOL,HYDERABAD

2nd year

GCMMFENVIRONMENTAL ANALYSIS

ENVIRONMENTAL ANALYSIS• PESTEL MODEL• ENVIRONMENTAL MATRIX SCORE• PORTERS DIAMOND• PORTERS FIVE FORCES FRAMEWORK

PESTEL ANALYSIS

SOCIAL

ENVIRONMENTAL LEGAL

TECHNOLOGY

POLITICAL ECONOMIC

POLITICAL

GOVT. POLICIES & ACTSOperation flood & establishment of diary cooperatives(1970)Delicencing of diary sector (1991)MMPO(1992) & its amendments (1999)

SUBSIDIESSubsidies given to Indian farmers low when compared to farmers of developed nations (US, EU)

TAXATIONCentral sales tax 4%

Local sales taxSection 44 of NDDB – excemption from income tax act

POLITICAL STABILITYGujarat – relatively stable political environment favorable for cooperatives & industries

POLITICISATIONToo much politicization & political interference in diary cooperatives

EXPORT & IMPORT DUTIES

Govt declaring cut in import duties of milk & milk products (esp. butter )

INFRSTRUCTURESetting up of institutes (IRMA) & universitiescold chain facilitiesTransport –rail/ road

Establishment of markets

BUDGET ALLOCATION

FDI POLICY100% FDI allowed

Political

OPPORTUNITIES

• Lower subsidies• Political base

• Institutes professional training support

• NDDB operation flood

TREATS

• Taxation• Political stability• Politicization

• FDI policies in food sector• No/low support of exports

ECONOMIC

GLOBALISATION & LIBERALISATION

Changed consumption pattern . Demand for global productsLiberalisation allowed private players to enter .Competition increased

GDP TRENDSIndia 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

TRADESPS & TBT

INTERNATIONAL PRICE

FLUCTUATIONS (especially for

edible oils, milk powder)

LENDING RATESNDDB give loans at 0% interest rates and development grants at lower rates of interest.

ECONOMICAL

OPPORTUNITIES

• Affluence/increase in GDP• Export

• Global standards• MNC’s competitions

• Huge support from NABARD• Technical inputs by subsidies

• Insurance

TREATS

• Grant for NDDB• Low interest rate

• WTO norms for exports• MNC’s competition

• Instant price fluctuation

SOCIAL

LIFESTYLEFOOD HABITS (mostly veg)

Fast food culture (demand for ice

creams, cheese etc)

IMPROVED PER CAPITA INCOME

INCOME DISTRIBUTION – (still skewed to middle &

upper classes)Price conscious (value

for money)

CULTURECustom of morning

teaAccustomed to milk

& milk products

EDUCATIONLiteracy level going up

– product & safety awareness inc.

DEMOGRAPHICSCOMPOSITION

Growing youth populationIncreased health conscious peopleHuge children population

SOCIAL

OPPORTUNITIES

• Fast food culture• Increase in per capita income• Skewed income levels

• Increase health consciousness• Food habits

• Increase in youth population

TREATS

• Grant for NDDB• Low interest rate

• WTO norms for exports• MNC’s competition

• Instant price fluctuation

TECHNOLOGICAL

AUTOMATIONPROCESS

TECHNOLOGYHACCP & ISO

TQM

TRANSFER OF TECHNOLOGY

NET ENABLED KIOSKS

SERVICE SUPPORTSE COMMERCE

GIS

RATE OF OBSOLENCE

LOW - MODERATE

TECHNOLOGY DEVELOPMENT

INSTITUTESNational diary

research institute

INNOVATIONS IN COLD CHAIN TECHNOLOGY

TECHNICAL

OPPORTUNITIES

• ISO• Automation• e-commeres

• Cold storage technology• IT application• Value addition

TREATS

• Field Orientation

ENVIRONMENTAL

ISO 14000Specifies

environment standards for

industries

WASTE DISPOSAL/ SEEWAGE

TREATMENTRECYCLING

SPREAD OF DISEASES/ VIRUSES

Would affect the supply of milk

EPA ACTSets the guidelines

for environment protection

ENVIRNMENTAL

OPPORTUNITIES

• ISO 14000

TREATS

• Phytosanitary• Methane gas

• Virus & microbes in milk

LEGALCOMPANIES ACT & CO

OPERATIVE LAWS

Amul is a cooperative so companies law not

applicableCooperative law – tax

implications (central tax – 4% & local tax)Interference from

registrar of cooperatives

PFA

LABELS (green – veg)

TRADEMARK ISSUE

AMUL should protect its trademark so as to preserve its purity

of brand

STANDARDS OF WEIGHTS &

MEASURES ACT

Weighing & packaging should be acc. to this act

CONSUMER RIGHTS

INDUSTRIAL DEVELOPMENT & REGULATION ACT

LEGAL

OPPORTUNITIES

• PFA Act• Labels

• Trademarks• Packing

• IPR related• Go-green

TREATS

• Quarantine• Child labour

ENVIRONMENTAL MATRIX SCOREFACTOR WEIGHTAGE RATING SCORE

GOVT POLICIES & ACT 0.8 4 3.2

SUBSIDIES 0.9 2 1.8

TAXATION 0.7 2 1.4

POLITICAL STABILITY 0.7 4 2.8

POLITICAL INTERFERENCE

0.8 4 3.2

INFRASTRUCTURE 0.6 2 1.2

FDI POLICY 0.7 3 2.1

EXPORT & IMPORT DUTIES

0.5 3 1.5

17.2/ 40 43%

WEIGHTAGE RATING SCORE

ECONOMIC

LENDING RATES 0.8 3 2.4

GLOBALISATION 0.8 4 3.2

WTO 0.6 3 1.8

INTERNATIONAL PRICE FLUCTUATIONS (EDIBLE OILS)

0.7 4 2.8

9.6/ 20 48%

SOCIAL

DEMOGRAPHIC COMPOSITION 1.0 5 5

INCOME LEVEL & DISTRIBUTION 0.8 4 3.2

PURCHASING POWER 0.9 4 3.6

FOOD HABITS 1.0 5 5

LITERACY & EDUCATION LEVEL 0.3 3 0.9

17.5/25 70%

TECHNOLOGY

AUTOMATION 0.9 4 3.6

TQM 0.9 4 4

IT 1.0 4 4

TRADEMARK ON PRODUCTS

0.6 4 2.4

COLD CHAIN TECHNOLOGY

0.9 3 2.7

17.7/25 70%

ENVIRONMENT

WASTE TREATMENT 0.8 4 3.2

SPREAD OF DISEASES & VIRUSES

0.8 4 3.2

EPA ACT 0.6 4 2.4

10.2/15 68%

LEGAL

COOPERATIVES ACT 0.8 3 2.4

PFA 1.0 5 5

LABELS (GREEN – VEG) 1.0 5 5

12.4/15 80%

84.6/140 60%

Focus areas for amul in PESTELFOCUS AREA STRATEGY

Subsidy Amul being a large cooperative can influence govt to increase the subsidy so that it can compete with global players

Taxation Urge govt to avoid the double taxation during distribution of milk in cooperatives

Political interference Can elect a strong governing body which is not influenced by political pressures

Globalisation Amul should have keen focus on market research & trends caused by globalisation & come up with better innovative products having global standards

Demographic composition Amul should come up with products for each target market segment. Come up with more products for growing youth & children population. Hiring third party consultancies for market research & have a strong internal R&D team for product innovations

Income level & purchasing power

Amul develops product for all income group especially low value products for low income level.

Technology Amul be competent in using the latest technology which would increase its efficiencyApplication of IT both at procurement site & distribution end should be enhanced. Increase investment on IT. Provide each village collection center with net enabled kiosks.

TQM Focus on TQM is essential for ensuring quality of the product. Quality is strength of AMUL brand so it should continue its focus on TQM & kaizen principles & implement continuous quality improvements. Update with new technology like HACCP, ISO 22OOO…

Environmental

Amul known for its quality & purely vegeterian products. Green labeling is ensured in all its products Amul is a socially responsible company and should take due care in proper disposal of wastes and seewage treatment according to the norms of industrial waste management policy.

Legal AMUL should be aware of all the legal & statutory requirements and follow it without fail. license requirement & renewal of license done acc to schedules.

PORTERS – FIVE FORCES

POTENTIAL NEW

ENTRANT

COMPETITIVE RIVALRY

SUPPLIERS

BUYERS

SUBSTITUTES

COMPETITIVE RIVALRY - HIGH

EXIT BARRIERS – HIGH• Due to huge capital

investment

DEMAND FOR PRODUCT• demand for milk & milk products are high therefore

more competitors

NATURE OF COMPETITION• large no of competitors like

Nestle, HUL, Cadbury• local and MNC players

INDUSTRY GROWTH RATES• high growth in the sector attracting more competitors

THREAT OF NEW ENTRANT

ECONOMIES OF SCALE

• it is high for amul but very difficult for

new entrant to achieve that scale of

operation

CUSTOMER/ SUPPLIER LOYALTY• High for Amul &

difficult for new entrant

EXPERIENCE• More than 50 years

CAPITAL REQUIREMENT OF

ENTRYHIGH

ACCESS TO SUPPLY/ DISTRIBUTION

CHANNELS• Well established for co-operative channel

TECHNOLOGY REQUIREMENT

HIGH• Amul has Denmark

based technology

THREAT OF SUBSTITUTES- HIGH

SUBSTITUTES• Paneer - soybean• Beverage – cold

drink• Sauce & fruit

drinks

SATISFACTION LEVEL OF SUBSTITUTES

• Costumer prefer both equally

NO OF SUBSTITUTES• Large no of

products from local vendors

PORTERS DIAMONDFIRM

STRATEGY, STRUCTURE & RIVALRY

DEMAND CONDITIONS

FACTOR CONDITIONS

RELATED AND

SUPPORTING INDUSTRIES

RELATED & SUPPORTING INDUSTRIES

NGOs & EXTENSION SERVICES

CREDIT INSTITUTIONS

LOGISTICS/ COLD CHAIN PROVIDERS

CATTLE FEED INDUSTRY

FOOD PROCESSING INDUSTRIES

VETINARY HOSPITALS

AGRICULTURE & DIARY DEPTS/

UNIVERSITIES

IT

PACKAGING INDUSTRIES

FACTOR & DEMAND CONDITION

FACTOR CONDITION• Largest bovine population• Agri residue as cattle feed• Co – operative movement

and distribution network in India

• Agri Universities and Veterinary

DEMAND CONDITION• High domestic demand

• Customer value conscious• High population

FIRM STRATEGY, STRUCTURE & RIVALRY• Amul structure – co operative model

this model has been successful because in India cooperative movement was encouraged by govt.

• Rivalry – there is high domestic demand for milk & milk products in India. This has attracted many local & MNC players into this sector which has increased the competitive rivalry. This has increased competitiveness of amul products.

• Strategy – since India is developing nation and cooperatives have development of farmers as their main agenda, amul strategy has evolved as• long-term, sustainable growth to its member farmers • value proposition to a large customer base by providing milk and other dairy products a low price