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BCG Matrix for ITC Ltd.
Ranjan Varma
http://financexchange.blogspot.com
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Structure
Act I Lights! ITC- A Background
Act II Camera! The BCG matrix
Act III Action!Learning points and
conclusions
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ActI [Lights!]Governance structure
Strategic supervision
Strategic management Executive management
Core values
Nation Orientation; Trusteeship; Excellence; Customer focus; respect for people; Innovation
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Vision & Mission statements Vision: Sustain ITCs position as one of
Indias most valuable corporationsthrough world class performance,creating growing value for the Indianeconomy and the Companys
stakeholders. Mission: To enhance the wealth
generating capability of the enterprise ina globalizing environment, delivering
superior and sustainable stakeholdervalue.
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Business Mix of ITC Ltd.
FMCG Cigarettes Foods Lifestyle Retailing
Greeting, Gifting & Stationery Safety MatchesAgarbattis
Paperboards & Packaging Paperboards & Specialty Papers Packaging
http://www.itcportal.com/busi_cigg_tob/busi_cig_itd_new.htmlhttp://www.itcportal.com/busi_cigg_tob/busi_cig_itd_new.htmlhttp://www.itcportal.com/busi_cigg_tob/busi_cig_itd_new.htmlhttp://www.itcportal.com/foods/foods.htmlhttp://www.itcportal.com/lyfestyle_retailing/lifestyle_retailing.htmlhttp://www.itcportal.com/greetings/greetings.htmhttp://www.itcportal.com/safetymatches/safetymatches.htmlhttp://www.itcportal.com/agarbathi/agarbathi.htmlhttp://www.itcportal.com/paperboards_specialtypapers/paperboards.htmlhttp://www.itcportal.com/packaging/packaging_new.htmlhttp://www.itcportal.com/packaging/packaging_new.htmlhttp://www.itcportal.com/paperboards_specialtypapers/paperboards.htmlhttp://www.itcportal.com/agarbathi/agarbathi.htmlhttp://www.itcportal.com/safetymatches/safetymatches.htmlhttp://www.itcportal.com/greetings/greetings.htmhttp://www.itcportal.com/lyfestyle_retailing/lifestyle_retailing.htmlhttp://www.itcportal.com/foods/foods.htmlhttp://www.itcportal.com/busi_cigg_tob/busi_cig_itd_new.html -
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Business Mix (Contd)
Agri - Business
Agri-Exports
e-Choupal Leaf Tobacco
Hotels
Group Companies ITC Infotech; etc.
http://www.itcportal.com/agri_exports/agri_exports_new.htmlhttp://www.itcportal.com/agri_exports/agri_exports_new.htmlhttp://www.itcportal.com/agri_exports/agri_exports_new.htmlhttp://www.itcportal.com/agri_exports/e-choupal_new.htmhttp://www.itcportal.com/busi_cigg_tob/busi_cig_iltd_new.htmlhttp://www.itcportal.com/group_companies/group_companies.htmlhttp://www.itcportal.com/group_companies/group_companies.htmlhttp://www.itcportal.com/busi_cigg_tob/busi_cig_iltd_new.htmlhttp://www.itcportal.com/agri_exports/e-choupal_new.htmhttp://www.itcportal.com/agri_exports/e-choupal_new.htmhttp://www.itcportal.com/agri_exports/e-choupal_new.htmhttp://www.itcportal.com/agri_exports/agri_exports_new.htmlhttp://www.itcportal.com/agri_exports/agri_exports_new.htmlhttp://www.itcportal.com/agri_exports/agri_exports_new.html -
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Business wise Sales data
Business/ Year Growth%
Value (Rs in Crore)2005 2004
FMCG-Cigarettes 8.4 10002.54 9230.27
FMCG-Others 85.2 563.39 304.16
Hotels 124.1 577.25 257.53
Agribusiness 4.2 1780.07 1708.77
Paper & pkg. 24.9 1565.31 1253.29
Net revenue 12.99 13349.58 11815.04
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CAGR during FY 2005-2008
Category CAGR Growth parameters
Cigarettes 10.9 % Pricing power
Hotels 22.7% Inward traffic, occupancy
Paper 17.2 % Capacity utilization, value
added products
Agri
business
34.3 % E-choupal, choupal sagar,
FMCG-
Others
60.2 % Fast track, decent share.
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Market share of ITC Ltd.
Outstanding market leader
Cigarettes, Hotels, Paperboards,
Packaging and Agri-Exports.Gaining market share
Nascent businesses of PackagedFoods & Confectionery, Branded
Apparel and Greeting Cards.
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Segment Dominance Contribution %Revenue PBIT
Cigarettes 70% share 77.0% 87.7%
Paper &Packg.
Packaging board No.1 in Asia
7.3% 10.7%
Agri
business
1of the largest xporters
from India
7.0% 3.7%
Hotels ITC Group ranks No.2 4.3% 5.4%
FMCG
(Others)
20% share of greeting
cards market,'Aashirvaad' atta isNo.1 in brandedsegment
4.4% -7.5%
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Market attractiveness & Competitive
strength is also important.
A
ct
2
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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 andprofitability is questionable.
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The BCG Matrix for ITC
Ltd.StarsHotels
Paperboards/
Packaging.
Agri business.
?FMCG- Others
CowsFMCG-Cigarettes
Dogs
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Act III - Action- Learning points
and conclusions
? - To be handled with care.
Strategic forays into emerging high growthmarkets.
E-Choupal is a transformational strategy.
Strong brand building capability will be
tested.
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Learning points (Contd)
Corporate strategy of creating multiple
drivers of growth anchored on its corecompetencies and distribution reach.
Embracing difficult and challenging corporate
strategy. (Ex: Paperboards).
EHS philosophy: Contribution to the triplebottom line- Economic, Environment and
social capital.
