Organizational Behavior

POSTGRADUATE PROGRAMME IN MANAGEMENT

Heritage Foods

Submitted to: Dr. M V Anuradha

Section: B

Group No. 10
Vijay Kumar Singh 2310183
Kevin Zorinkima 2310133
Kuntala Gupta 2310142
Patnana Yeswanth 2310156
Sandeep Verma 2310168
Avinash Mamidi 2320007

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Heritage Group: About the company

In 1992, Shri Nara Chandrababu Naidu, the Chief of the Telugu Desam Party and former Chief Minister of Andhra

Pradesh, founded the Heritage Group. The main company, Heritage Foods Limited (HFL), manages three key business

divisions: Dairy, Retail, and Agri. In addition to HFL, the group has an infrastructure subsidiary called Heritage Infra

Developers Limited, and several associated companies like Heritage Finlease Limited, Heritage International Limited,

and Heritage Agro Marine Private Limited.

In this report, we will study and assess the structural features of only the Dairy division of the Heritage Group.

ORGANIZATIONAL STRUCTURE

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Each Functional head further has subordinates under their control. The structure for the same is shown below with

reference to the Chief Operating Officer for simplification:

Thus, we see that Heritage Company exhibits a well-defined organizational Functional structure with a strong emphasis

on work specialization, indicating that employees have specific roles and tasks within their expertise. The company's

departmentalization is characterized by a functional approach at the upper level, emphasizing distinct functions like

marketing or finance, while at the lower level, it employs a geographical departmentalization strategy, reflecting a focus

on different regions. The chain of command is clear and hierarchical, promoting a top-down flow of authority, with a

narrower span of control at higher levels and a wider span at the plant level. The organization leans towards

centralization, suggesting that decision-making authority is concentrated at the top. Additionally, the company

demonstrates a moderately formalized environment, implying a balance between standardized procedures and flexibility

in its operations. This structured setup indicates a well-organized and efficient business model within Heritage

Company.

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The key dimensions of the organizational structure are captured as under:

VISION, MISSION, AND STRATEGIC INTENT

Vision: “Delighting every home with Fresh & Healthy products and empowering the Farmer”

Mission:

 “To be a nationally recognized brand for Healthy and Fresh products with a revenue of INR 6000 Crores

 To anticipate, understand and respond to our customers' needs by creating high-quality products and making

them available through innovative and convenient channels

 To embrace the right technology to delight our customers

 Advocating the balancing of economic, social and environmental aspects to create a better tomorrow

 Empowering the farmer community through our unique 'Relationship Farming' Model

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 Be the Employer of Choice by nurturing entrepreneurship and promoting empowerment, alongside

transparency” (Dairy Companies in India | Heritage Foods Limited, n.d.)

Strategic Intent:

 “Increase Milk Procurement: By investing prudently in village level milk collection infrastructure, bulk coolers,

chilling centers.

 Increase the share of Value-Added Products: Based on increasing disposable income, demand for convenient

products and growing consumer preference for branded healthier & nutritious alternatives.” (Investor

Presentation-Heritage Foods Limited-Q2 2023, n.d.-b)

 “Penetrate New Geographies: By leveraging the strong distribution network for entering in new geographies

and strengthen the existing ones through brand building initiatives.” (Investor Presentation-Heritage Foods

Limited-Q2 2021, n.d.)

 Expand the Product Portfolio: By continuously innovating and expanding the product portfolio and delight

customers through agile and flexible supply chain.

 “Aspire to be Nationally recognized brand: For healthy & fresh products while focusing on efficient capital

management.

 Expand product manufacturing capabilities: With state-of-the-art machinery while maintaining stringent quality

control and product innovation.

 Empowering farmers: Through direct procurement of milk from farmers, assisting and equipping farmers to

improve milch animals' yield to increase the income of farmers and enhance the socio-economic status of

farmers.

 Create Value for Stakeholders: By optimizing operations and efficiencies across the value chain.” (Investor

Presentation-Heritage Foods Limited-Q2 2023, n.d.-b)

Heritage Company's organizational structure closely aligns with its vision of “delighting homes with fresh and healthy

products while empowering farmers.” The functional structure, emphasizing efficiency and reliability, supports the

commitment to low-cost leadership. The hierarchical leadership style reinforces the dedication to milk producers,

customers, employees, and shareholders. With a processing plant as its production technology, the structure ensures
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streamlined processes. The strategic goal of reaching 6000 Cr in revenue aligns with internal strengths like brand value,

although there's a challenge of limited scope for innovation. The organization is well-prepared for opportunities in

untapped markets but acknowledges threats from competitors like Amul and uncertainties in the supply chain. The CEO

or top management addresses internal and external issues, ensuring the vision is consistently reflected in the company's

actions. Overall, the structure effectively supports Heritage's mission and strategic intent.

Technology used:

Heritage Company's organizational structure is well-suited to its technology-driven operations. The core departments,

encompassing Warehouse, Packaging, Distribution, and the Processing Plant, directly align with the company's

extensive technology-integrated network. “This network, facilitated by over 11,300 Milk Procurement Representatives,

2,100 distribution vehicles, and 6,500 distributors across 11 states, reflects a commitment to a highly interconnected and

digitized approach.”(Investor Presentation-Heritage Foods Limited-Q2 2023, n.d.-b)

These core departments play a pivotal role in the efficient production and distribution of Heritage's diverse product

range, including milk, curd, ghee, cheese, and other milk products. Simultaneously, the presence of non-core

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departments such as Digital Marketing, Financial, IT, Marketing, Process Excellence, and Internal Audit underscores

the company's recognition of the vital role played by these functions in optimizing technology usage and ensuring overall

organizational success. In essence, Heritage's organizational structure is strategically crafted to seamlessly integrate

various functions, leveraging technology to meet the demands of a widespread market. This synergy between structure

and technology underscores the company's adaptability and responsiveness to the evolving dynamics of the business

landscape.

Zoho's comprehensive suite of HR software revolutionizes the way organizations manage their workforce lifecycle.

Leveraging Zoho's tools enables seamless vacancy filling, streamlined appraisal processes, and efficient promotion

workflows. Additionally, its performance management system facilitates the creation of professional pointers, aiding in

the measurement and enhancement of employee performance. Incorporating Zoho into highlights the company

commitment to leveraging cutting-edge technology for robust HR practices, ensuring optimal talent management and

performance evaluation within organization

Heritage Company is a large and complex organization with standardized and efficient processes. “Its extensive network

across 11 states involves over 11,300 Milk Procurement Representatives, 2,100 distribution vehicles, and 6,500

distributors, allowing it to deliver a variety of products like milk, curd, ghee, and cheese.” ( Investor Presentation-
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Heritage Foods Limited-Q2 2023, n.d.-b). The company's mechanistic organizational structure is evident in core

departments like Warehouse, Packaging, Distribution, and the Processing Plant, each specializing in specific tasks for

production and distribution. The addition of non-core departments, including Digital Marketing, Financial, IT,

Marketing, Process Excellence, and Internal Audit, adds to the overall efficiency and quality, showcasing the

need for various specialized functions within the organization. In essence, Heritage's structured approach

Heritage Food’s Organizational Life Cycle

Since its inception in 1992 till date, the company has been successfully running the business operations. It has moved

through the various stages of organizational life cycle such as Entrepreneurial, Collective, formalization, elaboration

stage.

In 1995 it adopted unique practice of “Relationship farming model”, where in business adopts relationship-based

approach towards. Thereby maintaining constant supply of raw material/ milk and having control of key aspect of

supply chain.

“Through our Heritage Farmers Welfare Activities (HFWA), we work for the welfare of the dairy farmers. Over the

year we have collaborated with various farmers to enhance dairy productivity and the quality of life of dairy farmers.

We have been implementing various farmer empowerment initiatives throughout the year to constantly support and

develop our rural society.” (Investor Presentation-Heritage Foods Limited-Q2 2023, n.d.-b).

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CULTURE OF THE ORGANISATION

Heritage Company embodies a mission culture focused on stability and purpose. With a clear vision of providing fresh

products and empowering farmers, the company sets strategic goals, including sales, growth and profitability.

Employees have specific performance targets with promised rewards, fostering a performance-oriented environment.

Managers play a crucial role in shaping behavior and translating the vision into measurable goals. Heritage's mission

culture, rooted in stability, reflects competitiveness and a profit-making orientation, evident in its strategic goals and

commitment to crossing 6000 Cr in revenue. This culture aligns with the company's mission of serving specific

customers in a steadfast external environment.

POWERFUL DEPARTMENTS OF THE ORGANIZATION

In the context of the Heritage Company, the identified powerful departments, namely the Quality Department and the

Procurement Department, exhibit characteristics that align with the definitions of power in organizational dynamics.

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1. Quality Department:

 Centrality: The Quality Department holds centrality as it plays a crucial role in the primary activity of the

organization – ensuring the production of high-quality products. The extent to which this department's work

influences the final output is substantial, giving it inherent power.

 Non-substitutability: The function of maintaining and ensuring product quality is often specialized and not

easily substituted by other resources. The unique expertise of the Quality Department makes it non-substitutable,

thereby increasing its power.

2. Procurement Department:

 Dependency: The Procurement Department is powerful due to its dependency factor. The organization relies

heavily on this department for the acquisition of essential resources, and this dependency enhances the

department's influence and power.

 Centrality: Like the Quality Department, the Procurement Department is central as it directly impacts the

organization's primary activity – sourcing necessary materials for production. Its centrality contributes to its

overall power within the company.

 Non-substitutability: The Procurement Department's role in securing essential resources is often specialized and

not easily replaced by alternative sources. This non-substitutability adds to its power within the organization.

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ORGANIZATION FIT ACCORDING TO THE ENVIRONMENT

In Heritage's dairy sector, the organizational structure indicates low uncertainty in environmental change, characterized

by a mechanistic design with a centralized approach, few departments, and a focus on current operations. This aligns

well with the dairy industry's relatively stable demand, allowing for a structured and efficient operation.

On the other hand, the sector faces high uncertainty in environmental complexity, evident in its organic design. The

emphasis on teamwork, participative decision-making, and decentralization, along with numerous departments and

extensive planning for a swift response, highlights the need for adaptability in a complex and dynamic environment.

Striking a balance, the optimal scenario for Heritage involves elements from both low and high uncertainty contexts.

This is categorized as low to moderate uncertainty, featuring a combination of mechanistic and organic design elements.

It includes some mechanistic features for stability, such as a formal and centralized structure, alongside organic

characteristics like numerous departments and boundary-spanning roles for adaptability and responsiveness. This

blended approach allows Heritage to navigate the nuanced challenges of the dairy sector with both stability and

flexibility.

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DOES HERITAGE HAS GLOBAL DESIGN?

Heritage doesn't have a global design in place, but there's an exciting prospect on the horizon. The company is gearing

up to embrace a global design as part of its expansion plans. This move signifies Heritage's acknowledgment of the need

to reshape its organizational structure to meet the demands of a broader international landscape. As the company sets

its sights on a more global presence, the shift towards a global design may involve decentralizing decision-making,

forming specialized teams for diverse markets, and crafting strategies tailored to different regions. It's a strategic move

that positions Heritage to better navigate the complexities of global business. Watching this transition unfold offers a

glimpse into how theoretical concepts about global organizational design come to life in the practical realm of business.

CONCLUSION

In wrapping up, it's clear that Heritage Company has set its sights on significant expansion, not only in terms of

geographical reach but also by diversifying its product lines. This marks a crucial phase in the company's growth,

progressing from a regional player to a broader national and potentially global presence. Acknowledging the need for

adaptation, Heritage is looking ahead to the future adoption of a global design. Currently lacking such a structure, this

indicates a strategic shift, likely involving changes in decision-making and the formation of specialized teams tailored

to different markets.

The move towards a global design demonstrates Heritage's foresight in aligning its organizational structure with the

evolving demands of a larger and more diverse business landscape. This strategic evolution is essential for Heritage to

navigate the complexities of growth effectively. As the company sets out on this transformative journey, the focus on a

future global design underlines its commitment to not only meet but exceed the expectations of a national and global

marketplace. It's a thoughtful approach that ensures Heritage's journey from regional

prominence to becoming a nationally and globally recognized entity.

As a part of collecting primary data and getting insights about the company and its

Functioning we contacted Mr. Ram Kiran who is the Senior Executive HR of Heritage

Foods.

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References

Our commitments | Heritage Foods Limited. (n.d.-b). https://www.heritagefoods.in/corporate/our-commitments

Investor Presentation-Heritage Foods Limited-Q2 2023. (n.d.-b). Bseindia. https://www.bseindia.com/xml-

data/corpfiling/AttachHis/62b07eed-9174-4213-ba40-6f70d06deab7.pdf

Investor Presentation-Heritage Foods Limited-Q2 2021. (n.d.). heritagefoods.in.

https://www.heritagefoods.in/uploads/investors/pdf/16349011092Q2_Presentation.pdf?cv=1

Dairy companies in India | Heritage Foods Limited. (n.d.). https://www.heritagefoods.in/corporate/about-us

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