Social Scheme Example

Amul India : A Social Development EnterpriseIntroductionAmul India commenced with 2 villages in Gujarat.Began as a movement to overcome exploitation of rural farmers.Have adapted new technologies over its journey and have diversified into new markets replicating its model across India.Jointly owned by 3 million milk producers in Gujarat collecting approximately 6million kg of milk daily. Spurred White revolution making India Worlds largest producer of milk and milk products.

Ideological LeadershipSardar Vallabhai Patel recommended cooperative against the exploitative Polson.Believed that for India to thrive, must be rooted in its social integrity rather than Industrialization.A model to integrate economic prosperity with the imminent political freedom- to augment rural income while developing local industry.Tribhuvandas appointed as Chairman.Metric for progress- Are the Farmers happy?

Ideological Leadership contd.,Verghese Kurien , an aspirant for a career in engineering came to Gujarat for a Govt. Scholarship he had received to study abroad.His independent spirit & creativity clashed with submissive nature of Govt. officials.Was determined to find productive pursuits.Was offered to be a part of cooperative for his professional expertise.Joined as General Manager in 1950.

Dairy King of Kaira- Polson

Diary products brand (1915).Suppliers of coffee, butter and cheese to British army.Brand became a synonym to butter.Diverted to supply pasteurized milk to Bombay through Bombay Milk Scheme (BMS).Obtained an exclusive order to monopolistic practices to ensure consistent supply- set purchase price and selling price.Used unscientific methods to find fat content and quality- paying less for milk.Tribhuvandas led 15-day boycott- no supply of milk- BMS withdrew the order.

Amul-Serving FarmersAmulya-Priceless. Common Need - to fight abusive practices of Polson.Began its operation in Oct 7, 1946.Owned and operated a milk-processing plant.Functions- procuring, processing and selling dairy products to Mumbai.Primary Objective Economic liberation from the exploitation of money lenders and intermediaries.Quality control had final decision- quality takes precedence.Reinforced transparency at all levels.Nominal membership of Rs.10

The Anand pattern.Payment basis- fat content- a disincentive to adulterate.If contaminated or spoilt in plant, whole society suffered the loss of payment. DiversificationAnsoff Matrix

Products Markets present present new newStrategic vs DefensiveHigh Risk: Business has no experience in the new market and does not know if the product is going to be successful.Requires a company to acquire new skills, new techniques and new resources. Types: Concentric vs Horizontal diversificationAmul: Which type?Amul diversification: not defensive strategy; intended to get more economic value.

Path to Diversification1953: UNICEF proposed to donate Rs. 8lakh to Bombay govt. in exchange of distributing Rs/ 12lakh of free milk to undernourished children.The Milk Commissioner of Bombay, Khurody, was not in good terms with the cooperative.He questioned the feasibility of milk powder from Buffalo milk.Kuriens Statement after successful production of milk powder out of Buffalo milk: Experts advice can be biased towards economic interest of advanced nations & not for needs of developing economiesSuccessfully entered into niche segment of baby products by influencing Govt. to cancel the license of market leader Glaxo.

Staged ProgressionGujarat Cooperative Milk Marketing FederationOver the course of operation flood, district unions multiplied, each district union was responsible for its production, marketing, sale of dairy productsAll dairies had to employ a common distributor & a common brand name. This eliminated competition, integrated all the forces & helped saving on advertising & brand buildingThis led to the formation of Gujarat Cooperative Milk Marketing Federation in 1973, Kurien was its first chairman & MDGCMMF brought economic & political benefits to its cooperative membersFederation ensured full utilization of capacity, formulated production priorities, standardized systems, ensured greater consumer acceptanceIn 2005 GCMMF was Indias largest food products marketing organization with annual turnover of Rs 30 billionFederation focused on marketing & sales activities, developed new markets & determined higher value products.Team WorkTribhuvandas Patel unselfish, sincere, benign, thoughtful & serious observer, He promoted the cooperative structure & challenged the Polsons dominance, He had strong links with farmers, he mobilized the rural milk producers and convinced them about the power of cooperativesKurien extrovert, the general manager of Amul, Strategized the battle against Polson butter, innovated the manufacturing of milk powder & condensed milk, he championed the producers cooperative against threat from urban bureaucracies & politicsHM Dalaya Dairy technologist, innovated on dairy production techniques & methods to meet the need of the Kaira cooperativeDeveloping PeoplePrimary philosophy connect producers directly with the consumersSetup of cooperatives in various villages ensured that largest share of customers rupee is transferred to the producerTraders also supported for seeds & fertilizersBanks loaned money for buying cows & buffalosWomen also made lot of effortsBrought prosperity in the villagesSchools were establishedBetter homes were constructedElectricity was broughtLooking AheadDuring these years Amul empowered the village peopleAmul built trust among the consumers and build an image of high qualityBrought vertical integration of the value chainMoved from procurement & processing to branding & marketingEnvisions opening retail outlets across major citiesPersistent ChallengesConflict between farmer members & professional managersLack of leadership burnt bridgesGovernment bureaucracy and constant interferenceInternal Crisis in Amul Critics & Media voicing apprehensions over Kuriens PlansSustenance of Cooperative objectives after shift in leadershipThank You