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8/6/2019 GCMMF Group 6
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CASE : GCMMF LTDCASE : GCMMF LTD
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Problem StatementProblem Statement
Whether GCMMF should stick to its corebusiness in dairy products ?
(or)
To diversify into other products,particularly into processed foods
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Key differentiators ofKey differentiators ofGCMMFGCMMF
Business Model - Cooperative style ofmanagement
Run by farmers for the benefit of farmersand end consumers transparent andfair
Lean organizational structure > low cost Strong brand name for purity and quality
Trust created among the consumers Scale and scope of operations
Robust distribution network Cold chain network
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Product PortfolioProduct PortfolioCategory Market
share
Market
position
Growth Rate
(98-99)
Competition Profitability
Liquid milk N.A 1 10 % Local players,Nestle
Low (basic)
Butter 80-85% 1 13% HLL, Nestle High margin
Milk powder 60-80% 1 18% Nestle, Glaxo,
Heinz
Medium
Cheese 50-100% 1 39% HLL, Britannia High
Ice cream 30% 2 100% HLL, Regionalplayers (Vadilal)
High
Edible oils 12% N/A ITC, Localbrands
Low (basic)
Processed Food- - High growthrate
HLL, Nestle
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Analysis of Current portfolio andAnalysis of Current portfolio andBusiness Potential Milk productsBusiness Potential Milk products
Milk Production in India in 1998-99 : 86m ton
Procurement by organized sector : 40 mton
Milk procured by GCMMF : 4.6 m ton(12%)
Demand for milk (growth) : 8-10% per annumSupply (growth) : 6 % per annumSupply growth can be improved in long term (1000 kg perlactation per animal vs 2000 kg in Dairy countries)
Per capita consumption of milk in India is 225 grams perday (600 grams in other countries)
Sourcing and Processing Excellent Infrastructure
created by GCMMF which is its core competency
Potential available for further g
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Analysis of Current portfolio andAnalysis of Current portfolio andBusiness Potential ProcessedBusiness Potential Processed
foodfood
Processed food market in India : Rs 20 billion
Premium food consumption is likely to increase dueto high disposal income
Only 1.3% of total fruit & vegetable processed ascompared to 70 % in US > Good potential forprocessed food
Fruit and vegetable availability : spread across manystates
Food processing industry is highly fragmented Huge storage facilities, strong logistics / distribution
net work to be created
Competitors (HLL, Nestle) First mover advantages
Competition GCMMF did not have a level playingfield
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BCG MatrixBCG Matrix
rowth Rate
Market Share High
Low
High
Low
20 %
30 %
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Critical questions forCritical questions fordiversification success (Processeddiversification success (Processed
FoodFood))
What can GCMMF do compared tocompetitors? Needs to further investment, separate
processing set required
What strategic assets required? processing plants, existing cold storage
network?
Can we leapfrog competitors? No. Competitors are MNC with strong
resources; Already in the business (Firstmover advantage for them)
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Critical questions forCritical questions fordiversification success (Processeddiversification success (Processed
Food)Food)
Will diversification break up strategicassets?Yes, Milk products and processed food
requires different set of assets
Will be a player or winner in new market? Only a player
What GCMMF learn by diversification? Nothing specific to core business
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ConclusionConclusion
Create awareness among users for moreconsumption (health, advertisementcampaign)
Improve supply side bottlenecks Continue and focus in Milk and dairy
products
Exit processed food business
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THANK YOUTHANK YOU
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