Professional Documents
Culture Documents
On
Submitted by
Group 1
Batch No: 4
Submitted to
Dr. Hemraj Verma
School of Business
Oct 2012
TABLE OF CONTENT
S.No
Chapters
Executive Summary
SWOT Analysis
Competition Analysis
Industry Structure (Using Porters Five forces
model)
Competitive Profile Matrix (Based on Key
Success factors)
Conclusion
10
References
Page No
3
4
4
6
10
18
19
22
27
28
EXECUTIVE SUMMARY
This report is all about the ITC limited company. ITC limited is the company which is dealing
mainly in goods comprising Food, Personal Care, Cigarettes and Cigars, Branded Apparel,
Education and Stationery Products, Incense Sticks and Safety Matches, Hotels, Paperboards &
Specialty Papers, Packaging, Agri-Business and Information Technology. ITC is the sixth largest
company of FMCG in the world. ITC is the first Indian company and the second in the world to
win the prestigious Development Gateway Award. It won the $100,000 Award for the year 2005
for its trailblazing ITC e-Choupal initiative which has achieved the scale of a movement in rural
India.
Project:
Provides all the crucial information on ITC required for business and competitor
intelligence needs.
Contains a study of the major internal and external factors affecting ITC in the form of a
SWOT analysis as well as a breakdown and examination of strategies of ITC
Major factors contributing the success of ITC
Industrial analysis of ITC through Porters five forces model as well as comparing that
with its competitor HUL.
Analysis done on BCG matrix
With this project we have tried to understand the different business process identified by the
FMCG Company, as well as analyzing its strength and weakness as compared to other company.
Our project is mainly concentrated on the comparative analysis of ITC and competitor HUL. The
source of information is secondary that is through internet and different newspapers and sites of
ITC and HUL as well as some of the journals.
INTRODUCTION
Incorporated on 24 August 1910 as the Imperial Tobacco Company of India Limited, the
company's name was changed to ITC Limited in 1974. This company is rated among the 'World's
Best Big Companies' by Forbes magazine. ITC ranks third on all major profit parameters among
India's private sector corporations. ITC employs over 20,000 people at more than 60 locations
across India. ITC is one of India's foremost private sector companies with a market capitalization
of over US $ 13 billion and a turnover of US $ 3.5 billion.
ITC has a diversified presence in cigarettes, hotels, paperboards and specialty papers, packaging,
agri-business, packaged foods and confectionery, branded apparel and greeting cards. ITC's agribusiness is one of India's largest exporters of agricultural products. A wholly-owned subsidiary,
ITC
InfoTech
India
Limited,
provides
end-to-end
IT
solutions.
VISION: Sustain ITC position as one of the Indias most valuable corporations through world
class performance, creating growing value for the Indian economy and the companys
stakeholders.
HUL: Unilever products touch the lives of over 2 billion people every day whether that's
through feeling great because they've got shiny hair and a brilliant smile, keeping their homes
fresh and clean, or by enjoying a great cup of tea, satisfying meal or healthy snack.
MISSION: To enhance the wealth generating capability of enterprises in a globalizing
environment, delivering superior and sustainable stakeholder value.
HUL: Meet everyday needs for nutrition, hygiene and personal care with brands that helps
people feel good and get more out of his life.
FACTORS
Products & Services
Market Share
Technology
Survival, Growth & Profitability
Self Concept
Public Image
Customer
Employee
Philosophy
ITC
HUL
Yes
Yes
Yes
Yes
Yes
Yes
Market share of ITC is 66% and HULs market share is 56%. This shows it has huge
market share.
ITCs profit is increasing by 15% p.a. but HUL has a constant growth which shows that
ITC has more survival growth rate.
ITC has a good public image because it has a large contribution to the rural area like echaupal and also has a huge market share comparison to HUL.
ENVIRONMENT
ANALYSIS
EXTERNAL ENVIRONMENT
THE MICRO-ENVIRONMENT
This environment influences the organization directly. It includes suppliers that deal directly or
indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small,
but this can be misleading.
In this context, micro describes the relationship between firms and the driving forces that control
this relationship. It is a more local relationship, and the firm may exercise a degree of influence.
Stakeholders:
As organization requires greater inward investment for growth,increasing pressure to move from
private ownership to public. Satisfying shareholder needs may result in a change in tactics
employed by an organization. The companies have no conflict between the twin goals of
shareholder value enhancement and societal value creation. The challenge lies in fashioning a
corporate strategy that enables realization of these goals in a mutually reinforcing and synergistic
manner.
244,65,39,845 ordinary shares of the company, representing 64.79% of the company's paid up
capital, as on 11th September, 2009 are in dematerialized form. The paid-up share capital of the
company is Rs. 377, 62, 86,590(rs.377.63 crores) divided into 377, 62, 86,590 ordinary shares of
the face value of re 1/- each.
Supplier:
Raw materials, intermediates and the final product sourcing/distribution in wide spread across
the country few items have more than 1 supplier for the raw material e.g. Filter rods can be
sourced from Mumbai, Bangalore or M.P. huge supply-demand network for cigarette business
which must operate in the cost optimal way to maximize the profits few segments are particular
to factories e.g. King size.
Consumer:
Organizations survive on the basis of meeting the needs, wants and providing benefits for
their customers.
Failure to do so will result in a failed business strategy. Its businesses
and
brands are focused almost entirely on the Indian markets, and despite being most well-known for
its tobacco brands such as gold flake, the business is now diversifying into new FMCG (fast
moving consumer goods) brands in a number of market sectors.
HULS ENVIRONMENT:
Suppliers:
HUL has 2000 suppliers & associates to 37 factories that provide raw material. The suppliers are
basically farmers.
HUL has large distribution system online Sangam direct cosmetic brands from Assam
supply chain to eastern India with stock in Nagpur experimental kiosks under Lipton sales
officers 3 to 5 step process 35 % of FMCG products by local retailer micro environment.
Employees:
15000 employees including 1300 managers, they respect the dignity of the individuals and the
right of employees to freedom of association.
Consumers:
Provide quality products and services
Shareholders:
52.10 % equity stake is with HUL, rest 360675 individual and financial business partners: aims
at establishing mutually beneficial relations and adhere to business principles.
INTERNAL ENVIRONMENT
Leadership of company:
Under his leadership, ITCs Sustainability initiatives were given shape by fashioning corporate
strategies that not Only enhance shareholder value but add significantly to the development of
natural and social capital. ITC is today acknowledged as a global exemplar in sustainable
business practices and is the only Company in the world, of comparable dimensions to be
carbon positive, water positive and solid waste recycling positive. The Companys
businesses generate livelihoods for over 5million people, many of whom represent the poorest in
Rural India.
The pioneering farmer empowerment initiative, ITC e-Choupal, is today the world's largest rural
digital infrastructure and is a case study at the Harvard Business School besides receiving several
global awards including the inaugural World Business Award instituted by the United Nations
Development Programme, International Chamber of Commerce and the HRH Prince of Wales
International Business Leaders Forum.
In 2011, Deveshwar was conferred the Padma Bhushan, one of the highest civilian awards in the
country, by the Government of India in recognition of his distinguished International Business
Leaders Forum.
Leveraging the significant learning of sustainable excellence within ITC, he pioneered the
concept of Responsible Luxury in the hospitality industry that led to the LEED Platinum
certification of all ITC super premium luxury hotels, making it the Greenest Luxury Hotel
Chain in the world. Anand is widely recognized for excellent people management and teambuilding abilities. He has formulated value-based strategies to create a unique quality control
model. His dynamic leadership and passion for the business is recognized and acknowledged by
his peers. He is presently the President of the Hotel Association of India. (Report and accounts 2012)
Company policies:
To Ensure Respect for Human Rights Policy across the Supply Chain- ITC nurtures an internal
working environment which respects human rights without prejudice. Likewise, it expects its
business partners to establish a human rights compliant business environment at the workplace.
Policy to Prevent Discrimination at Workplace-ITC acknowledges that every individual brings a
different and unique set of perspectives and capabilities to the team. A discrimination-free
workplace for employees provides the environment in which diverse talents can bloom and be
nurtured.
10
ITC does not engage in or support direct or indirect discrimination in recruitment, compensation,
access to training, promotion, termination or retirement based on caste, religion, disability,
gender, age, race, color, ancestry, marital status or affiliation with a political, religious, or union
organization or minority group.
Policy on Freedom of Association-ITC respects the employees' right to organize themselves into
interest groups as initiatives of the workers, independent from supervision by the management.
In keeping with the spirit of this Policy, employees are not discriminated against for exercising
this right.
Policy Prohibiting Child Labour and Preventing Forced Labour from Workplace-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. No employee is made to
work against his/her will or work as bonded/forced labour, or subject to corporal punishment or
coercion of any type related to work.
Policy on Information and Consultation on Changes-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.
Resources:
The physical resources such as the raw material are available in abundance in India. Their
sources of innovation such as the e-choupal initiative are very useful intangible benefits of the
company.
Capabilities:
The state of art factories of ITC are one of the capabilities of the company. The technological
advantages of the company combined with the labor have allowed the company to develop their
resources well into their capabilities.
Core competencies:
ITC knows how to capitalize on its core competencies, which include unmatched
distributionreach, superior brand-building capabilities, effective supply chain management and
acknowledged service skills in hotel ring. This has also helped them to strategically diversify and
enter into the foods division.
11
Organization structure:
On the basis of portfolio
12
Board of directors
Managing directors
Group internal audit
Business development
department
Human resource
development
Management service
department
Property development
Financial accounting
Industry
Management accounting
Workout
Risk management
Information technology
EmployeesThe Company is currently headed by Yogesh Chander Deveshwar. It employs over 29,000
people at more than 60 locations across India and is listed on Forbes 2000. ITC Limited
completed 100 years on 24 August 2010.
13
14
HR Policy of ITC:
Fixed-Term 71%
Permanent 28%
Short-Term 1%
More than 70% of the category permanent professional stafs is on long-term contracts, indicating
that they have been with the ITC for more than five years. Permanent staff members on shortterm contract are those that have not completed five years service with the organization. ITC
provides a supporting working environment for its generally well qualified, professional and
motivated staff. . The ITC training and development budget is low for an organization with
ITCs scale and much of that budget is spent on Information Technology and language training.
No clear rotation program is found within ITC. No career planning for staff.
15
16
Targeting: All sets of customers including rural people, farmers, cigarette smoking people,
students, etc.
Positioning:
17
18
SWOT ANALYSIS
19
SWOT ANALYSIS
Strengths:
Managing diverse business. ITC has 105 subsidiaries connected with its various
operations.
Wealth of local knowledge & international expertise helps it to be globally competitive.
High quality standard products & services
Excellent export earnings.
Highly professional management.
Excellent distribution network.
Excellent brand making capability helping it to diversify it into Retailing, IT & Hotel
segments
Agro-export segment showing excellent growth of 28 % & earning Rs. 4 billion foreign
exchange.
A lasting impression by catchy ads.
ITC ltd is one of the most liquid scripts in the capital market. With domestic institutions
having a considerable stake this is likely to improve liquidity in De-mat trading.
Good returns by way of dividend per share every year. In 31.3.2002 the dividend
declared is 13.50 Rs per share
The lifestyle retailing segment has won acclaim & moving towards higher sales.
The expression greeting card is widening its base all over India & it is available at most
retail shops.
Steady increase in the return on capital employed.
Sophisticated research & development facilities.
Weakness:
Diversification into various lines in which it does not have much knowledge would be
very risky proposition.
High competition from established brands which has resulted in reduction in profit
margins.
Steep increase in cigarette taxes has adversely affected the revenue earned.
Due to high price of cigarette, consumers are switching to other cheaper forms of
tobacco.
Its hotel industry has still not created a big share in the market size.
20
Opportunities:
Big untapped market available. For cigarettes, hotels, it, retail garment, packaging &
agricultural products.
High growth potential could be achieved.
Good source of revenue & foreign exchange available by way of exports of agricultural
products, hotels & cigarettes.
Its competitors dont have the financial banking like it so it can take advantage of this.
Proper publicity of the hotels would increase its brand image & revenue.
Threats:
21
22
INDUSTRY ANALYSIS
Porters five force model
Degree
Low
Remark
Favorable
High
Unfavorable
High
Unfavorable
High
Unfavorable
High
Unfavorable
Positive
Product Differentiation
Positive
Capital Requirements
High
Positive
Not Easy
Positive
Cost Disadvantages
More
Positive
Government Policy
More
Positive
Switching Costs
Low
Negative
23
Considering buyer power retailers , they are able to negotiate the price with the company
Advertising battles may increase total industry demand, but may be costly to smaller
competitors
24
COMPETITION ANALYSIS
HUL
P&G
P&G
HUL
ITC
DISTRIBUTION
CHANNEL
M
L
BRAND IMAGE
H
QUALITY
ITC
P&G,HUL
M
L
H
M
INNOVATION
25
Quality
Innovation
Distribution channel
Brand image
Variety of products
Promotion
20%
20%
20%
20%
10%
10%
Parameters
Quality
Innovation
Distribution
Brand Image
Variety
Promotion
Total
ITC
HUL
P&G
Rating
WAS
Rating
WAS
Rating
WAS
4
4
3
3
3
4
.8
.8
.6
.6
.6
.3
4
3
4
4
4
4
.8
.6
.8
.8
.4
.4
4
3
4
4
4
4
.8
.6
.8
.8
.4
.4
3.5
3.8
3.8
26
CONCLUSION
From the above comparison it could be inferred that besides ITC is new in the FMCG sector but
still it has managed to reach a level at which the other strong companies are. A score of 3.5 is a
very good score at a point when the old competitors (leaders) are at a score of 3.8. ITC is paying
heavy competition to the old competitors and this growth will help the company to boom in
future. The innovation, R&D (e-chaupal ,Aashirwad Aata) and the Brand Image (100 years old)
of the company is making a strong base for the company to develop its potential and market in
FMCG.
ITC has been a leader in the tobacco business, but it realize from the upcoming trends that
remaining with a single business is not a noble thought, moreover the company was threatened of
the anti-tobacco campaign. Therefore the company decided to venture into InfoTech with ITC
InfoTech, foods via Kitchens of India, greeting cards through Expressions and lifestyle retailing
through Wills Sport. The revenue generation also is very high from each of these products. .ITC
was a cash rich company with a liquidity of Rs.8816 million in the cigarette business, even
though the company understood the need and usefulness of diversification.ITC by spreading its
wings in the lifestyle segments has opened forty-five stores in 34 cities in just under a year,
selling an expensive fashion brand of relaxed-wear. This way it has gained a victory lap through
its Wills Sport Brand.
The company has started its retail stores not only in Indian metros but also in the small towns
like Ranchi, Jabalpur, Gwalior, Belguam, Ernakulam etc. thus the company adopted strong
market campaign, and used its brand image to attract the Indian youth. The strategies adopted by
the company has helped it to differentiate itself in this segment, like the company is outsourcing
its designs to The American Design Intelligence Group (ADIG), a San Francisco, US-based
garment and retail consultancy. Now it has its own six-member team, even as it continues a tieup with Science & Designs, an Italian fashion design house through which it keeps a watch on
hot western labels such as Banana Republic and Armani Exchange.
Thus by adopting these strategies ITC will surely maintain its success and add many more new
sub-brands to its corporate group-ITC.
27
REFERENCS
28