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UNIVERSITY OF WALES

MASTER of BUSINESS ADMINISTRATION

ASSIGNMENT: MANAGING CHANGE IN ORGANISATIONS

BY

MOSES NHUTSVE (STU 29349)

JANUARY 2012

WORD COUNT: 4 260

Table of Contents
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Description Page
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Background of The Organisation 3 The Significant Organisational Change 3 Drivers of Change 3 Organisational Development Efforts 6 Key Management Objectives 7 The Change Process 7 Bullock and Batterns Planned Change Phases. 8 Key Issues That were Being Monitored 11 Resistance to Change. 11 Effectiveness of Change Process 14 14

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1.2

1.3

1.4

1.5

1.6

1.7

1.8

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1.10 Further Related Change Programmes

Bibliography 15 Appendix I 15

1.0 Background of The Organisation

D. King & Son (Pvt) Ltd is a farming enterprise, which is situated approximately 60 kilometres north of Harare off the main Mvurwi - Mazowe road in Mashonaland Central Province. The organisation started as a commercial cropping and dairying entity, but Ian King realised that milk products were highly demanded by the customers and considering the unviable milk producer prices obtaining on the market due to the monopoly of the then Dairy Marketing Board. The kiosk began to sell under a retail license issued by the Dairy Marketing Board which the prerogative of buying and selling of milk in the country before its privatisation to Dairibord Zimbabwe Ltd in 1996, which is the largest supplier of diary- products in Zimbabwe.

Dorking Dairies is a milk processing and distribution company formed in 1998 and registered in Zimbabwe in accordance with the Companies Act under the management of King family members namely Ian and Jane. The company specialises in the production of fresh milk, cultured milk, yoghurts and fruit juices.

1.1 The Significant Organisational Change From inception, the company has operated as a family run business. From 2006 up to present, the company has graduated from being a small milk processor to a medium processor after successfully securing an equity partner who brought in funding to transform the business from a family owned structure to a corporate set up with strict adherence to corporate governance issues. Transformation in organisations refers to any fundamental changes in the mission or purpose of the organisation and in the activities to the extent that the organisation changes its identity and become something totally different (Kanter et al 1992).

1.2 The Drivers of Change. Dawson (1994) point out that the conception of the need to change may either be in response to external or internal pressures for change (reactive) or through a belief in the need for change to meet future competitive demands (proactive). The key drivers of change fall into two broad categories: external triggers and internal triggers.

1.2.1 Internal Drivers of Change at Dorking Diaries

Need to Address Capacity Constraints This was in part due to capacity challenges as the initial set up of the factory was not designed to cater for huge volumes as the target market was a single district. Most of the initial equipment was old as the business did not get enough time to recapitalise and the factory was highly manual which compromised plant efficiency levels.

Need to Raise Capital. With the current model it was difficult to mobilise long term funding to re equip the business mainly because the factory was situated on a farm Credit lines from major suppliers were withdrawn due to the businesss type that it was family-run. 4

Need to Create Powerful Brands The cultured milk managed to dislodge competing brands because of its viscosity as the competing products were a bit watery. As the business started enjoying substantial growth, supply side constraints set in and affected the performance of the brand due to persistent shortages of product as production was failing tremendously to match with demand.

1.2.2 External Drivers of Change at Dorking Diaries

Political Factors The key issues in the political environment relate to shifts instigated by the government of the day on issues such as trade liberalistaion, tax policy, deregulation of industries and statutory provisions and legislation (Robbins and Coulter 2006).

Land Reform Programmes and Indigenisation Campaigns The land reform programme was a major driver for change. At the turn of the millennium, the politics in Zimbabwe became so hot with rampant dispossession of farm land which formed the base of the company as the business relied on outside farmers to supply raw milk. To a greater extent the political overtones increased the exposure of the business as operations were situated on the farm.

Economic Factors The Zimbabwean economy has been experiencing serious shortages of products in the supermarkets shelves. National production levels started plummeting and the country under normal circumstances requires five million litres of milk a month and at the bottom end in 2008, production was averaging one and a half million litres. The national herd also went down as farmers battled to sustain huge herds as there were no stock feeds let alone vaccines. During this obtaining period, the Zimbabwean Dollar began to fall in value until 2009, when the multicurrency regime was adopted. The dollarised economy presented great opportunities for investment as the economy began to stabilise.

Technological Factors 5

Massive de - stocking resulted in falling milk volumes from the farms and processors technology had to be brought in to compliment the new dispensation. With the advent of internet, it has allowed the business to computerise all systems from production, marketing and finance, such that data can be viewed live on operations allowing spontaneous decision making and the ability to transact with external stakeholders like suppliers, bankers and regulatory authorities. Research efforts have been simplified as information can now be exchanged freely and easily.

Shifts in Demographic Factors. The country has witnessed a massive shift in family setups where most households are now managed by single parents and mostly they are busy such that when preparing their meals, it is easier and convenient for them to use milk as it does not require a lot of effort to prepare considering time constraints in preparing other meals especially with the power situation currently affecting the country. This has resulted in huge demand for milk. See Appendix A for volumes of milk produced between 20062011.

Industry Competition Porter (1985) identified five forces that drive competition within an industry. These include the following: threat of potential new entrants, intensity of rivalry among existing firms, bargaining power of buyers, bargaining power of suppliers and threat of substitutes. Dorking needed to strive to gain pole position in increasing innovation in the industry. It is difficult for a family business to mobilise financial resources to upgrade capacity and working capital due to absence of critical mass due to thin balance sheets and perceived risk due to corporate governance issues as opposed to other market players who are listed on the stock exchange.

1.3 Organisational Development Efforts Bennis (1969) defined OD as a response to change, a complex educational strategy intended to change the beliefs, attitudes, values and structure of organizations so that they can better adopt to new technologies, markets, and challenges and the dizzying rate of change itself

This was a prophetic definition done in 1969 and it sound very current. There was great need to increase organizational effectiveness, raise capital for expansion and make Dorking able to compete with industry players such as Diaryboard Zimbabwe, Dendairy and Keshelmer.

1.4 Key Management Objectives The key management objectives in necessitating the change were premised on the following

(a) Remodelling the business so that it can secure funding through equity partners or venture capital partners (b) Delink the business from the farm so that it becomes a separate entity and guard against compulsory acquisition of the business and reduce the inherent risk (c) Manage perceptual issues from an investment point of view (d) Mitigate loss of raw milk intake from dispossessed farms with a viable convertible product such as powder milk which can be imported and cover the unfulfilled gap that was being taken away by imports. (e) Capacity utilisation to be increased to cater for the increased demand as milk processing by its very nature is a volume driven business. (f) Increased need to put in place stringent quality control systems in line with expanded capacity. (g) Need to put in place enough systems to manage stock control, accounting procedures. (h) Need to bolster the corporate profile by bringing in competent managers to drive the strategic intent and to enhance skills and capabilities of current staff through vigorous training initiatives. (i) Need to rationalise operations from a small business unit to a proper business model that encompasses all the critical aspects of corporate governance. (j) Retooling and reequipping the factory from a manual reliant system to a fully integrated automatic system.

1.5 The Change Process After careful analysis of the problems bedevilling the business, it was agreed by the Family Trust to engage a consultant as the Change Sponsor and would work closely with the Managing Director to lead the change process. They were supposed to do a stakeholder analysis that entails who are going to be the major participants in the 7

change programme, what effect the change is going to bring about, the anticipated timelines to complete the change programme.

Crafting an Implementation Plan The implementation plan focuses on what needs to be done, when and how it is done. This provides a road map for the transformation process and specifies the details and the action plan. Some of the activities that can be considered include establishing a change management team, activity planning, transition management structures, post-audits and training (Bamford et al 2004).

Why change? Determining the need for change, determining the degree of choice about whether to change. 8

Defining the desired future state

Describing the present state.

Getting from here to there: assessing the present in terms of the future to determine the work to be done.

Managing during the transition state. Fig1.1 Map of The Change Management Process. Source: Internal Training Manual: Organisational Training and Development (1999).

1.6 Bullock and Battern (1985) Planned Change Phases Based on Lewins (1958) 3-step model of planned change, and a synthesis of over thirty other models, Bullock and Batten (1985) quoted by Burns (2004) developed an integrated four-phase model of planned change. The respective dimensions are the change phases and the change process.

Change phases: These are the distinct states that an organization moves through during planned change.

Change processes: These are the actual methods (or modalities) that are used to move an organization from one state to another.

The model which incorporates key aspects of many other change models, comprises four sequential steps that organizations must go through to achieve successful change.

1 Exploration Phase 2 Planning Phase 3 Action Phase 4 Integration Phase

The study will use the four different stages to explore the management of change within Dorking Diaries from a family owned small business into a registered company.

1.6.1 Exploration Phase Exploration involves verifying the need for change, and acquiring any specific resources (such as expertise) necessary for the change to go ahead.

The first task was to set the objectives of the programme by understanding the current structure its shortfalls and what needs to be done to plug in the gap that exists. In order to set the tone the Change Sponsor allays fears in the participants by explaining why this is a necessary procedure, the benefits it brings so that it becomes easier for the committee to get buy in from the whole organisation.

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The initial step was to setup parameters for discussion forums, interviews, brainstorming sessions, analysis from customer complaints, previous budgets, management reports and constraints affecting the business and work on how best that can lead the participants to appreciate the change programme.

The organization becomes aware of the felt-need for change. The change agent serves as a catalyst for change and assists with the planning and implementation of the changes.

1.6.2 Planning Phase A diagnosis is completed and actions are sequenced in a change plan. The plan is signed off by management before moving into the action phase. This phase which of necessity must follow after the exploration phase involves: The correct diagnosis of the actual problems or concerns faced by the organization. This is achieved through collection of information. Establishment of the change goals and designing of appropriate actions to achieve the goals. Obtaining key decision-makers approval, support and commitment to the proposed changes (Burns 1992). Various authors emphasise the importance of planning during the implementation of change management programmes. There are some researchers who radically differ from the accepted norm of planning. Stacey (1998) challenged the assumptions of change thus: ..complexity theory holds that your intended theory actions in a programme of change will have unforeseen and unintended consequences, so an outcome will emerge, and change will occur but not in the way that you designed or planned it.. (p57:1998). Change may occur in a self-organised way where people have little influence. This theory makes sense in hyperactive macro-environments where volatility, unpredictability and uncertainty. The Zimbabwean macro-environment can be classified as very active and unstable and can certainly be viewed in light of the complexity theory.

Elements of Planning Phase.

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Management It was noted that the current set up was very rigid in terms of response to the dictates of changing trends. It was slow in terms of execution of critical decisions leading competitors to take advantage of opportunities that were arising. There was no clear cut separation between management and ownership meaning there was deliberate disregard of corporate governance procedures.

Man Generally the business was ill equipped in terms of its skills and competences as most people in the factory never had formal training in food processing. This compromised initiatives within the workforce as they presumed what they were told to be gospel truth whether it is wrong or not.

Machine The factory was ill equipped with most machines outdated and old. Frequency of break downs affected man hours. There was a tendency by employees of accruing unnecessary overtime. The factory was manually reliant which compromised a lot on quality.

Method The way work was being done left a lot to be desired as most procedures were not being followed whether deliberately or through ignorance. Short cuts were the order of the day. There was no clear cut procedure on cleaning, materials handling.

Materials There was no proper checking mechanisms especially on receiving raw milk from the farmers as most of the milk being put in the system was substandard as the viral count was over the prescribed limit. This affected the quality of products to be produced as most of the products would eventually be returned by the customers.

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1.6.3 Action Phase In the action phase, an organization implements the changes that were drawn up during the planning phase to change from undesirable current state to a desired future state. Some of the processes that need to be carried out in this phase include: Gaining the actual support from employees for the actions to be taken. Evaluating and monitoring the implementation activities and providing constant feedback to all stakeholders. The action phase equates to the Action Research Model proposed by Burns (1992) where he describes it thus: ..Action Research is research on action with the goal of making that action more effective.. (p160:1992).

This model originated from the Gestalt-Field theorists and recognizes that successful change requires a process of learning (action) based on analyzing all situation all situations correctly, identifying all possible alternative solutions and choosing the best solution to permit those involved to change insights, expectations and thought patterns. This approach critically requires gaining the commitment of both the organization and the subject of change. Actions are completed according to plan, with feedback mechanisms which allow some replanning if things go off track.

The initial stage involved a labour audit which sought to identify who was doing what and the level of competence. This rearranged the labour organisation in the system with the formation of quality circles and teams. Each of the critical divisions was to be led by a team leader and their main areas of focus centred on:

Main Processing Plant This team was responsible for receiving, checking all raw materials getting into the factory for compatibility purposes as this is where all production starts. Proper hygiene was also a key result area for this group and this centred on the cleaning of all materials, equipment and the general cleanliness of the factory.

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Quality Control This team was responsible for receiving product from the main plant before final packing. This entails analysing the final product makes sure it conforms to the maximum specifications before being packed. They would also look at consumer complaints and feedback and advise on how products can be improved on to the full satisfaction of the consumer and remain competitive on the market.

Packing This team was responsible for packing the final product that is ready for the market. They would ensure that product is being packed in the correct bottles and all the labelling and expiry dates are correct.

Procurements This team was responsible for getting all the key inputs for the factory and makes sure they are bringing in the right components. They are supposed to do a supply audit and makes sure critical raw materials are coming from the right sources and also on the pricing of the materials.

1.6.4 Integrated Phase It has been noted that for any successful change programme to succeed, there is need to have buy in from all the stakeholders on the main objectives and vision of the change programme. It was also noted that before the onset of the change programme, all the participants to the programme are identified, mapped according to the level of influence they hold in relation to the successful implementation of the change programme. A number of workshops, question and answer sessions, case studies and inherent merits were conducted at every level of the change programme so that all stakeholders were kept aware of every development and successes registered at every stage were announced to everyone. This was done to ensure commitment and support of the programme persists to the end. In the end resistance to the change programme was kept at bay as stakeholders had the same vision, hopes and expectations.

1.7 Key Issues That Were Being Monitored Throughout The Change Programme The key issues included the following. Developing and sharing a similar vision within the stakeholders. Recognising the role of leadership in the organisation and how it impacts on change. Continuously investing in the development of all stakeholders Respect and genuine concern on all stakeholders

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Driving behaviour in individuals so that the organisation delivers the best out of the teams Developing a culture of collaboration rather than command where change is viewed as an opportunity Allay fears in the old staff by spelling out the merits of the change.

1.8 Resistance to Change

1.8.1 Causes of Resistance to Change

Resistance to change occurs at the individuals group and organizational levels and are mutually reinforcing observes Janis (1982) (i) Individual level

Factors that influence resistance include the personality of those involved in the change process. Negative attitude towards further change are based upon an individuals past experiences of organizational change. Farm workers resisted the change since it threatened their status quo.

(ii)

Group level

Resistance has been observed to be pronounced and tenacious where a group suffers from the group think phenomena (Janis1982). In such a situation the organization power is centralized away from the group. Change which arises from outside the group is viewed as a threat to the status quo.

(iii)

Organizational level

Factors that influence resistance include organizational structure, climate, culture and strategy. Change is unknown and poses a threat to those affected by it. Change that is perceived to be detrimental to working conditions will be resisted. Psychological processes 15

such as anxiety, frustration and loss of self-esteem result in emotional resistance. Change is also resisted because it challenges the status quo. People invariably have vested interests in maintaining the status quo, because they benefits from it. Senior manager may resist an organizational intervention because they fear to lose power (Beckard et al 1987).

1.8.2 Dealing with Resistance to Change Strong resistance argues for a coupling of power-coercive and environmental-adaptive strategies. Weak resistance or occurrence argues for a combination of radical-empirical and normative-reductive strategies. Nickols (2000) argues that managing change is more a matter of leadership ability than management skills. Leaders employ a mix of strategies to counter the negative forces. Following are six classic strategies for dealing with change resistance.

Education and Communication:

One of the best ways to overcome resistance to change is to educate people about the change effort beforehand. Up-front communication and education helps employees see the logic in the change effort. This reduces unfounded and incorrect rumors concerning the effects of change in the organization. According to Burns(1992), the management must make people aware of the pressures of change. This can be achieved through regular meetings so as to exchange the key information such as competitive market pressures and the performance of key competitors. Nickols (2000) said that leaders must keep communication barriers low, widely spaced and easily hurdled

Participation and Involvement:

When employees are involved in the change effort they are more likely to buy into change rather than resist it. This approach is likely to lower resistance more so than merely hoping people will acquiesce to change (Kotter 2004). The leaders may ask for volunteers and also pick people with relevant skills and energy levels to participate in change programmes. This helps people to overcome their anxiety and develop feelings of anticipation that lead to confidence in the change process and subsequently leading to satisfaction with the change process. Some people fail to get rid of their anxiety and hence they never become part of the change. The Gestalt-Field theorist advocate for discussion, involvement and debate with the individual in order to bring about transformation.

Facilitation and Support:

Managers can head-off potential resistance by being supportive of employees during difficult times. Managerial support helps employees deal with fear and anxiety during a transition 16

period. This approach is concerned with provision of special training, counseling, time off work. There is need to develop enabling structures that facilitate and reinforce the transformation process (Bridges 1991). This is achieved through scheduled workshops, training programmes and creation of new structures and reward systems.

Negotiation and Agreement:

Managers can combat resistance by offering incentives to employees not to resist change. This can be done by allowing change resistors to veto elements of change that are threatening, or change resistors can be offered incentives to go elsewhere in the company in order to avoid having to experience the change effort. This approach will be appropriate where those resisting change are in a position of power.

Manipulation and Cooptation:

According to Nickols (2000), cooptation involves the patronizing gesture of bringing a person into a change management planning group for the sake of appearances rather than their substantive contribution. This often involves selecting leaders of the resisters to participate in the change effort. These leaders can be given a symbolic role in decision making without threatening the change effort. The Dorking family members have been managed using this strategy.

Explicit and Implicit Coercion:

Managers can explicitly or implicitly force employees into accepting change by making clear that resisting change can lead to losing jobs, firing, or not promoting employees. This methods works well in crisis situations and where the leaders are convinced that they are doing a correct thing and that the change process will be a success.

Lewis (1998) argues that generally, change management succeeds where the company is filled with troublemakers, mavericks and general pains in the neck. This explains why many companies fail to change because they do not have these types of people.

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1.9 Effectiveness of Change Process The organisation has managed to create a positive perception on the market as a pro active and forward thinking entity. A new culture on how to do things better and the quest to strive for the best is now the norm. The quality of products coming out of the factory has greatly improved with minimal returned product coming from the customers. The factory has been retooled and delinked from the farming operation. Management structure has been positioned favourably so that it becomes relevant to the prevailing macro- economic dynamics and the flexibility to continuously adjust itself as provided for by the environment. Staff morale is now at its best with the previous anti- trust tendencies written off. The business is now better positioned and self sustainable with the ability to unlock its inherent value. New markets have been exploited and new product users created.

With the ever changing global trends in terms of how business is conducted, changes in consumer tastes, opening of new markets, technological revolutions has seen change in organisations to be viewed as an ongoing process not as an event. Recognition of the need to evaluate the process at various stages. Taking necessary action. Provision for feedback. Recognition and acknowledgement of the contribution of staff.

1.10 Further Related Change Programmes Listing on The Stock Exchange: The next move that must be done at Dorking Diaries is to convert the private company into a public company by listing on the Zimbabwean Stock Exchange. This enables the company to raise more capital from members of the public.

Diversification Strategies: The company may also diversify into related or unrelated industries such as food processing and horticulture. This will enable Dorking to manage risks by creating synergy between units. 18

Global Strategies. Management may also implement changes that enable Dorking to become a global business. This will result in the organisation competing with other international milk processing companies like Pamalat and Nestle.

Creating a Learning. Peter Senge (1993) stated that managers must create a learning organisation. So management at Dorking may implement strategies that result in a learning organisation. A learning organisation can better adapt to the fast changing environment and cope with the rate of change itself. Bibliography Bamford, D.r. and Forrester, P.L. (2004). Managing planned and emergent change within an operations management environment. International Journal of Operations and Production Management, 23, 5, 546-564. Beckhard, R.F., and R.T. Harris.(1987) Organizational Transitions: Managing Complex Change. Reading, MA: Addison-Wesley. Berry L (2003) Cluing In Customers, Harvard Business Review Bridges, W. (1991). Managing Transitions. Reading, MA: Perseus.

Bridges, W., and S. Mitchell (2002). "Leading Transition: A New Model for Change." In On Leading Change. F. Hesselbein and R. Johnston, eds. New York: Jossey-Bass, .

Bullock, R.J., and D. Batten. (1985) "It's Just a Phase We're Going Through." Group and Organizational Studies 10. Burnes, B. (2004). Managing Change. 4th Edition.. Prentice-Hall: London. Burns, B.(1992),Managing Change. London: Pitman. Cameron, Esther, and Mike Green.(2004). Making Sense of Change Management: A Complete Guide to the Models, Tools and Techniques of Organizational Change. Sterling, VA: Kogan 19

Cameron, Esther, and Mike Green.(2004). Making Sense of Change Management: A Complete Guide to the Models, Tools and Techniques of Organizational Change. Sterling, VA: Kogan Page. Carney M (2001).The Development of a Model to Manage Change. Journal of Nursing Management Vol8 Issue 5 p 265. Internal Training Manual: Organisational Training and Development (1999). Kanter, Nadler, D.A and Tushman, M.L (1992). Academy of Management Executive. Vol3 pp 194-204 King N and Anderson N (2002). Managing Innovation and Change: A Critical Guide. Thomson, London. Kotter, John P.(2004). Leading Change. Boston: Harvard Business School Press. Janis (1982). Resistance to Change in Organisations. Mc-Graw Hill, New Delhi, India. Lewin, Kurt. (1951). Field Theory in Social Science. New York: Harper and Row, 1951. Lewis B. (1998). European Management Journal Vol 15 No 5. Luecke, Richard. (2003) Managing Change and Transition. Boston: Harvard Business School Press, Nadler, David, Michael L. Tushman, and Mark B. Nadler.(1997). Competing by Design: The Power of Organizational Architecture. New York: Oxford University Press, 1997. Ristino, Robert J. (2000). The Agile Manager's Guide to Managing Change. Bristol, VT: Velocity Business Publishing. Robbins S. P and Coulter M (2006) Management 8th Edition, Prentice Hall. New Delhi India Senge, Peter M., et al.(1999). The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations. New York: Doubleday. Senge, Peter.(1993). The Fifth Discipline. London: Century Business. Sims, Ronald R.(2002). Changing the Way We Manage Change. Westport, CT: Praeger Stacey, Ralph D.(1993). Strategic Management and Organisational Dynamics: The Challenge of Complexity. London: Pitman Publishing. Stewart J (1996). Managing Change Through Training and Development: Kogan Page 20

APPENDIX I Volumes of Milk Production Between 2006-2011 Milk Volumes YEAR Month 2006 2007 2008 2009 2010 2011 95, 110, 148, 212, 270, 300 January 000 451 236 611 550 ,155 Februa 85, 113, 145, 208, 273, 302 ry 000 286 789 923 412 ,469 80, 117, 146, 217, 275, 303 March 000 500 899 709 877 ,126 21

TOTAL 1,137 ,003 1,128 ,879 1,141 ,111

119, 148, 211, 863 712 925 90, 120, 152, 215, May 000 654 852 408 98, 123, 158, 225, June 788 664 321 176 109,1 126, 161, 230, July 42 848 250 374 112,9 128, 163, 233, August 42 183 256 353 Septem 119,2 134, 164, 247, ber 23 824 602 320 Octobe 120,9 137, 186, 251, r 55 311 305 112 Novem 126,8 140, 187, 255, ber 31 404 971 302 Decem 123,6 150, 190, 260, ber 93 020 588 125 1,246, 1,523, 1,954 2,769 Volume 574 008 ,781 ,338 Source: Internal Production Documents, Dorking April 000

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289, 305 655 ,145 291, 307 200 ,250 293, 309 469 ,711 295, 310 602 ,105 294, 312 138 ,241 295, 315 755 ,112 296, 315 083 ,970 298, 317 456 ,250 298, 321 523 ,523 3,472 3,720 ,720 ,057 Dairies (Pvt) Ltd:

1,160 ,300 1,177 ,364 1,209 ,129 1,233 ,321 1,244 ,113 1,276 ,836 1,307 ,736 1,326 ,214 1,344 ,472 14,68 6,478 2012

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