Dodla_osd.docx

Summary

D. Sunil Reddy established Dodla Dairy in 1995 in Nellore district of the southern Indian state of Andhra Pradesh. An industrial engineer from Mangalore University, Sunil set up Dodla as a greenfield company at the age of 27 with seed money provided by his father. He was inspired by his grandparents and father to help those in need grow and flourish and by Mahatma Gandhi's call to "reach out to rural India". The company had grown well over the years. In fiscal 2015-16, it achieved an annual turnover of over INR 11 billion and aimed to touch INR 25 billion in revenues by 2020. It had a workforce of more than 2,000 employees, procured about a million litres of milk per day from 250,000 milk producers, and processed and sold milk and milk products at 67 locations in nine states in India. In 2011, Private equity fund Proterra invested INR 1.1 billion in Dodla, bringing down the family's shareholding from 100% to 76.34% (it would later go down to 72.3%). Sunil knew that if the company had to move to the next orbit, both in terms of size (revenues, assets and market share) and professionalization, certain organizational changes would be necessary. He wondered what these changes would be and who would make them. How could he better prepare himself and the company for the future? How would the company move from being a family-owned enterprise to a professionally run, sustainable organization? Would one of his daughters join the organization, bringing freshness to the company while providing continuity in terms of family values? Would the company be run by an outsider? "Who after me?", thought Sunil. He often wondered whether the brand "Dodla" and the company he had founded would sustain beyond himself. While he continued his efforts to increase capacity, expand and capture more market share, he kept asking himself, "What next" and "How do I build a legacy? Q2. Organizational analysis: Structural dimension- The organization was divided into functional areas that reported directly to the CEO. The organization has a board of directors. The organization has a chairman, a managing director, CEO, head HR, a finance and accounts department, sales, procurement, materials, marketing, quality and assurance and production department. Apart from this, Reddy met the functional heads informally on a daily basis and conducted formal quarterly review meetings. The respective functional heads interacted with each other. Following are the determinants of structure in the company:

Long term organizational goals: The goal of the organization as given in the following paragraph is made very clear and all the employees are supposed to keep the vision and goal statement in mind while working in the organization. This will help in working in a proper direction towards the achievement of the goal. Size of operation: In fiscal 2015-2016, the company had an annual turnover of over INR 11 billion ( year-on-year growth of 20%), EBIDTA of INR 975 million, profit after tax of INR 356 million and a workforce strength of more than 2000 employees. Skills of employees: The skills of the employees include managerial, IT, automation, marketing and manual labour. Technologies used: Enterprise Resource Planning (ERP) system was implemented and also the business and functional processes were automated. Goals of the founder and current dilemma- The goals of the company is to touch INR 25 billion in revenues by 2020, meet international standards of product quality and customer satisfaction and eventually become a professional company. The vision of the founder is that the company should be able to successfully sustain itself beyond himself and the company should run by a set of non-family executives with guidance from an independent board. The dilemma is whether Dodla can carry forward its legacy, will his daughter take up his mantle in the future and if his family member will show the same enthusiasm and energy for the organization. Financial statement- The net worth of the company has increased from 257 INR millions in 2010-11 to 2442 INR millions in the year 2015-16. Profit after tax in the year 2015-16 was 356 INR million and profit before tax was 741 INR millions. The company has a fixed asset of 2142 INR millions in the year 2015-16 and a EBITDTA of 975 INR million. It has a turnover of 11824 INR million in the year 2015-16. Distinctive organizational practices- One of the unique organizational practices of Dodla was that Dodla paid milk producers market prices and made remittances directly to their saving accounts to prevent leakages which earned Dodla the trust of milk producing community. Also Dodla paid additional support such as facilitating loans, insurance and veterinary support for livestock.

Q3. Identification of the key dilemma presented in the case and the person who has to take a decision to solve the dilemma (decision-maker). The decision is to be taken by Mr. Sunil. There are a few threats which needs to be taken care of. 1. Threat of new entrants - If there is strong threat of new entrants then current players will be willing to earn less profits to reduce the threats.

2. Threat of substitute products and services - If the threat of substitute is high then Mr. Sunil has to either continuously invest into Research and Development or it risks losing out to disruptors in the industry.

3. Bargaining power of buyers of Dodla Dairy – If the buyers have strong bargaining power then they usually tend to drive price down thus limiting the potential of the Dodla Dairy to earn sustainable profits.

4. Rivalry among existing players – If competition is intense then it becomes difficult for existing players such as Dodla to earn sustainable profits.

5. Bargaining power of suppliers of Dodla - If suppliers have strong bargaining power then they will extract higher price from the Dodla.

Q4. Generation and evaluation of alternatives. You will be evaluated based on the quality of alternatives you generate and the mode of evaluating their pros and cons. Cost Leadership In cost leadership, Dolda can set out to become the low cost producer in its industry. How it can become cost leader varies based on the industry forces and structure. In pursuing cost leadership strategy, Dolda can assess – (pursuit of economies of scale, proprietary technology, supply chain management options, diversification of suppliers, preferential access to raw materials) and other factors.

Differentiation

Dolda can also pursue differentiation strategy based on the industry forces. In a differentiation strategy Dolda can seek to be unique in its industry by providing a value proposition that is cherished by buyers. It can select one or more attributes that can uniquely position it in the eyes of the customers for a specific needs. The goal is to seek premium price because of differentiation and uniqueness of the offering. Industry analysis can help Dolda to avoid spaces that are already over populated by the competitors.

Focus- Cost Focus and Differentiation Focus

The generic strategy of focus rests on the choice of competitive scope within an industry. Dolda can select a segment or group of segment and tailor its strategy to only serve it. Most organization follows one variant of focus strategy in real world.

Focus Strategy- Two Variants

(a) In cost focus Dolda can seek a cost advantage in one of its chosen segment in dairy. (b) In differentiation strategy Dodla can differentiate itself in a target segment in its industry.

Q5. Selection of a best alternative- As currently Dodla is facing stiff competition from its counterparts in terms of trained manpower and technology backwardness, automating the production process is a very much ecomically feasible and practically implementable alternative to stay in the competition. Besides this automating the processes will attract young professional into the organization as currently the dairy industry is not viewed by young college graduates as glamorous and attractive.