Group - 2

Aditya Joshi Kirti Paranjape Akshay Hosebettu Nilesh Upadhyay Darshan Shah Parvez Ahmed

ITC Business Profile

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ITC Company Strategy

ITCs diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies

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Unmatched Distribution Reach

Superior brand building capabilities

Effective Supply Chain Management

Acknowledged Service Skills

ITC Business Channel

Company Hub Factory Carried and forward agent

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Wholesale dealer
Small Wholesale Dealer

Retailer

Consumer

SWOT Analysis
Strength
Leveraged it traditional businesses Diversified co. trading in a no. of business sectors

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Weakness
Still dependent upon its tobacco revenues

Per capita consumption of personal care products in India is the lowest in the world

Competition, both Domestic and International Moving into new and emerging sectors

Increasing level of tax in Cigarettes

Opportunities

Threats

PEST Analysis
Political
VAT ranges 12.5% - 40% (across various states)

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Economical
Other forms of cheap tobacco intake

Excise duty raised by union budget by 5 %

Luxury tax in 10 states

100% FDI allowed

Bidi : cigarette ratio is 10:1

Taxation

Social
Health consciousness & welfare May 31 is no tobacco day

Technological
Adapting other concepts like QC,TQM, KSS, 5 S, 6 sigma State-of-the-art factories

Porters Five Forces - ITC

Buyers Power Threat of new entrance Entering FMCG sector is easy
P&G 1% Britania 6% Nestle 10% Dabur 5% HUL 30% Too many small firms No dominating firm Little product differentiating Customer switching cost low Marico 3%

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Customers Power

Large number of suppliers in country

Cost of switching supplier is Low

ITC 45%

Threat of substitutes

Eco System
Forest Grains/seeds Agriculture Rain FDI/ External investments Work quality

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Demands

Raw Materials Rs.9933 cr. in 2012

Govt. policies

Economic factors

Employees Sales/ Finance/ HR Rs. 1265 Cr

Training
External factors Worker Union

Farmers

ITC India Ltd.

45% of market share

Agro Policies Subsidies

Indian Government

Competitors
New comers Mkt. penetration policies

Shareholders
Import export policies regarding FMCG products

Technology

Import duties

Own USP

Value Chain at ITC

ITCs distribution network is recognised as one of its key strengths. Its focus is not only to enable easy access to brands, but also to touch consumers with a three-way convergence - of product availability, brand communication, and higher levels of brand experience.

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ITCs products, manufactured across the country, are distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets. The distribution network directly covers the entire urban population.

The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. ITC services each with a tailor-made mix of services. The emphasis is equally on using stores for direct contact with consumers, as much as is possible through in-store facilitators.

Revenue stream
Revenue 2012(25090)cr
14%

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44%

Paper
20%

Agri
Hotels FMCG Cigarattes

4%

18%

Cost Structure Comparison

Other Manufactu ring Expenses 15% Selling & Admin Expenses 21%

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Cost Structure 2007

Raw Materials 50%

Cost Structure 2012

Selling and Admin Expenses 12% Employee Cost 6% Other Manufactu ring Expenses 6%

Employee Cost 10%

Power & Fuel Cost 4%

Power & Fuel Cost 2%

Raw Materials 74%

Observation Increase In Raw material from 50% 2007 to 74% 2012 due to which other necessary expenses gone down . Reasons Inflation Monsoon scarcity from last 2-3 years Diversification

Strategies
Doing to reduce cost
Wow Wealth out of Waste Value Chain Integration ITC E-CHOUPAL

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What CAN be done to reduce the cost

Can buy farms and cultivate them to reduce the
cost . Build factories near buy the farm to reduce transportation and wastage of raw material

Sales Growth
Sales growth rate
30% 25% 20% 15% 10% 5% 0% 2009 2010 2011 2012
7% 14% 24%

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19%

Sales

There is growth in sales by 24% from 2009 to 2010 ,this was because itc expanded in hotel and consumer goods It has gone down by 14% in 2011 . Then again went up by 19% , this difference was due to not much investment in advertising as more was done in purchasing of raw material .

Conclusion
Overall Stretagy :-

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ITC is focusing on delivering value at competitive prices. Its tremendous reach through extensive distribution chain has been a competitive advantage.
ITCs E-choupal model for direct procurement is well known under which ITC partners with over 100,000 farmers for spices and wheat procurement and an even larger number for oilseeds. This kind of rural pedigree is hard to beat.

Growth Drivers : ITCs backward integration to ensure that its products pass efficiently from the farms to consumers has helped it to cut down supply and procurement costs. ITCs non-cigarette FMCG business leverages the large distribution network the company has developed by selling cigarettes over the years. A rich product mix, along with ramp-up of investments in its new sectors, will be instrumental in charting ITCs growth path.