STRATEGY

PURCHASING STRATEGY OF ITC

ITC's Agri Business Division, one of India's largest exporters of agricultural commodities,
has conceived e-Choupal as a more efficient supply chain aimed at delivering value to its
customers around the world on a sustainable basis.
The e-Choupal model has been specifically designed to tackle the challenges posed by the
unique features of Indian agriculture, characterised by fragmented farms, weak infrastructure
and the involvement of numerous intermediaries, among others.
VALUE CHAIN FROM FARM TO FACTORY
'e-Choupal' also unshackles the potential of Indian farmer who has been trapped in a vicious
cycle of low risk taking ability > low investment > low productivity > weak market
orientation > low value addition > low margin > low risk taking ability. This made him and
Indian agribusiness sector globally uncompetitive, despite rich & abundant natural resources.
Such a market-led business model can enhance the competitiveness of Indian agriculture and
trigger a virtuous cycle of higher productivity, higher incomes, and enlarged capacity for
farmer risk management, larger investments and higher quality and productivity.
Further, a growth in rural incomes will also unleash the latent demand for industrial goods so
necessary for the continued growth of the Indian economy. This will create another virtuous
cycle propelling the economy into a higher growth trajector

INFORMATION TECHNOLOGY STRATEGY

ITCs e-Choupal network, which leverages information technology to empower farmers, is a

rich repertoire of agri-based interventions and not only addresses the core needs of farmers in
terms of infrastructure, connectivity, price discovery and market access, but also provides a
significant boost to farm productivity through extension services and research-based agriinputs. Initiatives like the Choupal Pradarshan Khet bring suitable agricultural best practices
to farmers and have demonstrated significant productivity gains. These interventions have
helped transform village communities into vibrant economic organisations by enhancing
incomes and co-creating markets. ITCs e-Choupals serve 40,000 villages and 4 million
farmers, making it the worlds largest rural digital infrastructure

HUMAN RESOURCE STRATEGY

More than 70% of the category permanent professional staffs is on long-term contracts,
indicating that they have been with the ITC for more than five years. Permanent staff
members on short-term 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.

 The talent management programme in ITC Company strives to

deliver its unique talent promise: Building Winning Businesses.
Building Business Leaders. Creating Value for India.

ITC believe ITC believes that all its employees must live with social and economic
dignity and freedom, regardless of nationality, gender, race, economic status or
religion.
ITC upholds international human rights standards, does not condone human rights
abuses, and creates and nurtures a working environment where human rights are
respected without prejudice.
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
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.
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.
ITC is committed to providing a safe and healthy work environment to all its
employees. These policy guidelines on HIV/AIDS are an endorsement of this
commitment and, in particular, of the Company's commitment to specific programmes
and actions in response to the HIV epidemic
INFORMATION STRATEGY
ITC Infotech is a fully owned subsidiary of ITC Ltd. Formed in 2000, ITC Infotech has today
carved a niche for itself in the arena of global IT services and solutions.

PEOPLE FIRST
ITC Infotech nurtures its employees through numerous training and development
programmes to help them actualize their potential.

Services for the Banking, Financial Services & Insurance industry

ITC
SWOT ANALYSIS

SWOT ANALYSIS
A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to
evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a
business venture. A SWOT analysis can be carried out for a product, place, industry or
person. It involves specifying the objective of the business venture or project and identifying
the internal and external factors that are favourable and unfavourable to achieve that
objective. Some authors credit SWOT to Albert Humphrey, who led a convention at the
Stanford Research Institute (now SRI International) in the 1960s and 1970s using data from
Fortune 500 companies. However, Humphrey himself does not claim the creation of SWOT,
and the origins remain obscure. The degree to which the internal environment of the firm
matches with the external environment is expressed by the concept of strategic fit.
Strengths: characteristics of the business or project that give it an advantage over
others.
Weaknesses: characteristics that place the business or project at a disadvantage
relative to others.
Opportunities: elements that the project could exploit to its advantage.
Threats: elements in the environment that could cause trouble for the business or
project.
SWOT ANALYSIS OF ITC

S-STRENGTHS

Leveraged it traditional businesses to develop new brands for new segments. For
example, ITC used its experience of transporting and distributing tobacco products to
remote and distant parts of India to the advantage of its FMCG products.
ITC master chefs from its hotel chain are often asked to develop new food concepts
for its FMCG business.
ITC is a diversified company trading in a number of business sectors including
cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded
apparel, personal care, greetings cards, Information Technology, safety matches,
incense sticks and stationery.
ITC has a strong and experienced management
Strong brand presence, excellent products advertising
Diversified product and services portfolio which includes FMCG, Hotel chains, paper
& packaging and agri-business
Over 6500 E-Choupal CSR activities and sustainability initiatives enhance ITCs
brand image reaching over 4 million farmers
ITC limited employees over 25,000 people
Excellent research and development facilities
Government support
Market share

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
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.

WEAKNESSES

The companys original business was traded in tobacco. ITC stands for Imperial
Tobacco Company of India Limited. It is interesting that a business that is now so
involved in branding continues to use its original name, despite the negative
connection of tobacco with poor health and premature death.

ITC is still dependent upon its tobacco revenues. Cigarettes account for 47 per cent of
the companys turnover, and that in itself is responsible for 80% of its profits. So there
is an argument that ITCs move into FMCG (Fast Moving Consumer Goods) is being
subsidised by its tobacco operations. Its Gold Flake tobacco brand is the largest
FMCG brand in India and this single brand alone hold 70% of the tobacco market.

Hotel industry has not been able to create a huge market share

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

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

OPPORTUNITIES

Core brands such as Aashirvaad, Mint-o, Bingo! And Sun Feast (and others) can be
developed using strategies of market development, product development and
marketing penetration.

ITC is moving into new and emerging sectors including Information Technology,
supporting business solutions.

E-Choupal is a community of practice that links rural Indian farmers using the
Internet. This is an original and well thought of initiative that could be used in other
sectors in many other parts of the world. It is also an ambitious project that has a goal
of reaching 10 million farmers in 100,000 villages.

ITC leverages e-Choupal in a novel way. The company researched the tastes of
consumers in the North, West and East of India of atta (a popular type of wheat flour),
then used the network to source and create the raw materials from farmers and then
blend them for consumers under purposeful brand names such as Aashirvaad Select in
the Northern market, Aashirvaad MP Chakki in the Western market and Aashirvaad in
the Eastern market. This concept is tremendously difficult for competitors to emulate.

Per capita consumption of personal care products in India is the lowest in the world
offering an opportunity for ITCs soaps, shampoos and fragrances under their Wills
brand.
Tap rural markets and increase penetration in urban areas
Mergers and acquisitions to strengthen the brand
Increasing purchasing power of people thereby increasing demand
More publicity of hotel chains to increase market share
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

The obvious threat is from competition, both domestic and international. The laws of
economics dictate that if competitors see that there is a solid profit to be made in an
emerging consumer society that ultimately new products and services will be made
available. Western companies will see India as an exciting opportunity for themselves
to find new market segments for their own offerings.

ITCs opportunities are likely to be opportunities for other companies as well.

Therefore the dynamic of competition will alter in the medium-term. Then ITC will
need to decide whether being a diversified conglomerate is the most competitive
strategic formation for a secure future.

Increasing Tax on Cigarettes

Regulatory Restrictions on Cigarettes
Ban on Smoking
Negative publicity for smoking could affect its cigarette segment. Government is
under huge pressure from public organizations for banning tobacco products which
could affect it adversely.
High competition from established brands.
Competition from unbranded products.
Due to terrorist attacks the tourism industry has taken a back seat which would affect
the hotel segment.
Poor monsoon leads to poor agricultural growth which would affect the agro-exports

FUTURE PROSPECTS OF THE COMPANY

There are some 40 active projectsor ones at various stages of implementationinto

which the company proposes to pump in some Rs.6,000-7,000 crore in the current year. More
are in the pipeline.
ITCs consumer goods business is expected to recover operating costs in the current year and
make sustained profits from next year
ITC on Friday revealed the consumer spends on its key brands such as Aashirvaad and Sun
feast These two generate about Rs.2,000 crore each in annual revenue, followed by
stationery products sold under the Classmate brand. This generates Rs.1, 000 crore in annual
revenue
Bingo, Candyman and Vivel are estimated to have attracted consumer spends of Rs.500 crore
each, .Some products are described under the Aashirvaad, Candy man and Sun feast brands
as market leaders.
ITC is a growth company looking to invest Rs.26, 000 crore to expand all key businesses
over the next 5 years

KEY FINANCIALS

SEGMENT REVENUE 2013-2014

SEGMENT RESULTS 2013-2014

ITC KEY FINANCALS (2013-2014)

Segment Capital Employed Q3 2014/15

ITC Pricing strategy:

The pricing of the ITC food division depends upon the Customers demand schedule, the cost
function and the competitors price. The pricing of the company is such that it caters to the
need of all income groups of people but special provision has been kept for Low and middle
income group, and their pricing are competitive with respect to other players like Britannia,
Parle and Brisk farm. The company follows the Going rate pricing that is the price of the
product depends upon the competitors price. The firm chooses pricing more or less the same
as Market leader.
ITC Promotional activities
A particular budget is allocated for the promotion of the products, the local promotion
scheme is decided by the Area Sales Manager, it give its suggestion to the District office and
that is forwarded to the Head Quarter in Kolkata. In another promotional scheme for Biscuits
a particular number of cases is given freely to the distributors according to the amount of sale
they make, this was a drop down promotion i.e. of the number of free cases that a particular
distributors gets, off them a certain part is reserved for the retailers and customer if they buy a
certain level of biscuit quantity.
ITC Distribution
Buoyed by a strong distribution network ITC is likely to retain its market share in the
cigarettes business; the ban on advertisements is likely to work in favour of ITC thanks to the
recall factor. The company's reliable distribution network also ensures superior inventory
turnover than its peers.
REFERENCES
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http://www.mbaskool.com/brandguide/fmcg/1485-itc-limited.html
http://www.slideshare.net/Mj880/itc-swot-analysis
https://ideas.repec.org/a/jge/journl/345.html
http://www.itcportal.com/
http://en.wikipedia.org/wiki/ITC_%28company%29
http://www.marketingteacher.com/itc-swot/
http://en.wikipedia.org/wiki/SWOT_analysis
http://www.scribd.com/doc/59098501/itc-swot-analysis