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Strategic analysis of ITC Ltd using various tools


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Strategic analysis of ITC Ltd using various tools

  1. 1. Strategic analysis using various tools (ITC Limited) Submitted by- Md. Shakir
  2. 2. Introduction about ITC LIMITED: • ITC LIMITED (Indian Tobacco Corporation) is one of the India’s major private sector companies which hold a powerful place in the market with a huge capital of US $ 19 billion and a turnover of over US $ 5 billion. It owns many awards like Asia’s fab 50 and world’s most reputable companies given by Forbes magazine and Business world. • ITC LIMITED enters into the hotel industry as ITC welcome group in the year of 1975 with the aim to promote India’s rich tourism heritage. ITC hotels have unique value and fine art of hospitality which emerged as one of the India’s premier hospitality sector. It has over 100 hotels in more than 80 destinations with good standard services.
  3. 3. Contd… • Beyond hotel industry, it involves in some other business too. The following are some of the business of ITC LIMITED, • Cigarettes • Foods • Lifestyle retailing • Personal care • Education and stationary • Safety matches • Agricultural business • Information technology
  4. 4. • Vision: Sustain ITCs position as one of the India’s most valuable corporations through the world class performance, creating growing value for the Indian economy and the companies stakeholders. • Mission: To enhance the wealth generating capability of the enterprise with the globalizing environment, delivering superior and sustainable stakeholder value. • Values: ITC is a demand-driven organization responsive to national development objectives and programmes. It endeavors to deliver relevant and cost-effective services for sustainable development ends. Its staff is committed to providing information and advice according to criteria implicit in the United Nations Charter: the highest standards of efficiency, competence, integrity and neutrality.
  5. 5. • Objectives: • Enterprises: Strengthen the international competitiveness of enterprises • Trade support institutions: Develop the capacity of trade service providers to support businesses. • Policymakers: support policy makers in integrating the business sector into the global economy. • Stakeholders: • The following table shows us the stakeholders of ITC limited, • It shows us that the company has strong stake holders; hence it is also a key point to survive in the market. • Market position: • ITC hotels can be broadly classified in four major sectors such as, • The luxury collection, • Welcome Hotels, • Fortune Hotels, • Welcome Heritage. • With some of its unique techniques and design of the hotel, ITC welcome groups is now one of the best five star hotels with the true essence of Indian hospitality. And it started its special gateways to its new destinations. ITC welcomes groups are also getting a good reputation for its fortune hotels which show the well done survival in the market.
  6. 6. Tools and techniques of strategic analysis: The following are the tools and techniques of strategic analysis of ITC, • Investment map: It helps the investment agencies identity such as priority sector for foreign investments, competing countries and potential foreign investors. • Market asses’ map: It helps to find out the national tariff level of different countries. • Product map: It is an online product context which includes the overall study of the market, price indications and product information of different organizations which helps to comparison of the services. • Trade map: It is also an online data base which helps to find the flow of goods and services and the barriers in the international market.
  7. 7. Internal analysis: • According to (Centre, ITC Strategic plan, 2008), Though ITC has a good strategic approach in all ways, it has four major challenges such as, • Leveraging more unearmarked resources: ITC has been trying to develop a capacity to manage their large portfolio which will result in a need of huge funds. • Upgrading financial management: As ITC is being received funds from various different sources; it needs to maintain a proper flow of cash and proper project budget control. As flow of cash is important for every organization, the decisions taken by the management must be very accurate and flexible according to the fluctuations. • Investing in people: ITC consider their staff as their heart of the organization in order to achieve the business goals and objectives which need a good personal management. • Improving communications and information system: ITC is expanding its level in the market; it should maintain a proper communication level in order to maintain a smooth flow of business.
  8. 8. Financial performance: • The financial performance of the ITC limited is excellent when compared to the market situation. The balance sheet as on 31st march 2009 shows that the total value of source of funds which includes share holders funs, loan funds and deferred tax is 14779.82 (Rs in crores) where the 31st march 2008th value is 12817.17 (Rs in crores). It is clear that the funds seem to be increasing. • On the other hand the net current assets which includes inventories,debtors,cash in hand and bank is 3456.10 (Rs in crores) where the previous year was 2586.97 (Rs in crores) which seems to be increasing too.
  9. 9. BCG MATRIX • Stars: ITC Ltd has a very strong market position in the sectors such as Hotels, Paperboard/packaging and agricultural business. They are very famous for Hotels and Agri business.ITC is very strong in these positions as these sectors are considered as stars in BCG matrix which means these sectors generates a huge amount of profit because of the market shares. • Question marks: ITC Ltd FMCG sectors such as automotive companies, furniture companies, financial companies, tobacco companies, food companies are in the stage of question mark in the BCG matrix which means these sectors growing rapidly fast and consumes a large sum of cash because of low market shares. But there is a chance that these sectors may become stars.
  10. 10. • Dogs: ITC InfoTech are now the Dogs in the BCG matrix as they have very low market share and doesn’t produce lot sum amount of cash which indicates the weakest sector of ITC Ltd. • Cash cows: ITC Ltd FMCG-Cigarettes are now in the position of Cash Cows in the market as they produce a stable cash flow which makes a good growth rate in the market shares. As there is a good profit, it is a hope that this sector may move to the position of Stars or Question marks in the near future.
  11. 11. SWOT analysis of ITC Ltd: The SWOT analysis can be broadly classified into major two sections which are the internal analysis and the external analysis. • Internal analysis: Internal analysis of ITC Ltd is the strength and weakness of the organization. The strength of the organization is nothing but its brand and the powerful management. ITC Ltd brands are very popular in India. Their beauty products such as Fiama Di Wills and Vivel are more popular in the market. And the ITC Welcome group hotels have a powerful position in the market as well. This is the positive side for the ITC Ltd. On the other hand, the weakness of the organization is their unrelated diversification. They have major hotel sectors and as well as Agri sectors and so on. As there is no connection between the different sectors, there may arise a problem in the future of handling the business in the smooth way as the fortune of the market is always unpredictable. This is the negative side for the ITC Ltd.
  12. 12. External analysis: • The external analysis of ITC Ltd is the opportunity and threats for the organization. The opportunities for the organizations such as rural market and E-choupal are a big boon to the organization. Investing in the rural areas helps the development of rural markets and the Government lays a very less tax on the rural markets which helps the ITC to save their save their expenses on tax. This is one of the biggest advantage and the positive side for the organization. • Another external factor is the Threats to the ITC Ltd is that the increasing level of tax in Cigarettes which lead to loss the huge amount of cash on tax. The other threat is that the health hazard which the public is very well aware off. So the ITC Cigarettes industry which is doing very well in the present market may face some serious problems in the future market.
  13. 13. Conclusion: • It is a clear fact that so far ITC Ltd holds a good reputation in the market and a well slandered position. Even though there is an un-related diversification of ITC, the powerful and the good management help the smooth flow of business which is a successful key factor to survive in the market. Though ITC Ltd has some weak industrial sector, it keeps an overall slandered position in the market even in the recession period where lots of organizations are thrown out of the market. With the level of present status, there is a bright fortune for ITC Ltd after this dark recession which is very near and crystal clear.