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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
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