Strategic Management

Assignment

Group

Arunava Saha-2113
Apan Mondal-2112
Shuvam Mondal- 2165
Debasmita Chanda- 2123
Promashree Chakborty- 2154
Ishika Ranjan-2130
Triyasha Manna- 2171

THE ITC VISION

Sustain ITC's position as one of
India's most valuable
corporations through world
class performance, creating
growing value for the Indian
economy and the Company's
stakeholders

THE ITC MISSION

To enhance the wealth
generating capability of the
enterprise in a globalising
environment, delivering
superior and sustainable
stakeholder value
Industry sector and competitive
landscape mapping

Appreal Industry - Wills Lifestyle

Competitors

Cigarette - Insignia, India Kings, Classic, Gold

Flake, Navy Cut, Flake, Silk Cut, Duke & Royal.

Competitors

In 1975 the journey of their hotel

industry started. ITC has the second
largest hotel chain. Such as ITC One,
Towers, Eva, and the Executive Club.

Competitors In Hotels of ITC

Taj Group of Hotels
Leela Hotels
Sarovar Group of Hotels
Oberoi Group of Hotels
Industry sector and competitive
landscape mapping

FMCG Competitors in FMCG

Some of the food ITC brands are Godfrey Phillips India
Aashirvaad, Bingo! Sunfeast, Fabelle, Ltd
Sunbean, Yippee!, Farmland, B Natural, ITC HUL
Master Chef, Kitchens of India, mint-o, Nestle
GumOn, and Candyman. Some of the P&G
personal care item brands are Essenza Di Godrej Consumer
Wills, Dermafique, Fiama, Vivel, Engage, Products
Superia, Nimyle, Neemwash, Savlon, Coca-Cola
Shower to Shower, and Charmis. ITC sells Colgate
education and stationery items under the L’oreal
brand’s Classmate and Papercraft. Marico

Paperboard and packaging- It was first started with packaging and printing in
1925. ITC has eco-friendly and high-quality paperboards and special papers. ITC
provides services regarding printing and packaging.
ITC infotech– ITC has a global technology service and solutions provider brand
as ITC infotech.
Core Competencies and Integration

Farmer Linkages and Crop

Development Programmes

Customised Supply Chain

Quality Managements
Systems

Rural Marketing &

Services

People capabilities
Core Competencies and Integration
Recycling of
Agri Wastes

Paper &
Tobacco FMCG
Paper Board

Distribution network Cotton from wastes

Agricultural connect
ITC Welcome
Greenfield
Acquire property business

Appreal
Hotels

Agri Exports Cotton Retail

Export
Porters 5 force Model

The battle amongst already-established businesses reveals

the amount of rivals who fiercely compete with ITC Limited India. First High
rivalry demonstrates that ITC Limited India First may be subject to intense
pressure from competing companies, which may restrict each other's ability
to grow. Because businesses use aggressive pricing and targeting methods
against one another, profitability in these sectors is low.

ITC Limited India First will face little competition from other companies if:
• There are not many competitors in the market.
• The sector is expanding quickly.
• A blatant market leader is present.
• Each market participant targets distinct sub-segments, and the products
are extremely differentiating.
• Consumers have high psychological and economic switching costs.
• Due to the low exit barriers, businesses can readily quit the sector without
suffering significant losses.

Similar to this, there are various elements that fuel competition among
currently operating businesses for ITC Limited India First For instance, if
market participants are strategically varied and focus on the same market,
the company will encounter fierce competition from other current
enterprises. If consumers are not loyal to their current brands and switching
to other brands has minimal switching costs, there will be more severe
competition. Competitors with similar market share, undifferentiated product
offerings, and weak industry development frequently use aggressive tactics
to outperform one another. Due to all of these causes, ITC Limited India
First considers competition amongst existing businesses to be a serious
strategic problem.
Porters 5 force Model

For ITC Limited India, suppliers'

negotiating leverage will be
significant. If first:

• The concentration of suppliers in a given area is greater than that of

consumers.
• When switching suppliers costs are high for consumers, this force is
very potent (for example, due to contractual relationships).
• The suppliers' position against ITC Limited India First is strengthened
when there are few suppliers and high demand for the goods they are
offering.
• The ITC Limited India First's position is weakened by suppliers' forward
integration because they also become rivals in that market.
• If ITC Limited India First lacks the necessary education, market
expertise, and pricing sensitivity, the suppliers' position against the
company is immediately strengthened.
• High product differentiation supplied by suppliers, ITC Limited India
First making only a small fraction of suppliers' overall sales, and the
absence of substitute products are other factors that boost suppliers'
bargaining strength.

On the other hand, ITC Limited India First's suppliers will have weaker
negotiating strength if:

• The suppliers are not statewide.

• Low switching costs Lack of distinctiveness in the product
• There are alternative products available.
• There is no threat of forward integration by suppliers since ITC Limited
India First has significant market knowledge and is highly price sensitive.
Porters 5 force Model

Buyer bargaining power reflects the pressure that consumers place on

companies to provide high-quality goods at reasonable costs and with top-
notch customer service. This force has a direct impact on ITC Limited India
First's capacity to meet its operational goals. Strong negotiating position
reduces profitability and increases industry competition. In contrast, when
buyer power is weak, the industry is less competitive, which increases ITC
Limited India First's profitability and growth potential.

There are a few things that give purchasers more negotiating power:

• Their negotiating leverage against ITC Limited India First is increased by

a more concentrated customer base.
• In contrast to a large number of suppliers (business organizations), a
small number of buyers will likewise have a strong purchasing power.
• Low switching costs (both financially and psychologically) can provide
buyers more negotiating power.
• Corporate customers' capacity for backward integration improves their
competitiveness in the market. The ability of the buyers to create the goods
themselves rather than obtaining them from ITC Limited India First is
demonstrated through backward integration.
• Customers' considerable market awareness, price sensitivity, and
propensity to buy standardized goods in bulk also give them more
negotiating leverage.

Lower customer concentration (which indicates that the customer base is

geographically dispersed), customers' inability to integrate backwards, low
price sensitivity, lower market knowledge, high switching costs, and buying
customized goods in small volumes are some factors that reduce the
bargaining power of buyers.
Porters 5 force Model

Here are several elements that help ITC Limited India First lessen the threat
of new competitors:

• Investments in resources and finance are necessary to enter the market.

• If product differentiation is high and clients place a high value on the unique
experience, this force also loses power.
• If the current legislative framework places certain obstacles in the way of
new enterprises looking to enter the market, ITC Limited India First will only
be at low risk of competition from new competitors.
• In this scenario, entry-level players may be deterred from entering the
market by the need to satisfy stringent, time-consuming regulatory standards.
• If consumers have a strong psychological barrier to switching brands and
are already committed to established companies, the danger will be low.
• If access to the distribution channels is restricted, new entrants will be
deterred.

If ITC Limited India First is not protected from the prospect of new
competitors

• The introduction of new players is encouraged by the current restrictions.

• Due to little or nonexistent brand loyalty, consumers can quickly switch
brands.
• Initial capital outlay is substantial.
• For new players, creating a distribution network is simple.
• Retaliation from the already-established market participants is not a
deterrent.
Porters 5 force Model

Threats of Substitute –
For ITC Limited India First and other established firms, the
competitive landscape is difficult due to the availability of
substitute goods or services. High substitution threat indicates that
consumers have access to substitute goods and services from other
sectors of the economy. The severity of this threat to ITC Limited
India First depends on a number of things.

Increasingly, the threat of substitute goods or services is present

when:

• There is a cheaper alternative accessible from a different industry.

• The psychological costs of transitioning from one industry to a
replacement product are minimal.
• The quality and performance of the replacement product are equal
to or even better than those of the ITC Limited India First product.

However, ITC Limited India considers this threat to be very low.

initial when;

• The expense of moving to the replacement product is substantial

(due to high psychological costs or higher economic costs)
• Customers cannot obtain the same utility from a substitute product
(in terms of quality and performance) as they can from an ITC
Limited India First product.
Porters generic strategies

Cost-leadership Strategy
Cost leadership strategy used by ITC Limited India First-
• Through effective value chain management, the main goal of this
strategy is to maintain market leadership.
• The middle class, which makes up the greatest percentage of the
overall consumer market mix in the majority of countries, can be
targeted by ITC Limited India First in order to increase market
share.
• Cost leadership is the greatest way to meet the needs of this
market segment because middle class consumers typically give great
emphasis to the pricing issue.
• ITC Limited India First places a major emphasis on affordability and
ease of access to its products around the world, which promotes
high brand awareness, rapid sales growth, and a strong competitive
edge.
• ITC Limited India First regularly gives discounts and coupons in
addition to charging cheap prices through reducing production costs
and maximizing supply chain efficiency in order to meet sales goals
and combat competition from its main rival. These discount and
promotional efforts hope to boost brand recognition and boost
consumer spending.
Porters generic strategies

Differentiation Strategy
Differentiation tactics does ITC Limited India First employ-
• By focusing on the distinctive qualities of the products, differentiation, used
as a secondary generic strategy, enables ITC Limited India First to grow its
customer base.
• The strategic goal of ITC Limited India First in employing this tactic is to
differentiate by integrating innovation and take care of consumers' growing
health concerns. For instance, to set itself apart from rivals and broaden the
range of prospects within the sector, ITC Limited India First has expanded its
product line after researching consumers' shifting interests. ITC Limited India
First has amassed a solid and devoted customer base thanks to its
distinctiveness and cost leadership.

ITC Limited India First promotes its product offerings through differentiation
generic strategy in a way to stand out and be distinctive from the available
alternatives. Being an established, seasoned brand, the business employs
difference as a technique to lessen competition from other companies. For the
sole purpose of setting ITC Limited India First apart from competing brands,
significant marketing, advertising, and celebrity endorsement expenditures
are made.
• In the company's marketing and communication initiatives, distinguishing
characteristics including extensive experience, the oldest brand, and
significant global presence are emphasized.
• In addition to these, the brand logo is employed to establish the basis for
distinctiveness. Consumers' perceptions of the brand are positively shaped by
its distinctive and distinctively unique logo. Although the brand has
experienced numerous changes, its core has stayed constant, which also acts
as a potent differentiator.
Porters generic strategies

Focus Strategy

The third general competitive tactic, focus, encourages businesses

to concentrate their efforts on growing the specifically targeted
areas. When businesses use the focus strategy, they target certain
market segments and use specialty marketing to get a competitive
edge.

Emphasis strategy is applied by ITC Limited India First-

• ITC Limited India First uses the focus strategy in order to
provide the best value while also keeping costs low. By meeting a
particular market segment's needs at the most affordable cost, the
low-cost focus method is used. While the best value focus strategy
emphasizes the flavor, size, and design of the product that may
most effectively meet the demands and requirements of the clients.

• To meet the psychological expectations of the client and

maximize value for money, ITC Limited India First continuously
updates its branding strategies and makes modifications to the
product design and packaging by concentrating on its product
features.
Lead and lag indicators

The company's hotel business continues to be a loss-

making segment. Their revenue contribution dropped
from 4.3 percent in Q3FY20 to 1.8 percent in Q3FY21.
The pandemic has been an added disadvantage for them
which has improved hugely after pandemic.

ITC manufactures cigarette papers and

components, FMCG cartons, electrical insulation
papers, Bio-based Barrier Coated Board, writing
and printing papers, etc. This business vertical's
contribution to revenue mix has decreased by 0.9
percent year over year.

FMCG
2022 STRATEGIC MANAGEMENT

CONCLUSION
Headquartered in Kolkata, West Bengal, ITC Limited (ITC) was one of India's leading private
sector companies and a diversified conglomerate, with business interests ranging from FMCG,
Hotels, Paperboards and Packaging, to Agri Business and Information Technology. But, among the
various business segments, ITC remained as the market leader for cigarettes in India courtesy of
its wide range of invaluable brands. Despite the company’s move to strengthen its FMCG business
and reduce contributions of the cigarettes vertical, in July of 2020, more than 74% of ITC’s
standalone profits before tax came from the tobacco segment. Because of this, many investors in
domestic and global markets refrained from investing in the tobacco company with concerns of
not abiding with the global Environment, Social and Governance (ESG) norms.

RECOMMENDATION
Divesting the Cigarette Business to Strengthen FMCG
Experiencing the government’s tough stance on levying heavy taxes on tobacco-based
products, ITC tried to diversify into other businesses such FMCG. Companies think of
diversifying into new categories and products typically because growth in the core business is
slowing down or with the intention of leveraging their existing brand equity. Diversification
into new products and categories could be one of the ways to generate growth.“The impact of
excise duties on the product had gone up 118% since 2012-13. Despite the efforts being
successful in discouraging local cigarettes.