PROJECT

“ITC LIMITED”

Integrated MBA Programme

Submitted By: -
Anuj kadel -IM15031
Lokesh Vaishnav -IM15108

Submitted to: -
Prof. maulik shah
 Introduction on ITC:

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India
Limited. As the Company's ownership progressively Indianised, the name of the Company was
changed from Imperial Tobacco Company of India Limited to India Tobacco Company
Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the Company's multi-
business portfolio encompassing a wide range of businesses - Fast Moving Consumer
Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded Apparel, Education
and Stationery Products, Incense Sticks and Safety Matches, Hotels, Paperboards & Specialty
Papers, Packaging, Agri-Business and Information Technology. The full stops in the
Company's name were removed effective September 18, 2001.

The Company now stands rechristened 'ITC Limited'.

HISTORY OF ITC LIMITED

History and Evolution

Established in 1910, ITC Limited is a diversified conglomerate with businesses spanning Fast
Moving Consumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded
Apparel, Education & Stationery Products, Incense Sticks and Safety Matches; Hotels,
Paperboards and Packaging, Agro Business and Information Technology. The Company was
incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited.
As the Company's ownership progressively Indianite, the name of the Company was changed
to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition
of the ITC's multi-business portfolio encompassing a wide range of businesses, the full stops
in the Company's name were removed effective September 18, 2001. The Company now stands
rechristened 'ITC Limited,' where 'ITC' is today no longer an acronym or an initialised form.

A Beginning

The Company's beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was
the 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. Nehru
Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more
ways than one. It was to mark the beginning of a long and eventful journey into India's future.
The Company's headquarter building, 'Virginia House', which came up on that plot of land two
years later, would go on to become one of Kolkata's most venerated landmarks.

1925: Packaging and Printing: Backward Integration

Though the first six decades of the Company's existence were primarily devoted to the growth
and consolidation of the Cigarettes and Leaf Tobacco businesses, ITC's Packaging & Printing
Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business.
It is today India's most sophisticated packaging house.

1975: Entry into the Hospitality Sector - A 'Welcom' Move

The Seventies witnessed the beginnings of a corporate transformation that would usher in
momentous changes in the life of the Company. In 1975, the Company launched its Hotels
business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup
Hotel Chola' (now renamed My Fortune, Chennai). The objective of ITC's entry into the hotels
business was rooted in the concept of creating value for the nation. ITC chose the Hotels
business for its potential to earn high levels of foreign exchange, create tourism infrastructure
and generate large scale direct and indirect employment. Since then ITC's Hotels business has
grown to occupy a position of leadership, with over 100 owned and managed properties spread
across India under four brands namely, ITC Hotels - Luxury Collection, WelcomHotels,
Fortune Hotels and WelcomHeritage.

ITC Hotels recently took its first step toward international expansion with an upcoming super
premium luxury hotel in Colombo, Sri Lanka. In addition, ITC Hotels also recently tied up
with RP Group Hotels & Resorts to manage 5 hotels in Dubai and India under ITC Hotels' 5-
star 'WelcomHotel' brand and the mid-market to upscale 'Fortune' brand.

1979: Paperboards & Specialty Papers - Development of a Backward Area

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards
Limited. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002
and became a Division of the Company, Bhadrachalam Paperboards Division. In November
2002, this division merged with the Company's Tribeni Tissues Division to form the
Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality
and manufacturing processes are comparable to the best in the world. It has also made an
immense contribution to the development of Sarapaka, an economically backward area in the
state of Andhra Pradesh. It is directly involved in education, environmental protection and
community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT
Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows
ITC to improve customer service with reduced lead time and a wider product range.
1985: Nepal Subsidiary - First Steps beyond National Borders

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. In
August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed
to Surya Nepal Private Limited (Surya Nepal). In 2004, the company diversified into
manufacturing and exports of garments.

1990: Paperboards & Specialty Papers - Consolidation and Expansion

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and
a major supplier of tissue paper to the cigarette industry. The merged entity was named the
Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was
merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty
Papers Division in November 2002.

1990: Agri Business - Strengthening Farmer Linkages

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business
Division for export of agri-commodities. The Division is today one of India's largest exporters.
ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with soya
farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. Also,
through the 'Choupal Pradarshan Khet' initiative, the agri services vertical has been focusing
on improving productivity of crops while deepening the relationship with the farming
community.

2002: Education & Stationery Products - Offering the Greenest products

ITC launched line of premium range of notebooks under brand Paperkraft in 2002. To augment
its offering and to reach a wider student population, the Classmate range of notebooks was
launched in 2003. Classmate over the years has grown to become India's largest notebook
brand and has also increased its portfolio to occupy a greater share of the school bag. Years
2007- 2009 saw the launch of Practical Books, Drawing Books, Geometry Boxes, Pens and
Pencils under the 'Classmate' brand. 'Paperkraft' offers a diverse portfolio in the premium
executive stationery and office consumables segment.

2000: Lifestyle Retailing - Premium Offerings

ITC also entered the Lifestyle Retailing business with the Wills Sport range of international
quality relaxed wear for men and women in 2000. In 2006, Wills Lifestyle became title partner
of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has
gained recognition from buyers and retailers as the single largest B-2-B platform for the
Fashion Design industry. To mark the occasion, ITC launched a special 'Wills Signature',
taking the event forward to consumers.

2000: Information Technology - Business Friendly Solutions

In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC
Infotech India Limited, to more aggressively pursue emerging opportunities in this area. Today
ITC Infotech is one of India's fastest growing global IT and IT-enabled services companies and
has established itself as a key player in offshore outsourcing, providing outsourced IT solutions
and services to leading global customers across key focus verticals - Banking Financial
Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing,
Engineering Services, Media & Entertainment, Travel, Hospitality, Life Sciences and
Transportation & Logistics.

2001: Branded Packaged Foods - Delighting Millions of Households

ITC's foray into the Foods business is an outstanding example of successfully blending multiple
internal competencies to create a new driver of business growth. It began in August 2001 with
the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC
entered the confectionery and staples segments with the launch of the brands mint-
o and Candyman confectionery and Aashirvaad Atta (wheat flour). 2003 witnessed the
introduction of Sunfeast as the Company entered the biscuits segment. ITC entered the fast
growing branded snacks category with Bingo! in 2007. In 2010, ITC launched Sunfeast
Yippee! to enter the Indian instant noodles market. In September 2014, ITC
launched GumOn Chewing Gum marking the entry into the category of gums. The Company
entered the Fruit-based juices and beverages market with the launch of B Natural Fruit
beverages in January 2015. ITC's forayed into the dairy segment with the launch of
Aashirvaad Svasti Ghee in November 2015. Launched in April 2016, Fabelle chocolates are
ITC's premier offering in the luxury chocolate space. ITC forayed into the branded coffee
category in July 2016 with the launch of Sunbean Gourmet Coffee. In February 2017, ITC
launched ITC MasterChef super safe spices - the first-of-its-kind spices launched in India,
offering export quality super safe spices to the Indian homemaker. ITC MasterChef
Prawns were launched in June 2017 as the Company entered the Frozen foods segment. ITC's
first foray into fresh fruits and vegetables segment was marked with the launch
of Farmland Potatoes in November 2017.

In just over a decade and a half, the Foods business has grown to a significant size under
numerous distinctive brands, with an enviable distribution reach, a rapidly growing market
share and a solid market standing.

2002: Agarbattis & Safety Matches - Supporting the Small and Cottage Sector

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value
chain found yet another expression in the Safety Matches initiative. ITC now markets
popular safety matches brands like iKno, Mangaldeep and Aim.
ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation
of its partnership with the cottage sector. Mangaldeep is a highly established national brand
and is available across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood and
'Fragrance of Temple'.

2005: Personal Care Products - Expert Solutions for Discerning Consumers

ITC entered the Personal Care Business in 2005 and the portfolio has grown under 'Essenza
Di Wills', 'Fiama', 'Vivel' 'Superia' brands which have received encouraging consumer
response and have been progressively extended nationally. In May 2013, the business expanded
its product portfolio with the launch of Engage deodorants. ITC marked its foray into the
health space with the acquisition of the brand Savlon and Shower to Shower in 2015. In 2017,
the business acquired the brand Charmis to enhance its skincare portfolio.

2010: Expanding the Tobacco Portfolio

In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market. Armenteros
cigars are available exclusively at tobacco selling outlets in select hotels, fine dining restaurants
and exclusive clubs.
 PRESENT SITUATION OF ITC

ITC, headquartered at Kolkata, is one of India’s foremost private sector companies with a
market capitalization of US $ 45 billion and a turnover of US $ 7 billion. It is currently headed
by Mr. Y C Deveshwar.

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India
Limited. The name of the Company was changed to India Tobacco Company Limited in
1970 and then to I.T.C. Limited in 1974. In recognition of the Company’s multi-business
portfolio encompassing a wide range of businesses – Fast Moving Consumer Goods, Hotels,
Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology – the
full stops in the Company’s name were removed effective September 18, 2001. The Company
now stands rechristened ‘ITC Limited‘ where ‘ITC’ is today no longer an acronym or an
initialised form.

ITC is rated among the World’s Best Big Companies, Asia’s ‘Fab 50’ and the World’s Most
Reputable Companies by Forbes magazine and among India’s Most Valuable Companies by
Business Today.
ITC Presence:

ITC’s FMCG Product Mix

ITC Limited has a large focus on FMCG sector.

Food Products:

ITC’s Branded Packaged Foods business is one of the fastest growing foods businesses in India,
driven by the market standing and consumer franchise of its seven popular brands –
Aashirvaad, Sunfeast, Bingo!, Kitchens of India, mint-o, Candyman and Yippee! The Foods
business is today represented in 4 categories in the market – Staples, Snack Foods, Ready To
Eat Foods and Confectionery.
Lifestyle Products:

ITC’s Lifestyle Retailing Business Division has established a nationwide retailing presence
through Wills Lifestyle & John Players.
Personal Care:

ITC’s personal care portfolio brings world-class products with clearly differentiated benefits
to quality-seeking consumers. ITC’s Personal Care portfolio under the ‘Essenza Di Wills’,
‘Fiama Di Wills’, ‘Vivel’, ‘Engage’ and ‘Superia’ brands has received encouraging consumer
response and is being progressively extended nationally.

Education and stationary:

ITC is the manufacturer of India’s first Ozone treated environment friendly Elemental Chlorine
Free (ECF) pulp, paper and paperboard. They entered in education business with Papercraft
and Classmate brands. Classmate is one of the largest notebook brand in India.

Also, ITC has safety matches brands like AIM, i-Kno and incense sticks of Mangaldeep.

Cigarettes and Cigars:

ITC is the market leader in cigarettes in India. ITC’s highly popular portfolio of brands
includes Insignia, India Kings, Lucky Strike, Classic, Gold Flake, Navy Cut, Players,
Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal.
Paperboards and specialty papers:

ITC’s Paperboards and Specialty Papers Division is India’s largest, technologically advanced
and most eco-friendly, paper and paperboards business. The business caters to a wide spectrum
of packaging, graphic, communication, writing, printing and specialty paper requirements
through its four world-class manufacturing units, 7 sales offices and a network of more than
50 dealers in India.

BCG Matrix:
In ITC businesses, Paperboards and Agri businesses have higher growth rate with low market
share, while ITC infotech is having low market share and less growth.
Sustainability

ITC is the only company in the world of comparable dimensions to be carbon positive, water
positive and solid waste recycling positive. ITC has innovatively crafted unique business
models that synergise long-term shareholder value creation with enhancing societal capital.
This has be achieved by ITC by embedding sustainability in business, investing in social
development and adopting a low carbon growth path and a cleaner environment approach.

Financial status

Gross Revenue for the year grew by 19.9% to Rs. 41809.82 crores. Net Revenue at Rs.
29605.58 crores grew by 19.4% primarily driven by a 26.4% growth in the non-cigarette
FMCG segment, 26.4% growth in Agribusiness segment and 13.4% growth in the Cigarettes
segment. Profit before tax increased by 20.1% to Rs. 10684.18 crores while Net Profits at Rs
7418.39 crores registered a growth of 20.4%.
Segment wise net sales clearly shows the dominance of cigarette products. Company is trying
to increase the percentage of FMCG-others.
Business Strategy

ITC has grown around 300% during last ten years. Introduction of brands like Sunfeast,
Mangaldeep, and Classmate has been a great success. Entry in the personal care products
market after 2005 boosted the company income and growth. Company’s focus on quality,
innovation and differentiation backed by deep consumer insights, world-class R&D and an
efficient and responsive supply chain will further strengthen its leadership position in the Indian
FMCG industry.

Company started new innovations on agricultural sciences and biosciences through its research
centres. In mid-2012, ITC reduced the prices of non-cigarette products by 35% to increase its
market share. As a result, company experienced 26.4% growth in non-cigarette products during
2012-13.
Corporate Strategy

ITC Group’s corporate strategy aims at creating multiple drivers of growth anchored on its core
competencies. The Group is currently focused on four business groups: FMCG, Hotels,
Paperboards, Paper and Packaging and Agri Business. The Group’s organizational structure
and governance processes are designed to support effective management of multiple businesses
while retaining focus on each one of them.

Empowering Value Chain

A conscious strategy to drive the competitiveness of value chains linked to its businesses
enables ITC to make a more enduring contribution to national economic development. ITC’s
winning brands drive synergies to make these value chains sustainable and inclusive. At the
same time, by nurturing and strengthening these value chains, ITC adds a unique source of
competitive strength to its brands. A very successful example of value chain augmentation is
the ITC e-Choupal initiative that empowers over 4 million farmers, while at the same time
providing significant competitive advantage in procuring raw material for ITC’s Foods
business – be it for Aashirvaad atta produced from handpicked whole wheat, quality-assured
Aashirvaad spices or superior chip stock potatoes for Bingo! snack foods.

Investment in World Class Infrastructure

Significant investments made in creating world-class manufacturing infrastructure across India

provide ITC’s brands the much required competitive edge in terms of scale, quality and time-
to-market whilst ensuring rigorous standards of safety and hygiene. Several of ITC’s factories
have received the Platinum Green Factory Building Rating from the Indian Green Building
Council. ITC’s investment-led business growth strategy includes over 60 ongoing
infrastructure projects in the country, spanning luxury hotels, globally benchmarked factories,
warehouses, R&D, office and residential complexes.

Strategy for Pulp Industry

ITC promotes social forestry plantations for pulpwood as access to adequate supplies of
pulpwood at competitive prices remains a major challenge for the paper industry. The industry
is currently facing an acute shortage of pulpwood especially in Andhra Pradesh, which is
largely attributable to the enhanced demand from new pulp capacities that have been set up
without adequate investments in pulpwood plantations and diversion of supplies for alternative
usage such as commercial poles, bio-fuel etc. With demand far exceeding supplies, pulpwood
procurement prices witnessed steep hikes during the year, adversely impacting industry
margins. ITC expects the current demand-supply skew to be corrected over the next couple of
years on the back of additional plantations by farmers due to the prevailing remunerative price
levels and renewed efforts by pulp mills in promoting plantations in their core areas. In the
short to medium term, ITC is exploring several options including procurement of wood from
other states, use of bamboo in a limited scale etc. with a view to mitigating the cost pressure.
HR Strategy

ITC’s human resource management systems and processes are designed to empower employees
and enable them adopt innovative approaches to creating enduring value. These processes aim
to create a responsive, customer-centric and market-focused culture that enhances
organizational capability and vitality, so that each business is internationally competitive and
equipped to exploit emerging market opportunities. The strategy of organization lays great
emphasis on developing and supporting distributed leadership and this has ensured that each
of your Company’s businesses is managed by a team of competent, passionate and inspiring
leaders, capable of building an organization anchored in a culture of learning, innovation and
world-class execution.

MAJOR COMPITITOR OF ITC

HUL, P&G, Marico, Colgate-Polmolive, Dabur, L’oreal, Godfrey Phillip, VST, Golden
Tobacco, etc.
 Vision, Mission, Core Values and Governance Policies

ITC's 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.

ITC's Mission

To enhance the wealth generating capability of the enterprise in a globalising environment,

delivering superior and sustainable stakeholder value.
ITC's Core Values

ITC's Core Values are aimed at developing a customer-focused, high-performance organisation

which creates values for all its stakeholders.

Trusteeship

As professional managers, we are conscious that ITC has been given to us in 'trust' by all our
stakeholders.
We will actualise stakeholder value and interest on a long term sustainable basis.

Customer Focus

We are always customer focused and will deliver what the customer needs in terms of value,
quality and satisfaction.

Respect for People

We are result oriented, setting high performance standards for ourselves as individuals and
teams. We will simultaneously respect and value people and uphold humanness and human
dignity.

We acknowledge that every individual brings different perspectives and capabilities to the team
and that a strong team is founded on a variety of perspectives.

We want individuals to dream, value differences, create and experiment in pursuit of

opportunities and achieve leadership through teamwork.

Excellence

We do what is right, do it well and win. We will strive for excellence in whatever we do.

Innovation

We will constantly pursue newer and better processes, products, services and management
practices.

Nation Orientation

We are aware of our responsibility to generate economic value for the Nation. In pursuit of our
goals, we will make no compromise in complying with applicable laws and regulations at all
levels.
SWOT ANALYSES OF ITC LIMITED
 Strengths in the SWOT Analysis of ITC:
Portfolio of Business:

 ITC has 6 strong and diverse businesses under its name which boasts its total revenue
and allows ITC to innovate and explore other business opportunities.

Strong Brands in various businesses:

 ITC is a strong house of brands with most of its products leading the segments in which
they operate. ITC owns some of the most popular cigarette brands like gold flake and
Classic. It also owns Sunfeast, which is amongst the top selling biscuits in India.
Similarly, Aashirvaad, Yippee!, Engage, John Players and Bingo are also amongst
the market leader in their respective categories. ITC’s hotel and property businesses are
also doing well.With a portfolio like this, ITC has become one of the most powerful
conglomerates in India and is admired all over the world.

Effective Social Business Initiatives:

 ITC has developed a triple-bottom-line strategy through which concentrates on

developing the nation’s economic, social and environmental capital. ITC has brought
in initiatives like E-Choupal, Choupal Pradarshan Khet (CPK) which benefits
the people at the grass root level, i.e. farmers. These initiatives have also helped ITC to
improve its corporate image from a traditional tobacco manufacturer.

Inter and Intra-divisional Synergy:

 ITC has successfully utilised the strengths of existing business to foray into a newer
products or categories. ITC leveraged the strong distribution system of cigarette brands
to create a channel for its FMCG products. Furthermore, ITC leveraged the knowledge
of food and bakery items from its hotel business to enter into Packaged Food category.
 Weaknesses in the SWOT Analysis of ITC:
High Proportion of revenues from Tobacco products:

 ITC has been continuously making efforts to divert the FMCG business from over
dependence on tobacco products and have been successful in doing so to an extent. But,
tobacco products remain to be the major source of the revenue contributing more than
60% of the total revenue from FMCG businesses.

Association with Tobacco Products affects the image:

 ITC has made a lot of efforts to improve its corporate image but the fact that ITC has
many tobacco products in its portfolio impacts its corporate image.

An increase in Tax on Tobacco affects revenue:

 Due to the increase in taxation on tobacco products, the prices and hence
revenues get affected.
 Opportunities in the SWOT analysis of ITC

Strategic Acquisitions:

 ITC should continue making the strategic acquisition like they have done in the past by
acquiring Savlon from Johnson & Johnson and B Natural from Balan natural Foods.
Keeping in mind that the product fits into the existing distribution network, ITC can
look to increase its portfolio of products and expand its Non-Tobacco FMCG business
and thereby strengthening the base of revenue.

Growth in Purchasing power and improving lifestyle:

 ITC should tap on the increasing purchasing power and improving the lifestyle of
customers in India. This could help in increasing revenue for all its businesses.

Growing Personal Hygiene as well as Food processing Industry in India:

 ITC should utilise its distribution channel in Personal Hygiene and Food Processing
Industry to capitalise on the growth in the categories and hence increase revenue.

Tap opportunities created in the Rural Market:

 The growing rural market in India and other emerging nations create huge opportunities
to improve the bottom-line of the company.
 Threats in the SWOT Analysis of ITC:

Intensifying Competition in FMCG businesses:

 ITC faces intense competition in its FMCG business from large MNCs like HUL and
P&G and Indian FMCGs like Patanjali and Dabur. This limits the market share for ITC.

Strict Regulations and Increasing Taxation in Cigarette Business:

 The Tobacco and Cigarette Industry in India continue to be targeted by strict

government regulations and taxation system. This possesses a threat to the highly
profitable Cigarette business of ITC.

Increasing awareness on health:

 There has been an increase in the health consciousness which has resulted in the
decrease in demand for tobacco products in India. Also, anti-smoking campaigns
throughout the country affect the sales of cigarettes.
 PEST ANALYSIS of ITC

POLITICAL FACTORS:

The political arena has a huge influence upon the regulation of businesses, and the 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 the masses,
government institutions appear less capable than ever before of accommodating conflicts in a
society mobilized along competing ethnic and religious lines. Budget impact - Among the
FMCG stocks, ITC is one of the biggest gainers. Due to Govt. new conditions, ITC Maurya
won the 'Best eco-friendly hotel –Special Prize' award by the Ministry of Tourism, Government
of India. Some recent Political Factors ITC had to face in some previous years are mentioned
as below:
• Huge burden of VAT – increase in prices may affect the sales.
• Excise duty raised by union budget by 5 %.
• Ban on communication.
• Luxury tax in 10 states – making it difficult for ITC to maintain the consistency level
in prices for different places.
• Smuggling - regarding Tobacco products.
• 100% FDI allowed - as it will allow several Foreign Brands to enter the Indian
Markets, and thus, may affect the share of ITC in the Indian Markets.

ECONOMIC FACTORS:

Marketers need to consider the state of a trading economy in the short and long-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 rapidly rising inflation and the
complexities of running the world’s biggest democracy are proving challenging. India’s
economy has been one of the stars of global economics in recent years, growing consistently
over the past decade. 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 capital
market. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's
Most Reputable Companies by Forbes magazine, among India's Most Respected Companies
by Business World and among India's Most Valuable Companies by Business Today. ITC
ranks among India's 10 Most Valuable (Company) Brands', in a study conducted by Brand
Finance and published by the Economic Times. ITC also ranks among Asia's 50 best
performing companies compiled by Business Week. ITC employs over 25,000 people at more
than 60 locations across India. Some Economic Factors ITC had to face in some previous years
are mentioned as below:
• Bidee : cigarette ratio = 10:1 – which means they are the producers of a very less level
of tobacco products as compared to overall consumed.
• Profit margin is high – and thus, it will yield higher level of returns over comparatively
lesser inputs.
• Other forms of cheap tobacco intake – the economy of India is not as strong which
leads to people consuming cheap tobacco products. This means they can have higher
returns as production of cheap tobacco products is comparatively cheaper.
 • India’s top producer of cigarettes. – and it can be concluded that since ITC is the
leading producer of tobacco products in India, they earn a higher proportion of their
income by selling these tobacco products.

SOCIAL FACTORS:

The social influences on business vary from country to country. It is very important that such
factors are considered Envisioning a larger societal purpose has always been a hallmark of ITC.
As a corporate citizen with enduring relationships in rural India, ITC has a history of
collaboration with communities and government institutions to enhance farm productivity and
the rural resource base. Some Social Factors ITC had to face in some previous years are
mentioned as below:
• Becoming status symbol – for many, intake of tobacco is a status symbol. They feel
that the usage of Cigars and high-branded Cigarettes gives an increase to their status in
the society. ITC banks on it and makes highly-prices tobacco products as well in
addition to the cheaper ones.
• Companions mounted by W.H.O.
• Changing attitudes towards tobacco – Many people are becoming aware about the
ill-effects of intake of Tobacco. This may lead to the industry suffering some amount
of loss in the years to come.
• Restrictions by government – Several restrictions on tobacco and it advertising has
made the promotion of tobacco brands almost impossible, thus leading to a decline in
their sales.

TECHNOLOGICAL FACTORS:

Technology is vital for competitive advantage, and is a major driver of globalization.

Technology in India accounts for a substantial part of the country's GDP and export earnings
while providing employment to a significant number of its tertiary sector workforce. ITC's
development of its Integrated Quality Management System (IQMS) is based on its strong
foundation of implementing ISO 9001:2000, ISO 14001, OHSAS 18001, SA 8000,
HACCP (for Foods) and IQRS (performance rating and benchmarking of the quality
management system). Likewise, ITC's strategic initiatives for developing its people have been
based on participative management concepts like QC (Quality Control), TQM (Total
Quality Management), KSS (Kaizen Suggestion Scheme), 5S, Six Sigma etc. All ITC
manufacturing units have ISO quality certification. Almost all contract manufacturing units in
the Foods Business and all large hotels have food safety and quality systems certified by
accredited 'third party' in accordance with 'Hazard Analysis Critical Control Points' (HACCP)
standards. Additionally, the quality of all FMCG products of the Company is regularly
monitored through 'Product Quality Rating System' (PQRS). The Leaf Tobacco and Printing
& Packaging businesses have achieved world-class ratings in the 'International Quality Rating
System' (IQRS) for business excellence in which key processes are rated against international
benchmarks and certified by accredited 'third party' independent assurance providers. IT also
plays a very critical role in driving the ITC business strategies. IT is an enabler of the business
process to ensure business growth through efficient management of operations in the value
chain. IT creates new business process or restructures the current business process to enhance
customer service availability, efficient manufacturing / supply chain operations etc. Some
Technological Factors affecting ITC in some previous years are listed as below:
• State-of-the-art factories.
• Cheap labour supply – It has often been noticed that labour is very cheap and in
abundance in India. Thus, ITC gets large number of labour supplies from under-
developed areas for a comparatively cheaper cost and thus, their margin on the product
increases significantly.
• Development of IQMS i.e. Innovative Quality Products and Systems. The basic
principle of ITC is to produce quality products and thus, systems are set-up in order to
obtain them.
• Adapting other concepts like QC and TQM – Various techniques such as QC
(Quality Control) and TQM (Total Quality Management have regularly been adopted
by ITC so as to ensure the Quality is maintained and managed regularly.
• Hardware investment – High amount of investment is done in hardware such as large
Storehouses, high shelves, etc.
• Software investment – such as GPS monitoring circuits, long-distance clients landing
enquiries, GIS circuit optimization, and online method of electronic clearing, etc.
• Miscellaneous – along with good Hardware and Software investment, ITC also
possesses a great Logistic as well as Inventory support.
 PORTERS FIVE FORCE MODEL OF ITC LIMITED
Supplier power

 ITC Consumer product faces few quantity of supplier power simply due to the cost
they effected when switching supplier. Suppliers are doing high volume of business
with these companies are also positive value to their customers.

Threat of new entrants

 The amount of capital investment required to enter in certain house hold consumer
products needs more, so the threat of new entries may results fairly low.

Threat of substitutes

 Within the business sector, brand name proceeds to get success with building a
competitive advantage, but even though the pricing power of the products can be
eroded.

Degree of rivalry

 It does not price anything for a consumer to buy one brand of shampoo instead of
another, preparing the industry quite competitive. Consumer in this class enjoys
variable choices.

Customer power

 Consumer faces low buying power because of fragmented and have little influence on
product price. Comparing the buyer power retailers it is very high since they are
needed to negotiate the price with their competitors
Strategic group mapping (FMCG)
 OTHERS STRATEGIES USE BY ITC

1. Value chain Analysis

ITC target to refine its environmental impacts by 2020 not only applies to its industries, but
also to its total value chain, from the sourcing of raw materials to the disposal of product
packaging. For example, in its production industries, initiatives have been taken to reduce
water, waste and carbon emissions.

ITC industry in Coimbatore is now preparing biogas energy from the waste by-product of the
manufacturing products. Such initiatives of ITCS Business Principles’, which need the
company to work forward to the goal of developing a sustainable business. The business
benefits are increase in sales, build consumer preference and business benefits for suppliers by
sustainable supply chain projects.

2. Internal strengths and weaknesses

Leveraging more unremarked resources: ITC has been trying to improve a capacity to manage
their portfolio which will finally in a need of huge funds.

Upgrading financial management: As ITC is being achieved funds from different sources; it
needs to maintain an ideal flow of cash and proper project budget control. As flow of cash is
important for every organization, the decisions making by the administration must be very
accurate and flexible according to the market trends.

Investing in people: ITC consider their staff as their heart of the organization in order to reach
the business targets and objectives which require a good personal management.

Improving communications and information system: ITC is expanding its market area, it should
keep a proper communication level in order to regulate a smooth flow of business.

Strength

ITC leveraged its businesses to introduce new brands for new products. For example, ITC used
its experience of logistics in tobacco products to remote and other parts of India as the
advantage of its FMCG products. ITC master chefs from its food industry are often ready to
prepare new food items for its FMCG business.

ITC is a diversified industry who trading in a number of business sectors including cigarettes,
restaurants, agro business, bakery and confectionary, branded apparel, cosmetics, cards,
Information Technology, incense sticks, paper and stationery products. Its Gold Flake
cigarettes brand is the largest brand in India which takes over 70% of the tobacco market.
Weakness

The company’s traditional business was traded in tobacco. It is surprising that a business now
involved in branding continues to use its original name, despite the negative connection of
tobacco with cancer and death.

To fund its cash guzzling FMCG start-up, the company is still stands upon its tobacco income.
Cigarettes takes place 47 per cent of the company’s cash flow, and that in itself is source for
80% of its profits. So there is a conflict that ITC’s move into Fast Moving Consumer Goods is
being subsidised by its tobacco revenues.

4. Trends Analysis

(Trend analysis tries to predict a trend like a bull market run and ride that trend until data
suggests a trend reversal (e.g. bull to bear market). Trend analysis is useful in business
because fallowing with trends, and not against them, will profit for a business investor. Trend
Analysis is the practice of gathering information and attempting to current pattern, or trend,
in the knowledge.) Project Management Book of Knowledge
 Analysis of ITC through VRIO approach Strategy
 VRIO approach to human resources was given by Jay Barney in 1991
 VRIO framework is resource-based view or an economic tool used to determine the
strategic resources available to a firm
 The fundamental principle of this approach is that competitive advantage of a firm lies
primarily in the application of the bundle of valuable resources at the firm s disposal

Value
 Must employ talented and skilled work pool who will be experienced enough to
implement the business level strategies by controlling the operations
 This is looked after by the Human Resources department, which is able to create
VALUE
 Only value-adding resources can lead to competitive advantage, whereas non-value-
adding capabilities may lead to competitive disadvantage
 To separate the value adding employees from the others companies like ITC have a
excellence performance monitoring system in place paired with a reward for
performance policy
Imitability
 Due to the support of a strong Training and Development module it becomes difficult
to imitate the talent at ITC
 Due to In-House Training and OJT’s, Roleplay’s at the T&D department, it becomes
difficult to imitate
Organization
 For people to provide competitive advantage, organizations systems and practices
must be exploited to the maximum
 This involves a complex task of creating synergies between different departments and
units in order to exploit the resources available to the company
 The organizational structure of ITC is not the simplest, as it has multiple units across
industries and regions
 This does lead to confusion and wastage of resources
 It is an area where there is room for improvisation as more synergies and harmonies
between different business units can create more wealth for the company and its
stakeholders
Rare
 Brand equity that of ITC is an rare thing in industry and that no other company can
match.
 Marketing and leadership
 HR department
 CORPORATE STRATAGIES OF ITC
Focus on the chosen business portfolio
 FMCG; Hotels; Paperboards, Paper & Packaging; Agri Business; Information
Technology
Blend diverse core competencies residing in various Businesses to enhance the
competitive power of the portfolio
Position each business to attain leadership on the strength of world-class standards in
quality and costs
Craft appropriate ‘Strategy of Organisation’ and governance processes to:
 Enable focus on each business and – Harness diversity of portfolio to create unique
sources of competitive advantage

Strategy formulation

Strategy formulation is major to the well-being of an organization. There are two types of
strategy:

(1) corporate strategy, in which companies decide in which sector of business to engage in

(2) business or competitive strategy, which sets the objectives to get success in a particular
business. Even business strategy receives more attention than corporate strategy in the forms
of planning, market analysis, goal fixing and monitoring.

3. Buy over the competitor

In 1975, the Company starts its Hotels business with the acquisition of a hotel in Chennai which
was named as ‘ITC-Welcomgroup Hotel Chola’.Then ITC’s Hotels business has grown to get
a position of leadership, with over 100 owned and managed properties spread across India
under four brands namely, ITC Hotels -, Welcome Hotels, Welcome Heritage, Luxury
Collection and Fortune Hotels.

In 2004, ITC occupied the paperboard manufacturing facility of BILT Industrial Packaging
Co. Ltd near Coimbatore, Tamil Nadu. This Unit allows ITC to develop in customer service
with reduced lead time and a variety range of products.

In 1990, ITC take over the Tribeni Tissues Limited, a Specialty paper production company and
a major supplier of tissue paper to the cigarette industry. The merged company was named the
Tribeni Tissues Division.

4. Find a partner

In 1985, ITC starts Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. In
August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed
to Surya Nepal Private Limited. In 2004, the company entered into production and exports of
branded garments.

Being a partnership with SAP, ITC InfoTech offers extensive SAP related services to
companies like Enterprise Resource Planning software solutions, testing services, Product
Lifecycle Management solutions, , Sustainability management and reporting tool software, IT
infrastructure outsourcing, risk management solutions, retail technology services, logistics
supply chain management, Supply Chain Management solutions, Data Warehousing and
engineering solutions, offshore software development centers, application development
services and Business Intelligence.

The Tobacco leaf business partnership with the farmer is the truly Company’s commitment
beyond the market, ITC has enhance the Indian farmer to produce quality tobacco leaf and
linked them to global markets. It has a group of experienced, highly qualified and lead buyers
which classifiers the source to segregate tobaccos to customer expectations. A huge inventory
base of quality tobacco leafs providingan boundary in serving customers through product
customization, product bundling and value added products. This strategy influences the
customers from crop fluctuations, a key ‘winning proposition’ through all over the world.

5. Cut the price

ITC is compressing costs due to the impact of raw material prices. The manufacturer of brands
including Vivel, Fiama and face cream are raised to higher costs for vegetable oil and chemicals
in 2011. In February it forecast price rose to 11-13%, but now estimates that it will have to pay
14-16% much important for raw materials in this year. The group also includes soap, halls and
fair and lovely, said it would find an extra Rs.300 cores in cuts this year.

Because of slow growth and rise in material cost, consumer goods industries are implementing
different strategy to hold back price hikes. As industries begin to accomplish with the standard
packaging specifications, they are reducing the volume of packs to the nearest standard volume
in a bid to keep product cost unchanged, which technically known as compressing in trade
market

Even in some relevant cases where gram mages have been raised to conventional volumes,
industries are targeting on cost absorption to ensure that the standards of product should not
effect. For customers, this spells positive news. Due to raise in the cost of raw materials and
the rupee fluctuation, which treats imports more expensive, FMCG industries have increased
its cost by 8-10% since July 2011.
 Implementation
Cost-Benefit analysis
The process of manipulating and evaluating costs and benefits of an assignment or project
called cost-benefit analysis. It has two major purposes: 1. to eliminate if it is a favor
investment/decision 2. It involves by matching the total budgeted cost of each option verses
the total expected benefits, to analyze either the benefits outweigh by how much in its price.

 Availability of raw materials

Because of the Indian agro-climatic forecast, there is a mass production of raw material
recourses base suitable for food processing companies. India is the largest producer of milk,
canes, coconuts, spices, paddy, rice and cashew nuts. It is one of the largest growers of rice,
wheat and fruits &vegetables. India also produces washing soda and soda ash, which are used
in the manufacturing of soaps and detergents. The productivity of these raw materials makes
India the location advantage.

 Low cost labor

Low cost labor makes India a competitive advantage value. India’s labor cost is very low
amongst the other countries in the world, after China & Indonesia. Low labor costs make the
advantage in low cost of mass productions. Many international companies have established
their production units in India to outsource for domestic and export markets.
GRASSROOT STRATEGY
CONCLUSION
ITC’s vision to sustain its position as one of India’s most valuable corporations through world-
class performance, creating value for the Indian economy and the Company’s stakeholders has
been standing proof of its enduring commitment to delivering superior and sustainable stakeholder
value, over the last twenty two years of its operations. The Company’s existence was at the
initial phase primarily devoted to the growth and consolidation of the Cigarettes and Leaf
Tobacco businesses; its Packaging and Printing business contributed to strategic backward
integration for the cigarettes business. The business diversification strategy, it has adopted at
different times of its long journey has invariably targeted at creating value for the nation. It also
has remained for long among the top three contributors to the Exchequer. Over the last five years,
contribution to the Exchequer has increased to nearly 1.50 Lakh Crores. Over the last twenty
two years, the net revenue and post-tax profit have recorded compound annual growth rate of
13.3% and 18.6% respectively. ITC has leveraged it senterprise strengths to create the
businesses of tomorrow which have a growing presence across all three sectors of the economy –
agriculture, manufacturing and services. The aspiration is to be India’s No. 1 FMCG company
and achieve a turnover of `1,00,000 crores from the new Consumer Goods Businesses by 2030.

Along-with key decisions taken on business diversification and portfolio expansion, ITC has lived
by its credo of “Putting India First” through a super-ordinate vision articulated nearly two decades
ago to make societal value creation the bedrock of its business strategy. The focus has been on
spurring innovative strategies that would enable ITC make a growing contribution to building
economic, environmental and social capital of the nation. While ITC has achieved significant
milestones in its sustainability journey and the scale achieved is immensely encouraging, there
are miles to go. ITC will continue to strive to create larger societal value through superior Triple
Bottom Line performance. The Company is committed to make a meaningful contribution to
create a secure and sustainable future for all its stakeholders and the nation.