ITC Industry Analysis

8/2/2019 ITC Industry Analysis

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Strategic management

SUBMITTED BY: GROUP-6 (OPERATIONS)

PRERNA AGRAWALARAVINDDEVANSHU TIWARIKRISHNA BHASKARSAMRAT

SUBMITTED FOR PARTIAL FULFILMENT OF MBA 2010-2012

ALLIANCE BUSINESS SCHOOL, BANGALORE

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COMPANY Analysis


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Introduction:

ITC is one of India's foremost private sector companies with a marketcapitalization of over US $ 22 billion and a turnover of US $ 6 billion. ITC israted among the World's Best Big Companies, Asia's 'Fab 50' and theWorld's Most Reputable Companies by Forbes magazine, among India's MostRespected Companies by Business World and among India's Most ValuableCompanies by Business Today. ITC ranks among India's `10 Most Valuable(Company) Brands', in a study conducted by Brand Finance and publishedby the Economic Times. ITC also ranks among Asia's 50 best performingcompanies compiled by Business Week. ITC has a diversified presence inCigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-

Business, Packaged Foods & Confectionery, Information Technology,Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCGproducts. While ITC is an outstanding market leader in its traditionalbusinesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports,it is rapidly gaining market share even in its nascent businesses of PackagedFoods & Confectionery, Branded Apparel, Personal Care and Stationery.

As one of India's most valuable and respected corporations, ITC is widelyperceived to be dedicatedly nation-oriented. Chairman YC Deveshwar callsthis source of inspiration "a commitment beyond the market". In his ownwords: "ITC believes that its aspiration to create enduring value for the

nation provides the motive force to sustain growing shareholder value. ITCpractices this philosophy by not only driving each of its businesses towardsinternational competitiveness but by also consciously contributing toenhancing the competitiveness of the larger value chain of which it is apart." ITC's diversified status originates from its corporate strategy aimed atcreating multiple drivers of growth anchored on its time-tested corecompetencies: unmatched distribution reach, superior brand-buildingcapabilities, effective supply chain management and acknowledged serviceskills in hoteliering. Over time, the strategic forays into new businesses areexpected to garner a significant share of these emerging high-growthmarkets in India.

ITC's Agri-Business is one of India's largest exporters of agriculturalproducts. ITC is one of the country's biggest foreign exchange earners (US $3.2 billion in the last decade). The Company's 'e-Choupal' initiative isenabling Indian agriculture significantly enhance its competitiveness byempowering Indian farmers through the power of the Internet. Thistransformational strategy, which has already become the subject matter ofa case study at Harvard Business School, is expected to progressively createfor ITC a huge rural distribution infrastructure, significantly enhancing theCompany's marketing reach. ITC's wholly owned Information Technology

subsidiary, ITC Infotech India Ltd, provides IT services and solutions toleading global customers. ITC Infotech has carved a niche for itself by

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addressing customer challenges through innovative IT solutions. ITC'sproduction facilities and hotels have won numerous national andinternational awards for quality, productivity, safety and environmentmanagement systems. ITC was the first company in India to voluntarily seeka corporate governance rating. ITC employs over 26,000 people at more

than 60 locations across India. The Company continuously endeavors toenhance its wealth generating capabilities in a globalizing environment toconsistently reward more than 3,53,000 shareholders, fulfill the aspirationsof its stakeholders and meet societal expectations. This over-arching visionof the company is expressively captured in its corporate positioningstatement: "Enduring Value for the nation For the Shareholder."

Organization Analysis:

Vision:Sustain ITC's position as one of India's most valuable corporations through world classperformance, creating growing value for the Indian economy and the Companys stakeholders

Mission: To enhance the wealth generating capability of the enterprise in a globalizingenvironment, delivering superior and sustainable stakeholder value

Objectives:

The primary focus of ITC's Social Development Initiatives is to create sustainable sources offarm and off-farm livelihoods and to improve the social infrastructure especially in areas whereit impacts women and children. In pursuit of these objectives, the following goals have been setfor the next five years:

Web-enable 10 million farmers through 20,000 e-Choupals in 100,000 villages.

Bring at least 50,000 hectares under soil and moisture conservation practices.

Transform at least 1,00,000 hectares of wastelands into productive and revenue-generating assets for the poor.

Create at least 10,000 women entrepreneurs with a sustainable source of supplementaryincomes.

Improve the genetic stock of at least 150,000 cattle through artificial inseminationpractices.

Provide supplementary education support services to at least 100,000 children.

In its Endeavour to preserve India's cultural and artistic heritage, ITC will also continue toensure that its initiatives in the areas of preservation and promotion of Indian music, art andtheatre are strengthened.

Goals:

Poverty:To halve by 2015 the proportion of the worlds people whose income is less than$1/day.

Hunger:

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To halve by 2015 the proportion of the worlds people who suffer from hunger.

Universal Primary Education :To ensure that, by 2015, children everywhere will be able to complete a full course of

primary schooling.

Gender Equality :Progress towards gender equality and the empowerment of women should bedemonstrated by ensuring that girls and boys have equal access to primary andsecondary education.

Environmental Sustainability:To stop the unsustainable exploitation of natural resources and to halve, by 2015 the

proportion of people who are unable to reach or to afford safe drinking water.

Sustaining ITCs position as one of Indias most valuable corporations

Achieving leadership in each of the business segments within a reasonable time frame

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Strategic Analysis of the company:

In all businesses today, aligning human resource management with business strategy has

become an important element to succeed. And ITC is no different. Organizational

restructuring, managing key resource requirements, performance management systems,

career and succession planning have all been re-aligned to form synergy with the companys

overall business strategy.

Organizational Structure:

Strategic management and organization structure/structure followsstrategy:

Once the mission,vision, goals,objectives,strategies,values andprogrammes are defined for an organization. the manager has toimplement and execute the chosen strategy by developing theorganizational capabilities to reach the target objectives on schedule

Strategy execution on strategy implementation is an action orientedprocess which aims to achieve competencies and capabilities for aneffective organization

As firms grow, their structure generally changes from single tocomplex structure for eg-small firms are functionally structured. Asthey grow in size and are medium sized they lend to be divisionallystructured whereas large organizations are matrix structured

There are many internal and external factors that affects theorganization structure. However the basic aim of organization

structure is to facilitate corporate objectives effectively and efficiently.

There are four types of organization structure and they are as follows-

The functional strategy:

This is the simplest and least expensive structure.in this the activitiesare grouped by the business functions such as marketing,finance,HR,operations,etc.it promotes specialization and encouragesperfection at a given task.quick decisions making is possible. However

the big disadvantage is that it allows for top down approach and puts

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lot of pressure on the top management to perform.the functionalstructure can be diagrammatically represented as follows:-

The divisional structure-

As the small business grows it has more difficulty in managingdifferent functions in different geographical markets. This requires astructure that controls operations, competes successfully in variouslocations this kind of structure is called as divisional structure. A banksdivisional structure can be shown on the following basis: Geographic area

North zone, east zone, west zone and south zone

Products and servicesCorporate finance consumer finance

CustomerRetail segment,HNI,NRI segment etc..HNI(high networth individuals)

Strategic business unit( subs )structure

As the business grows in size and diversity organizational control andevaluation becomes more difficultThe span of control becomes too

large and thus increase in revenue need not be an increase in profits

In order to define a profit center, a sbu is needed.sbu groups similardivision into unique and delegates authority and responsibility foreach unit to a single executive and directly reports to a CEO

This increases co-ordination and communication leading to increasedprofitability and overall efficiencyThe SBU structure of ITC is as follows-

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Matrix structure:

This is the most complex of all design as it depends on both ways i.e.

authority and communication. Traditionally on functional and divisional

organizational structure depends on suthority, responsibility, and

communication with a top down approach

In a matrix structure there are dual times budgetary, authority and

control. This kind of system is not prevalent in the existing Indian

corporate sector but is very popular in USA by organizations heading new

products new markets and latest technologies.

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The disadvantages of this structure are that it is very complex, costly and

requires more management position.

At the top are Chairman and Board of Directors, who areresponsible for the strategic supervision of ITC, its wholly ownedsubsidiaries and their wholly owned subsidiaries. The ITC board isa balanced board comprising Executive and Non-ExecutiveDirectors. The Board ensures that the Company has clear goalsrelating to shareholder value and its growth. It sets strategic goalsand seeks accountability for their fulfillment. There are four board

committees, namely, the Audit Committee, the NominationsCommittee, the Compensation Committee and the InvestorServices Committee.

At the second level is the Corporate Management Committee,which is responsible for the strategic management of thecompany's businesses within Board-approved direction/framework.It comprises all the Executive Directors and three or four keysenior members of management.

Third level consists of divisional CEOs of each business assisted bytheir own divisional management committees. CorporateFunctions of the Executive Management Team includes Planningand Treasury, Accounting, Legal, Secretarial, Human Resources,Communications, Internal Audit and Information Technology.

With mundane tasks of everyday executive management beingdelegated the management remains focused on issues ofimmediate importance;

The Executive management of the individual businesses that are

free of handling strategic management responsibilities of ITC as awhole is then able to channelize their energies and time inenhancing the effectiveness and overall growth of their individualunits.

Corporate Governance as defined by ITC is a systemic process bywhich companies are directed and controlled to enhance theirwealth-generating capacity. A company employs vast sums ofsocietal resources during this process of wealth generation. ITC isof the firm belief that the governance process being followed

should ensure that these resources are used optimally to meet theaspirations of its stakeholders and society. This is further reflected

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2. Business strategy3. Functional strategy

The above three levels can be diagrametically rapresent are as follows,

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The above levels of management is explain as follows..

CORPORATE STRATEGY: [CEO,MD]1. It describe the companies over all direction in terms of its general attitude

towards growth and the management of its various businesses and the productline.

2. Corporate strategy refers to the principle strategy of the diversified firm.3. It is also concerned with selection of businesses.4. It is also called as highest level of strategy

ITCs corporate strategies are :

a) ITC is a board-managed professional company, committed to creating enduring

value for the shareholder and for the nation. It has a rich organisational culturerooted in its core values of respect for people and belief in empowerment. Its

philosophy of all-round value creation is backed by strong corporate governancepolicies and systems.

b) Create multiple drivers of growth by developing a portfolio of world class businesses that best matches organisational capability with opportunities indomestic and export markets.

c) Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards

& Packaging, Agri Business and Information Technology.

d) Benchmark the health of each business comprehensively across the criteria ofMarket Standing, Profitability and Internal Vitality.

e) Ensure that each of its businesses is world class and internationally competitive.

f) Enhance the competitive power of the portfolio through synergies derived byblending the diverse skills and capabilities residing in ITCs various businesses.

g) Create distributed leadership within the organisation by nurturing talented andfocused top management teams for each of the businesses.

h) Continuously strengthen and refine Corporate Governance processes and systemsto catalyse the entrepreneurial energies of management by striking the golden

balance between executive freedom and the need for effective control andaccountability.

Business strategy: [HOD]1. It is usually occurs at the strategic business unit level or product levels.2. It emphasis improvement of the competitive position of a firms product or

services in a specified industry

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Corporate

Business strategy

Functional strategy

CEO, MD

HOD

SUPERVISORS,

WORKERS,

EMPOYEES


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3. Business strategy includes mktg strategy`s, H.R strategy`s, financial strategy`s,legal strategy`s and information technology development strategies.

4. This level is based on short and medium term plan and each departmentfunctional responsibilities.

BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCEHENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970s.

According to this technique, businesses or products are classified as low or highperformers depending upon their market growth rate and relative market share.

THE BCG GROWTH-SHARE MATRIX

It is a portfolio planning model which is based on the observation that a companysbusiness units can be classified in to four categories:

a) Starsb) Question marksc) Cash cowsd) Dogs

It is based on the combination of market growth and market share relative to the nextbest competitor.

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Market attractiveness & Competitive strength is also important

Limitations

Assumes market growth rate. A firm may grow the market. A Dog may be helping other products. High market share/Growth is not the only success factor. Linkage between market share and profitability is questionable

STARS-High growth, High market share

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Stars are leaders in business. They also require heavy investment, to maintain its large market share.

It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share otherwise the star will become

a CASH COW.

CASH COWS-Low growth , High market share

They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining.

DOGS-Low growth, Low market share Dogs are the cash traps.

Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.

QUESTION MARKS-High growth , Low market share

Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged,

(low). Why question marks? Question marks have potential to become star and eventually cash cow but can

also become a dog. Investments should be high for question marks.

FUTURE BUSINESS STRATEGY OF ITC ARE-

No new investments in cigarrates

New ventures in agri business

Use the distribution network to reach rural areas

Tie ups and acquisitions to boost IT business

Increased exports

Cut down prices in the biscuit domain

Introduce low fat chips in respect of ITC foods

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Strategic management process

1) strategic management is the systematic approach to a major and increasing importantresponsibility of general management to position and relate the firm to its environment in aaway which will assure its continue success and make it secure from surprises

2) Strategic management is a stream of decision and actions which lead to the development ofan effective strategy or strategies to help achieve corporate objectives .

Thus strategic management process is the way in which strategies determine objectives andmake strategy decisions

3) The strategic management process can be broadly divided into 3phases each phases consistsof number of steps these phases are as follows

Phases 1) strategy formulation -

Strategy formulation can also be called as strategic planning .

A strategic formulation is done at the top management level at the top management level or atthe top management level or at the co-operate level stage with the levels of strategicmanagement .

Example- At the top are Chairman and Board of Directors, who are responsible for thestrategic supervision of ITC, its wholly owned subsidiaries and their wholly ownedsubsidiaries.

The ITC board is a balanced board comprising Executive and Non-Executive Directors.

The Board ensures that the Company has clear goals relating to shareholder value and itsgrowth.

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It sets strategic goals and seeks accountability for their fulfillment.

There are four board committees, namely, the Audit Committee, the NominationsCommittee, the Compensation Committee and the Investor Services Committee.

The strategic formulation phase evolves the following steps

Step 1 framing mission and objectives

Eg-

Mission:

To enhance the wealth generating capability of the enterprise in a globalising environment,delivering superior and sustainable stakeholder value

Objective-

Web-enable 10 million farmers through 20,000 e-Choupals in 100,000 villages.

Bring at least 50,000 hectares under soil and moisture conservation practices.

Step 2 analysis of internal environment

After setting the objective or goals the analysis of internal environment may be done theinternal environment refers to the study of men power machines method procedure of theorganization that is it reveals strength and weakness of the organization

The internal environment

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All factors that are internal to the organization are known as the 'internal environment'. They aregenerally audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials andMarkets. The internal environment is as important for managing change as the external. Asmarketers we call the process of managing internal change 'internal marketing.'

Men:

ITC employs over 25,000 people at more than 60 locations across India. The Companycontinuously endeavors to enhance its wealth generating capabilities in a globalizingenvironment to consistently reward more than 3, 53,000 shareholders, fulfill the aspirations ofits stakeholders and meet societal expectations.

Money:

ITC is one of India's foremost private sector companies with a market capitalization of nearlyUS $ 14 billion and a turnover of over US $ 5 billion. ITC is one of the country's biggest foreignexchange earners (US $ 3.2 billion in the last decade).

Machinery:

ITC is using world class machinery so that they can match with demand of the market. Theirmost of the facilities are fully automated.

Materials:

ITC is using quality raw material so that they can give world class quality product to theircustomers. They are very selective while selecting supplier for them.

Markets:

Its businesses and brands are focused almost entirely on the Indian markets, and despite beingmost well-known for its tobacco brands such as Gold Flake, the business is now diversifying

into new FMCG (Fast Moving Consumer Goods) brands in a number of market sectors -including cigarettes, hotels, paper, agriculture, packaged foods and confectionary, brandedapparel, personal care, greetings cards, Information Technology, safety matches, incense sticksand stationery.

Step 3 analysis of external environment .

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The external environment refers to study of government competition consumer technologydevelopment affecting the organization that is it reveals opportunity and threats of theorganization.

Customers ,Competitors ,Market trends ,Suppliers ,Partners ,Social changes ,Newtechnology ,Economic environment

Example-

Supplier: Raw materials, intermediates and the final product sourcing/distribution in widespreadacross the country. Few items have more than 1 supplier for the raw material e.g. filter rods can

be sourced from Mumbai, Bangalore or Devas in MP.

Huge supply-demand network for cigarette business, which must operate in the cost optimalway to maximize the profits. Few segments are particular to factories e.g. Kingsize.

Consumer: Organisations survive on the basis of meeting the needs, wants and providingbenefits for their customers.

Failure to do so will result in a failed business strategy. Its businesses and brands are focusedalmost entirely on the Indian markets, and despite being most well-known for its tobacco brandssuch as Gold Flake, the business is now diversifying into new FMCG (Fast Moving ConsumerGoods) brands in a number of market sectors.

The macro-environment

This includes all factors that can influence and organization, but that are out of their directcontrol. A company does not generally influence any laws (although it is accepted that theycould lobby or be part of a trade organization). It is continuously changing, and the companyneeds to be flexible to adapt. There may be aggressive competition and rivalry in a market.Globalization means that there is always the threat of substitute products and new entrants. Thewider environment is also ever changing, and the marketer needs to compensate for changes in

culture, politics, economics and technology.

Economic Factors: Marketers need to consider the state of a trading economy in the short andlong-terms. This is especially true when planning for international marketing.

India has been one of the best performers in the world economy in recent years, but rapidlyrising inflation and the complexities of running the worlds biggest democracy are provingchallenging.

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Indias economy has been one of the stars of global economics in recent years, growing 9.2% in2007 and 9.6% in 2006. Growth had been supported by markets reforms, huge inflows of FDI,rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capitalmarket.

Socio-Cultural Factors: The social and cultural influences on business vary from country tocountry. It is very important that such factors are considered Envisioning a larger societal

purpose has always been a hallmark of ITC. Following are the factor which should be kept inmind while doing business in india:

1. India, being a multi-cultural and multi-religious society, celebrates holidays and festivalsof various religions

2. India is one of the most religiously diverse nations in the world, with some of the mostdeeply religious societies and cultures. Religion still plays a central and definitive role in

the life of most of its people.3. The demographics of India is remarkably diverse. India's population of approximately

1.17 billion people (estimate for July, 2009) consists of approximately one-sixth of theworld's population

4. India is a young country with an average age between 23-24 years.

As a corporate citizen with enduring relationships in rural India, ITC has a history ofcollaboration with communities and government institutions to enhance farm productivity andthe rural resource base.

ITCs commitments in agricultural R&D and knowledge sharing have spanned vital aspects ofcompetitiveness efficient farm practices, soil and water management.

Technology factor: Technology is vital for competitive advantage, and is a major driver ofglobalization. Technology in India accounts for a substantial part of the country's GDP andexport earnings while providing employment to a significant number of its tertiary sectorworkforce.

Technically proficient immigrants from India sought jobs in the western world from the 1950sonwards as India's education system produced more engineers than its industry could absorb.

Indias growing stature in the information age enabled it to form close ties with both the UnitedStates of America and the European Union

IT plays a very critical role in driving the ITC business strategies.

IT is an enabler of the business process to ensure business growth through efficientmanagement of operations in the value chain.

IT creates new business process or restructure the current business process to enhancecustomer service availability ,efficient manufacturing / supply chain operations etc

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Political factors: The political arena has a huge influence upon the regulation of businesses, andthe spending power of consumers and other businesses. The Indian polity is increasingly seen

by political observers as the problem. When populist political appeals stir the passions of themasses, government institutions appear less capable than ever before of accommodatingconflicts in a society mobilized along competing ethnic and religious lines

Budget impact: Among the FMCG stocks Marico and ITC are the biggestgainers. Marico has added 7.3% to Rs 77. ITC has surged 7% to Rs 212, after nochange in excise cuts on cigarettes

Due to Govt new conditions ITC Maurya winning the 'Best eco-friendly hotel Special Prize' award by the Ministry of Tourism, Government of India.

Step 4 gap analysis

the management also conduct for this purpose the management must compare and analyze itspresent performance level and the desired future performances level

eg- Advertisement for the Aashirvaad atta was found to be ineffective and infrequent and didnot attract the target customers especially housewives

Step 5 framing alternative strategy-

After framing mission objectives doing swot analysis is gap analysis the management needs toframe alternative strategies to accomplish objectives of the firm.

Eg- ITC came up with an aggressive advertisement to attract the Indian housewives as they arefound to be the decision maker in the buying of Atta.

Choice of strategies = The organization cannot implement all the alternatives strategiestherefore the company has to be selective in nature.

Eg-For increasing the sales of ashirwad aata the company selected the marketing strategy ofadvertisement through which it increased it sales

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Phase 2 strategic implementation

The strategies are formulated to each and every functional development of the business that ismarketing finance , hr, operations ,etc once the strategies are formulated then the next stage is

implemented of such strategies the strategies involves the following steps

Step 1 formulation of plans program project

These is a need to frame plans programs and project as strategy by itself does not lead to actionthat is plans result in different kinds of program that is program lead to formulation of project

Eg-LOW CARBON GROWTH STRATEGY

ITC made a plan and was the only enterprise in the world of its size to have achieved andsustained three global environmental distinctions

Step2 project implementation

A project passes through various stages before the actual implementation .The various phasesinclude conception phase, definition phase, implementation phase and clean up phase

Eg-This plan was effectively carried out as 31% of the energy consumed by ITC was from cleanand renewable source such as wind power

Step3 procedural implementation

The organisation needs to the aware of the regulatory frame work of the government authorities before implementing strategies. The government (regulatory) frame work that needs to bechecked out may be such as form regulations, foreign collaboration procedure foreign traderegulation etc

Eg-This strategy was implemented to contribute to the goals of national action plan on climatechange

Step4 : resources allocation

It deals with the arrangement and commitment of different types of resources of various

activities so as to achieve the goals of the organization

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Eg-ITCs agri-business with its deep rural linkages is well poised as a supply chain partner tocreate value for ITC FOODS and tobacco business

Step 5 : structural implementation

Organisation structure is the frame work to which the organization operates there can be variousorganisational structure for the implementation of the strategy

Eg-chairman and board of directors,corporate management committee and divisional CEOs areresponsible with the implementation of the strategies.

Step 6 :functional implementation

it deals with the implementation of functional plans and policies that is for effectiveimplementation of strategy, strategists have to provide direction to functional manager

eg-Promotion, Advertising,Pricing

Steps 7 :behavioral implementation

It deals with issues of leadership co-operate politics, use of power personal value ,businessethics and social responsibility

ITCs social responsibility towards society-

ITC e-Choupal won the Award for the importance of its contribution to developmentpriorities like poverty reduction, its scale and replicability, sustainability and transparency.

The Company continues to sustain its unique position as the only company in the world to becarbon positive, water positive and solid waste recycling positive.

Phase 3 strategic evaluation

Evaluation of strategy is that phase of strategic management process in which managers try toassure that the strategic choice is properly implemented and its meeting the objectives of thecompany . The strategic evaluation involves the following steps

Step 1 :setting of standards

The strategies need to establish performance target standards objectives strategy andimplimentation plans standards needs to be define and the employees must accept it

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Eg- The company's original business was traded in tobacco. ITC stands for Imperial TobaccoCompany of India Limited. The company was into the manufacturing of cigarrates earlier.

Step 2 measurement of performance

The next step is to measure the actual performance both in quantitative terms and qualitativeterms

Cigarettes accounted for 47 per cent of the company's turnover, and that in itself is responsiblefor 80% of its profits of ITC.

Step 3 comparison of actual performance with standards

The actual performance needs to be compared with standards to find out eviction if any

It is interesting that a business that is now so involved in branding continues to use its originalname, despite the negative connection of tobacco with poor health and premature death.

Step 4 finding out deviation after comparison the manager may noticed the deviation

Although the ITC group is marketing its image as an ideal corporate citizen and a company that

takes its social responsibility seriously, it still earns 80% of revenues from selling cigarettes andother tobacco related products.

Step 5 analyzing deviation = the deviations may be reported to higher authorities and the higherauthorities must analyses the cause of deviation

The cause of deviation was noted to be more dependence of the company on tobacco relatedproducts for its profits so ITC has transformed itself from a leading cigarette manufacturer to anumbrella group that offers a diversified product mix to enhance its brand image and reducedependency on tobacco related products.

Step 6 taking corrective measure after identifying the causes of eviations,the manager needs totake the corrective steps to correct the deviation

So there is an argument that ITC's move into FMCG (Fast Moving Consumer Goods)anddiversify its business operations

Thus the strategic management process is the complicated complex and challenging tax whichinvolves 19steps and that can be diagrammatically represented as follows

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Recommendations:

a. According to the survey conducted and after analyzing the Price, Promotion,Place and Product of the ITC and the consumer behavior in the market thecompany can implement the following measure for increasing the sales andvolume of their products.

b. Advertisement for the Aashirvaad atta is found to be ineffective and infrequent.So,the company can come up with an aggressive advertisement to attract theIndianhousewife as they are found to be the decision maker in the buying of Atta.

c. The company can come up the concept of forming a Retail chain of Foodproducts across all over India as it is follows the marketing strategy of Umbrellabranding.In such retail chains all the food division products can be sold at thediscounted rate, as more and more products are coming under the Umbrella

products likefood processing.

d. The branded atta can be exported to other countries where we are currentlyexporting the whole wheat.

e. The company can approach the government or distributing their products inMilitary canteens and can sell them to organization that provides the afternoonmeals to the children as a part of mid-day meal scheme.

f. Precision analysis of products in Food Business.g. Process optimization for product development in Food Business.h. Impact of measures for reduction of energy consumption and consequent impact

on the cost of production of goods.

SWOT Analysis

SWOT analysis is a tool for auditing an organization and its environment. It is the firststage of planning and helps marketers to focus on key issues

Strengths

ITC leveraged it traditional businesses to develop newbrands for new segments.

For example- ITC used its experience of transporting anddistributing tobacco products to remote and distant partsof India to the advantage of its FMCG products. ITCmaster chefs from its hotel chain are often asked todevelop new food concepts for its FMCG business. ITC isa diversified company trading in a number of businesssectors including cigarettes, hotels, paper, agriculture,

packaged foods and confectionary, branded apparel, personal care, greetings cards, InformationTechnology, safety matches, incense sticks and stationery.

Weaknesses

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The company's original business was traded in tobacco. ITC stands for Imperial TobaccoCompany of India Limited. It is interesting that a business that is now so involved in brandingcontinues to use its original name, despite the negative connection of tobacco with poor healthand premature death.To fund its cash guzzling FMCG start-up, the company is still dependent upon its tobacco

revenues. Cigarettes account for 47 per cent of the company's turnover, and that in itself isresponsible for 80% of its profits. So there is an argument that ITC's move into FMCG (FastMoving Consumer Goods) is being subsidized by its tobacco operations. Its Gold Flake tobacco

brand is the largest FMCG brand in India - and this single brand alone hold 70% of the tobaccomarket.

Opportunities

Core brands such as Aashirvaad, Mint-o, Bingo! And Sun Feast (and others) can be developedusing strategies of market development, product development and marketing penetration. ITC ismoving into new and emerging sectors including Information Technology, supporting business

solutions. e-Choupal is a community of practice that links rural Indian farmers using theInternet. This is an original and well thought of initiative that could be used in other sectors inmany other parts of the world. It is also an ambitious project that has a goal of reaching 10million farmers in 100,000 villages. ITC leverages e-Choupal in a novel way. The companyresearched the tastes of consumers in the North, West and East of India of atta (a popular type ofwheat flour), then used the network to source and create the raw materials from farmers andthen blend them for consumers under purposeful brand names such as Aashirvaad Select in the

Northern market, Aashirvaad MP Chakki in the Western market and Aashirvaad in the Easternmarket. This concept is tremendously difficult for competitors to emulate. Chairman YogiDeveshwar's strategic vision is to turn his Indian conglomerate into the country's premierFMCG business. Per capita consumption of personal care products in India is the lowest in theworld offering an opportunity for ITC's soaps, shampoos and fragrances under their Wills brand.

Threats

The obvious threat is from competition, both domestic and international. The laws of economicsdictate that if competitors see that there is a solid profit to be made in an emerging consumersociety that ultimately new products and services will be made available. Western companieswill see India as an exciting opportunity for themselves to find new market segments for theirown offerings.ITC's opportunities are likely to be opportunities for other companies as well. Therefore the

dynamic of competition will alter in the medium-term. Then ITC will need to decide whether

being a diversified conglomerate is the most competitive strategic formation for a secure future.ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company ofIndia Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, wasthe centre of the Company's existence. The Company celebrated its 16th birthday on August 24,1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. NehruRoad) Kolkata, for the sum of Rs 310,000.

Conclusion:

1. ITC promoting their brands through advertisement campaign as well as door to doorpromotion.

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2. ITC is also focusing on Retailers and Wholesalers to promote their brand.

3. The demand of their product in very low, because people dont know about their brandsvery well.

4. ITC knows their strength and weakness in the personal care market, so they are applyingnew concept to overcome their weaknesses.

5. ITC now offering more margins, exiting offers and long credit period to retailers andwholesalers.

ITC Industry Analysis

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Transcript of ITC Industry Analysis