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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.