About the Company• The Company was founded in year 1790 by Henry Overton Wills.• It’s current headquarter is in Kolkata.• It is the largest producer of Cigarettes in India with maximum brands of all range.• It provides employment to near about 27,000 people.• Apart from Cigarettes the company is diversified into many other businesses also like Hotels, papers, packaged foods, apparels, etc.• They have a very successful CRS activity called ‘e-choupal’.• In the list of world most reputable companies ITC position at 95.• Only Indian FMCG company on Forbes Global 2000 ranking.
Indian Tobacco Industry• Cigarettes – so many challenges.• Graphic pack warnings.• Despite regulatory controls, underlying factors for cigarette growth are strong• Cigar culture grows• Segmented Market Share
Threats of New Entrants = LOW• New product differentiation very tough- already cigarettes at different price points, flavors, brand image• Access to distribution channel is tough – big & established players are present• Capital requirement is very high for a pan India launching.• Government policy –high tax, No Ads allowed
Bargaining Power of Supplier = LOW• Many inputs are required but in small amount – paper tobacco filter• There are many small scale , unorganized suppliers• Cigarette companies are big and have direct access to distribution channel and addicted buyers. Suppliers don’t have much control over smokers.
Competitive Rivalry in the Industry = HIGH• Presence of many players like: Godfrey Philips, VST, GTC, etc.• Price Competition• Ban on Advertisements• Replacements for ads – event promotions and sponsorship• Introduction of international brands in India like Davidoff, Dunhill, Camel, etc.
PESTEL Analysis• Political Analysis The cigarette industry in India continues to operate in a challenging economic environment, particularly with respect to taxation and regulations relating to communication and consumption.• Economical Analysis India is a major grower and exporter of tobacco in the world. Presently India is among top three producers of tobacco in the world.• Social Analysis There is a growing public concern regarding increasing consumption of tobacco, its health implications and the need to prevent access to minors and non-users.
PESTEL Analysis (cont.)• Technological Analysis• ITC cigarettes have came a long way and that can be concluded by the fact that the supply chain management that the ITC employs now is of the latest trends- they have a great inventory control, logistics support etc.• Environmental Analysis• The gap between urban and rural households in cigarette consumption is the highest in low and lower-middle income households.• Legal Analysis• Ban on Smoking in Public Places with effect from last quarter of 2008 resulting in a dip in sales and profit.
SWOT Analysis• Strength• The main strength of the company is the brand Image• Gold Flake brand is the largest selling Tobacco brand in India (70 % Mark Cap)• Weakness• Low popularity of most of its products• After the ban on advertisement it is not able to promote their new product
SWOT Analysis (cont.)• Opportunity• Even expanding market share in the Indian tobacco market is an opportunity• Threats• The threats of the company are competition from international companies. The main competitors are Marlboro• The next threat may also be the changing habits of the consumer; they may quit smoking due to its ill effects and hazards.
New Factors for Consideration• Introduction of New Brands.• Impact of taxes on ITC cigarettes sales.• Environmental practices at ITC factories• The burgeoning illegal trade in cigarettes and its impact on the ITC cigarettes sales. Tax Revenue Share 0% From Cigarettes 0% from other tobacco products 25% 75%
Cigarettes: Future Growth potential • Cigarettes account for only 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation – Cigarettes (15% of tobacco consumption) contribute nearly 85% of Revenue to the Exchequer from tobacco sector • Of the 58% of adult Indian males who consume tobacco, barely 15% can afford cigarettes • Bidi : Cigarettes ratio = 10 : 1 • Annual per capita adult cigarette consumption in India is approximately one tenth world average : 141 • Future growth depends on relative rates of growth of per capita income and moderation in taxes
CORE COMPETENCIES• Powerful brands across segments• Concentrate on Leadership in all segments which is focussed on geographic & price having a extensive FMCG distribution network.• It has a world class state of art technology and products.• ITCs pursuit of international competitiveness is reflected in its initiatives in the overseas markets. In extremely competitive markets.• ITC offers high-quality, value-priced cigarettes and Roll-your-own solutions.• ITCs cigarettes are produced in its state-of-the-art factories at Bengaluru, Haridwar, Saharanpur and Kolkata.
STRATEGY ANALYSIS OF ITC CIGARETTES• Sustain multiple drivers of growth, matching internal capabilities with emerging market opportunities• Pursue World class competitiveness in the entire value chain• Best-in-class in terms of:• Internal Vitality• Market Standing• Profitability
PAST AND PRESENT STRATEGY OF ITC CIGARETTES• To be filled by andy bhai
THE STRATEGIC OPTIONS FOR DRIVING GROWTH• Expertise in a particular type of product is the anchor. New growth is created by expanding sales of that product to new customer segments.• A particular target customer is the anchor. Growth is created by selling new products or services to the same customer base.• A particular technology is the anchor. Finding any new “home” for that technology creates growth.
Our Recommended Strategy• to be filled by arya
Our Learning• This assignment gave us the inside out view of the cigarette industry.• The different types of strategies that a company can use in the FMCG sector.• The practical implementation of different strategy in cigarette industry.• The kind of promotional strategies are used by the company especially when they are in a industry which cannot advertise.• The pull back strategy they used while raising the prices of cigarette.