Business Strategy

Prepared for

Sheikh Morshed Jahan

Associate Professor, IBA

Prepared by

Iftaquer Tanim Tarafder, ZR47, 47E

Institute of Business AdministrationUniversity of Dhaka

February 27, 2015

The case 22 is about the giant Indian brand Amul. The case covers contexts pertinent to the background of Amul’s formation and its vision, strategy behind its success.

Amul, which was based on three tier cooperative society structure, not just became successful as an enterprise, but also helped to make India self sufficient in milk production. They ventured into other businesses as well in their long journey. In some of those ventures, they failed to capture market share while in some other they are still in the race. Amul has not just became successful locally, but also confirmed its strong footprint in other geographical areas too.

Apart from competition from rival companies, deregulation of dairy industry by federal government and threats of entrants by large global players, Amul is experiencing a new threat. Recently there has been a tendency among the farmers to switch from milk production to more profitable meat and leather industry by selling their cattle. This could temporarily affect the overall supply chain and price and eventually in longer run affect the whole industry.

In the class discussion, there were many strategic suggestion as to how to face this situation. Few suggested about government intervention and others about Amul’s own initiative in the form of incentive. But the better suggestions were Fair trade proposal and giving incentive to the farmers.

The fare trade could really play the trick for Amul as it could really hit the soft corner of the customers in niche markets because of its core philosophy of business. They can charge premium price and explore the untapped market. The company or government can also play vital role by paying back the poor farmers in the form of incentives.

The growth of Amul is still on the rise evidenced by its CAGR of 32% in last couple of years. The company has set the vision of becoming not just the leader in Indian market but also in the global market backed by its profit revenue from vast Indian market. The company can go for other backward linkage industries to diversify its portfolio as well as providing the farmers more scope for advancement. The cow dung could be processed into biogas while it can easily venture into meat and bone processing industry as well. This would just open new horizons for the growth of Amul apart from its endeavor to enter other conventional businesses like pizza, butter, fortified milk and ice cream and so on.

The company is also heavily reliant on its aggressive merger and acquisition strategy to excel further. The new strategic initiatives and the way they balance the game will decide the future growth of Amul. At present it seems to be in the midst of transition from a successful local ethical enterprise to a global diversified business firm. The strong R&D backbone supported by huge distribution channel and its unique cooperative structure and business process will definitely help Amul to venture into new horizons of success in the coming days.