SUBMITTED BYHIMANSHU SHEKHAR 12EX021PIYUSH DWIVEDI 12EX035SREEKANT SUKUMAR 12EX049VIVEK KUMAR 12EX056

OPERATION STRATEGY BY ITC

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

INTRO

Incorporated in 1910, as Imperial Tobacco Company of India Limited

Changed to Indian Tobacco Limited in 1970 and then to I.T.C Limited in 1974

With wide portfolio from FMCG to hotels renamed to ITC limited in 2001

Companies Diversification tobacco

Started as a cigarette, tobacco leave manufacturing

Packaging and printing business started in 1925 to backward integrate with cigarette business

1985 Surya tobacco Co in Nepal set up, renamed to Surya Nepal Pvt Ltd in 2002 becoming a subsidy of ITC

In 2010, ITC launched its hand rolled cigar, Armenteros

Companies Diversification paper

1979 entry in paper business, ITC Bhadrachalam

1990, Tribeni tissues limited acquired, speciality paper for cigarette

Nov 2002, Tribeni tissues division and Bhadrachalam paper board combines to form Paperboards & Specialty Papers Division

Companies Diversification stationery

Paperkraft notebooks launched in 2002 Classmate range launched in 2003 2007 Practical Books, Drawing Books,

Geometry Boxes, Pens and Pencils under the 'Classmate' brand

Paperkraft -eco friendly premium business paper

Colour crew- art stationery brand launched in 2010

Companies Diversification apparels

2000 launch of Wills lifestyle Wills Classic formal wear (2002) and Wills

Clublife evening wear (2003) Men's wear brand, John Players, in 2002 Wills Lifestyle India Fashion Week  launched

in 2006 acts as a platform for B2B for fashion industry

Companies Diversification food

Kitchens of India- ready to eat food launched in 2001

Mint-o, Candyman & Ashirvad launched in 2002 2003 saw the raise of Sunfeast as a major player in

biscuit segment Entry into snack with Bingo in 2007 & noodle

industry with Sunfeast Yipee in 2010

Companies Diversification others

Launched in 2005 Personal Care portfolio has grown under 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia'

1975 ITC- Welcomgroup hotel Chola acquired in Chennai, now known as Fortune Hotels

2000 launched the ITC Infotech Enters matchboxes industry in 2002 and 2003

launches incense sticks

SWOT Analysis

StrengthBrandManagement

WeaknessUnrelated diversification

OpportunityRural marketE-choupal

ThreatsIncreasing tax in CigarettesHealth hazard

The BCG Matrix

Stars•Hotels•Paperboards/ Packaging.•Agri business.

?•FMCG- Others

Cows•FMCG-Cigarettes

Dogs

Political Aspects

In 2001 Government of India has announced ban on the advertising by cigarettes Companies. Therefore many policies have come up like this.

Increased in Excise duties.

Economical Aspects

A growing portfolio of business encompassing FMCG, Paperboards &Packaging, Agri & Foods Business, Hotels and Information Technology.

 Total Shareholder Returns, measured in terms of increase in market capitalization and dividends, grew at a compound rate of over 24% per annum over the last 5 years.

 The new FMCG businesses support the competitiveness, technology up gradation and market reach of over 200 Small and Medium Enterprises (SMEs).

Social Aspects

ITC Group provides direct employment to more than 26,000people.

ITC’s globally recognized E-choupal initiative is the world’s largest rural digital infrastructure benefiting over 4 million farmers.

• ITC’s Watershed Development initiative brings precious water

to over 46,000 hectares of dry lands and moisture-stressed areas. • ITC’s Sustainable Community Development initiatives include

women’s empowerment, supplementary education.

Technological Aspects

Wholly own subsidiary named “ITC INFOTECH”

India’s fastest growing IT services and solution providers

Providing services in more than 140countries

Major strategies followed by ITC:

Entering into less competitive or unexplored markets (ready to eat, staples, wafers).

A managed supply chain network. Innovation-Regular introduction of new products

(all products). Supported by R & D. Market differentiation ( Ready to eat, biscuits) Cost control strategy (all products) Extensive advertising (biscuits, confectionary,

wafers)

Competitors

HUL

BRITANNIA

PARLE

NESTLE

Diversification

PROS of Diversification

Economies of scale and scope

Operational synergies can be realized.

Spreading the firm's unutilized organizational resources to other areas can create value.

Leveraging skills across businesses can create value.

Internal capital market 

Cash from some businesses can be used to make profitable investments.

External finance may be more costly due to transaction costs, monitoring costs, etc.

Contd…

Diversifying shareholders’ portfolios

Individual shareholders may benefit from investing in a diversified portfolio.

Identifying undervalued firms

Shareholders may benefit from diversification if its managers are able to identify firms that are under valued by the stock market.

CONS of Diversification

Combining two businesses in a single firm is likely to result insubstantial influence costs.

Resource allocation can be influenced by lobbying.

Costly control systems may be needed that reward managers based on division profits and discipline managers by tying their careers to business unit objectives.

Internal capital markets may not work well in practice.

Shareholders can diversify their own personal portfolios. Corporate managers are not really needed to do this.

Identifying undervalued firms may not be as easy as it sounds.

Future Positioning of ITC A leading FMCG player in India

FARMERS

MARKETS

Cigarette Trade Marketing capability

BrandedFoods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment capability

A basis for strategic partnerships with other FMCG brand owners

VPN providing SCM, ERP & CRM capability

Lifestyle retailing

Greeting cards/stat

ionery

Matches & Agarbattis

Conclusion

Leverage upon its existing skills and competencies. Benchmarked it’s operations and quality control techniques.

Strong branding capabilities backed by good quality.

Won numerous awards like ‘Enterprise Business Transformation Award‘, NASSCOM - CNBC IT User Award etc.

ITC’s strong distribution capabilities and a strong brand name are a useful asset.

Using its agri sourcing network to source raw materials for its biscuits and atta businesses.

Ahead of Competition