Strategy Analysis of ITC Cigarettes

2. Introduction
 ITC is one of India's foremost private sector companies
 ITC has a diversified presence in FMCG (Fast Moving
Consumer Goods), Hotels, Paperboards & Specialty
Papers, Packaging, Agri-Business and Information
Technology.
 ITC is an outstanding market leader in its traditional
businesses of Hotels, Paperboards, Packaging, Agri-
Exports and Cigarettes, it is rapidly gaining market
share even in its nascent businesses of Packaged Foods
& Confectionery, Branded Apparel, Personal Care and
Stationery

3. PROFILE OF ITC
 Type: Public
 Traded as: BSE: 500875 BSE SENSEX Constituent
 Industry: Conglomerate
 Predecessor(s):
 Founded: August 24, 1910[1] (as Imperial Tobacco Company of
India) Founder(s) Henry Overton Wills
 Headquarters: Kolkata, West Bengal, India
 Chairman: Yogesh Chandler Deveshwar
 Products: Tobacco, Hotels, Paperboards & specialty papers,
packaging, agri-business, packaged foods & confectionery, IT,
branded apparel, personal care, stationery, safety matches and
other FMCG products
 Revenue : US$ 7 billion (2010)
 Employees : 29,000 (2012)
 Website : www.itcportal.com

4. VISION & MISSION
 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.

5. Competitors of ITC Ltd.
 Golden Tobacco Limited
 Godfrey Philips India Ltd.
 VST Industries Ltd.(Vazir Sultan Tobacco
Company)
 RTCL Ltd. (Raghunath Tobacco Company Ltd)
 Hindustan Unilever Ltd.
 Marico

6. PRODUCT PROFILE
Hotel
Cigare
ttes
Incens
e
Sticks
Person
al Care
Safety
Match
es
Agricu
ltural
Indust
ry
Inform
ation
Techn
ology
Paperb
oards
Packag
ed
Foods
Stationery
Brand
ed
Appare
l

11. e-Choupal is an initiative of ITC Limited, a large multi business conglomerate in India,
to link directly with rural farmers via the Internet for procurement of agricultural and
aquaculture products like soybeans, wheat, coffee, and prawns. e-Choupal was conceived
to tackle the challenges posed by the unique features of Indian agriculture, characterized
by fragmented farms, weak infrastructure and the involvement of numerous
intermediaries. The programme involves the installation of computers with Internet
access in rural areas of India to offer farmers up-to-date marketing and agricultural
information.

16. External Factor Evaluation (EFE)
Opportunities Weight Rating Weighted Score
Ever growing Consumer base due to addiction 0.2 2 0.4
Reduction the price of the
product and offer the same quality.
0.2 4 0.8
Social media marketing as a replacement for
advertisement
0.1 4 0.4
Threats
Ban on cigarette smoking in public places 0.2 2 0.4
Lot of competitors with similar quality and price 0.2 3 0.6
Taxes 0.1 2 0.2
Total 1 2.8

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

19. Competitive Profile Matrix (CPM)
Critical Success Factors Weight ITC Classic
Cigarettes
(Ratings & Weighted
Scores)
Marlboro Benson
Premium Segment 0.100 2 0.20 3 0.30 2 0.2
Economies of Scale 0.175 4 0.70 1 0.175 3 0.525
Distribution System 0.100 3 0.30 2 0.20 3 0.30
Customer Loyalty 0.25 2 0.5 1 0.25 2 0.5
Marketing Strategy 0.125 1 0.13 2 0.25 2 0.25
Diversification 0.100 4 0.40 4 0.40 3 0.30
Pricing 0.100 4 0.40 3 0.30 2 0.20
Market Share 0.025 1 0.025 4 0.10 2 0.05
Total 1 2.755 2.025 2.4

20. Internal Factor Evaluation (IFE)
Strengths Weight Rating Weighted Score
Available in nine different varieties 0.25 4 1
Strong brand name and reputation of ITC in Tobacco
industry
0.10 4 0.40
Customer loyalty amongst customers is high 0.02 3 0.06
Excellent availability due to ITC’s strong distribution
network
0.02 4 0.08
Research & Development 0.16 4 0.64
Weaknesses
The manufacturing process very time consuming 0.20 2 0.40
Company has to rely on surrogate advertising to
promote products
0.02 1 0.02
Govt. policies regarding tobacco and cigarettes 0.20 2 0.40
Improper Diversification 0.02 1 0.02
Total 1 3.02

21. VRIN Analysis
Tangible
Resources
Rare Valuable Inimitable Non
Substitutable
Implications for Competitiveness
Financial No Yes No No Competitive Parity
Organizational Yes Yes Yes Yes Sustainable Competitive
Advantage
Physical No Yes No No Competitive Parity
Technological No Yes Yes No Temporary Advantage
Intangible
Resources
Innovation No Yes No No Competitive Parity
Human Yes Yes Yes Yes Sustainable Competitive
Advantage
Reputation Yes Yes No No Temporary Competitive
Advantage

23. SWOT ANALYSIS
Strength
•Cigarette market is 22,000 cr and
ITC has lion’s share in it
•Strong brand recognition and
product portfolio
•Distribution network
•Management
Weakness
•Dependence on tobacco revenues
• Negative Connection of Tobacco
Opportunity
•Consumption Of personal care
products
•Rural Market
•E-Choupal
• Filter cigarette segment of less than
60mm size
Threat
•Competition both Domestic &
International
•Increasing Tax on cigarettes
•Excise duty on unfiltered cigarettes less
than 60mm in length was increased
387% last year
•Hike was 142% for those between
61mm and 70mm long.
•Regulatory restrictions on cigarettes
•Ban on smoking

24. TOWS MATRIX OF ITC
Strength Weakness
Opportunities
• Market Expansion
• Promotion
• Awareness
• Affordability
• Emphasize on Personal
Care
Threats • Diversification
• Strategic Alliances with
International Players
• Govt. Policies

25. Corporate Shared Values
ITC's Core Values are aimed at developing a
 Customer-focused
 High-performance organisation
 Customer Focus
 ITC delivers what the customer needs in terms of value,
quality and satisfaction.

26. Organizational Structure
 The practice of Corporate Governance in ITC takes
place at 3 interlinked levels –
 Strategic supervision- by the Board of Directors
 Strategic management- by the Corporate
Management Committee
 Executive management- by the Divisional/Strategic
Business Unit (SBU) Chief Executive assisted by the
respective Divisional/SBU ManagementCommittee

27. HRM Policies
 All employees must live with social and economic dignity and freedom,
regardless of nationality, gender, race, economic status or religion.
 ITC does not employ any person below the age of eighteen years in the
workplace. ITC prohibits the use of forced or compulsory labour at all its units.
 All major changes in operations involving work processes, manning norms and
other productivity linked issues are carried out after discussions with the
employees and the recognized unions at each location.
 The Corporate Human Resources function conducts non-discrimination
reviews annually on a sample basis with unit heads and through on-site
assessments.
 ITC Unit has appropriate systems and checks to ensure compliance with the
Policy and statutory provisions, including means for filing of grievances,
collective bargaining agreements and minutes from worker meetings.

28. Operations & Logistics
 Emphasis on the current programs of organization and
planning which essentially deals with the future and
two intimately related activities.
 Planning departments are key in developing strategies,
crystallizing goals ,setting objectives, maintain
control.
 Enables technologies facilitates smooth flow of goods
and services and related information as well as
integration of business processes.
(Retailers place orders through mobile phones)

29. Research & Development
 ITC R&D centre are at Bengaluru, Hyderabad, Bhadrachalam,
Rajamundry, consisting of a pool of world class scientists
focused on providing the requisite R&D support system.
 Rajahmundry in AP cover all aspects of tobacco crop
cultivation. (Collaboration with the central tobacco board
research institute and tobacco board.)
 ITC pioneered FCV tobacco cultivation in India and
introduced the burley and HDBRG varieties.

30. CONCLUSION
 ITC promoting their brands through advertisement campaign as well as
door to door promotion.
 ITC is also focusing on Retailers and Wholesalers to promote their
brand.
 The demand of their product in very low, because people don’t know
about their brands very well.
 ITC knows their strength and weakness in the personal care market, so
they are applying new concept to overcome their weaknesses.
 ITC now offering more margins, exiting offers and long credit period to
retailers and wholesalers.