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

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.

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

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.

Agri - Business • Agri-Exports • e-Choupal • Leaf Tobacco

Hotels

Group Companies • ITC Infotech; etc.

SWOT Analysis Threats Increasing tax in Cigarettes Health hazard Opportunity Rural market E-choupal Weakness Unrelated diversification Strength Brand Management

Threats

Increasing tax in Cigarettes

Health hazard

Opportunity

Rural market

E-choupal

Weakness

Unrelated diversification

Strength

Brand

Management

Business wise Sales data Source: Annual Accounts 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

CAGR during FY 2005-2008 Source: Equity research reports 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

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

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: Equity research reports -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

Market attractiveness & Competitive strength is also important. Act 2

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.

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

Cows

FMCG-Cigarettes

?

FMCG- Others

Stars

Hotels

Paperboards/ Packaging.

Agri business.

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.

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.

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.