Strategic Management in ITC Ltd.

Ganesh Naik Nand Kumar Aradhye Raj Kumar Ranjan Varma

The Corporate Mission

Governance structure Strategic supervision Strategic management Executive management Core values Nation Orientation; Trusteeship; Excellence; Customer focus; respect for people; Innovation

Vision & Mission statements

Vision: Sustain ITCs position as one of Indias most valuable corporations through world class performance, creating growing value for the Indian economy and the Companys stakeholders. Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

Business Mix of ITC Ltd.

FMCG Cigarettes

Foods Lifestyle Retailing Greeting, Gifting & Safety Matches Agarbattis

Stationery

Paperboards & Packaging Paperboards & Specialty Papers Packaging

Business Mix (Contd)

Agri - Business

Agri-Exports e-Choupal Leaf Tobacco

Hotels

Group Companies ITC Infotech; etc.

SWOT Analysis
Strength Brand Management
Opportunity Rural market E-choupal

Weakness Unrelated diversification

Threats Increasing tax in Cigarettes Health hazard

Business wise Sales data

Business/ Year Growth Value (Rs in Crore) % 2005 2004 10002.54 9230.27 563.39 304.16

FMCG-Cigarettes 8.4 FMCG-Others 85.2

Hotels
Agribusiness Paper & pkg. Net revenue
Source: Annual Accounts

124.1
4.2 24.9 12.99

577.25
1780.07 1565.31

257.53
1708.77 1253.29

13349.58 11815.04

CAGR during FY 2005-2008

Category CAGR Growth parameters Pricing power Inward traffic, occupancy Cigarettes 10.9 % Hotels 22.7%

Paper
Agri business FMCGOthers

17.2 %
34.3 % 60.2 %

Capacity utilization, value added products E-choupal, choupal sagar,

Fast track, decent share.

Source: Equity research reports

Market share of ITC Ltd.

Outstanding market leader Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports. Gaining market share Nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.
Source: Annual Accounts/Equity research

Segment Cigarettes Paper & Packg. Agri business Hotels FMCG (Others)

Dominance 70% share Packaging board No. 1 in Asia 1of the largest xporters from India ITC Group ranks No.2 20% share of greeting cards market, 'Aashirvaad' atta is No.1 in branded segment

Contribution % Revenue PBIT 77.0% 7.3% 7.0% 4.3% 4.4% 87.7% 10.7% 3.7% 5.4% -7.5%

Source: Equity research reports

A c t 2

Market attractiveness & Competitive strength is also important.

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 and profitability is questionable.

The BCG Matrix for ITC Ltd.

Stars Hotels Paperboards/ Packaging. Agri business. Cows FMCG-Cigarettes ? FMCG- Others

Dogs

Act III - Action

Learning points and conclusions

Question Marks (? ) To be handled with care. Strategic forays into emerging high growth markets. E-Choupal is a transformational strategy. Strong brand building capability will be tested.

Learning points (Contd)

Corporate strategy of creating multiple drivers of growth anchored on its core competencies and distribution reach. Embracing difficult and challenging corporate strategy. (Ex: Paperboards). EHS philosophy: Contribution to the triple bottom line- Economic, Environment and social capital.