Description
OPERATIONAL STRATEGY IN ITC
OPERATION STRATEGY BY ITC
SUBMITTED BY HIMANSHU SHEKHAR PIYUSH DWIVEDI SREEKANT SUKUMAR VIVEK KUMAR
12EX021 12EX035 12EX049 12EX056
THE ITC 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 THE ITC MISSION To enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value
INTRO
? Incorporated in 1910, as Imperial Tobacco
Company of India Limited ? Changed to Indian Tobacco Limited in 1970 and then to I.T.C Limited in 1974 ? With wide portfolio from FMCG to hotels renamed to ITC limited in 2001
Companies Diversification tobacco
? Started as a cigarette, tobacco leave
manufacturing ? Packaging and printing business started in 1925 to backward integrate with cigarette business ? 1985 Surya tobacco Co in Nepal set up, renamed to Surya Nepal Pvt Ltd in 2002 becoming a subsidy of ITC ? In 2010, ITC launched its hand rolled cigar, Armenteros
Companies Diversification paper
? 1979 entry in paper business, ITC
Bhadrachalam ? 1990, Tribeni tissues limited acquired, speciality paper for cigarette ? Nov 2002, Tribeni tissues division and Bhadrachalam paper board combines to form Paperboards & Specialty Papers Division
Companies Diversification stationery
? Paperkraft notebooks launched in 2002 ? Classmate range launched in 2003 ? 2007 Practical Books, Drawing Books,
Geometry Boxes, Pens and Pencils under the 'Classmate' brand ? Paperkraft -eco friendly premium business paper ? Colour crew- art stationery brand launched in 2010
Companies Diversification apparels
? 2000 launch of Wills lifestyle ? Wills Classic formal wear (2002) and Wills
Clublife evening wear (2003) ? Men's wear brand, John Players, in 2002 ? Wills Lifestyle India Fashion Week launched in 2006 acts as a platform for B2B for fashion industry
Companies Diversification food
? Kitchens of India- ready to eat food launched in 2001 ? Mint-o, Candyman & Ashirvad launched in 2002 ? 2003 saw the raise of Sunfeast as a major player in biscuit segment ? Entry into snack with Bingo in 2007 & noodle industry with Sunfeast Yipee in 2010
Companies Diversification others
? Launched in 2005 Personal Care portfolio has
grown under 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia' ? 1975 ITC- Welcomgroup hotel Chola acquired in Chennai, now known as Fortune Hotels ? 2000 launched the ITC Infotech ? Enters matchboxes industry in 2002 and 2003 launches incense sticks
SWOT Analysis
Strength ?Brand ?Management
Opportunity ?Rural market ?E-choupal
Weakness ?Unrelated diversification
Threats ?Increasing tax in Cigarettes ?Health hazard
The BCG Matrix
Stars •Hotels •Paperboards/ Packaging. •Agri business. Cows •FMCG-Cigarettes ? •FMCG- Others
Dogs
Political Aspects
? In 2001 Government of India has announced
ban on the advertising by cigarettes Companies. Therefore many policies have come up like this.
? Increased in Excise duties.
Economical Aspects
? A growing portfolio of business encompassing FMCG,
Paperboards &Packaging, Agri & Foods Business, Hotels and Information Technology.
?
Total Shareholder Returns, measured in terms of increase in market capitalization and dividends, grew at a compound rate of over 24% per annum over the last 5 years. The new FMCG businesses support the competitiveness, technology up gradation and market reach of over 200 Small and Medium Enterprises (SMEs).
?
Social Aspects
? ITC Group provides direct employment to more than
26,000people.
? ITC?s globally recognized E-choupal initiative is the world?s ? ? ? ?
largest rural digital infrastructure benefiting over 4 million farmers. • ITC?s Watershed Development initiative brings precious water to over 46,000 hectares of dry lands and moisturestressed areas. • ITC?s Sustainable Community Development initiatives include women?s empowerment, supplementary education.
Technological Aspects
? Wholly own subsidiary named “ITC
INFOTECH”
? India?s fastest growing IT services and
solution providers
? Providing services in more than 140countries
Major strategies followed by ITC:
? Entering into less competitive or unexplored markets (ready to eat, staples, wafers). ? A managed supply chain network. ? Innovation-Regular introduction of new products (all products). Supported by R & D. ? Market differentiation ( Ready to eat, biscuits) ? Cost control strategy (all products) ? Extensive advertising (biscuits, confectionary, wafers)
Competitors
? HUL
? BRITANNIA ? PARLE ? NESTLE
Diversification
PROS of Diversification
? Economies of scale and scope
? Operational synergies can be realized. ? Spreading the firm's unutilized organizational resources to other areas can create
value.
? Leveraging skills across businesses can create value.
? Internal capital market
? Cash from some businesses can be used to make profitable investments. ? External finance may be more costly due to transaction costs, monitoring costs,
etc.
Contd…
? Diversifying shareholders’ portfolios
? Individual shareholders may benefit from investing in a
diversified portfolio.
? Identifying undervalued firms ? Shareholders may benefit from diversification if its
managers are able to identify firms that are under valued by the stock market.
CONS of Diversification
? Combining two businesses in a single firm is likely to result
insubstantial influence costs.
? Resource allocation can be influenced by lobbying. ? Costly control systems may be needed that reward managers based on
division profits and discipline managers by tying their careers to business unit objectives.
? Internal capital markets may not work well in practice. ? Shareholders can diversify their own personal portfolios. Corporate
managers are not really needed to do this.
? Identifying undervalued firms may not be as easy as it sounds.
Future Positioning of ITC
A leading FMCG player in India
VPN providing SCM, ERP & CRM capability
F A e-choupal rural two-way R fulfillment capability M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S
Branded Foods Lifestyle retailing Greeting cards/st ationery Matches & Agarbatti s
M A R K E T S
A basis for strategic partnerships with other FMCG brand owners
Conclusion
? Leverage upon its existing skills and competencies. Benchmarked
it?s operations and quality control techniques.
? Strong branding capabilities backed by good quality.
? Won numerous awards like „Enterprise Business
Transformation Award‘, NASSCOM - CNBC IT User Award etc.
? ITC?s strong distribution capabilities and a strong brand name are
a useful asset.
? Using its agri sourcing network to source raw materials for its
biscuits and atta businesses.
Ahead of Competition
doc_586104134.pptx
OPERATIONAL STRATEGY IN ITC
OPERATION STRATEGY BY ITC
SUBMITTED BY HIMANSHU SHEKHAR PIYUSH DWIVEDI SREEKANT SUKUMAR VIVEK KUMAR
12EX021 12EX035 12EX049 12EX056
THE ITC 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 THE ITC MISSION To enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value
INTRO
? Incorporated in 1910, as Imperial Tobacco
Company of India Limited ? Changed to Indian Tobacco Limited in 1970 and then to I.T.C Limited in 1974 ? With wide portfolio from FMCG to hotels renamed to ITC limited in 2001
Companies Diversification tobacco
? Started as a cigarette, tobacco leave
manufacturing ? Packaging and printing business started in 1925 to backward integrate with cigarette business ? 1985 Surya tobacco Co in Nepal set up, renamed to Surya Nepal Pvt Ltd in 2002 becoming a subsidy of ITC ? In 2010, ITC launched its hand rolled cigar, Armenteros
Companies Diversification paper
? 1979 entry in paper business, ITC
Bhadrachalam ? 1990, Tribeni tissues limited acquired, speciality paper for cigarette ? Nov 2002, Tribeni tissues division and Bhadrachalam paper board combines to form Paperboards & Specialty Papers Division
Companies Diversification stationery
? Paperkraft notebooks launched in 2002 ? Classmate range launched in 2003 ? 2007 Practical Books, Drawing Books,
Geometry Boxes, Pens and Pencils under the 'Classmate' brand ? Paperkraft -eco friendly premium business paper ? Colour crew- art stationery brand launched in 2010
Companies Diversification apparels
? 2000 launch of Wills lifestyle ? Wills Classic formal wear (2002) and Wills
Clublife evening wear (2003) ? Men's wear brand, John Players, in 2002 ? Wills Lifestyle India Fashion Week launched in 2006 acts as a platform for B2B for fashion industry
Companies Diversification food
? Kitchens of India- ready to eat food launched in 2001 ? Mint-o, Candyman & Ashirvad launched in 2002 ? 2003 saw the raise of Sunfeast as a major player in biscuit segment ? Entry into snack with Bingo in 2007 & noodle industry with Sunfeast Yipee in 2010
Companies Diversification others
? Launched in 2005 Personal Care portfolio has
grown under 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia' ? 1975 ITC- Welcomgroup hotel Chola acquired in Chennai, now known as Fortune Hotels ? 2000 launched the ITC Infotech ? Enters matchboxes industry in 2002 and 2003 launches incense sticks
SWOT Analysis
Strength ?Brand ?Management
Opportunity ?Rural market ?E-choupal
Weakness ?Unrelated diversification
Threats ?Increasing tax in Cigarettes ?Health hazard
The BCG Matrix
Stars •Hotels •Paperboards/ Packaging. •Agri business. Cows •FMCG-Cigarettes ? •FMCG- Others
Dogs
Political Aspects
? In 2001 Government of India has announced
ban on the advertising by cigarettes Companies. Therefore many policies have come up like this.
? Increased in Excise duties.
Economical Aspects
? A growing portfolio of business encompassing FMCG,
Paperboards &Packaging, Agri & Foods Business, Hotels and Information Technology.
?
Total Shareholder Returns, measured in terms of increase in market capitalization and dividends, grew at a compound rate of over 24% per annum over the last 5 years. The new FMCG businesses support the competitiveness, technology up gradation and market reach of over 200 Small and Medium Enterprises (SMEs).
?
Social Aspects
? ITC Group provides direct employment to more than
26,000people.
? ITC?s globally recognized E-choupal initiative is the world?s ? ? ? ?
largest rural digital infrastructure benefiting over 4 million farmers. • ITC?s Watershed Development initiative brings precious water to over 46,000 hectares of dry lands and moisturestressed areas. • ITC?s Sustainable Community Development initiatives include women?s empowerment, supplementary education.
Technological Aspects
? Wholly own subsidiary named “ITC
INFOTECH”
? India?s fastest growing IT services and
solution providers
? Providing services in more than 140countries
Major strategies followed by ITC:
? Entering into less competitive or unexplored markets (ready to eat, staples, wafers). ? A managed supply chain network. ? Innovation-Regular introduction of new products (all products). Supported by R & D. ? Market differentiation ( Ready to eat, biscuits) ? Cost control strategy (all products) ? Extensive advertising (biscuits, confectionary, wafers)
Competitors
? HUL
? BRITANNIA ? PARLE ? NESTLE
Diversification
PROS of Diversification
? Economies of scale and scope
? Operational synergies can be realized. ? Spreading the firm's unutilized organizational resources to other areas can create
value.
? Leveraging skills across businesses can create value.
? Internal capital market
? Cash from some businesses can be used to make profitable investments. ? External finance may be more costly due to transaction costs, monitoring costs,
etc.
Contd…
? Diversifying shareholders’ portfolios
? Individual shareholders may benefit from investing in a
diversified portfolio.
? Identifying undervalued firms ? Shareholders may benefit from diversification if its
managers are able to identify firms that are under valued by the stock market.
CONS of Diversification
? Combining two businesses in a single firm is likely to result
insubstantial influence costs.
? Resource allocation can be influenced by lobbying. ? Costly control systems may be needed that reward managers based on
division profits and discipline managers by tying their careers to business unit objectives.
? Internal capital markets may not work well in practice. ? Shareholders can diversify their own personal portfolios. Corporate
managers are not really needed to do this.
? Identifying undervalued firms may not be as easy as it sounds.
Future Positioning of ITC
A leading FMCG player in India
VPN providing SCM, ERP & CRM capability
F A e-choupal rural two-way R fulfillment capability M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S
Branded Foods Lifestyle retailing Greeting cards/st ationery Matches & Agarbatti s
M A R K E T S
A basis for strategic partnerships with other FMCG brand owners
Conclusion
? Leverage upon its existing skills and competencies. Benchmarked
it?s operations and quality control techniques.
? Strong branding capabilities backed by good quality.
? Won numerous awards like „Enterprise Business
Transformation Award‘, NASSCOM - CNBC IT User Award etc.
? ITC?s strong distribution capabilities and a strong brand name are
a useful asset.
? Using its agri sourcing network to source raw materials for its
biscuits and atta businesses.
Ahead of Competition
doc_586104134.pptx