Sm Project Report Group 8 on Itc

7/23/2019 Sm Project Report Group 8 on Itc

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Project Report

On

Strategic Analysis of ITC

Submitted by Submitted to

Group 8 Professor Krishna

Kumar Balodi

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TABLE O CO!TE!T

S"!o C#apters Page !o

$ E%ecuti&e Summary

'

( Introduction to t#e company

)

' Analysis of *ision+ ,ission - Core &alues

)

) T#e E%ternal En&ironment Analysis

.

/ T#e Internal En&ironment Analysis

$0

. *alue C#ain acti&ities

$1

2 S3OT Analysis

$4

1

Competition Analysis

Industry Structure 56sing Porter7s

i&e forces model8

Competiti&e Pro9le ,atri% 5Based

on :ey Success factors8

((

4 Organi;ational Be#a&ior+ CSR and

Product Categories

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4 Conclusion - Recommendations

(2

$0 References

(1

E


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Incense &tic(s and &afety )atches# *otels# Paperboards + &pecialty Papers#

Pac(ain# $ri,Business and Information Technoloy.ITC is the si-th larest

company of ")CG in the !orld. ITC bein the rst Indian company and the

second in the !orld over to !in the prestiious /evelopment Gate!ay

$!ard. It !on the 01# $!ard for the year 2 for its uni3ue innovation

as ITC e,Choupal initiative !hich has ained the popularity amon the

masses in rural India.

Project>

Contains the strateic analysis of the rm ITC and its nearest rivals.

Contains a study of the important intrinsic and e-trinsic variables in

the form of a &45T analysis as !ell as a deeper understandin of the

path follo!ed by the ITC. Important events6initiatives leadin to the success of ITC

Industrial analysis of ITC throuh Porter7s ve forces and its comparison

!ith its maor competitor in ")CG sement *9:. $nalysis done !ith Internal + e-ternal factors of the rm

This proects deals !ith the various business processes + product cateories

identied by the ")CG Company# as !ell as comparin its uni3ue positionin

!ith respect to its competitors. 5ur proect is mainly concentrated on thecomparative analysis of ITC and competitor *9:. The source of information is

secondary that is throuh internet and di;erent ne!spapers and sites of ITC

and *9: as !ell as some of the ournals.

I!TRO?6CTIO!> Incorporated on 2< $uust 1=1 as the Imperial Tobacco

Company of India Limited# the name !as rechristened as ITC in 1=>


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the maor )AC7s in India. ITC employs over 2.8( people at more than 8

locations across India. ITC is one of Indias rst private sector companies !ith

a mar(et capitali@ation of ?s. 2=#8=.2= Crs and the annual turnover of

?s.'8.' Crs. ITC has ventured into various sements li(e ciarettes#

hotels# paperboards and specialty papers# pac(ain# ari,business#

pac(aed foods and confectionery# branded apparel and reetin cards. ITCs

ari,business is one of Indias larest e-porters of rural produce. ITC InfoTech

India :imited provided end to end IT solutions for the company.

,ISSIO! - *ISIO! STATE,E!T O T@E CO,PA!= A!? CO,PARATI*E

A!AL=SIS

DI&I5AE &ustain ITC position as one of the India7s most valuable

corporations throuh !orld class performance# creatin ro!in value for the

Indian economy and the company7s sta(eholders.

)I&&I5AETo enhance the !ealth eneratin capability of enterprises in a

lobali@in environment# deliverin superior and sustainable sta(eholder

value.

ACTORS ITCProducts - Ser&ices,aret S#are FesTec#nologySur&i&al+ rot# - Pro9tability FesSelf ConceptPublic Image FesCustomer FesEmployeeP#ilosop#y

)ar(et share of ITC is ' and *9:7s mar(et share is '.


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ITC7s prot is increasin by 1 p.a. for "F 21


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E!*IRO!,E!T A!AL=SIS

E %very orani@ation needs investment from the shareholders

for its ro!th and chane of o!nership from a private limited co. to a public

limited one. )a-imi@in shareholder7s value and increasin their needs is the

main obective. The companies have no conHict bet!een the t!in oals of

shareholder value enhancement and society value development. The

challene lies in fashionin a corporate stratey that enables reali@ation of

these oals in a collaborative and syneristic manner.

Supplier>

?a! materials# intermediates and the nal product sourcin6distribution are

!ide spread across the countries and nal product6ra! materials can be

sourced by more than one supplier. "or e.. "ilter rods can be procured from

)umbai# Banalore or ).P. hue supply,demand net!or( for ciarette

business !hich has to function as the most cost reduction method !hich

ma-imi@es the prots of the fe! sements !hich are particular to

the factories e.. Kin si@e.

>


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Consumer>

5rani@ations e-cel on the

obectives of meetin the needs# !ants and providin benets for

their customers. "ailure !ill result in a failed business venture. Its businesses

+ brands are focused all its resources in capturin the Indian mar(ets# and

despite bein famous for its tobacco brands such as old Ha(e# the business

is no! spreadin its !ins into ne! ")CG fast movin consumer oodsJ

brands in a number of mar(et sectors.

T@E ,ACRO E!*IRO!,E!T 5PESTLE8

Political factorsLegal factors>

The political environment is 3uite favorable for ITC and has a positive impact

on ")CG and *otel business. "or e-ample# the removal of the e-penditure

ta-es from 2>,8 and the e-emption of service ta- in budet of 28,=

!hich helps in increasin the buyin po!er of the customers. The increase in

the ta- brac(et by increasin the e-cise duty and the vat from 12. to 2

in three maor ciarettes consumption states of )aharashtra# ?aasthan and

/elhi have resulted in the increase in the overall sellin price of the

ciarettes !hich deters the potential customers and results in lo!er sales.

Economic factors>

4ith non lter ciarettes bein chared the same ta- rate as compared to

the lter ciarettes# there !as a sharp decline in the volume of the non lter

ciarettes for "F 1


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public !ith reards to the increase in the consumption of the tobacco has led

the overnment to ban all sorts of advertisements li(e the commercials# print

media and pamphlets. This !ill result in an maor roadbloc( for the company.

"or the hospitality business# the society is no! turnin more to!ards and

personal sement culture !hich means that people spend only for

themselves. The ro!th in the per capita income and the !or(in consumers

in the country is also a ood sin for the company because the number of

people !illin to spend more on leisure increases !ith per capita income.

Tec#nological factors>

ITC has come a lon !ay in its technoloical development. 4ith state of the

art industries and cheap labor supply from the 2ndlarest tobacco producin

country amon the !orld!ide production the supply chain manaement of

the ITC follo!s the latest trend. ITC also has the reat inventory control and

loistics support. They have been able to adapt to the 3uality concepts such

as Luality Control# TL) and the si- sima concepts.

En&ironmental factors>

The main ra! material source for tobacco is found mainly in the states of

$ndhra Pradesh and Karnata(a in India. The environment is favorable for the

company because of the hue ra! material availability and ine-pensive and

lare availability of cheap labor.

Legal factors>

The developments on the macro environment and consumer reulations and

protection such as the ban on smo(in and the ban on smo(in in public

places + sellin ciarettes to minors have resulted in setbac(s for the

company in terms of the number of sales of their product !hich contributes

the ma-imum revenues. The leal issues related to the hospitality industry

a;ect the international customers because of the visa and

other administrative issues involved.

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I!TER!AL E!*IRO!,E!T

Leaders#ip of company>

9nder the leadership# ITC7s sustainability initiatives !ere strateies that not

only enhance the shareholder value but added maor share to the

development of natural and social capital. ITC is today rearded as a lobal

e-emplar in sustainable business practices and is the only Company in the

!orld# of comparable dimensions to be Mcarbon positive7# M!ater positive7 and

Msolid !aste recyclin positive7. The Company7s businesses enerate

livelihoods for over > million people# !ho represent the poorest in ?ural India.

The pioneerin farmer empo!erment initiative# ITC e,Choupal# is today the

!orlds biest rural diital infrastructure and is in a case study at the *B?

besides receivin several lobal a!ards includin the inauural 4orld

Business $!ard instituted by the 9nited Aations /evelopment Proramme#

International Chamber of Commerce and the *?* Prince of 4ales

International Business :eaders "orum.

In 211# /evesh!ar !as conferred the Padma Bhushan# one of the hihest

civilian a!ards in the country# by the G5I in reconition for his distinuishedInternational Business :eaders "orum.

:everain the aspect of sustained e-cellence !ithin ITC# he pioneered the

concept of M?esponsible :u-ury7 in the hospitality industry that ave to the

:%%/ Platinum certication of all ITC super premium lu-ury hotels# ma(in it

the MGreenest :u-ury *otel Chain in the !orld7. $nand is !idely reconi@ed

for e-cellent team manaement and cohesion activities as a roup. *e has

desined value,based strateies to create a uni3ue 3uality control model. *is

dynamic leadership and enthusiasm for the business is rearded and

respected by his peers. *e is presently the President of the *otel $ssociation

of India"

Company policies>

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To %nsure ?espect for *uman ?ihts Policy across the &upply Chain, ITC

nurtures an internal !or(in environment !hich respects human rihts

!ithout preudice. :i(e!ise# it e-pects its business associates to establish a

human rihts business compliant environment.

Policy to Prevent /iscrimination at 4or(place,ITC respects that every

individual brins a di;erent and uni3ue set of abilities and learnin7s to the

team. $ discrimination,free !or(place for employees provides the

environment in !hich diverse talents can bloom and be nurtured.

ITC does not enae in or support direct or indirect discrimination in

recruitment# compensation# access to trainin# promotion# termination or

retirement based on caste# reliion# disability# ender# ae# race# color#

ancestry# marital status or aNliation !ith a political# reliious# or union

orani@ation or minority roup.

Policy on "reedom of $ssociation,ITC respects the employees riht to

orani@e themselves into interest roups as initiatives of the !or(ers#

independent from supervision by the supervisor. In (eepin !ith the spirit of

this Policy# employees are not discriminated aainst for e-ercisin this riht.

Policy Prohibitin Child :abour and Preventin "orced :abour from

4or(place,ITC does not employ any person belo! the ae of eihteen years in the

!or(place. ITC prohibits the use of forced or compulsory labour at all its units. Ao

employee is made to !or( aainst his6her !ill or !or( as bonded6forced labour# or

subect to corporal punishment or coercion of any type related to !or(.

Policy on Information and Consultation on Chanes,$ll maor chanes in

operations involvin !or( processes# mannin norms and other productivitylin(ed issues are carried out after discussions !ith the employees and the

reconi@ed unions at each location.

Resources>

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The physical resources such as the ra! material are available in abundance

in India. Their sources of innovation such as the e,choupal initiative are very

useful in terms of creatin the ood!ill for the company.

Capabilities> The state of art factories of ITC are one of the capabilities

of the company. The technoloical advantaes of the company combined

!ith the labor have allo!ed the company to develop their resources !ell into

their capabilities.

Core competencies>

ITC (no!s ho! to capitali@e on its core competencies# !hich include

e-cellent distribution reach# superior brand,

buildin capabilities# e;ective supply chain manaement and ac(no!leded

service s(ills in hotel rin. This has also helped them to strateically diversify

and enter into the foods division.

Organi;ation structure> 5n the basis of portfolio

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5n the basis of decision ma(in po!er,

1'Board of


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EmployeesD The Company is currently headed by Foesh Chander

/evesh!ar. It employs over 2.8( people at more than 8 locations across

1

Current asset F ('4//"0'

Current liabilities F $$.1$"4$

&o ratio isE 2'=.'61181.=1 O 2.

4e can say it is ood sin for company and also for the investors.

?ebt eGuity ratio>

Total long term debt> '1"2$

Total eGuity> '02'/".4

&o ratio isE '8.>16'>'.= O .1

It is ood sin for company but not for investors or shareholders# because

most of the funds are throuh e3uity.

Earnings per s#are gi&en in P-L ac

Basis> $("0/

?iluted> $$"4'

Company provides ood returns to their investors.

It provides 11=' return to shareholders.

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@R Policy of ITC>

"i-ed,Term >1

Permanent 28

&hort,Term 1

)ore than > of the cateory permanent professional sta;s are on lon,

term contracts# indicatin that they have been !ith the ITC for more than

ve years. Permanent sta; members on short,term contract are those that

have not completed ve years service !ith the orani@ation. ITC provides a

supportin !or(in environment for its enerally !ell 3ualied# professional

and motivated sta;. . The ITC trainin and development budet is lo! for an

orani@ation !ith ITC7s scale and much of that budet is spent on Information

Technoloy and lanuae trainin. Ao clear rotation proram is found !ithin

ITC. Ao career plannin for sta;.

,areting Policy of ITC>

Segmentation>

Source> "itc"portal"com

1>


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Source> "itc"portal"com

Targeting> $ll sets of customers includin rural people# farmers# ciarette

smo(in people# students# etc.

Positioning>

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ITC7s pricing strategy>

The pricin of the company is such that it caters to the need of all income

roups of people but special provision has been (ept for :o! and middle

income roup# and their pricin are competitive !ith respect to other players

li(e Britannia# Parle and Bris( farm. The company follo!s the Goin rate

pricin that is the price of the product depends upon the competitors price.

The rm chooses pricin more or less the same as )ar(et leader.

ITC7s Promotional acti&ities

$ particular budet is allocated for the promotion of the products. The local

promotion scheme is decided by the $rea &ales )anaers.

ITC7s ?istribution

Buoyed by the stron distribution net!or( ITC is li(ely to retain its mar(et

share in the ciarettes business the ban on advertisements is li(ely to !or(

in favor of ITC. The companys reliable distribution net!or( also ensures

superior inventory turnover than its peers.

1=


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S3OT A!AL=SIS

Strengt#s>

)anain diverse business. ITC has 1 subsidiaries connected !ith its

various business operations.

4ealth of local (no!lede + international e-pertise helps it to be

lobally competitive.

*ih 3uality standard products + services

%-cellent e-port earnins.

*ihly professional manaement.

%-cellent distribution net!or(.

%-cellent brand ma(in capability helpin it to diversify it into

?etailin# IT + *otel sements

$ro,e-port sement sho!in e-cellent ro!th of 28 + earnin ?s.

"rom the charts dra!n belo!# it becomes obvious that follo!in are the

competitors of ITCE

*9:P+G

* P+G

*9: ITC?ISTRIB6TIO! )C@A!!EL

:

* ) :

BRA!? I,AE

* ITC J6ALIT= P+G#*9:

)

:

* ) : I!!O*ATIO!

:ey success factors of ITC>

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There could be number of factors that contribute to the success of the

company# but the (ey factors for the success of ITC includeE

LualityInnovation/istribution channelBrand imaeDariety of productsPromotion

Comparison on t#e basis of ey success parameters>

3t"

allotted

Paramet

ers

ITC @6L P-

Rating

3AS Rating 3AS Rating

3AS

(0K Juality < .8 < .8 < .8(0K Inno&ati

on

< .8 ' . ' .

(0K ?istribut

ion

' . < .8 < .8

(0K Brand

Image

' . < .8 < .8

$0K *ariety ' . < .< < .

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Sm Project Report Group 8 on Itc

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