AMUL

Product Portfolio Management Of Amul

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INTRODUCTION AND HISTORY

AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. Variants, all meaning "priceless", are found in several Indian languages. Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. (Turnover: Rs. 67.11 billion in 2008-09). Today Amul is a symbol of many things. Of high-quality products sold at reasonable prices. Of the genesis of a vast co-operative network. Of the triumph of indigenous technology. Of the marketing savvy of a farmers' organisation. And of a proven model for dairy development.

In the early 40’s, the main sources of earning for the farmers of Kaira district were farming and selling of milk. That time there was high demand for milk in Bombay. The main supplier of the milk was Polson dairy limited, which was a privately owned company and held monopoly over the supply of milk atBombay from the Kaira district. This system leads to exploitation of poor and illiterates’ farmers by the private traders. The traders used to beside the prices of milk and the farmers were forced to accept it without uttering a single word. However, when the exploitation became intolerable, the farmers were frustrated. They collectively appealed toSardar

Vallabhbhai Patel, who was a leading activist in the freedom movement. Sardar Patel advised the farmers to sell the milk on their own by establishing a co-operative union, Instead of supplying milk to private traders. Sardar Patel sent the farmers to Shri Morarji Desai in order to gain his co-operation and help. Shri Desai held a meeting atSamarkha village near Anand, on 4th January 1946. He advised the farmers to form a society for collection of the milk.

These village societies would collect the milk themselves and would decide the prices at which they can sell the milk. The district union was also form to collect the milk from such village co-

operative societies and to sell them. It was also resolved that the Government should be asked to buy milk from the union.

However, the govt. did not seem to help farmers by any means. It gave the negative response by turning down the demand for the milk. To respond to this action of govt., the farmers of Kaira district went on a milk strike. For 15 whole days not a single drop of milk was sold to the traders. As a result the Bombay milk scheme was severely affected. The milk commissioner of Bombay then visited Anand to assess the situation. Having seemed the condition, he decided to fulfill the farmers demand.

Thus their cooperative unions were forced at the village and district level to collect and sell milk on a cooperative basis, without the intervention of Government. Mr. Verghese Kurien showed main interest in establishing union who was supported byShri Tribhuvandas Patel who lead the farmers in forming the Co-operative unions at the village level. The Kaira district milk producers union was thus established inAN AND and was registered formally on 14th December 1946. Since farmers sold all the milk in Anand through a co-operative union, it was commonly resolved to sell the milk under the brand nameAMUL.

At the initial stage only 250 liters of milk was collected everyday. But with the growing awareness of the benefits of the cooperativeness, the collection of milk increased. Today Amul collect 11 lakhs liters of milk everyday. Since milk was a perishable commodity it becomes difficult to preserve milk flora longer period. Besides when the milk was to be collected from the far places, there was a fear of spoiling of milk. To overcome this problem the union thought out to develop the chilling unit at various junctions, which would collect the milk and could chill it, so as to preserve it for a longer period. Thus, today Amul has more than 150 chilling centers in various villages. Milk is collected from almost 1073 societies.

With the financial help fromUNICEF, assistance from the govt. of New Zealand under the Colombo plan, of Rs. 50 millions for factory to manufacture milk powder and butter was planned. Dr.Rajendra Prasad, the president of India laid the foundation on November 15, 1954. Shri Pandit Jawaharlal Nehru, the prime minister of India declared it open at Amul dairy on November 20, 1955.

MILK PROCUREMENT

Total milk procurement by Member Unions during the year 2009-10 averaged 93.02 lakh kilograms (9.30 million kgs) per day representing a growth of 6.68% over 87.19 lakh kgs (8.7 million kgs) per day achieved during the year 2008-09. The highest procurement as usual was recorded during January, 2010 at 122.5 lakh kgs per day.

SALES

During the year, sales of Federation registered a quantum growth of 19.3% to reach Rs. 8005.36 crores (Rs. 80 billion). Last year, turnover was Rs. 6711.31 crores (Rs. 67.11 billion). This is an extremely impressive growth when viewed from the perspective of draught effect and resultant drop in milk procurement as well as 27.7% growth that we achieved in the year 2008-09.

Federation has justified its undisputed leadership in milk business by achieving sales growth in pouch milk category by more than 21% and achieving average sales volume of 38.30 LLPD (lakh litres per day). The Sales growth in value terms is 32% from existing markets only. They have achieved number one status in pouch milk sales in Delhi this year. With this achievement, Amul Milk has emerged as the largest selling brand of milk in all major metro markets of Delhi, Mumbai, Kolkata and Ahmedabad.

Their Masti Dahi sales grew at an impressive rate of 46%. Ice-cream sales registered a value growth of 22%. Amul Cheese sales increased by 20%. UHT milk also grew strongly at 14% along with Fresh Cream registering 39% growth. Our beverage sales grew by 23% and our chocolate sales also registered an encouraging growth of 30%.

RETAILING

Federation has created 5000 Amul preferred outlets which exclusively sell wide range of Amul products. 2000 of these parlours have been added during the current year which speaks volumes about the quantum of scale and speed with which the expansion has been dealt with. It is unthinkable for any competitors to create such massive network of exclusive outlets. This has been possible due to strong brand equity, consumer pull and relentless efforts on part of our entire sales organisation which includes our wholesale dealers.

These parlours have not only enhanced the Amul brand visibility but also are giving an easy access to millions of discerning consumers to our unmatched range of existing products and new products which they launch on regular basis. Moreover, these parlours have increased the efficiency in distribution by reducing the distribution costs significantly. The Retailing business alone fetched a turnover of Rs. 300 crores during the current financial year which is approximately 4% of the Federation’s total turnover.

EXPORT

They have been able to maintain and strengthen their presence in consumer pack export markets. This year too they have crossed a mark of Rs. 100 crores in foreign exchange earnings. They have been able to achieve this figure for the 5th time by now.

During the year they have been able to expand their reach to   New Zealand with exports of Paneer, Shrikhand, Butter, etc. They have also started export of their Cheese and Butter to Sri Lankan market.

Their traditional market of Middle East and Far East are doing very well especially in newer products like Paneer as well as in case of established products like ghee, butter, etc.

DISTRIBUTION NETWORK

Amul range of products continues to penetrate deeper and deeper across the country simultaneously through their four distribution highways created with specialist distributors handling ambient milk products, chilled milk products, fresh milk products and frozen products.

This unique combination of  managing distribution highways has always been their huge competitive advantage.

Distributors are considered to be Marketing Managers of Federation in true sense. To develop Self Leadership amongst each individual distributor, a major initiative called SLDP (Self Leadership Development Programme) has been implemented since last year.

Distributors along with their stake-holders undergo a Vision Mission Strategy (VMS) workshop at their level which would eventually integrate each of them in the process of organisation’s strategic planning and enable them to manage their own business efficiently by meeting the challenges of competitive environment. In the process, Distributor prepares his Mission statement and business plan for next few years.

To get exposure to their network of cooperative Institutions, they organise Amul Yatra for our channel partners. Distributors and major retailers from across the country come to Anand in Amul Yatra programme. So far more than 7700 distributors and other channel partners have visited Anand in Amul Yatra. This year too the initiative continued with inclusion of more distributors and retailers.

MISSION 2020

Their perspective plan for the year 2020 for their member unions envisaging a capital investment of Rs. 2600 crores (Rs. 26 billion) and a projected group sales turnover of Rs. 27000 crores (Rs. 270 billion). All of their dairies have started activities to achieve the planned targets. It may be noted that Kaira Union has commissioned a state-of-the-art Paneer Plant and also a whey drying plant. Their Sabarkantha Union too is in process of commissioning a similar Paneer Plant. Their Mehsana Union has expanded capacity to 9.61 lakh litres per day at its dairy at Manesar near Delhi. Banaskantha Union too has embarked on installing new powder plant and cattle-feed plant which shall be commissioned soon. New cattle-feed plants are being put up by Mehsana and Valsad Unions as well.

Products

Over the years, Amul has come up with many products. There has been product line extension as well as product category extension. The picture below is a snapshot of various SBU’s of Amul.

List of Products Marketed:

Breadspreads:

Amul Butter Amul Lite Low Fat Breadspread Amul Cooking Butter

Cheese Range:

Amul Pasteurized Processed Cheddar Cheese Amul Processed Cheese Spread Amul Pizza (Mozarella) Cheese Amul Shredded Pizza Cheese Amul Emmental Cheese Amul Gouda Cheese Amul Malai Paneer (cottage cheese) Utterly Delicious Pizza

Mithaee Range (Ethnic sweets):

Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom) Amul Amrakhand Amul Mithaee Gulabjamuns

Amul Mithaee Gulabjamun Mix Amul Mithaee Kulfi Mix Avsar Ladoos

UHT Milk Range:

Amul Shakti 3% fat Milk Amul Taaza 1.5% fat Milk Amul Gold 4.5% fat Milk Amul Lite Slim-n-Trim Milk 0% fat milk Amul Shakti Toned Milk Amul Fresh Cream Amul Snowcap Softy Mix

Pure Ghee:

Amul Pure Ghee Sagar Pure Ghee Amul Cow Ghee

Infant Milk Range:

Amul Infant Milk Formula 1 (0-6 months) Amul Infant Milk Formula 2 ( 6 months above) Amulspray Infant Milk Food

Milk Powders:

Amul Full Cream Milk Powder Amulya Dairy Whitener Sagar Skimmed Milk Powder Sagar Tea and Coffee Whitener

Sweetened Condensed Milk:

Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

Amul Taaza Toned Milk 3% fat Amul Gold Full Cream Milk 6% fat Amul Shakti Standardised Milk 4.5% fat Amul Slim & Trim Double Toned Milk 1.5% fat Amul Saathi Skimmed Milk 0% fat Amul Cow Milk

Curd Products:

Yogi Sweetened Flavoured Dahi (Dessert) Amul Masti Dahi (fresh curd) Amul Masti Spiced Butter Milk Amul Lassee

Amul Icecreams:

Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi) Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted

Almond) Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black

Currant, Santra Mantra, Fresh Pineapple) Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae) Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone, Chococrunch,

Megabite, Cassatta) Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake Magic) Probiotic Prolife

Chocolate & Confectionery:

Amul Milk Chocolate Amul Fruit & Nut Chocolate

Brown Beverage:

Nutramul Malted Milk Food

Milk Drink:

Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose, Chocolate) Amul Kool Cafe Amul Kool Koko Amul Kool Millk Shaake (Mango, Strawberry, Badam, Banana)

Health Beverage:

Amul Shakti White Milk Food

Strategic Business Units of Amul

I have taken four strategic units of Amul which are as follows:-1. Cheese- Cheese Spread, Cheddar Cheese2. Chocolates- Milk Chocolate, Fruit & Nuts3. Milk Drinks- Amul Kool, Amul Lassee4. Ice Cream- Prolife, Tricone

The respective market shares of these SBUs are as follows:

Products Amul’s Market Share(%) Competitor Competitor’s Market Share(%)Cheese 65 Britannia 25

Chocolates 10 Cadbury 70Milk Drinks 70 Mother

Dairy10

Ice Cream 38 Vadilal 52

BCG Matrix Model

The BCG model is a well-known portfolio management tool used in product life cycle theory. BCG matrix is often used to prioritize which products within company product mix get more funding and attention.

The BCG matrix model is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's.

The BCG model is based on classification of products (and implicitly also company business units) into four categories based on combinations of market growth and market share relative to the largest competitor.

When to use the BCG matrix model?

Each product has its product life cycle, and each stage in product's life-cycle represents a different profile of risk and return. In general, a company should maintain a balanced portfolio of products. Having a balanced product portfolio includes both high-growth products as well as low-growth products.

A high-growth product is for example a new one that we are trying to get to some market. It takes some effort and resources to market it, to build distribution channels, and to build sales infrastructure, but it is a product that is expected to bring the gold in the future. An example of this product would be an iPod.

A low-growth product is for example an established product known by the market. Characteristics of this product do not change much, customers know what they are getting, and the price does not change much either. This product has only limited budget for marketing. The is the milking cow that brings in the constant flow of cash. An example of this product would be a regular Colgate toothpaste.

The BCG matrix reaches further behind product mix. Knowing what we are selling helps managers to make decisions about what priorities to assign to not only products but also company departments and business units.

BCG Matrix for AMUL

SBUs Cheese Chocolate Milk Drinks Ice CreamsCheese Spread

Cheddar Cheese

Milk Chocolate

Fruit n Nuts

Amul Kool

Amul Lassee

Prolife

Tricone

Market Growth Rate(%)

8 14 6.5 5.5 7 9.5 11 6

Relative Market Share

2 1 3.5 5.2 0.5 1.5 3.2 2

Analyzing the above two tables indicating the market growth rate of the SBUs and their relative market share the BCG matrix can be plotted as follows:

High Relative Market Share

Cheddar Cheese

Prolife

Amul Lassee

Cheese Spread

Amul Kool

Tricone

Fruit & Nut

Milk Chocolate

Placing products in the BCG matrix results in 4 categories in a portfolio of a company:

BCG STARS (high growth, high market share)

Stars are defined by having high market share in a growing market. Stars are the leaders in the business but still need a lot of support for promotion a placement. If market share is kept, Stars are likely to grow into cash cows. Amul Cheddar Cheese lies in star category in India because the consumption of fast food is increasing at a very fast rate and majority of the fast foods have ‘Cheddar Cheese’ as an ingredient and Amul being a leader in dairy products in India has captured a high market share in this market.

BCG QUESTION MARKS (high growth, low market share)

These products are in growing markets but have low market share. Question marks are essentially new products where buyers have yet to discover them. The marketing strategy is to get markets to adopt these products. Question marks have high demands and low returns due to low market share. These products need to increase their market share quickly or they become dogs. The best way to handle Question marks is to either invest heavily in them to gain market share or to sell them. Amul Prolife ice cream is meant for health/calorie conscious people. This product lies in the Question Mark category because growth rate for its market is high as people are becoming more and more calorie conscious in India but the market share is low for this product as people are not well aware of existence of this product. Similarly Tricone is also a Star but as its market growth rate is not high it is tending to be a cash cow.

BCG CASH COWS (low growth, high market share)

Cash cows are in a position of high market share in a mature market. If competitive advantage has been achieved, cash cows have high profit margins and generate a lot of cash flow. Because of the low growth, promotion and placement investments are low. Investments into supporting infrastructure can improve efficiency and increase cash flow more. Cash cows are the products that businesses strive for. Amul Lassee, Amul Cheese Spread and Amul Kool lie under this category because market gtowth rate for these products are not that high but performance of these products are stable. Amul Kool with 70% market share has the largest market share in Flavoured Milk Category in India.

BCG DOGS (low growth, low market share)

Dogs are in low growth markets and have low market share. Dogs should be avoided and minimized. Expensive turn-around plans usually do not help. Amul Fruit And Nut chocolate has very low market share but it can become a cash cow if some modifications are made. But in case of Milk Chocolate it would be better if the company divests it as it is not generating any revenue.

Some limitations of the BCG matrix model include:

The first problem can be how we define market and how we get data about market share A high market share does not necessarily lead to profitability at all times The model employs only two dimensions – market share and product or service growth

rate Low share or niche businesses can be profitable too (some Dogs can be more profitable

than cash Cows) The model does not reflect growth rates of the overall market The model neglects the effects of synergy between business units Market growth is not the only indicator for attractiveness of a market

GE / McKinsey Matrix

In consulting engagements with General Electric in the 1970's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU). This business screen became known as the GE/McKinsey Matrix and is shown below:

 Business Unit Strength

    High      Medium      Low    

High     

Medium     

Low     

The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways:

The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit.

The GE matrix has nine cells vs. four cells in the BCG matrix.

Industry attractiveness and business unit strength are calculated by first identifying criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry.

Industry Attractiveness

The vertical axis of the GE / McKinsey matrix is industry attractiveness, which is determined by factors such as the following:

Market growth rate Market size Demand variability

Industry profitability Industry rivalry Global opportunities Macroenvironmental factors

Business Unit Strength

The horizontal axis of the GE / McKinsey matrix is the strength of the business unit. Some factors that can be used to determine business unit strength include:

Market share Growth in market share Brand equity Distribution channel access Production capacity Profit margins relative to competitors

The business unit strength index can be calculated by multiplying the estimated value of each factor by the factor's weighting, as done for industry attractiveness.

Plotting the Information

Each business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows:

Market size is represented by the size of the circle. Market share is shown by using the circle as a pie chart. The expected future position of the circle is portrayed by means of an arrow.

The following is an example of such a representation:

The shading of the above circle indicates a 38% market share for the strategic business unit. The arrow in the upward left direction indicates that the business unit is projected to gain strength relative to competitors, and that the business unit is in an industry that is projected to become more attractive. The tip of the arrow indicates the future position of the center point of the circle.

SBUs

1. Cheese

Factors Underlying Market Attractiveness:Factors Weight Rating (1-5) Value= Weight * Rating

Resource Availability 0.15 4 0.6

Overall Market Size 0.15 3 0.45Annual Market Growth Rate 0.3 3 0.9

Profitability 0.2 4 0.8Competitive Intensity 0.1 3.5 0.35

Technological Requirements 0.1 3 0.3Total 1 3.4

Factors Underlying Business Strength:Factors Weight Rating (1-5) Value= Weight * Rating

Vertical Integration 0.05 3 0.15Product Innovation 0.05 2 0.1

Brand Image 0.15 4 0.6Distribution Channel 0.1 3 0.3

Outsourcing 0.025 3 0.075Financial Position 0.075 3.5 0.2625

Global Position 0.05 4 0.2R&D Performance 0.5 4 2

Total 1 3.6875

2. Milk Drink

Factors Underlying Market Attractiveness:Factors Weight Rating (1-5) Value= Weight * Rating

Resource Availability 0.15 3.5 0.525Overall Market Size 0.15 4 0.6

Annual Market Growth Rate 0.25 4 1Profitability 0.25 4 1

Competitive Intensity 0.1 4 0.4Technological Requirements 0.1 4.5 0.45

Total 1 3.975

Factors Underlying Business Strength:Factors Weight Rating (1-5) Value= Weight * Rating

Vertical Integration 0.15 5 0.75Product Innovation 0.1 3.5 0.35

Brand Image 0.1 4 0.4Distribution Channel 0.15 3 0.45

Outsourcing 0.15 3 0.45Financial Position 0.1 4.5 0.45

Global Position 0.1 4.5 0.45R&D Performance 0.15 3 0.45

Total 1 3.75

3. Chocolates

Factors Underlying Market Attractiveness:Factors Weight Rating (1-5) Value= Weight * Rating

Resource Availability 0.2 3.5 0.7Overall Market Size 0.15 4 0.6

Annual Market Growth Rate 0.15 3 0.45Profitability 0.2 4 0.8

Competitive Intensity 0.2 4 0.8Technological Requirements 0.1 4 0.4

Total 1 3.75

Factors Underlying Business Strength:Factors Weight Rating (1-5) Value= Weight * Rating

Vertical Integration 0.15 3.5 0.525Product Innovation 0.1 3 0.3

Brand Image 0.1 3 0.3Distribution Channel 0.15 3 0.45

Outsourcing 0.15 2.5 0.375Financial Position 0.1 2 0.2

Global Position 0.1 2.5 0.25R&D Performance 0.15 3 0.45

Total 1 2.85

4. Ice Cream

Factors Underlying Market Attractiveness:Factors Weight Rating (1-5) Value= Weight * Rating

Resource Availability 0.15 3 0.45Overall Market Size 0.15 3 0.45

Annual Market Growth Rate 0.3 4 1.2Profitability 0.2 4 0.8

Competitive Intensity 0.1 3.5 0.35Technological Requirements 0.1 4 0.4

Total 1 3.65

Factors Underlying Business Strength:Factors Weight Rating (1-5) Value= Weight * Rating

Vertical Integration 0.15 3 0.45Product Innovation 0.1 4 0.4

Brand Image 0.1 3.5 0.35Distribution Channel 0.15 3 0.45

Outsourcing 0.15 3 0.45Financial Position 0.1 4 0.4

Global Position 0.1 3.5 0.35R&D Performance 0.15 4.5 0.675

Total 1 3.525

Strategic ImplicationsResource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows:

Grow strong business units in attractive industries, average business units in attractive industries, and strong business units in average industries.

Hold average businesses in average industries, strong businesses in weak industries, and weak business in attractive industies.

Harvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.

There are strategy variations within these three groups. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry.

While the GE business screen represents an improvement over the more simple BCG growth-share matrix, it still presents a somewhat limited view by not considering interactions among the business units and by neglecting to address the core competencies leading to value creation.

Rather than serving as the primary tool for resource allocation, portfolio matrices are better suited to displaying a quick synopsis of the strategic business units.

Arthur D Little Matrix

Industry MaturityThere are four categories of industry maturity (also referred to as the industry life cycle):

1. Embryonic – The introduction stage, characterized by rapid market growth, very little competition, new technology, high investment and high prices.

2. Growth – The market continues to strengthen, sales increase, few (if any) competitors exist, and company reaps rewards for bringing a new product to market.

3. Mature – The market is stable, there’s a well-established customer base, market share is stable, there are lots of competitors, and energy is put toward differentiating from competitors.

4. Aging – Demand decreases, companies start abandoning the market, the fight for market share among remaining competitors gets too expensive, and companies begin leaving or consolidating until the market’s demise.

Competitive PositionThe five categories for competitive position are as follows:

1. Dominant – This is rare and typically short-lived. There’s little, if any, competition, usually a result of bringing a brand-new product to market or having built an extremely strong reputation in the market (think Microsoft).

2. Strong – Market share is strong and stable, regardless of what your competitors are doing.

3. Favorable – Your business line enjoys competitive advantages in certain segments of the market. However, there are many rivals of equal strength, and you have to work to maintain your advantage.

4. Tenable – Your position in the overall market is small, and market share is based on a niche, a strong geographic location, or some other product differentiation. Strong competitors are overtaking your market share by building their products and defining clear competitive advantages.

5. Weak – There’s continual loss of market share, and your business line, as it exists, is too small to maintain profitability.

The resulting ADL Matrix looks like this, with the various strategies prescribed for each of the 20 combinations:

Industry Maturity

Embryonic Growth Mature Aging

Com

pet

itiv

e P

osot

ion

Dominant -Aggressive push for market share

- Invest faster than market share dictates

- Maintain industry position and market

share- Invest to sustain

growth

- Maintain position, grow market share as the industry

grows- Reinvest as necessary

- Maintain industry position

- Reinvest as necessary

Strong

-Aggressive push for market share

- Look for ways to improve competitive

advantage- Invest faster than

market share dictates

-Aggressive push for market share

- Look for ways to improve competitive

advantage- Invest to increase growth and position

- Maintain position, grow market share as the industry

grows- Reinvest as necessary

- Maintain industry position or cut expenditures to maximize profit

(harvest)- Minimum

reinvestment

Favorable

- Moderate to aggressive push for

market share- Look for ways to

improve competitive advantage

- Invest selectively

- Look for ways to improve competitive advantage and market

share- Selectively invest to

improve position

- Develop a niche or other strong differentiating factor

and maintain it.- Minimum or selective

reinvestment

- Cut expenditures to maximize profit

(harvest) or plan a phased withdrawal

- Minimum investment or look to get out of current investment

Tenable

- Look for ways to improve industry

position- Invest very selectively

- Develop a niche or other strong

differentiating factor and maintain it

- Invest selectively

- Develop a niche or other strong differentiating factor

and maintain it or plan a phased withdrawal.

- Selective reinvestment

- Phased withdrawal or abandon market

- Get out of investments or divest

Weak

- Decide if potential benefits outweigh

costs, otherwise get out of market

- Invest or divest

- Look for ways to improve share and

position, or get out of the market 

- Invest or divest

- Look for ways to improve share and position or plan a

phased withdrawal- Selectively invest or divest

- Abandon market- Divest

Using the ADL Matrix

The ADL Matrix provides you with a generic strategy. You’ll need to fine-tune the strategy and tailor it to your current business.

Step One: Identify your industry maturity category. Think about the following questions as you decide which stage is most descriptive:

What are you currently experiencing with market growth? How many competitors do you have? How large is your market? Is your investment increasing or decreasing? Are your sales increasing, decreasing or staying the same? How is your product differentiated from competitor products?

Deciding on an industry life cycle stage isn’t easy, and competitors’ actions often have a bearing on this, making it hard to determine and predict. Strategy is not an exact science, so do the best you can.

Step Two: Determine your competitive position. Choose the best fit. Be careful not to project what you want your position to be, but what it truly is. Take a long, hard look at where you’re currently operating.

Step Three: Plot your matrix position.Consider the strategies suggested as a starting point for your strategic planning.

Arthur D Little Matrix For Amul

Industry Maturity

Embryonic Growth Mature Aging

Com

pet

itiv

e P

osit

ion

Dominant

StrongMilk Drinks Cheese

Favorable Ice Creams

Tenable

Weak Chocolates

Milk drinks: Strong- EmbryonicThe company should adopt following strategies-

Aggressive push for market share. Look for ways to improve competitive advantage. Invest faster than market share dictates

Cheese: Strong- GrowthThe company should adopt following strategies-

Aggressive push for market share Look for ways to improve competitive advantage Invest to increase growth and position

Ice Cream: Favorable- MaturityThe company should adopt following strategies-

Develop a niche or other strong differentiating factor and maintain it. Minimum or selective reinvestment

Chocolates: Weak- MaturityThe company should adopt following strategies-

Look for ways to improve share and position or plan a phased withdrawal Selectively invest or divest

Conclusion

After analyzing the product portfolio of different SBUs of Amul we have learnt about various tools and techniques used by managers which helps them to choose what business units to have in a portfolio. Each tool focuses on one of three criteria:

The balance of the portfolio i.e. in relation to its markets and the needs of the corporation The attractiveness of the business units in the portfolio in terms of how profitable they

are or are likely to be and how fast they are growing ; and The degree of fit that business units have with each other in terms of potential synergies

or the extent to which the corporate parent will be good at looking after them.