Smoking Kills

A Case Analysis by
Ashok Kumar Raveen Selvan Revathi Priya Stanley Jebakumar Vinoth Kumar 13AC06 13AC28 13AC30 13AC36 13AC

ITC - Introduction
An !n"ian Con#lomerate $103 years ol"% &as 'ive (iversi)ie" Se#ments $'*C+, &otels, Pa-erboar"s, Pa-er . Pa/ka#in#, A#ri 0usiness% 201212013 Revenue 2 3S4 8531 0illion 6ne o) 'orbes 2000 list 6nly /om-any in the 7orl" to be Carbon Positive, 8ater Positive, Soli" 8aste Re/y/lin# Positive

ITCs Vision
Sustain !9C:s -osition as one o) !n"ia:s most valuable /or-orations throu#h 7orl" /lass -er)orman/e, /reatin# #ro7in# value )or the !n"ian e/onomy an" the Com-any:s stakehol"ers

ITCs Mission
9o enhan/e the 7ealth #eneratin# /a-ability o) the enter-rise in a #lobalisin# environment, "eliverin# su-erior an" sustainable stakehol"er value

Corporate Strategies
Continue to )o/us on their e;istin# -ort)olio <nsure that their business is 7orl" /lass an" internationally /om-etitive <nhan/e /om-etitive -o7er o) the -ort)olio Create "istribute" or#ani=ation #overnan/e -ro/ess lea"ershi7ithin the

Continuously stren#then . re)ine Cor-orate

Developed Vision
9o make !9C as the 7orl">s most valuable /or-orations throu#h "evelo-in# te/hnolo#y, many more ne7 innovative -ro"u/ts that a"" value to the /ustomers an" the /om-any>s stakehol"ers

Developed Mission
9o enhan/e the 7ealth #eneratin# /a-ability o) the enter-rise in a "i#ital environment an" /reate a ne7 su-erior "i#ital 7ay to rea/h the /ustomers, "eliverin# sustainable stakehol"er value

orters !ive !orce Model

"ivalry Among Competitors

Attractiveness
#o$ '
,o o#arg Competitors e Industry Slo$ .ro$t& !i/ed Cost Di--erentiati on %ig& #o$ #o$ Secr et #arg e %ig&

%ig& ) * +
Small !ast #o$ %ig& %ig&

"emarks
Com-etitors like &3?, Ca"bury, P.+ '*C+ se/tor #ro7s 1@53A every year $!0<'% </onomies o) S/ale avoi"s most o) the )i;e" /osts Bot mu/h "i))erentiation is )oun" unless they have varieties Bo /ost involve" 9he -ro/ess is kno7n (eman" is al7ays hi#h in '*C+ se/tor '*C+ se/tor is stable, so -eo-le invest more

S$itc&ing Cost
0penness in terms osales 1/cess Capacity Strategic Stakes

0pen Small #o$

2arriers to 1/it
Attractiveness #o$ ' Asset Speciali3atio %ig& n Cost o- 1/it %ig& ( ) * %ig& + #o$ &ol"1u- is bilateral
*arket (eman" #o$ almost nulli)ies their /ost o) e;it 9here is no restri/tion an" no nee" to -ay any /ost to the #overnment

"emarks

.overnment %ig& restrictions

#o$

2arriers to 1ntry
Attractiveness
#o$ '
1conomies Small o- Scale
roduct Di--erentiatio n

%ig& ) * +

"emarks
#arge %ig& %ig& %ig& #imite d

?ar#e S/ale Pro"u/tion *arket <;-ansion Consumers are bran" /ons/ious Bo /ost )or -re)errin# a "i))erent bran" Planne" (istribution
(eman" is hi#h, so more investment is nee"e"

#o$ #o$ #o$ 1asy Small 1asy 1asy ,one

2rand Identity S$itc&ing Cost

Access to C&annels oDistribution

Capital "e4uiremen t Access to Tec&nology Access to "a$ Material .overnment rotection

#arge
"estricte d "estricte d
Substanti al

'aster a//ess to in)ormation Ra7 material are easily available Bo Restri/tion

T&reat -rom Substitutes

Attractiveness
#o$ ' Availability o- close %ig& Substitutes S$itc&ing Cost ( ) %ig& * +

"emarks
Plenty o) Substitutes ?o7 Attra/tiveness Bot mu/h s7it/hin# /ost is involve" Com-aratively better -ri/e

#o$

#o$

%ig&

Substitutes5 2ette price value r ro-itability o- t&e producers %ig& osubstitutes

6orse

#o$

!) they lose /ustomers on/e, it>s tou#h to retain them ba/k

2argaining po$er o- 2uyers

Attractiveness
#o$ '
,o oSmall 2uyers Availability oMany Substitutes S$itc&ing #o$ Cost
2uyers T&reat o- 2ack$ard Integration Industrys t&reat o!or$ard Integration

%ig& ) * +

"emarks
#arge !e$ %ig& 'ourth ?ar#est se/tor in !n"ian </onomy$!0<'% *any lo/al -ro"u/ers have similar -ro"u/ts Almost all variants are o) same -ri/e Customers lon# )or these -ro"u/ts in market Bo (ominant Su--liers Customers are hi#hly /on/erne" about Cuality 0uyer has no involvement in /ost Customer (eli#ht is relatively hi#h

%ig& #o$

#o$ %ig& %ig& #o$ %ig&

Contributio #o$ n to 7uality Contributio %ig& n to Cost 2uyers ro-itability #o$

2argaining po$er o- Suppliers

Attractiveness
#o$ '
,o oSmall Suppliers Availability o!e$ Substitutes S$itc&ing %ig& Cost
Suppliers T&reat o!or$ard Integration Industrys t&reat o2ack$ard Integration

%ig& ) * +
#arge Many #o$ #o$

"emarks
*any Players are there in this in"ustry *any lo/al -layers are there to -ro"u/e similar -ro"u/ts Almost all variants are o) same -ri/e Chan/es o) 'or7ar" !nte#ration )or su--liers is less 0uyer>s "o not threaten to inte#rate ba/k7ar" Su--liers are hi#hly /on/erne" about /ustomer retention Su--liers al7ays minimi=e the /ost to #ain their e"#e in market !) they lose su--liers, they 7on>t be able to satis)y /ustomer nee"s

%ig&

#o$

%ig& #o$ #o$ %ig&

Contributio %ig& n to 7uality Contributio %ig& n to Cost

Industrys Importance to Suppliers

#o$

.overnment Actions
Attractiveness #o$ ' Industry rotection #o$ ( ) * %ig& +
+overnment e;ten"s its han" to %ig& -rote/t an in"ustry by e;em-tin# ta; an" throu#h other -oli/ies +overnment en/oura#es ne7

"emarks

Industry %ig& "egulation Customs and Tari-%ig& "estrictions Abroad

#o$ entre-reneurs o) '*C+ -ro"u/ts

#o$

<;-ort "uties are less to en/oura#e more e;-orts )rom !n"ia

0verall Assessment
Attractiveness
#o$ '
2arriers to 1ntry "ivalry Among Competitors 2arriers to 1/it o$er o- 2uyers o$er o- Suppliers T&reat oSubstitutes .overnment Actions

%ig& ) * +

"emarks
0arriers to entry is almost less Com-etition is mo"erate

0arriers to e;it is lo7 Po7er o) 0uyers is mo"erate Po7er o) Su--liers is mo"erate 9hreat o) Substitutes is hi#h +overnment has many su--ortive -oli/ies

0verall Assessme nt

8ltimately its a good sector to do business

1/ternal 0pportunities And T&reats

0pportunities
3nta--e" Rural *arkets *er#ers an" A/Cuisition !n/reasin# 0uyin# Po7er o) Customers Ra-i" +ro7th o) *e"ia +ro7th o) Be7 Customers +ro7th o) <1Commer/e 0ran" Cons/iousness o) Peo-le

T&reats
Com-etitors in *arket '(! !nterventions <mer#en/e o) ?o/al Players +overnment A/tions Bo5 o) Substitutes

Competitive ro-ile Matri/

!actor
"9D 1/penses roduct Innovation "evenue 2rand A$areness Attrition "ate :Top Mgmt;< roducts Varieties

ITC #imited
2 0 Crores Be7 varieties o) 'iama (i 8ills 3S4 8531 0illion Very &i#h 0A )or -ast 1E years 'e7 -ro"u/ts

%industan 8nilever #imited

225D1 Crores Knorr Sou-s 3S4 356 0illion &i#h About EA 8i"e ran#e o) Pro"u/ts

Competitive ro-ile Matri/

S; ,o
' ( ) *

!actors
"9D 1/penses roduct Innovatio n "evenue 2rand A$arenes s Attrition "ate :Top Mgmt;< roduct Varieties

ITC
6eig&t
0518 0513 051 0522

%8#
6eig&te d Score
05E 0526 05E6 0588

"ating
3 2

6eig&t
0518 0513 051 0522

"ating
2

6eig&te d Score
0536 05E2

3 3

05 2 0566

0518

05@2

0518

0536

051E

053

051E

056

Total

'

);(=

'

(;>(

1/ternal !actor 1valuation Matri/

S; ,o ' ( ) * + = ?

Key 1/ternal 0pportunities 8ntapped "ural Markets Mergers 9 Ac4uisition Increasing 2uying o$er o- Customers "apid .ro$t& o- Media .ro$t& o- ,e$ Customers .ro$t& o- 1-Commerce 2rand Consciousness oeople

6eig&t 0513 0506 0508 050@ 050D 0506 050@

"ating

6eig&ted Score 05E2

1 2 2 3 1 2

0506 0516 051 052@ 0506 051

Total

@;+=

';)+

1/ternal !actor 1valuation Matri/

S; ,o
' ( ) * +

Key 1/ternal T&reats

Competitors in Market !DI Interventions 1mergence o- #ocal layers .overnment Actions ,o; o- Substitutes

6eig&t
0513 050D 0508 0506 0508

"ating

6eig&ted Score
05 2

3 2 2 2

052@ 0516 0512 0516

Total

@;**

';')

1/ternal !actor 1valuation Matri/

S; ,o ' (

Key 1/ternal !actors 0pportunities T&reats

6eig&ted Score
153E 1513

Total

(;*A

Internal Strengt&s And 6eaknesses

Strengt&s
0ran" Bame Fuality *arket Share +oo" 9o- *ana#ement Pro"u/t (iversi)i/ation 0i# Su--ly Chain *arketin# 9eam ?o7 Pri/e R.( (e-artment

6eaknesses
Be#ative Botion on 9oba//o &i#h 9a;ation 3nrelate" (iversi)i/ation

Internal !actor 1valuation Matri/

S ,o ' ( ) * + = ? A >

Key Internal Strengt&s 2rand ,ame 7uality Market S&are .ood Management roduct Diversi-ication 2ig Supply C&ain Marketing Team #o$ rice "9D Dept

6eig&t 0506 051 0506 050@ 051 050@ 050@ 0513 0508

"ating

6eig&ted score 052

052 052 0528

052 0528 0528

1 3

0513 052

Total

@;?*

(;@>

Internal !actor 1valuation Matri/

S ,o

Key Internal 6eaknesses

,egative ,otion on Tobacco %ig& Ta/ation 8nrelated Diversi-ication

6eig&t

"ating

6eig&te d score
0518 0521 051

' ( )

050D 050@ 051

2 3 1

Total

@;(=

@;*>

Internal !actor 1valuation Matri/

S; ,o ' (

Key Internal !actors Strengt&s 6eaknesses

6eig&ted Score
250D 05 D

Total

(;+A

S60T Matri/
Strengt&
15 Stron# . e;-erien/e" mana#ement 25 9ruste" bran" in !n"ia 35 (iversi)ie" -ro"u/ts an" servi/e -ort)olios 5 <;/ellent R.( )a/ilities E5 6ne o) the most liCui" s/ri-t in /a-ital market

6eakness
15 (iversi)i/ation into various )iel"s 7oul" be risky i) there s no kno7le"#e in that 25 ?ar#ely (e-en"ent on /i#arette revenues 35 ?o7 market share in hotels se#ment

0pportunity
15!n/rease rea/h in rural markets 25*er#ers an" a/Cuisitions to stren#then the bran" 35!n/reasin# -ur/hasin# -o7er o) -eo-le 5+oo" sour/e o) )orei#n e;/han#e is available )rom the e;-ort o) a#ri -ro"u/ts

8ith the mer#ers an" 8ith its stron# bran" ima#e a/Cuisitions it /an im-rove it /oul" e;ten" its markets its hotels se#ment in rural re#ions $S2,61 % $83,62%

S0 Strategy

60 Strategy

T&reat
15Be#ative -ubli/ity )or smokin# /oul" a))e/t its /i#arette se#ment 25 Com-etition )rom unbran"e" -ro"u/ts 35 !ntense /om-etition )rom other '*C+ an" hotel /hains 5*onsoon )ailures /oul" a))e/t the a#ri e;-orts

ST Strategy
'in"in# alternatives to over/ome monsoon )ailures 7ith its or#anise" R.( )a/ilities $S ,9 %

6T Strategy
Coul" in/rease the market share o) hotels /hain throu#h vi#orous marketin# $83,93%

2C. Matri/
Star
. " 0 6 T %
A#ri 0usiness &otels Pa-erboar"s . Pa/ka#in#

7uestion Mark
'*C+ $'oo" Pro"u/ts%

Cas& Co$
'*C+ $Ci#arettes%

Dog
!9C 1 !n)ote/h

MA"K1T S%A"1

I1 Matri/
."06 A,D 28I#D %0#D A,D MAI,TAI, ) (;+A Average %A"V1ST 0" DIV1ST 6eak

* %ig& ) (;*A oc S / i rt a M 1! 1
Mediu ( m

Strong

'

' * ?

( + A
I!1 Matri/ Score

) = >

#o$ '

.rand Strategy Matri/

"apid Market .ro$t&

kae 6

Slo$ Market .ro$t&

no rt S

Space Matri/
S;, o

!actors
Industrial Strengt&

"atings

1 2 3

Viral *arketin# . Promotions 0ran" !ma#e (iversi)i/ation

E 3 2

Total

'@

Competitive Advantage
1 2 3 @0A *arket Share in !n"ian Ci#arette !n"ustry 0A Attrition Rate in 9o- *#mt5 )or the -ast 1E years S-en"s nearly 2 0 Crores )or R.( ProGe/ts 11 12 13

Total

-=

Space Matri/
S;, o

!actors !inancial Strengt&

"atings

1 2 3

Bet Pro)it has in/rease" by 1@A "urin# 201212013 Phenomenal in/rease o) R6C )rom 285 A to E5@ &as a liCui"ity ratio o) 152@

Total

''

1nvironmental Stability
1 2 &i#h !n)lation rate in !n"ia ?o7 S7it/hin# /ost in '*C+ in"ustry 1 12

Total

-=

Space Matri/
<S Avera#e is 16H2 I 13 !S Avera#e is 10H3 I 3533 CA Avera#e is 16H3 I 12 'S Avera#e is 11H3 I 3566 (ire/tional Ve/tor Coor"inates

J1a;is K 12L3533 I 1533 M1a;is K 13L3566 I 0566

Space Matri/
Conservativ e
@;== ';))

Aggressiv e

De-ensive

Competitiv e

7S M Matri/
Strategy '
9a--in# the rural market

Strategy (
!n/reasin# the market share o) &otels

7S M Matri/
S; ,o
' ( ) * + = ?

Key 1/ternal 0pportunities

8ntapped "ural Markets Mergers 9 Ac4uisition Increasing 2uying o$er oCustomers "apid .ro$t& oMedia .ro$t& o- ,e$ Customers .ro$t& o- 1Commerce 2rand Consciousness oeople

Strategy ' 6eig&t 0513 0506 0508 050@ 050D 0506 050@ 1 2 2 3 1 2 AS TAS 05 2 1 0516 051 052@ 1 051

Strategy ( AS 1 1 2 2 3 1 1 TAS 1 0506 0516 051 052@ 0506 1

Total

@;+=

';')

@;=>

7S M Matri/
S; ,o
' ( ) * +

Key 1/ternal T&reats Competitors in Market !DI Interventions 1mergence o#ocal layers .overnment Actions ,o; oSubstitutes

Strategy ' 6eig&t AS 0513 050D 0508 0506 0508 1 2 2 1 TAS 05E2 1 0516 0512 1 1 1 1 2

Strategy ( AS TAS 05E2 1 1 1 0516

Total

@;**

@;A

@;=A

7S M Matri/
S; ,o
' ( ) * + = ? A >

Key Internal Strengt&s

2rand ,ame 7uality Market S&are .ood Management
roduct Diversi-ication

Strategy ' 6eig&t AS 0506 051 0506 050@ 051 050@ 050@ 0513 0508 1 1 2 1 1 2 TAS 052 052 1 1 052 0528 0528 0513 1 1 1 1 1 1 2 1

Strategy ( AS TAS 052 052 1 0528 1 1 1 0513 1

2ig Supply C&ain Distribution c&annel #o$ rice "9D Dept

Total

@;?*

';))

@;A+

7S M Matri/
S; ,o
' ( )

Key Internal 6eakness

,egative ,otion on Tobacco %ig& Ta/ation 8nrelated Diversi-ication

Strategy ' 6eig&t AS 2 1 1 TAS 0518 1 051

Strategy ( AS 1 3 1 TAS 1 0521 1

050D 050@ 051

Total

@;(=

@;(A

@;('

7S M Matri/
S; ,o

Key !actors
0pportunities T&reats Strengt&s 6eaknesses

6eig&t
05E6 05 05@ 0526

Strategy ' TAS

1513 058 1533 0528

Strategy ( TAS
056D 0568 058E 0521

' ( ) *

Total

);+*

(;*)

T%A,K B08