BCG Matrix for ITC Ltd


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Project on understanding the BCG Matrix and applying it to ITC Ltd. Segregating the businesses of ITC into Cash Cows, Stars, Question Marks and Dogs.

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BCG Matrix for ITC Ltd

  1. 1. BCG Matrix for ITC Ltd. Ranjan Varma
  2. 2. Structure Learning points and conclusions Action! Act III The BCG matrix Camera! Act II ITC- A Background Lights! Act I
  3. 3. Act –I [Lights!] <ul><li>Governance structure </li></ul><ul><li>Strategic supervision </li></ul><ul><li>Strategic management </li></ul><ul><li>Executive management </li></ul><ul><li>Core values </li></ul><ul><li>Nation Orientation; Trusteeship; Excellence; </li></ul><ul><li>Customer focus; respect for people; Innovation </li></ul>
  4. 4. Vision & Mission statements <ul><li>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. </li></ul><ul><li>Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value. </li></ul>
  5. 5. Business Mix of ITC Ltd. <ul><li>FMCG • Cigarettes • Foods • Lifestyle Retailing • Greeting, Gifting & Stationery • Safety Matches • Agarbattis Paperboards & Packaging • Paperboards & Specialty Papers • Packaging </li></ul>
  6. 6. Business Mix (Cont’d) <ul><li>Agri - Business • Agri-Exports • e-Choupal • Leaf Tobacco </li></ul><ul><li>Hotels </li></ul><ul><li>Group Companies • ITC Infotech; etc. </li></ul>
  7. 7. Business wise Sales data Net revenue Paper & pkg. Agribusiness Hotels FMCG-Others FMCG-Cigarettes Business/ Year 12.99 24.9 4.2 124.1 85.2 8.4 Growth % 11815.04 13349.58 1253.29 1565.31 1708.77 1780.07 257.53 577.25 304.16 563.39 Value (Rs in Crore) 9230.27 10002.54 2004 2005
  8. 8. CAGR during FY 2005-2008 Fast track, decent share. 60.2 % FMCG-Others E-choupal, choupal sagar, 34.3 % Agri business Capacity utilization, value added products 17.2 % Paper Inward traffic, occupancy 22.7% Hotels Pricing power 10.9 % Cigarettes Growth parameters CAGR Category
  9. 9. Market share of ITC Ltd. <ul><li>Outstanding market leader </li></ul><ul><li>Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports. </li></ul><ul><li>Gaining market share </li></ul><ul><li>Nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards. </li></ul>
  10. 10. -7.5% 4.4% 20% share of greeting cards market, 'Aashirvaad' atta is No.1 in branded segment FMCG (Others) 5.4% 4.3% ITC Group ranks No.2 Hotels 3.7% 7.0% 1of the largest xporters from India Agri business 10.7% 7.3% Packaging board – No. 1 in Asia Paper & Packg. 87.7% 77.0% 70% share Cigarettes Contribution % Revenue PBIT Dominance Segment
  11. 11. Market attractiveness & Competitive strength is also important. Act 2
  12. 12. Limitations <ul><li>Assumes market growth rate. A firm may grow the market. </li></ul><ul><li>A “Dog” may be helping other products. </li></ul><ul><li>High market share/Growth is not the only success factor. </li></ul><ul><li>Linkage between market share and profitability is questionable. </li></ul>
  13. 13. The BCG Matrix for ITC Ltd. Dogs <ul><li>Cows </li></ul><ul><li>FMCG-Cigarettes </li></ul><ul><li>? </li></ul><ul><li>FMCG- Others </li></ul><ul><li>Stars </li></ul><ul><li>Hotels </li></ul><ul><li>Paperboards/ Packaging. </li></ul><ul><li>Agri business. </li></ul>
  14. 14. Act III - Action- Learning points and conclusions <ul><li>? - To be handled with care. </li></ul><ul><li>Strategic forays into emerging high growth markets. </li></ul><ul><li>E-Choupal is a transformational strategy. </li></ul><ul><li>Strong brand building capability will be tested. </li></ul>
  15. 15. Learning points (Cont’d) <ul><li>Corporate strategy of creating multiple drivers of growth anchored on its core competencies and distribution reach. </li></ul><ul><li>Embracing difficult and challenging corporate strategy. (Ex: Paperboards). </li></ul><ul><li>EHS philosophy: Contribution to the triple bottom line- Economic, Environment and social capital. </li></ul>