Business Models

and Planning

Case Analysis 1
India’s Amul: Keeping Up with the Times

Submitted By,
Group 8
14/06/2022

Sraman Sanyal D020 80512100094

Priya Shah D050 80512100264
Reehab Dalvi E015 80512100178
Ishani Nachane H062 80512100062
Prashant Panjwani J060 80512101005
Vineet Puri J062 80512100284

India’s Amul: Keeping Up with the Times

Q1) Should Amul continue with the business model that has served it so well for
decades, or should it change its strategy in order to keep up with India's
changing social, political and economic landscape?

According to our analysis, Amul should continue with the business model that has
served it so well for decades,instead of changing its strategy in order to keep up with
India's changing social, political and economic landscape.

Amul's business model is guided by two goals mainly: Sustainable growth for its
member farmers, and low-cost milk and other dairy products to a large customer base
and it has efficiently managed to leverage its independence from governmental control
unlike others in India.

The company's path to a successful business model has been distinguished by a critical
knowledge of the business environment in large growing economies like India, where
markets must be created through a combination of efficiency and expanding the base of
marginal suppliers and consumers by focusing on:

1. Combining market and social development in an emerging economy like India

and identifying inter-linkages between various environments that governed the
lives of marginal milk farmers and the unmet needs of consumers.
2. Benefiting a large number of people even though a large scale had the danger of
failure due to poor control and required more resources (suppliers and
consumers).

In emerging economies, the greatest section of the market seeks good value for money
in their purchases. The growth of such markets necessitates careful nurturing and a
long-term strategy. In these markets, initial success is often predicated on a low price
strategy supported by cost leadership, but developing an adequate value proposition
suitable for big mass markets in India demands a deep study of the environment and an
emphasis on costs, which AMUL has done.

Q2) What business model was adopted by Amul? How is it considered unique?
The cooperative society model is used by Amul. The idea is for people to join together
and pool their resources in order to expand their market. Members of this society are
the ones that pool their resources. They manage the cooperative society's finances,
resources, and operations. The business strategy emphasizes providing consumers
with reasonable prices while also taking into account the needs of farmers.

Amul is a dairy cooperative society in India that helped spark the country's "White
Revolution" and rose to become the country's biggest producer of milk and dairy goods.
Amul has three tier cooperative system-

The farmers from the villages who are members of the Village Dairy Cooperative
Society make up the first layer. Representatives who represent their villages in the
District Milk Unions are chosen by each village in a certain State. In this Business
Model, the Village Dairy Cooperative Society is the first tier.

Second Tier - The representatives chosen by the Village Society make up the second
tier. The District Milk Union is then governed by these representatives collectively.
These unions are in charge of milk and milk products, as well as the processing of these
products. They sell the products to the State Milk Federation after they've been
processed.

The State Milk Federation is the third rung in this system. The State Milk Federation
sells the processed products that it receives from the District Milk Union, as well as
acting as a distributor and facilitating product sales in the market. Similar to this, the
earned income is transferred downward.

The reason it is considered unique because –

- Unlike many other multinational or private companies, Amul is run by a

cooperative system

- Cooperative varies greatly in their mission, structure and size

- Amul focused on maximizing farmers' income. Amul passed approx. 80%

revenues to its farmers

- Farmers also controlled the cooperative functions through a system of election

unlike other organization where farmers has no say in any functioning
 - Amul ran its advertisement longer compared to its competitors. They bought in
the proud story of the cooperative movement. Given all multinationals coming into
India, there's a sense of national pride that they have built.

Q.no If a new business model to be devised , what are the various business
model strategies can be adopted ( Hint: Product mix strategy, E Commerce,
Supply chain, Raw materials etc)

● Expansion of ice cream parlour across country

To cater to the gap created between previous generations and the young generation in
terms of the brand perception & acceptance, amul can create its exclusive product
outlets in various parts of the country much like what it has done in Gujarat. Adjacent to
the outlets, in Gujarat it has created small play parks for people and children to spend
time thereby developing the concept of “experience center” with food. This can be
replicated in other parts of India to increase brand presence and get connected to
millennials. The people end up buying Amul products for themselves, their kids and
family after spending time in the parks thereby generating revenue also.

● Work on the products in terms of localized preferences, tastes and flavors

(what multinationals like Keyloggs & likewise has done in India to succeed)

Amul can increase its product range by making use of local tastes and flavors to meet
the language and cultural needs of new markets. Brand loyalty increases much more
when the brands try to fit themselves in the intended market. This would also help amul
in increasing its numbers as people would be able to relate themselves more with the
products.

● Developing D2C platform to provide milk and allied products

Amul can develop their own D2C platform to sell their products which can help to
increase brand loyalty and work better on their brand image . They can provide better
service to their customers and exploit connection with them. A well developed D2C
platform can also increase market opportunities for amul as there will be no boundary
restrictions and it would sell the right product to the right customer at the right time.This
would also help in catering the unpredictable customer demands.
● Investing in R&D to work on breed culture of animals (cows, buffalos) to
see possibilities of increased milk production.
This can involve factors like improving the quality of grassland for pasturages,
maintaining better animal shelter conditions, etc. Factors like geographic regions
where there can be chances of better production of milk owing to suitable climatic
conditions, better pasturage can be explored and accordingly Amul can increase
penetration of dairy farms in those regions.
Q3) If a new business model to be devised , what are the various business model
strategies can be adopted ( Hint: Product mix strategy, E Commerce, Supply
chain, Raw materials etc)