itc strategy

8/12/2019 itc strategy

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ITC LT


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INTRODUCTION

Imperial Tobacco company India Ltd was incorporated on 24 August,1910 when British American Tobacco (BAT) consolidated itsIndian operations under a single umbrella.

Imperial Tobacco company India Ltd was managing the entire gamut ofBAT's tobacco operations in India.

Companys name changed to Indian Tobacco company Ltd in the year1970 & then to I.T.C. Ltd in the year 1974

Company diversified into many segments other than Cigarettes such asFMCG, HOTEL, Stationary, packaging, Information Technology &

Agricultural exports


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HISTORY

In year 1928, Imperial Tobacco Company was managing BATs opIndia at headquarters in Kolkata

Main competitors of Imperial Tobacco Company were Golden TobaGodfrey Phillip. To symbolize the move beyond tobacco, the companys name was cto I.T.C. Ltd.


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ITC ERAS

HASKAR ERA ( 1969-1983 ) : CHAIRMAN : Ajit Narain Haksa SAPRU ERA ( 1983- 1989) : CHAIRMAN: Jagdish Sapru

CHUGH ERA ( 1989 1997 ): CHAIRMAN : K.L CHUGH , DEBESHWAR ERA ( 1997 onwards) : CHAIRMAN: Y.C. Dev


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ITC MIX FMCG Cigarettes Foods Lifestyle Retailing Greeting, Gifting & Stationery Safety Matches Agarbattis


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STRENGTHS

Strong Management Diversification Brand image

ITC leveraged it traditional businesses to develop new brands Sustainability CSR


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WEAKNESS

Unrelated diversifications Dependent upon its tobacco revenues Heavy taxation policy


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THREATS

Increasing tax in Cigarettes Health hazard

Competitors FDI in retail


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ITC ETOP ANALYSISPOLITICAL High Excise duty

Advertising cannot be done

Additional tax in some states (Luxury tax)FDI in retail

ECONOMICAL High Profit Margin

SOCIO CULTURAL Companies mounted by WHOPeople changing their attitude towards tobacco

TECHNICAL Total quality managementQuality Checking


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PORTER 5 FORCESANALYSIS

Consumer powerConsumer faces low buying power as the substitute product price is almost same.Supplier powerSuppliers are not having more power because they are getting order in huge quantity andincreasing sale of ITC make the supplier sales increase.Threat of new entrantsThe amount of capital investment required is more to enter in certain consumer products, sothreat of new entries is low.Threat of substitutesBrand name plays a role, ITC is having good brand name and substitute pricing is marginal so there is no threat of substitute.Degree of rivalryQuality product have its loyal customer, so no rivalry of product.


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Sales Data of ITCBusiness/ Year Growth

% Value (Rs in Cro

2005 2004 FMCG-Cigarettes 8.4 10002.54 9230.2

FMCG-Others 85.2 563.39 304.16

Hotels 124.1 577.25 257.53

Agribusiness 4.2 1780.07 1708.7

Paper & pkg. 24.9 1565.31 1253.2

Net revenue 12.99 13349.58 11815


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BCG Matrix of ITC Ltd.StarsHotels Agro business.Paperboards/Packaging.

?FMCG-Others

Cash CowsCigarettes

Dogs


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PROBLEMS AND SOLUTION

After independence company faced many problem of high tax rates for

it hiked its price and thus it resulted into loss of percentage in market sh

In late 1960s filter cigarettes came, it introduced Wills Filter with taMade for each other, which help in sale of cigarettes on large scale ashowed relation between filter and cigarettes and thus company haveachieved success again its market share.


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In early 1970s there were lot of changes in indian economic, poltical andenvironment norms and launch ofTirade by Golden Tobacco against ITC

ITC Board had made two fine strategies to overcome the problem.1. Enter in new industry that can help in earning foreign exchange2. Entering in the core sector of industry where Government have difficult to attract

finances by industrial.

It made change in company name I.T.C. Ltd. And given new direction to company.

Haksar and team diversifies business in Paperboards, Hotels and Marine Foods.


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Chugh also identified the needof Financial Services and GlobalTrading.

ITC Peregrine Mutual Funds andITC Peregrine Capita.


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Chugh realized that global company will be spreading their brand in India

ITC had done marketing research and than taken decision of relaunched and

repositioned each brands of cigarettes : India Kings, Classic, Wills, ScissorsBristol, Gold Flake and Capstan .


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Corporate Strategies of ITC

Sustaining growth, adding internal capabilities along with emergingopportunities

Practice of quality competitiveness in all area of business andacross the entire value chain.

Internal vitality Market Standing Profitability


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Recommendation s

Maintain the current level of market share by Investing more incigarettes .

For market growth investing high in Hotels, paper and packaging andagricultural business.

Invest in foods, agarbattis and matches and look over its growth.

itc strategy

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