BCG Matrix for ITC Ltd.

Ranjan Varma

Structure

Act I Act II Act III

Lights!

ITC- A Background

Camera! The BCG matrix Action!
Learning points and conclusions

Act –I [Lights!]
  

 

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

 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.

Vision & Mission statements

Business Mix of ITC Ltd.
FMCG • Cigarettes

• Foods • Lifestyle Retailing • Greeting, Gifting & • Safety Matches • Agarbattis

Stationery

Paperboards & Packaging • Paperboards & Specialty Papers • Packaging

Business Mix (Cont’d)
Agri - Business • Agri-Exports

• e-Choupal • Leaf Tobacco

Hotels Group Companies • ITC Infotech; etc.

Business wise Sales data
Business/ Year Growth Value (Rs in Crore) % 2005 2004 10002.54 9230.27 563.39 577.25 1780.07 1565.31 304.16 257.53 1708.77 1253.29

FMCG-Cigarettes 8.4 FMCG-Others Hotels Agribusiness Paper & pkg. Net revenue 85.2 124.1 4.2 24.9 12.99

13349.58 11815.04

CAGR during FY 2005-2008
Category CAGR Growth parameters Pricing power Inward traffic, occupancy Capacity utilization, value added products E-choupal, choupal sagar, Fast track, decent share. Cigarettes 10.9 % Hotels Paper Agri business FMCGOthers 22.7% 17.2 % 34.3 % 60.2 %

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.

Segment Cigarettes

Dominance 70% share

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

Paper & Packaging board – No. Packg. 1 in Asia Agri 1of the largest xporters business from India Hotels ITC Group ranks No.2 FMCG (Others) 20% share of greeting cards market, 'Aashirvaad' atta is No.1 in branded segment

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.

Sta rs •Hotels •Paperboards/ Packaging. •Agri business. Cows •FMCG-Cigarettes

The BCG Matrix for ITC Ltd.
? •FMCG- Others

Dogs •Maybe ITC Infotech.

Act III
?

- Action- Learning points and
conclusions

- 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.