GCMMF

ENVIRONMENTAL
ANALYSIS
By Mr. ATUL VINAYAKRAO BHOLE
Mr. GIBIN GEORGE
Miss. DEEPTHI REDDY
FOOD AND AGRI BUSINESS
MANAGEMENT SCHOOL,HYDERABAD
2 n d year
ENVIRONMENTAL ANALYSIS
• PESTEL MODEL
• ENVIRONMENTAL MATRIX SCORE
• PORTERS DIAMOND
• PORTERS FIVE FORCES FRAMEWORK
PESTEL ANALYSIS

POLITICAL
POLITICAL ECONOMIC
ECONOMIC

SOCIAL
SOCIAL TECHNOLOGY
TECHNOLOGY

ENVIRONMENTAL
ENVIRONMENTAL LEGAL
LEGAL
 POLITICAL
GOVT. POLICIES & ACTS
Operation flood &
establishment of diary
cooperatives(1970)
Delicencing of diary sector
(1991)
MMPO(1992) & its
amendments (1999)
SUBSIDIES
Subsidies given to Indian
farmers low when compared to
farmers of developed nations
(US, EU)
TAXATION
Central sales tax 4%
Local sales tax
Section 44 of NDDB –
excemption from income tax
act
POLITICAL STABILITY
Gujarat – relatively stable
political environment
favorable for cooperatives
& industries
POLITICISATION
Too much politicization &
political interference in
diary cooperatives

INFRSTRUCTURE
Setting up of institutes BUDGET ALLOCATION
(IRMA) & universities
cold chain facilities
Transport –rail/ road
Establishment of markets
EXPORT & IMPORT DUTIES
Govt declaring cut in
import duties of milk &
FDI POLICY
milk products (esp. butter )
100% FDI allowed
Political

TREATS
OPPORTUNITIES
• Taxation
• Lower subsidies
• Political stability
• Political base
• Politicization
• Institutes professional training
• FDI policies in food sector
support
• No/low support of exports
• NDDB operation flood
ECONOMIC

LENDING RATES
WTO & INTERNATIONAL NDDB give loans at 0%
TRADE interest rates and
SPS & TBT development grants at
lower rates of interest.

GLOBALISATION & GDP TRENDS

LIBERALISATION India developing nation with
Changed consumption high GDP growth rate 8-9%
INTERNATIONAL PRICE
pattern . Demand for high growth rates imply
FLUCTUATIONS
global products increase in per capita
(especially for edible
Liberalisation allowed income of people therefore
oils, milk powder)
private players to more consumption of food
enter . products
Competition increased
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
IMPROVED PER CAPITA
LIFESTYLE
INCOME DEMOGRAPHICS
FOOD HABITS (mostly
INCOME DISTRIBUTION – COMPOSITION
veg)
(still skewed to middle & Growing youth population
upper classes) Increased health
Fast food culture
Price conscious (value for conscious people
(demand for ice creams,
money) Huge children population
cheese etc)

CULTURE EDUCATION
Custom of morning tea Literacy level going up –
Accustomed to milk & product & safety
milk products awareness inc.
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
TRANSFER OF
TECHNOLOGY
AUTOMATION
NET ENABLED KIOSKS
PROCESS
INNOVATIONS IN COLD
TECHNOLOGY
SERVICE SUPPORTS CHAIN TECHNOLOGY
HACCP & ISO
E COMMERCE
TQM
GIS

TECHNOLOGY
DEVELOPMENT
RATE OF OBSOLENCE
INSTITUTES
LOW - MODERATE
National diary research
institute
TECHNICAL

OPPORTUNITIES
TREATS

• Field Orientation
• ISO
• Automation
• e-commeres
• Cold storage technology
• IT application
• Value addition
 ENVIRONMENTAL

ISO 14000
WASTE DISPOSAL/
Specifies environment RECYCLING
SEEWAGE TREATMENT
standards for industries

SPREAD OF DISEASES/ EPA ACT

VIRUSES Sets the guidelines for
Would affect the supply of environment protection
milk
ENVIRNMENTAL

OPPORTUNITIES TREATS

• ISO 14000 • Phytosanitary

• Methane gas
• Virus & microbes in milk
 LEGAL
COMPANIES ACT & CO
OPERATIVE LAWS

Amul is a cooperative so CONSUMER RIGHTS

companies law not PFA
applicable INDUSTRIAL
Cooperative law – tax LABELS (green – veg) DEVELOPMENT &
implications (central tax – 4% REGULATION ACT
& local tax)
Interference from registrar
of cooperatives

TRADEMARK ISSUE
STANDARDS OF
WEIGHTS & MEASURES
AMUL should protect its
ACT
trademark so as to
preserve its purity of
Weighing & packaging
brand
should be acc. to this
act
LEGAL

OPPORTUNITIES TREATS

• PFA Act • Quarantine

• Labels • Child labour
• Trademarks
• Packing
• IPR related
• Go-green
 ENVIRONMENTAL MATRIX SCORE
FACTOR 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 0.7 4 2.8

(EDIBLE OILS)

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 & 0.8 4 3.2
VIRUSES
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 PESTEL
FOCUS 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 Amul develops product for all income group especially low value
power products for low income level.
Technology Amul be competent in using the latest technology which would
increase its efficiency
Application 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
POTENTIAL
NEW
NEW
ENTRANT
ENTRANT

COMPETITIVE
COMPETITIVE BUYERS
BUYERS
SUPPLIERS
SUPPLIERS RIVALRY
RIVALRY

SUBSTITUTES
SUBSTITUTES
 COMPETITIVE RIVALRY - HIGH

NATURE OF COMPETITION
DEMAND FOR PRODUCT • large no of competitors like Nestle,
• demand for milk & milk products are HUL, Cadbury
high therefore more competitors • local and MNC players

INDUSTRY GROWTH RATES

EXIT BARRIERS – HIGH
• high growth in the sector attracting
• Due to huge capital investment
more competitors
 THREAT OF NEW ENTRANT

ECONOMIES OF SCALE TECHNOLOGY

• it is high for amul but CAPITAL REQUIREMENT REQUIREMENT
very difficult for new OF ENTRY HIGH
entrant to achieve that HIGH • Amul has Denmark
scale of operation based technology

ACCESS TO SUPPLY/
CUSTOMER/ SUPPLIER DISTRIBUTION
LOYALTY EXPERIENCE
CHANNELS • More than 50 years
• High for Amul & • Well established for co-
difficult for new entrant operative channel
 THREAT OF SUBSTITUTES- HIGH

SUBSTITUTES
SATISFACTION LEVEL OF NO OF SUBSTITUTES
• Paneer - soybean
SUBSTITUTES • Large no of products
• Beverage – cold drink
• Costumer prefer both from local vendors
• Sauce & fruit drinks
equally
PORTERS DIAMOND
FIRM
FIRM
STRATEGY,
STRATEGY,
STRUCTURE
STRUCTURE & &
RIVALRY
RIVALRY

FACTOR
FACTOR DEMAND
DEMAND
CONDITIONS
CONDITIONS CONDITIONS
CONDITIONS

RELATED
RELATED AND
AND
SUPPORTING
SUPPORTING
INDUSTRIES
INDUSTRIES
RELATED & SUPPORTING INDUSTRIES

CATTLE
CATTLE FEED
FEED VETINARY
VETINARY FOOD
FOOD
INDUSTRY
INDUSTRY HOSPITALS
HOSPITALS PROCESSING
PROCESSING
INDUSTRIES
INDUSTRIES

NGOs
NGOs &
& AGRICULTURE
AGRICULTURE &&
EXTENSION
EXTENSION IT
IT DIARY
DIARY DEPTS/
DEPTS/
SERVICES
SERVICES UNIVERSITIES
UNIVERSITIES

CREDIT
CREDIT LOGISTICS/
LOGISTICS/ COLD
COLD PACKAGING
PACKAGING
INSTITUTIONS
INSTITUTIONS CHAIN
CHAIN INDUSTRIES
INDUSTRIES
PROVIDERS
PROVIDERS
FACTOR & DEMAND CONDITION

FACTOR
FACTOR CONDITION
CONDITION
•• Largest
Largest bovine
bovine population
population DEMAND
DEMAND CONDITION
CONDITION
•• Agri
Agri residue
residue as
as cattle
cattle feed
feed •• High
High domestic
domestic demand
demand
•• Co Co –– operative
operative movement
movement and and •• Customer
Customer value
value conscious
conscious
distribution
distribution network
network inin India
India •• High
High population
population
•• Agri
Agri Universities
Universities and
and Veterinary
Veterinary
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