Strategy Management

Presentation

Company: ITC Limited – Tobacco Division

Group Members:
Vamshi Krishna Sujay Mujeti Bhanu Prasad Dannana
Ghatkeshwaram

Prakash Kumarimali Abijeeth Manikanta Budankayala

Pramod Manuomare
Akshit Sai Kalyan Ravula
 Contents:
• Introduction

• History

• External Analysis

• Internal Analysis

• Corporate Strategy

• Business Strategy

• Evaluation

• Conclusion
 ITC is one of India's foremost conglomerate multinational private sector company and (100+ years of
excellency)

 Its businesses are spread over a wide spectrum, ranging from cigarettes and tobacco to hotels,
packaging, paper and paperboards, FMCG’s and international commodities trading corporation

 ITC & its Group Companies employ over 26,147 people directly (2018); Sustainable development
models and value chains have supported creation of ~6 million sustainable livelihoods

 ITC has a Market Capitalization of over US $33 billion and Revenue of US $6.9 billion (2018)

 Among the Top tax payer in the country and one of the top contribution of exchequer of country

 Listed in Forbes 2019 on #806 rank under Global 2000

 ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco
Company of India Limited”

 A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's
existence

 Its first cigarette factory was started at Banglore in 1913

 In 1974 the company name was renamed as I.T.C Limited and later September, 2000 it
was named as ITC Limited
Vision
Sustain ITC’s position as one of India’s Mission
most valuable corporations through To enhance the wealth generating
world class performance, creating capability of the enterprise in a globalizing
growing value for the Indian economy environment, delivering superior and
and the company’s stakeholders sustainable stakeholder value
PESTEL Analysis (Macro Environment):

Political - Negative
• Operating Cigarette Industries in India is a challenging economic environment
• Smuggling: Illegal Cigarettes
• Huge Tax Burden: Increase in price may effect the sales

Economical - Neutral
• Profit margin is high
• Other forms of cheap tobacco intake
• Consumption ratio of Bidee : Cigarette = 10:1
• India’s top producers of tobacco products
 Social - Neutral
• Status Symbol: People feel the usage of Cigars and High-Branded Cigarettes
gives an increase to their status in their society
• Changing attitude towards tobacco: Due to awareness in ill-effects of intake of
tobacco makes some amount of sales down
• Restrictions by government: Rules and penalties

Techonological - Positive
• High Supply Chain Management
• Great Innovative Control in Logistic Support
• Hardware Investment: High amount of investment are done in hard ware like
store houses
• Upgrading of machinery
 Environmental- - Positive
• Only enterprise in the world of comparable dimensions to have achieved and
sustained the 3 key global indices of environmental sustainability
• Water Positive – 14 years
• Carbon Positive – 11 years and
• Solid Waste Recycling – 9 years

Legal - Negative
• Ban on smoking in public places results in dip in sales and profits
• No Advertisements
• Ugly lung cancer images on cigarette packet will makes consumer feel bad
and discourage new customers
 BUYER POWER
HIGH- UNFAVOURABLE
THREAT OF
SUBSTITUTES .
SUPPLIER POWER
HIGH- LOW-FAVOURABLE
MODERATELY
UNFAVORABLE
PORTER’S
FIVE
FORCES

THREAT OF NEW
DEGREE OF RIVALRY ENTRANTS
HIGH- HIGH-
MODERATELY UNFAVOURABLE
UNFAVOURABLE.
1) Buyer’s Power:
*Low switching cost
*Buyers are numerous and addicted

2) SUPPLIER’s POWER:
*Large number of suppliers in the country
*Cost of switching suppliers is low
*Prices of substitutes are low

3) THREAT OF NEW ENTRANTS

*To many small firms
*No dominating firm
*Little product differentiation
*Customer switching costs are low
4) DEGREE OF RIVALRY:

*Consumer in this category enjoy multitude of choices

5) THREAT OF SUBSTITUTES:

*Numerous substitutes are available

Resource Based View(RBV) (Micro Environment):

RBV

Tangible In-Tangible

Brand
Financial
Availability

Patent Rights
Physical
Human Resources
Financial Resource:

• ITC Cigarette’s and Bidi’s have 81% market share which give 47% total revenue to the
company
• ITC have total assets of US $9.3 billion and have a total market value of US $11 billion
• ITC Cigarette revenue is the Cash Cow business

Physical Resource:

• ITC have a sophisticated machinery that have a capability to produce 16000

cigarettes/minute and 24/7
• ITC itself produce there raw-materials like tobacco leaf’s, paper and packaging
• They have own research and development centre
1) Brand:
• ITC produces top 15+ brand name cigarette
• Strong brand name in the market given reputation to the company

2) ITC have the Patent Rights for making and packing of cigarette’s

3) Customer loyalty is extremely high due to taste addiction in filters like menthol, honey-
dew, double-filters etc…,

4) Excellent availability in market due to we have strong distribution network and high
R&D facility

5) Under E-Choupal 4 million farmers are connected to ITC which generates resources

6)ITC has huge human resource where 26,147 are getting direct employment
1) Vertical Integration: ITC own the most of resources & raw-materials.
2) Horizontal Integration: ITC acquired Carreras Tobacco Factory
3) Related Integration: ITC manufacture related tobacco product like
bid and different types of filter products
4) Un-Related Integration: ITC manufactures different types of FMCG’s
products
5) Market Penetration
6) Product Development
ITC will go through long term plan of action to achieve a particular goal through set of objectives

• Cost Leadership: ITC is focusing in delivering value at competitive prices. They believe in customer friendly
products with major emphasis on low cost overall without compromising on the quality of the product.

• BCG MATRIX:
Turn-Around Strategy:
• Joint-Venture: In 1985 ITC set up Indo-Nepal-UK based Surya Nepal Tobacco
Company in Nepal

Distribution Strategy:
• Low profit margins
• Intense competition
• Higher customer service
• Fast and Effective sales ordering processes
Suitability: - This strategy is highly suitable as, ITC never compromised to their
quality and core capabilities.

Acceptability: - It is acceptable by the customers as the quality is high and it has

licenced by Tobacco Licencing Board of India and ITC controls all the suppliers and
the production of the goods are fast.

Feasibility: - It is feasible for ITC as it has huge tobacco farms and paper mills etc.,
as resources makes cost reduction and generate margins and also due to
horizontal integration the number of competitors is reduced.
• ITC has been a leader in the tobacco business, but it realize from the upcoming
trends that remaining with a single business is not a noble thought, moreover
the company was threatened of the anti-tobacco campaign. Therefore the
company decided to venture into InfoTech with ITC InfoTech, foods via Kitchens
of India and more FMCG products in market will increase the company
reputation

• Thus by adopting these strategies ITC will surely maintain its success and add
many more new sub-brands to its corporate group-ITC Limited.
THANK YOU