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 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.
 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 & Stationery
• Safety Matches
• Agarbattis

Paperboards & Packaging

• Paperboards & Specialty Papers
• Packaging
Business Mix (Cont’d)
Agri - Business
• Agri-Exports
• e-Choupal
• Leaf Tobacco

Hotels

Group Companies
• ITC Infotech; etc.
 SWOT Analysis
Strength Weakness
Brand Unrelated diversification

Management

Opportunity Threats
Rural market Increasing tax in

E-choupal Cigarettes
Health hazard
 Business wise Sales data
Business/ Year Growth Value (Rs in Crore)
% 2005 2004

FMCG-Cigarettes 8.4 10002.54 9230.27

FMCG-Others 85.2 563.39 304.16
Hotels 124.1 577.25 257.53

Agribusiness 4.2 1780.07 1708.77

Paper & pkg. 24.9 1565.31 1253.29
Net revenue 12.99 13349.58 11815.04
Source: Annual Accounts
CAGR during FY 2005-2008
Category CAGR Growth parameters
Cigarettes 10.9 % Pricing power
Hotels 22.7% Inward traffic, occupancy
Paper 17.2 % Capacity utilization, value
added products
Agri 34.3 % E-choupal, choupal sagar,
business
FMCG- 60.2 % Fast track, decent share.
Others

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 Dominance Contribution %
Revenue PBIT
Cigarettes 70% share 77.0% 87.7%

Paper & Packaging board – No. 1 7.3% 10.7%

Packg. in Asia
Agri 1of the largest xporters 7.0% 3.7%
business from India
Hotels ITC Group ranks No.2 4.3% 5.4%

FMCG 20% share of greeting 4.4% -7.5%

(Others) cards market,
'Aashirvaad' atta is
No.1 in branded
segment

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 FMCG- Others

Paperboards/
Packaging.
Agri business.

Cows Dogs
FMCG-Cigarettes
 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 (Cont’d)
 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.