Strategy Analysis of ITC Cigarettes
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ITC is one of India's largest conglomerates with diversified businesses including FMCG, hotels, paperboards, packaging, agri-business, and IT. It is a market leader in traditional businesses like hotels, paperboards, packaging, agri-exports, and cigarettes. The document provides an overview of ITC's vision, mission, products, revenues, employees, and eChoupal initiative to connect with rural farmers.
![PROFILE OF ITC
Type: Public
Traded as: BSE: 500875 BSE SENSEX Constituent
Industry: Conglomerate
Predecessor(s):
Founded: August 24, 1910[1] (as Imperial Tobacco Company of
India) Founder(s) Henry Overton Wills
Headquarters: Kolkata, West Bengal, India
Chairman: Yogesh Chandler Deveshwar
Products: Tobacco, Hotels, Paperboards & specialty papers,
packaging, agri-business, packaged foods & confectionery, IT,
branded apparel, personal care, stationery, safety matches and
other FMCG products
Revenue : US$ 7 billion (2010)
Employees : 29,000 (2012)
Website : www.itcportal.com](https://image.slidesharecdn.com/itc1-150126104641-conversion-gate02/85/Strategy-Analysis-of-ITC-Cigarettes-3-320.jpg)
Strategy Analysis of ITC Cigarettes
- 2. Introduction ITC is one of India's foremost private sector companies ITC has a diversified presence in FMCG (Fast Moving Consumer Goods), Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology. ITC is an outstanding market leader in its traditional businesses of Hotels, Paperboards, Packaging, Agri- Exports and Cigarettes, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery
- 3. PROFILE OF ITC Type: Public Traded as: BSE: 500875 BSE SENSEX Constituent Industry: Conglomerate Predecessor(s): Founded: August 24, 1910[1] (as Imperial Tobacco Company of India) Founder(s) Henry Overton Wills Headquarters: Kolkata, West Bengal, India Chairman: Yogesh Chandler Deveshwar Products: Tobacco, Hotels, Paperboards & specialty papers, packaging, agri-business, packaged foods & confectionery, IT, branded apparel, personal care, stationery, safety matches and other FMCG products Revenue : US$ 7 billion (2010) Employees : 29,000 (2012) Website : www.itcportal.com
- 4. VISION & MISSION Vision: Sustain ITC’s position as one of India’s most valuable corporations through world class performance, creating growing value for the Indian economy and the Company’s stakeholders. Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.
- 5. Competitors of ITC Ltd. Golden Tobacco Limited Godfrey Philips India Ltd. VST Industries Ltd.(Vazir Sultan Tobacco Company) RTCL Ltd. (Raghunath Tobacco Company Ltd) Hindustan Unilever Ltd. Marico
- 11. e-Choupal is an initiative of ITC Limited, a large multi business conglomerate in India, to link directly with rural farmers via the Internet for procurement of agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. e-Choupal was conceived to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries. The programme involves the installation of computers with Internet access in rural areas of India to offer farmers up-to-date marketing and agricultural information.
- 16. External Factor Evaluation (EFE) Opportunities Weight Rating Weighted Score Ever growing Consumer base due to addiction 0.2 2 0.4 Reduction the price of the product and offer the same quality. 0.2 4 0.8 Social media marketing as a replacement for advertisement 0.1 4 0.4 Threats Ban on cigarette smoking in public places 0.2 2 0.4 Lot of competitors with similar quality and price 0.2 3 0.6 Taxes 0.1 2 0.2 Total 1 2.8
- 18. Stars Hotels Paperboards/ Packaging. Agri business. ? FMCG- Others Cows FMCG-Cigarettes Dogs
- 19. Competitive Profile Matrix (CPM) Critical Success Factors Weight ITC Classic Cigarettes (Ratings & Weighted Scores) Marlboro Benson Premium Segment 0.100 2 0.20 3 0.30 2 0.2 Economies of Scale 0.175 4 0.70 1 0.175 3 0.525 Distribution System 0.100 3 0.30 2 0.20 3 0.30 Customer Loyalty 0.25 2 0.5 1 0.25 2 0.5 Marketing Strategy 0.125 1 0.13 2 0.25 2 0.25 Diversification 0.100 4 0.40 4 0.40 3 0.30 Pricing 0.100 4 0.40 3 0.30 2 0.20 Market Share 0.025 1 0.025 4 0.10 2 0.05 Total 1 2.755 2.025 2.4
- 20. Internal Factor Evaluation (IFE) Strengths Weight Rating Weighted Score Available in nine different varieties 0.25 4 1 Strong brand name and reputation of ITC in Tobacco industry 0.10 4 0.40 Customer loyalty amongst customers is high 0.02 3 0.06 Excellent availability due to ITC’s strong distribution network 0.02 4 0.08 Research & Development 0.16 4 0.64 Weaknesses The manufacturing process very time consuming 0.20 2 0.40 Company has to rely on surrogate advertising to promote products 0.02 1 0.02 Govt. policies regarding tobacco and cigarettes 0.20 2 0.40 Improper Diversification 0.02 1 0.02 Total 1 3.02
- 21. VRIN Analysis Tangible Resources Rare Valuable Inimitable Non Substitutable Implications for Competitiveness Financial No Yes No No Competitive Parity Organizational Yes Yes Yes Yes Sustainable Competitive Advantage Physical No Yes No No Competitive Parity Technological No Yes Yes No Temporary Advantage Intangible Resources Innovation No Yes No No Competitive Parity Human Yes Yes Yes Yes Sustainable Competitive Advantage Reputation Yes Yes No No Temporary Competitive Advantage
- 23. SWOT ANALYSIS Strength •Cigarette market is 22,000 cr and ITC has lion’s share in it •Strong brand recognition and product portfolio •Distribution network •Management Weakness •Dependence on tobacco revenues • Negative Connection of Tobacco Opportunity •Consumption Of personal care products •Rural Market •E-Choupal • Filter cigarette segment of less than 60mm size Threat •Competition both Domestic & International •Increasing Tax on cigarettes •Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year •Hike was 142% for those between 61mm and 70mm long. •Regulatory restrictions on cigarettes •Ban on smoking
- 24. TOWS MATRIX OF ITC Strength Weakness Opportunities • Market Expansion • Promotion • Awareness • Affordability • Emphasize on Personal Care Threats • Diversification • Strategic Alliances with International Players • Govt. Policies
- 25. Corporate Shared Values ITC's Core Values are aimed at developing a Customer-focused High-performance organisation Customer Focus ITC delivers what the customer needs in terms of value, quality and satisfaction.
- 26. Organizational Structure The practice of Corporate Governance in ITC takes place at 3 interlinked levels – Strategic supervision- by the Board of Directors Strategic management- by the Corporate Management Committee Executive management- by the Divisional/Strategic Business Unit (SBU) Chief Executive assisted by the respective Divisional/SBU ManagementCommittee
- 27. HRM Policies All employees must live with social and economic dignity and freedom, regardless of nationality, gender, race, economic status or religion. ITC does not employ any person below the age of eighteen years in the workplace. ITC prohibits the use of forced or compulsory labour at all its units. All major changes in operations involving work processes, manning norms and other productivity linked issues are carried out after discussions with the employees and the recognized unions at each location. The Corporate Human Resources function conducts non-discrimination reviews annually on a sample basis with unit heads and through on-site assessments. ITC Unit has appropriate systems and checks to ensure compliance with the Policy and statutory provisions, including means for filing of grievances, collective bargaining agreements and minutes from worker meetings.
- 28. Operations & Logistics Emphasis on the current programs of organization and planning which essentially deals with the future and two intimately related activities. Planning departments are key in developing strategies, crystallizing goals ,setting objectives, maintain control. Enables technologies facilitates smooth flow of goods and services and related information as well as integration of business processes. (Retailers place orders through mobile phones)
- 29. Research & Development ITC R&D centre are at Bengaluru, Hyderabad, Bhadrachalam, Rajamundry, consisting of a pool of world class scientists focused on providing the requisite R&D support system. Rajahmundry in AP cover all aspects of tobacco crop cultivation. (Collaboration with the central tobacco board research institute and tobacco board.) ITC pioneered FCV tobacco cultivation in India and introduced the burley and HDBRG varieties.
- 30. CONCLUSION ITC promoting their brands through advertisement campaign as well as door to door promotion. ITC is also focusing on Retailers and Wholesalers to promote their brand. The demand of their product in very low, because people don’t know about their brands very well. ITC knows their strength and weakness in the personal care market, so they are applying new concept to overcome their weaknesses. ITC now offering more margins, exiting offers and long credit period to retailers and wholesalers.