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A TERM PAPER ON ITC Ltd

Na me: Deepak Kumar Biradar M.B.A 3rd SEM Section A U SN : 1PI10MBA39

A TERM PAPER ON ITC Ltd Subj ect: STRATEGIC MANAGEMENT

A TERM PAPER ON ITC Ltd

Sl. no.
1

PARTICULARS
Introduction to the Company:

a.

History

b.

Present status in industry

c.

Summary of business areas and products / services

d.

Organization structure (high level)

e.

Overview of sectors in which company operates

The Strategy of the Company:

a.

Vision and Mission statements & analysis

b.

Current objectives and analysis

c.

Details of the strategy currently followed

d. e.

Corporate governance in the company (If the company has conducted a Balanced Scorecard exercise, some details of this Optional)

The External Environment of the Company:

a.

Industry Driving Forces

A TERM PAPER ON ITC Ltd

1. INTRODUCTION TO THE COMPANY:


About the company: ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianized, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. ITC is one of India's foremost private sector companies with a market capitalisation of over US $ 30 billion and a turnover of US $ 6 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 Business World and among India's Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, 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, Personal Care and Stationery.

A TERM PAPER ON ITC Ltd ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Ltd, provides IT services and solutions to leading global customers. ITC Info tech has carved a niche for itself by addressing customer challenges through innovative IT solutions. ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating. ITC employs over 26,000 people at more than 60 locations across India. The Company continuously endeavours to enhance its wealth generating capabilities in a globalising environment to consistently reward more than 4,04,000 shareholders, fulfil the aspirations of its stakeholders and meet societal expectations. a. HISTORY OF THE COMPANY: ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianised, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then toI.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agribusiness, Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. The Companys beginnings were humble. A leased office on Radha Bazaar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000.Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the gradual steps witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company. Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company.

A TERM PAPER ON ITC Ltd ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house. In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India. In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. Since inception, its shares have been held by ITC, British American Tobacco and various independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal). In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in November 2002. ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands include Spriha and Mangaldeepacross a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa.

A TERM PAPER ON ITC Ltd ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products for men and women in July 2005. Inizio, the signature range under Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for men (Inizio Homme) and women (Inizio Femme). Continuing with its tradition of bringing world class products to Indian consumers the Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2007 respectively. The Company also launched the 'Superia' range of Soaps and Shampoos in the mass-market segment at select markets in October 2007 and Vivel De Wills & Vivelrange of soaps in February and Vivel range of shampoos in June 2008.

A TERM PAPER ON ITC Ltd b. PRESENT STATUS IN INDUSTRY: 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.

Business wise Sales data

A TERM PAPER ON ITC Ltd

c. SUMMARY OF BUSINESS AREAS AND PRODUCTS / SERVICES: CIGARETTES: ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it has a leadership position in every segment of the market. It's highly popular portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake. The Company has been able to build on its leadership position because of its single minded focus on value creation for the consumer through significant investments in product design, innovation, manufacturing technology, quality, marketing and distribution. All initiatives are therefore worked upon with the intent to fortify market standing in the long term. This in turns aids in designing products which are contemporary and relevant to the changing attitudes and evolving socio economic profile of the country. This strategic focus on the consumer has paid ITC handsome dividends. ITC's pursuit of international competitiveness is reflected in its initiatives in the overseas markets.

In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes and Roll-your-own solutions. In West Asia, ITC has become a key player in the GCC markets through growing volumes of its brands.ITC's cigarettes are produced in its state-of-the-art

A TERM PAPER ON ITC Ltd factories at Bengaluru, Munger, Saharanpur, Kolkata and Pune. These factories are known for their high levels of quality, contemporary technology and work environment. HOTELS: In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India. PACKING AND PAPEROARDS: ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house. In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead time and a wider product range.

AGRIBUSINESS: Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000

A TERM PAPER ON ITC Ltd with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operational in the 3 states of Madhya Pradesh, Maharashtra and Uttar Pradesh. STATIONARY: In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards. A line of premium range of notebooks under brand Paper Kraft was launched in 2002. To augment its offering and to reach a wider student population, the popular range of notebooks was launched under brand Classmate in 2003. Classmate over the years has grown to become Indias largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag. Years 2007- 2009 saw the launch of Children Books, Slam Books, Geometry Boxes, Pens and Pencils under the Classmate brand. In 2008, ITC repositioned the business as the Education and Stationery Products Business and launched. India's first environment friendly premium business paper under the Paper Kraft Brand. Paper Kraft offers a diverse portfolio in the premium executive stationery and office consumables segment. Paper Kraft entered new categories in the office consumable segment with the launch of Text liners, Permanent Ink Markers and White Board Markers in 2009. RETAILING: ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Club life evening wear (2003).

ITC also initiated a foray into the popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largesB-2-B platform for the Fashion Design industry.

d. ORGANIZATION STRUCTURE (High Level)

A TERM PAPER ON ITC Ltd

e. OVERVIEW OF SECTORS IN WHICH COMPANY OPERATES:

ITC's diversified portfolio comprises:

A TERM PAPER ON ITC Ltd

2.

THE STRATEGY OF THE COMPANY:

VISIONSustain ITC's position as one of India's most valuable corporations through world class performance, creating growing value for the Indian economy and the Companys stakeholders. MISSIONTo enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value. b. CURRENT OBJECTIVES AND ANALYSIS: ITC's objectives are aimed at developing a customer-focused, high-performance organisation which creates value for all its stakeholders: Trusteeship: As professional managers, we are conscious that ITC has been given to us in "trust" by all our stakeholders. We will actualise stakeholder value and interest on a long term sustainable basis. Customer Focus: We are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.

A TERM PAPER ON ITC Ltd Respect For People: We are result oriented, setting high performance standards for ourselves as individuals and teams. We will simultaneously respect and value people and uphold humanness and human dignity. We acknowledge that every individual brings different perspectives and capabilities to the team and that a strong team is founded on a variety of perspectives. We want individuals to dream, value differences, create and experiment in pursuit of opportunities and achieve leadership through teamwork. Excellence: We do what is right, do it well and win. We will strive for excellence in whatever we do.

Innovation: We will constantly pursue newer and better processes, products, services and management practices. Nation Orientation: We are aware of our responsibility to generate economic value for the Nation. In pursuit of our goals, we will make no compromise in complying with applicable laws and regulations at all levels. C. DETAILS OF THE STRATEGY CURRENTLY FOLLOWED: Business leadership worldwide is confronted with the realisation that the limits to sustainable growth will be determined less by access to financial capital and more by the commitment to preserve and augment social and ecological capital. ITC, along with the Confederation of Indian Industry, launched the -CII-ITC Centre of Excellence for Sustainable Development' in January 2006. The Centre seeks to address the institutional void in developing the requisite capability among Indian industry to pursue sustainability goals. The Centre will endeavour to transform Indian businesses by providing thought leadership, promoting awareness and building capacity. Envisioning a larger societal purpose has always been a hallmark of ITC - 'a commitment beyond the market'. This commitment finds expression in the Company's sustainable development philosophy, which recognises the need to not only preserve but also enrich precious environmental resources while providing a safe and healthy workplace for its employees. ITC sees no conflict between the twin goals of shareholder value enhancement and societal value creation. The challenge lies in fashioning a corporate strategy that enables realisation of these goals in a mutually reinforcing and synergistic manner. ITC's e-Choupal and social forestry programmes represent just two of the stellar examples of this philosophy in action.

A TERM PAPER ON ITC Ltd

Apart from crafting business models that establish direct linkages between businesses and societal goals, ITC is also engaged in implementing various other sustainable development initiatives towards making a meaningful contribution in the economic vicinity of its operating locations. The thrust of these initiatives, christened 'Mission Sunehra Kal', is in three areas: (i) natural resource management, which includes wasteland, watershed and agriculture development; (ii) sustainable livelihoods, comprising genetic improvement in livestock and economic empowerment of women; and (iii) community development, with focus on primary education and health and sanitation. d. CORPORATE GOVERNANCE IN THE COMPANY: PREAMBLE: Over the years, ITC has evolved from a single product company to a multibusiness corporation. Its businesses are spread over a wide spectrum, ranging from cigarettes and tobacco to hotels, packaging, paper and paperboards and international commodities trading. Each of these businesses is vastly different from the others in its type, the state of its evolution and the basic nature of its activity, all of which influence the choice of the form of governance. The challenge of governance for ITC therefore lies in fashioning a model that addresses the uniqueness of each of its businesses and yet strengthens the unity of purpose of the Company as a whole. Since the commencement of the liberalisation process, India's economic scenario has begun to alter radically. Globalisation will not only significantly heighten business risks, but will also compel Indian companies to adopt international norms of transparency and good governance. Equally, in the resultant competitive context, freedom of executive management and its ability to respond to the dynamics of a fast changing business environment will be the new success factors. ITC's governance policy recognises the challenge of this new business reality in India.

A TERM PAPER ON ITC Ltd Core Principles: ITC's Corporate Governance initiative is based on two core principles. i. Management must have the executive freedom to drive the enterprise forward without undue restraints; and ii. This freedom of management should be exercised within a framework of effective accountability. ITC believes that any meaningful policy on Corporate Governance must provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management is not only not misused, but is used with care and responsibility to meet stakeholder aspirations and societal expectations. Cornerstones: From the above definition and core principles of Corporate Governance emerge the cornerstones of ITC's governance philosophy, namely trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship. ITC believes that the practice of each of these leads to the creation of the right corporate culture in which the company is managed in a manner that fulfils the purpose of Corporate Governance.

2. THE EXTERNAL ENVIRONMENT OF THE COMPANY:

A TERM PAPER ON ITC Ltd

The porters 5 Forces tool is a simple but powerful tool for understanding where power lies in a situation. This is useful, because it helps you understand both strength of currene competitive position, & the strength of a position company looking to move into. With a clear understanding of where power lies, company can take far advantage of a situation of strength, improve a situation of weakneaa, and avoid taking wrong steps. This makes it an important part of planning toolkit. Conventionally, the tool is used to identify whether the new products, services or businesses have the potential t be profitable. However it can be very illuminating when used to understand the balance of power in other situations.

KEY SUCCESS FACTORS OF THE COMPANY: 1. Establish organizational preconditions

A TERM PAPER ON ITC Ltd Corporate management often grants lead management a certain amount of attention, while remaining no more than partly aware of the organizational complexity involved. Successful lead management, however, depends on organizational measures that can be implemented only by top-level management, or by management on the business unit or regional level. The construct starts with defining the correct goals for lead management in harmony with the corporate goals and ends with generating models for remuneration. These models should be geared toward promoting achievement of the goals as effectively as possible and establishing conflict-reducing incentives for the various instances involved in setting up and operating lead management. 2. Establish technical preconditions

The most important resource for successful lead management is an end-to-end, proven, cross divisional and cross-company lead-management process. The quality and efficiency of this process should be checked and evolved on a rolling basis. Under best-case conditions they are in harmony with the targets laid down by Marketing and Sales and in the incentive systems, which can integrate sales-structure mapping. In most instances, the introduction of new processes and software solutions involves some measure of deviation from familiar work practices. In the Sales arena, the benefit is usually accompanied by an unwanted increase in transparency. When systems of this nature are introduced or relaunched, therefore, it is essential for executive management to lend its support to the move and make sure that the benefits for each role are clearly demonstrated and communicated. A change management process that balances out different interests is another critical aspect. Accompanying changes within the organization in this way helps demonstrate benefit and eliminate doubt in a way that "top-down management" is unlikely to match.

3. Ensure the high quality of the leads The stakeholders will not maintain their support for lead management in the long term unless the quality of the leads continuously meets or exceeds expectations. Vis--vis Sales, therefore, Marketing should pursue the "quality, not quantity" approach. Only good leads are

A TERM PAPER ON ITC Ltd of use to Sales and create a positive image for Marketing and for lead management. Good planning is critical to quality lead management. Successful lead management, therefore, starts with annual marketing planning, and given the dynamism of ITC markets the 12-month plan should be revised several times as it runs its course, and updated accordingly. It is vitally important to avoid giving the impression that lead generation on the part of Marketing is something akin to advance selling, largely relieving Sales of its responsibility to exert itself to the full to ensure that leads actually convert into purchasing clients. 4. Create transparency in the lead-management process The planning process has to be checked from beginning to end to ensure that implementation at the requisite level of quality is possible given the available human resources and budget, and with the available stock of addresses. Additional checks have to be run on the basis of logged conversion rates and with due provision made for the leads assigned to each sales unit. In terms of transparency, other key points include stipulating the content and frequency of progress reports and scheduling regular meetings for reporting. Sales must be required to report on its follow-up activities and the conversion of leads to income, while at the same time taking part in an ongoing process of improvement embracing the entire lead management system. In the long term, only a closed control loop comprising of target agreement, planning, implementation, and results monitoring to drive target adjustment, etc. can sustain cost reductions and quality improvements.

5. Generate a positive attitude among employees Many years of experience clearly indicate that in the lead-management system or, more accurately, in work with a lead-management system, many and diverse emotions are stirred. Although these emotions can be subdued or directed by organizational measures, they cannot be eliminated entirely. Consequently, the following can contribute to success.

4.THE RESOURCE BASED ANALYSIS OF THE COMPANY:


a. SHORT TERM (1-3 YEARS) SWOT ANALYSIS OF THE COMPANY:

A TERM PAPER ON ITC Ltd

b. VALUE CHAIN & ANALYSIS: ITC uses value chains, specifically value chain analysis, to understand private sector development in emerging economy settings to jumpstart economic growth and poverty reduction. ACDI/VOCA's value chain approach is unique in that it uses a participatory, stakeholder-driven approach to exploit opportunities for investment and growth in industries with high levels of micro and small enterprise (MSE) involvement.

A TERM PAPER ON ITC Ltd The value chain approach analyzes the firms in a market chainfrom input suppliers to final buyersand the relationships among them. It analyzes the factors influencing industry performance, including access to and the requirements of end markets; the legal, regulatory and policy

environment; coordination between firms in the industry; and the level and quality of support services.

Relationships among firms in an industry can facilitate production and marketing efficiencies and enable the flow of information, learning, resources and benefits. ACDI/VOCA works with industry stakeholders to strengthen or restructure relationships and address resource constraints to increase the global competitiveness of the industry and the ability of small firms to contribute to and benefit from this competitiveness.

A TERM PAPER ON ITC Ltd

5. COMPETITIVE STRATEGY ANALYSIS:


a. GENERIC STRATEGIES ADOPTED BY THE COMPANY AND RATIONALE FOR THESE: Generic strategies were used initially in the early 1980s, and seem to be even more popular today. They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage. Each of the three options are considered within the context of the competitive environment. 1. Cost Leadership. The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Factories are built and maintained, labor is recruited and trained to deliver the lowest possible costs of production. 'cost advantage' is the focus. Costs are shaved off every element of the value chain. Products tend to be 'no frills.' However, low cost does not always lead to low price. Producers could price at competitive parity, exploiting the benefits of a bigger margin than competitors. Some organizations, such as Toyota, are very good not only at producing high quality autos at a low price, but have the brand and marketing skills to use a premium pricing policy. 2. Differentiation Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. For example, British Airways differentiates its service.

A TERM PAPER ON ITC Ltd The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously improve.

3. Focus or Niche strategy. The focus strategy is also known as a 'niche' strategy. Where an organization can afford neither a wide scope cost leadership nor a wide scope differentiation strategy, a niche strategy could be more suitable. Here an organization focuses effort and resources on a narrow, defined segment of a market. Competitive advantage is generated specifically for the niche. A niche strategy is often used by smaller firms. A company could use either a cost focus or a differentiation focus. With a cost focus a firm aims at being the lowest cost producer in that niche or segment. With a differentiation focus a firm creates competitive advantage through differentiation within the niche or segment. There are potentially problems with the niche approach. Small, specialist niches could disappear in the long term. Cost focus is unachievable with an industry depending upon economies of scale e.g. telecommunications.

A TERM PAPER ON ITC Ltd The danger of being 'stuck in the middle. ITC follows differentiation Generic strategy as they believe in satisfying their customers with differentiated goods & services.

b.STRATEGIC ALLIANCES AND COLLABORATIVE STRATEGIES FOLLOWED BY THE COMPANY: In a significant move to strengthen its presence in the greeting cards industry, ITCs Greeting Cards Business has entered into a strategic alliance with Maple Leaf, the countrys leading pop-up card manufacturer. As a part of this alliance, Maple Leaf will exclusively make pop-up cards for ITC. ITC is expected to re-launch the pop-up cards under its Expressions brand later in the quarter. Maple Leaf is Indias premier pop-up card manufacturer. Strongly rooted in the business of Pop-up cards, Mr. Hari Tejani and Mr. Gopal Tejani are considered to be pioneers in this segment of the Greeting Cards Market and enjoy very high equity in the trade. Announcing the alliance, Mr. Chand Das, Chief Executive ITC Greetings Cards Business said, "We are pleased to enter into an alliance with Maple Leaf the leading player in the segment and the pioneer of pop-up cards in the country. Manufacture of pop-up cards entail intricate designing and hence requires specialized skills. The alliance will leverage the manufacturing skills of Maple Leaf and the marketing organization of ITC to help tap the latent demand for such cards in the country." "Internationally pop-cards are very popular and contribute almost ten per cent to total sales of the industry. However, in India the manufacturing skills of pioneers like Maple Leaf have not been backed by adequate distribution support. We hope to trigger a rapid growth in the segment by launching the Expressions range of pop-up cards nationally in more than 10,000 outlets across the country supported by an intensive communication program". ITC Greetings Cards Business has on offer more than 6000 designs under its Expressions range. The company has been able to capture a five per cent market share despite being a recent entrant in the industry.

A TERM PAPER ON ITC Ltd

C. M & A STRATEGIES OF THE COMPANY: ITC Ltd. has made 12 acquisitions while taking stakes in 6 companies. ITC Ltd. has 6 divestitures during this period. Yea Acquisitio Stake Divestitur r ns s es 201 0 0 0 1 201 0 0 0 0 200 0 0 0 9 200 2 0 0 8 200 1 0 0 7 200 0 0 0 6 200 3 1 1 5 200 2 0 1 4 200 0 1 0 3 200 0 0 0 2 200 0 0 0 1 200 1 2 1 0 199 1 1 1 9 199 0 0 0 8 199 0 0 0 7 199 0 0 1 6 199 1 1 1

A TERM PAPER ON ITC Ltd 5 199 4 Tot al

1 12

0 6

0 6

6.BCG MATRIX FOR THE COMPANY AND ANALYSIS: The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the faster the product's market grows the better it is for the company.

A TERM PAPER ON ITC Ltd

BCG Matrix 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.

BCG Matrix of ITC


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

A TERM PAPER ON ITC Ltd

9. LONG TERM (5 YEAR) SUMMARY SWOT ANALYSIS OF THE COMPANY: STRENGTHS


Diversification of business Profits from other businesses

Has a very professional way of handling both business and management. 80%.

Biggest and the largest player in the Indian tobacco market with a market share of Gold Flake tobacco brand is the largest FMCG brand in India - and it holds 70% of the tobacco market

WEAKNESS
Sensitive to excise duties To fund its cash guzzling FMCG start- up, the company is still dependent upon its tobacco revenues Its dependent on tobacco for cigarettes and 60 % of profits are from cigarettes

A TERM PAPER ON ITC Ltd

OPPORTUNITIES
Windmill project Dairy project

THREATS

Increase in competition from foreign players(Marlboro)

Goods and service tax (GST) Challenges from IFRS

Increase of government control in report backs and audit controls.

10. RECOMMENDATIONS FOR THE FUTURE :


The excessive growth of any company is good unless it can be handled properly. ITC has grown too much to be handled.

GST can be implemented in India as early as possible to avail the services and goods on a global scale at a cheaper price Form F & Form C can be made online from manual processing The process of duplication of Re-conciliation which is done manually and through SAP process can be reduced Establishment of authenticated tax base value-absence of authenticated tax base value was one of the main reasons of the study. Now, when all the financial data is centralized in commercial department, the tax base value which was not able to be cross checked earlier can now be checked accurately. Hence , the authencity of the tax base value is established

Creation of a back -up mechanism for auditing process- before, during the auditing process there was no sufficient back up for the tax base value. Now ,since all the required data is readily available with the commercial department , proper back up mechanism has been created for tax base value during the auditing process

A TERM PAPER ON ITC Ltd

E-payment of taxes- The taxes were filed and paid on time electronically and the process involved was learnt and performed with due diligence

Centralization of financial data required for filing of returns - The process of extracting data and centralizing them to be readily available to be filled in the respective forms was done

Familiarization with SAP specific to taxes-The SAP software was learnt thoroughly with respect to Indirect taxes and the files were extracted from SAP with the use of specific T codes.

Re-conciliation of Accounts The re-conciliation of accounts and their entries were learnt thoroughly and checked accordingly

Availing of CENVAT credit - The CENVAT credit was availed on time without holding back any credit or delaying the process

Interpretation of law -The laws relating to Excise, service tax, VAT & Entry tax was read through and interpreted as required for the filing and payment process.

A TERM PAPER ON ITC Ltd

A TERM PAPER ON ITC Ltd