ASSIGNMENT

ON
MARKET
STRUCTURE
 Company Overview: ITC Group

ITC is one of India's foremost private sector companies with a market

capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 billion.
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 BusinessWorld and among India's Most Valuable
Companies by Business Today. ITC also ranks among India's top 10 `Most
Valuable (Company) Brands', in a study conducted by Brand Finance and
published by the Economic Times.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty
Papers, Packaging, Agri-Business, Packaged Foods & Confectionery,
Information Technology, Branded Apparel, Greeting Cards, Safety Matches and
other FMCG products. While ITC is an outstanding market leader in its
traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-
Exports, it is rapidly gaining market share even in its nascent businesses of
Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.

MARKET STRUCTURE

Market structures refer to the specific social organization that exists between
buyers and sellers in a given market i.e. market structures are models of markets
that describe a specific social organization between buyers and sellers.Market
structure identifies how a market is made up in terms of:-
 the number of firms in the industry
 the nature of the product produced
 the degree of monopoly power each firm has
 the degree to which the firm can influence price
 profit levels
 firms’ behaviour – pricing strategies, non-price competition, output levels
 the extent of barriers to entry
 the impact on efficiency

Importance of market structure:- There are several reasons why market

structures are important to us ie the public. The following are three of these
reasons:
 Households buy final goods and services or commodities in these
commodity markets and firms buy factor inputs in these factor markets.
Thus it is useful that households and firms know the markets in which
they participate as buyers of goods and services.
 These markets dominate our lives as we purchase foods, airline tickets,
clothes, houses, cars, soaps, textbooks, financial services, electricity,
 cooking gas, health care services and a wide array of other goods and
services for our daily use from firms selling these commodities.
 These markets are dynamic and as such they are always changing their
structures and as such they need to be studied to understand their new
structures ie a monopolist market does not always remain a monopolist
market they may change to become an oligopolist market if for example
one or two other firms succeed to enter a monopolist market as
competitors.

Types of Market Structures/Market Models:- There are primarily four

market structures or market models that we are interested in studying. They are
as follows:
1. Perfect Competition
2. Monopolistic Competition
3. Oligopoly
4. Monopoly

1.Perfect Competition:- are those markets in which the competitive market

forces of supply and demand determine market prices and output levels of
goods and services produced by competitive firms. These are markets in which
the competitive free market model of supply and demand discussed in class
work to set prices and quantities of commodities produced. They are intensely
competitive markets in which no one seller or buyer is powerful enough to
determine prices and output levels and so must accept the prices\output levels
dictated by the market forces.

2.Monopolistic Competition:- refer to those markets that are a hybrid or

intermediary market structure between two other extremes of market structures;
namely Perfectly Competitive Markets on the one hand and Monopolist Markets
on the other.
Examples of Monopolistic Markets are generally prevalent in repair services
such as shoe repair, bag repair, refrigerator repair, tailoring establishments,
beauty salons, barber shops, tutoring services etc.

3.Oligopolistic Competition:- refer to those market structures in which a few

firms large or small dominate a particular market or industry and there is limited
competition and often collusion on the part of these firms to dominate a market
or industry. These firms also collude explicitly or implicit to limit or prevent
rival firms from entering these markets or industries by erecting barriers to their
entry.
Examples of oligopolist markets in the US are: Auto industry, Airline industry,
Car Rental industry, Credit Card industry, Fast Food industry, Network TV
News, Breakfast cereals, Sporting goods industry etc.
 4.Monopolistic Market Structure:- are those markets in which there is a
single firm. There is no competition in these markets and the single firm sets its
own profit maximizing price and output where its marginal cost is equal to its
marginal revenue. This type of monopolist market is called a Pure Monopolist
market or a single firm industry.
Examples of Monopolist Markets in the US: Cable, Cooking gas, electricity,
sewerage, water markets in several cities and states across the US.

Competitors to ITC Ltd:-Some of the main and leading competitors ofITC

Ltd. in personal care products are:
 Hindustan Unilever Ltd
 Procter & Gamble
 Colgate Palmolive Ltd
 Dabur India Ltd.
 Godrej Consumer
 Emami Ltd.

Study of Market Structure of ITC Ltd.:-Market structure of ITC Ltd. is done

by a comaparative analysis of the company with its competitors and then
analyzing its strengths and weaknesses.

Comaparison of ITC Ltd. with other FMCG companies in India in 2010

Market Total
Name Sales turnover Net Profit Last Price Capital Assets Networth
ITC Ltd. 21167.58 4987.61 201.90 156937.61 16052.67 15953.57
Hindustan
Unilever Ltd 19735.79 2,305.97 326.75 215.95 2,633.25 2,633.92
Procter and
1000.27
Gamble 150.88 1929.25 6262.49 534.65 534.64
Colgate
Palmolive Ltd 2296.86 402.58 987.85 13434.05 384.09 384.05
Dabur India
Ltd. 3287.67 471.93 99.90 17403.05 1354.51 1101.16
Godrej
Consumer 2442.64 434.96 399.90 12940.37 1806.18 1533.68
Emami Ltd. 1221.15 227.49 428.50 6843.71 906.88 902.56

Name Total Debt Total Liabilities Investments Inventories Earnings Per Share
ITC Ltd. 99.20 16052.27 5554.66 5267.53 6.45
Hindustan
Unilever Ltd 00.00 2633.92 1260.68 2811.26 10.68
Procter and
Gamble 00.00 534.64 00.00 54.41 55.38
Colgate
Palmolive
Ltd 00.05 384.78 38.74 153.70 29.60
Dabur India
Ltd. 253.35 1354.51 519.23 460.58 2.71
Godrej
Consumer 272.49 1806.17 362.06 306.36 13.44
Emami Ltd. 223.89 906.89 7.08 121.91 15.03

SALES TURNOVER

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.

Last Price

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.
 NET PROFIT

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.

MARKET CAPITAL

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.
NET WORTH

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.

TOTAL ASSETS

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.
 TOTAL DEBT

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.

TOTAL LIABILITIES

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.
INVESTMENTS

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.

INVENTORIES

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.
 EARNINGS PER SHARE

ITC Ltd.
Hindustan Unilever Ltd
Procter and Gamble
Colgate Palmolive Ltd
Dabur India Ltd.
Godrej Consumer
Emami Ltd.

Total Comparison Chart

180000
160000
140000
120000 ITC Ltd.
100000 Hindustan Unilever Ltd
80000
Procter and Gamble
60000
40000 Colgate Palmolive Ltd
20000 Dabur India Ltd.
0 Godrej Consumer
Emami Ltd.
Analysis:-It is very well inferred from above graphs that ITC Ltd. is one of the
leading companies in the personal care products.ITC Ltd. being one of the last
entrant in the market among its competitors like HUL has grown tremendously.
With a marginally higher sales turnover and net profit, it makes it clear for one
to understand that that the company is growing at a faster rate than the other
companies.
A higher value of debt and liabilities indicates much obligations on the
company and therefore efforts should be made to bring down the debts and
liabilities.
A higher value of market share and assets ,investments and net worth value
indicates a strong position in the market and in the heart of the shareholders.