The content of this presentation is related to the diversification strategy adopted or implemented by Indian Tobacco Company. It also explains the corporate strategy and the process of strategy formulation. The outcome of the strategy and observation are also available.

1. ITC’s PROFILE
• ITC Ltd is an Indian Conglomerate headquartered in
Kolkata, West Bengal.
• Its diversified business includes five segments:
FMCG, Hotels, Paperboards & packaging, Agro
business & IT.
• It Was formed on 24 Aug,1910 under the name of
Imperial Tobacco Company of India Limited.
• In earlier decades, company’s activities centered
mainly around tobacco products.

2. Company’s Diversification
• 1910 - Formed under Imperial Tobacco Comp.
• 1954 – The company went public.
• 1970s – Diversified into non-tobacco business.
• 1975 – Acquired Hotel renamed as ITC
Welcomegroup Hotel Chola.
• 1985 – Set up Surya Tobacco Co. Ltd in Nepal

3. Contd…
• 2000 – ITC launched Expressions & Wills Sports.
• 2001 – Introduced ‘Kitchens Of India’ brand.
• 2002 – Entered in Confectionary and staples.
• 2002 – Acquired Bhadrachlam Paperboard division
• 2003 – Entered into safety matches & Incense sticks.
• 2005 – Diversified into body and skincare products.

4. CORPORATE STRATEGY
• Create multiple drivers of growth by developing a
portfolio of world class businesses that best matches
organisational capability with opportunities in
domestic and export markets.
• Continue to focus on the chosen portfolio of FMCG,
Hotels, Paper, Paperboards & Packaging, Agri
Business and Information Technology.
• Enhance the competitive power of the portfolio
through synergies derived by blending the diverse
skills and capabilities residing in ITC’s various
businesses.

5. • Continuously strengthen and refine Corporate
Governance processes and systems to catalyse the
entrepreneurial energies of management.
• Create distributed leadership within the organisation
by nurturing talented and focused top management
teams for each of the businesses.
• Ensure that each of its businesses is world class and
internationally competitive.
• Enhance the competitive power of the portfolio
through synergies derived by blending the skills.
Contd…

6. Process of Strategy Formulation
1) Setting Organization’s Objectives
Objectives stress the state of being there whereas Strategy stresses upon
the process of reaching there. Strategy includes both the fixation of
objectives as well the medium to be used to realize those objectives.
2) Evaluating the Organizational Environment
The purpose of qualitative & quantitative review is to make sure that the
factors important for competitive success in the market can be discovered
so organisation can identify its SWOT.

7. 3) Setting Quantitative Standards
The idea behind this is to compare with long term customers, so as to
evaluate the contribution that might be made by various product zones or
operating departments.
4) Aiming in context with the organizational plan
In this step, the contributions made by each department or division or
product category is identified and accordingly strategic planning is done
for each sub-unit.
Contd…

8. 5) Performance Analysis
Performance analysis includes discovering and analyzing the gap between
the planned or desired performance. A critical evaluation of the
organization’s past, present and the desired future conditions must be
done.
6) Choice of Strategy
The best course of action is actually chosen after considering
organizational goals, organizational strengths, potential and limitations as
well as the external limitations.
Contd…

9. Method Accepted by ITC
 Internal New Venture
• Company has a set of valuable competencies in its
existing businesses.
• Competences leveraged or recombined to enter new
business areas.
 Acquisitions
• Company lacks important competencies to compete
in an area.
• Company can purchase an incumbent company that
has those competencies at a reasonable price.

10.  Joint Ventures
• Company can increase the probability of
success by teaming up with another company
with complementary skills.
• Joint ventures are preferred when risks and
costs of setting up a new business unit are
more than company can assume.

11.  It developed an organization having potential of
carrying out its diversification strategy
successfully.
 The Company disbursed its abundant resources
to strategy-essential activities.
 The company focused on the formulation of
those types of policies which helped it in
diversification..
 It employed many kind of programs and
techniques for constant improvement.
 ITC limited linked its reward structure to best
suggestions from employees on diversification
 For successful implementation of diversification,
the company also focused on strategic leadership.

12. Outcome Of Strategy
 The ITC’s diversification strategy paid off in very brilliant
manner. The Company has been one of the biggest wealth
creator in the Indian stock markets, over the past many years.
 In the last 10 years alone, ITC’s stock price has increased by
over 1200 %.
 The company which started its business from cigarettes
diversified its business in many segments like FMCG, Paper
industry etc had shown a handsome and continuous profit year
after year.

13.  None of the segment in which the company
entered had failed. The major part of the
revenue comes from its core product/segment
i.e. cigarette which grosses around 41.17% still
the other segments have shown a whooping
increase contributing high in its revenues and
profits.

14. Here are some of the data and pie-chart which
proves the successful diversification of the company.
 Net revenue from the sale of products and services in
the financial year 2015-16 was Rs.36475.27 crore.
 2 Of its Rs.36475.27 crore revenue, ITC earned Rs
27,417 crore revenue from the cigarettes business and
made Rs 9,419 crore of profit
 3 The FMCG and hotels businesses earned Rs 120
crore and 146 crore of profits on revenues of Rs.8128
crore and Rs.1200 crore respectively.
 4 The farm and paper business are also contributing
highly in the company’s profit.

16. OBSERVATIONS
While concluding the presentation, we would like to share our
findings which we observed in the preparation of this project.
During continuous research of the company’s diversification
strategy, we found that the
 Time gap taken and the segment chosen by ITC ltd in
diversifying was close to perfect but we also found that the
company is highly dependent on its cigarette segment for
profit.
 2 We also found that investors see highly diversified
companies as less attractive.
 3 The company needs to formulate strategies to meet new
challenges like FDI.