A STUDY ON STRATEGIES ADOPTED BY ITC

A STUDY ON STRATEGIES ADOPTED BY ITC

(Synopsis towards partial fulfilment of the assessment in the subject of Strategic Management)

Submitted By:
Divya Sood Roll No. 586 U.G.-Vth Semester B.B.A. L.L.B (Hons.)

Submitted To:
Dr. Archi Mathur Asstt. Dean, Department of Management, National Law University

National Law University, Jodhpur Summer Session

A STUDY ON STRATEGIES ADOPTED BY ITC

(July - November 2010)

Topic- Strategies adopted by ITC Introduction Derek Abell in his book Defining the business: The starting point of Strategic Planning has defined business along the three dimensions of customer groups, customer functions and alternative technologies. Customer groups relate to who is being satisfied, customer needs describe what is being satisfied, and alternative technologies means how the need is being satisfied. The business definition for a large firm is quite complex because each of its business defined along these three dimensions results in a variety of customer groups, performing a variety of customer functions for them and making use of a range of different set of technologies. It is here that the need of choosing among various strategic alternatives arises to take decisions related to allocating resources among different businesses of a firm, transferring resources from one business to another and managing and nurturing a portfolio such that the overall corporate objectives are met. ITC is one of India's biggest and best-known private sector companies with a turnover of US $ 6 billion, being the only Indian FMCG company that features on the Forbes Global 2000 rankings for 2009 at position 987. 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 has a diversified product base in FMCG brands in a number of market sectors - including cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care, greetings cards, Information Technology, safety matches, incense sticks and stationery. Glueck has identified four basic strategies followed by such large organisations as above as stability, growth, retrenchment and a combination of any of the above. Whereas the stability strategy is adopted when an organisation attempts at an incremental improvement of its functional performance by marginally changing one or more of its businesses, the growth strategy is followed when a business aims at high growth by substantially increasing the scope of one or more of its businesses. Only when an organisation aims at contracting its activities through substantial reduction or the elimination of the scope of one or more of its businesses is the retrenchment strategy used. A combination strategy is used to improve the

A STUDY ON STRATEGIES ADOPTED BY ITC

performance of the organisation by adopting a mixture of any of the above strategies either at the same time in different businesses or at different times in the same business. This project will study the above strategies as chosen to be adopted by ITC for its vast product base and will also look into changes that may be brought about in the existing line of strategy to further increase its hold over the market. Objectives To identify and analyse the competitive strategies adopted by ITC. To identify and analyze the factors influencing the formulation of above strategies. To identify lacunae and formulate strategies for the success of the organisation.

Research methodology It is proposed that the project will follow an analytical and deductive research methodology. The theoretical information will be gathered from books, journals and the internet and reliance will be placed mostly on secondary data. The assimilated information will be analyzed on the basis of which conclusions will be drawn. To support the findings in the project a field study may also be conducted depending upon the requirement of primary data to appreciate the practical aspects of the theoretical inferences. Chapterization I. II. III. IV. V. VI. VII. Executive Summary Objectives Research Methodology Introduction Types of strategies Introduction ITC Products of ITC Data Tabulation- Tentative Analysis Recommendations Conclusion Annexures Bibliography

A STUDY ON STRATEGIES ADOPTED BY ITC

Limitations (if any)

Bibliography Pearce II, John A., Robinson Jr., Richard B., Strategic Management:Formulation, Implementation & Control, 9th Ed., 2005, (New Delhi: Tata Mc-Graw-Hill Companies) Wheeler, Thomas L., Hunger, J. David, Strategic Management & Business Policy, 6th Ed., 1998, Addison-Wesley Wheelan Thomas L & Hunger David J, Strategic Management & Business Policy: Entering 21 Century Global Society, Sixth Edition, Addison- Wesley, 1998. Prasad LM, Business Policy: Strategic Management, Sultan Chand & Sons, 2001. Francis Cherumilam, Strategic Management, Oumakaya Publishing house, Edn. 5th, 2005.

A STUDY ON STRATEGIES ADOPTED BY ITC

EXECUTIVE SUMMARY

ITC is one of India's biggest and best-known private sector companies with a turnover of US $ 6 billion, being the only Indian FMCG company that features on the Forbes Global 2000 rankings for 2009. 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 has a diversified product base in FMCG brands in a number of market sectors including cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care, greetings cards, Information Technology, safety matches, incense sticks and stationery. This project looks into the profile of ITC as an organisation, its development from a tobacco centric company to a multi faceted conglomerate, various products offered ITC and strategies followed by it in making them a success. It also looks into the current factors affecting such products and the future strategies that may be adopted by the organisation.

A STUDY ON STRATEGIES ADOPTED BY ITC

RESEARCH OBJECTIVES

To identify and analyse the competitive strategies adopted by ITC. To identify and analyze the factors influencing the formulation of above strategies. To identify lacunae and formulate strategies for the success of the organisation.

A STUDY ON STRATEGIES ADOPTED BY ITC

RESEARCH METHODOLOGY

The project has followed an analytical and deductive research methodology. The theoretical information has been gathered from books, journals and the internet and reliance has been placed solely on secondary data. The assimilated information has been analyzed on the basis of which suggestions have been given and conclusions have been drawn.

A STUDY ON STRATEGIES ADOPTED BY ITC

CHAPTER 1- INTRODUCTION: TYPES OF STRATGIES

Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives1

As per William Glueck, strategic management is a combination of five processes namely; 1) planning 2)appraisal 3) choice 4) implementation and 5) control. Planning involves setting the enterprise objectives and identifying the enterprise strategists. Appraisal involves determining the present and potential threats by searching the environment for governmental, technological and social issues and then determining the enterprises comparative advantage by considering the size, distribution of resources nd strengths and weaknesses. Choice involves considering the various strategic alternatives and choosing the strategy based on various techniques and methods given like BCG Matrix, GEs Spotlight Matrix, Directional Policy Matrix etc.. It is assumed that the most appropriate strategy is chosen by the organization. Implementation involves developing the organizational climate and structure by matching the organization structure with the strategy so chosen and then developing short and medium range plans, policies and programmes by deploying human material, financial and ideational resources as required by the strategy. More particularly it also includes Establishing a chain of command or some alternative structure (such as cross functional teams), assigning responsibility of specific tasks or processes to specific individuals or groups, managing the process i.e. monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary and when implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with (and/or conversion from) legacy processes.
1

David, F Strategic Management, Columbus:Merrill Publishing Comapny, 1989

A STUDY ON STRATEGIES ADOPTED BY ITC

This strategy formulation process is sometimes referred to as determining where you are now, determining where you want to go, and then determining how to get there. These three questions are the essence of strategic planning. Strategic management techniques can be viewed as bottom-up, top-down, or collaborative processes. In the bottom-up approach, employees submit proposals to their managers who, in turn, funnel the best ideas further up the organization. This is often accomplished by a capital budgeting process. Proposals are assessed using financial criteria such as return on investment or cost-benefit analysis. The proposals that are approved form the substance of a new strategy, all of which is done without a grand strategic design or a strategic architect. The top-down approach is the most common by far. In it, the CEO, possibly with the assistance of a strategic planning team, decides on the overall direction the company should take. Some organizations are starting to experiment with collaborative strategic planning techniques that recognize the emergent nature of strategic decisions. Functional strategies include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, and information technology management strategies. The emphasis is on short and medium term plans and is limited to the domain of each departments functional responsibility. Each functional department attempts to do its part in meeting overall corporate objectives, and hence to some extent their strategies are derived from broader corporate strategies. Many companies feel that a functional organizational structure is not an efficient way to organize activities so they have reengineered according to processes or strategic business units (called SBUs). A strategic business unit is a semi-autonomous unit within an organization. It is usually responsible for its own budgeting, new product decisions, hiring decisions, and price setting. An SBU is treated as an internal profit centre by corporate headquarters. Each SBU is responsible for developing its business strategies, strategies that must be in tune with broader corporate strategies. The lowest level of strategy is operational strategy. It is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria. It must operate within a budget but is not at liberty to adjust or create that budget. Operational level strategy was encouraged by Peter Drucker in his theory of management by objectives (MBO). Operational

A STUDY ON STRATEGIES ADOPTED BY ITC

level strategies are informed by business level strategies which, in turn, are informed by corporate level strategies. Business strategy2, which refers to the aggregated operational strategies of single business firm or that of an SBU in a diversified corporation refers to the way in which a firm competes in its chosen arenas. Corporate strategy, then, refers to the overarching strategy of the diversified firm. Such corporate strategy answers the questions of "in which businesses should we compete?" Alternative Strategies that may be followed by an organization are:
Incremental Sub Strategy Breathing Spell Stability Strategy Growth Strategy Alternative Strategies Retrenchment Strategy Harvesting Sustainable Growth Niche Simultaneous Combination Sequential Combination

Combination Strategy

http://www.csuchico.edu/mgmt/strategy/module1/

A STUDY ON STRATEGIES ADOPTED BY ITC

Grow to sell out Ansolf's Matrix Expansion Strategy Internal Growth Strategy

Competitor's Analysis

Concentric Horizontal Diversification Conglomerate Intensive Growth Strategy Backward Growth Strategy Vertical Integration Forward Go together split

Internal External Growth Strategy

Joint Ventures

Spider Web

External External Growth Strategy

Mergers

Successive Integration

Acquisitions

Concentric diversification can be further classified into Constrained and Linked diversification.

A STUDY ON STRATEGIES ADOPTED BY ITC

Turnaround Strategy Divestment strategy Retrenchment Strategy Captive Company Strategy Liquidation Strategy Harvesting Strategy

Dominate Market

Hold the Market

Shrink Selectively

Milk the Investment

Divest

In context of ITC, various strategies from the above have been used and the suggestions shall be proposed from the above strategies thus, will be dealt with in the relevant chapters.

A STUDY ON STRATEGIES ADOPTED BY ITC

CHAPTER 2- ABOUT ITC

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianised, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agribusiness, Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. ITC is one of India's foremost private sector companies with a market capitalisation of over US $ 22 billion and a turnover of US $ 6 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by BusinessWorld and among India's Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. As one of Indias most valuable and respected corporations, it is widely perceived to be a nation oriented organisation. It employs over 26,000 people at more than 60 locations across India and is listed on Forbes 2000. ITC Limited completes 100 years on 24th August, 2010. ITC's aspiration to be an exemplar in sustainability practices is manifest in its status as the only company in the world of its size and diversity to be 'carbon positive', 'water positive' and 'solid waste recycling positive.' In addition, ITC's businesses have created sustainable livelihoods for more than 5 million people, a majority of whom represent the poorest in rural India. ITC works with a mission of enhancing the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value. By following this vision, it has achieved the following levels of success:

A STUDY ON STRATEGIES ADOPTED BY ITC

1) Its portfolio of products and services is represented by over 50 energetic Brands in a range of more than 650 Stock Keeping Units (SKUs). 2) Its products are available in over 6 million retail outlets in the country with its distribution organisation directly servicing more than 2 million of these retail outlets. 3) ITCs factories, hotels, R & D facilities, lifestyle retail outlets, e-Choupals, integrated rural service hubs and offices, taken together, are present in over 6500 locations in the country. 4) Its world-class manufacturing assets comprise 18 owned factories spread across the country. More than 195 outsourced factories also manufacture its products 5) Its wholly owned subsidiary, ITC Infotech, runs operations in the 4 continents of North America, Europe, Africa and Asia. 6) Its Social and Farm Forestry initiatives have greened more than 1,00,000 hectares and created over 46 million person days of employment potential. This helps in sequestering twice the amount of carbon emitted from the Companys operations, contributing to its carbon positive status.

A STUDY ON STRATEGIES ADOPTED BY ITC

CHAPTER 3- PRODUCTS OF ITC

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. Through the first six decades of its existence, the main thrust was given to consoldation of Cigarettes and Leaf Tobacco business and with the turn of the decade, the company began to witness the beginnings of a corporate transformation. ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house. In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co.

A STUDY ON STRATEGIES ADOPTED BY ITC

Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead time and a wider product range. Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operatonal in the 3 states of Madhya Pradesh, Maharashtra and Uttar Pradesh. In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards. A line of premium range of notebooks under brand Paperkraftwas launched in 2002. To augment its offering and to reach a wider student population, the popular range of notebooks was launched under brand Classmate in 2003. Classmate over the years has grown to become Indias largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag. Years 2007- 2009 saw the launch of Children Books, Slam Books, Geometry Boxes, Pens and Pencils under the Classmate brand. In 2008, ITC repositioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper under the Paperkraft Brand. Paperkraft offers a diverse portfolio in the premium executive stationery and office consumables segment. Paperkraft entered new categories in the office consumable segment with the launch of Textliners, Permanent Ink Markers and White Board Markers in 2009. ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry

A STUDY ON STRATEGIES ADOPTED BY ITC

In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area. Today ITC Infotech is one of Indias fastest growing global IT and IT-enabled services companies and has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals - Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R (Consumer Packaged Goods & Retail), THT (Travel, Hospitality and Transportation) and Media & Entertainment. ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands minto and Candyman confectionery and Aashirvaadatta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007. In eight years, the Foods business has grown to a significant size with over 200 differentiated products under six distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing3. ITC also started manufacturing matches and Agarbattis with the aim of enhanching core competencies of entire value chain. It is clear that the ITC story is one of transformation from a single product company to one of Indias largest multi-business corporate enterprises in the private sector. This long and inspirational journey of challenge and change has unfolded in tandem with Indias own evolution and growth across ten decades it has been a journey of consciously putting Country before Organisation with its very famous logo of Lets put India First4.

3 4

http://www.itcportal.com/about-itc/itc-profile/history-and-evolution.aspx ITC : 100 inspiring years

A STUDY ON STRATEGIES ADOPTED BY ITC

Presently, the product portfolio of the company is as follows:

ITC

FMCG Cigarettes and Cigars

Hotels

Paperboards and Packaging

Agriculture Info Tech

Foods Lifestyle Retailing Personal Care Education and Stationery Safety Matches and Agarbattis

1) Within Cigarettes and Cigars, the brands included are Insignia, India Kings, Classic,

Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake
2) Foods include Kitchens of India, Aashirwad, Sunfeast, Candyman, Mint-O and Bingo 3) Lifestyle Retailing and personal care combined consist of brands like John Players,

Miss Players, Wills Lifestyle, Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, Superia, Wills Classic, Wills Sport, Wills Clublife, Wills Signature
4) Education and Stationery includes the brands Classmate and Paperkraft 5) Safety Matches are sold under various brands of i Kno, Mangaldeep, Aim, Aim

Mega and Aim Metro whereas agarbattis are sold under the brand name of Mangaldeep with various variants.
6) Hotels include a chain of hotels which are classified as ITC Hotel: Luxury Collection,

Welcome Hotel: Sheraton, Fortune Hotels and Welcome Heritage.

7) The agri business division markets feed ingredients, food grains, edible nuts, marine

products, processed fruits and coffee and spices.

8) Information Technology segment of ITC provides services across 5 key industries

including banking financial services and Insurance (BFSI), Consumer Packed Goods, Travel, Hospitality and Transportation, Media and Entertainment.

A STUDY ON STRATEGIES ADOPTED BY ITC

CHAPTER 4- ANALYSIS

ITC follows a 3 tier structure which includes Top, Middle and Lower level hierarchies.

Top Level

Corporate Strategy

Middle Level

Functional Level Strategy

Lower Level

Operating Level Strategy

Corporate Strategy
1.

Create multiple drivers of growth by developing a portfolio of world class businesses that best matches organisational capability with opportunities in domestic and export markets.

2.

Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards & Packaging, Agri Business and Information Technology.

3.

Benchmark the health of each business comprehensively across the criteria of Market Standing, Profitability and Internal Vitality.

4. 5.

Ensure that each of its businesses is world class and internationally competitive. Enhance the competitive power of the portfolio through synergies derived by blending the diverse skills and capabilities residing in ITCs various businesses.

6.

Create distributed leadership within the organisation by nurturing talented and focused top management teams for each of the businesses.

A STUDY ON STRATEGIES ADOPTED BY ITC

7.

Continuously strengthen and refine Corporate Governance processes and systems to catalyse the entrepreneurial energies of management by striking the golden balance between executive freedom and the need for effective control and accountability.

Functional Strategy 1) Production Department A) To achieve higher levels of cost cutting by newer and cheaper methods of production B) To find and implement eco friendly methods of production 2) Sales Department- To increases sales revenue by increasing transportation, procurement of raw material etc. 3) Marketing and Promotion Departmenta) To portray an image of various brands in consonance with their target segment b) To increase awareness about newly launched brands in various segments c) To increase consumer perception of ITC as a socially responsible organisation Operating level Strategies and derivative and minor strategies (In case of SBU): They have been discussed within the analysis of respective segments. With particular reference to its diversification from mainly tobacco based company into a conglomerate, the following strategies were used by ITC: 1) Segmentation- Brands were created from scratch with no history and lineage. ITC used clear segmentation across its five product lines and the target audience, each brand was meant for. 2) Group Synergy- Once the five products were created and communication strategies set, ITC leveraged its properties like hotels, foods and apparel store network to retail these brands 3) Communication Strategy- these brands sport Western names, and different communication. Essenza &Fiama, meant for the elite, have English communication, while Vivel & Superia use Hindi 4) Packaging- Since packaging plays a key role in product differentiation, ITC uses it to the hilt. It has taken foreign experts help to make its products stand out from competition

A STUDY ON STRATEGIES ADOPTED BY ITC

FAST MOVING CONSUMER GOODS

I.

Cigars and Cigarettes:

Throughout the first six decades of the existence of the company, primary devotion was given to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses. Until 2001, Cigarettes were the mainstay of ITCs business. They accounted for close to 65 per cent of earnings, with tobacco and agri-products contributing another 10 per cent and other businesses like hotels, paper and packaging bringing in the balance 5 per cent5. Brands of cigarettes manufactured by ITC include Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake. These cigarettes are produced in its state-of-the-art factories at Bengaluru, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment.

Strategies followed: 1) Product variants and continuous innovation- Consumers are fortified by creating value through significant investments in product design and innovation which are relevant to the changing attitudes and evolving socio economic profile of the country Eg. Classic Rock, Jazz or Blues types of cigarettes 2) Backward vertical integration- Innovation in supply chain management by creating synergy with paper and packaging segment for raw material for cigarettes and procuring tobacco through ITC choupal project. 3) Cost cutting exercise- By backward vertical integration, costs of production has cleverly been reduced.

Beating the Odds, Economic Times, June 01, 2001, http://www.itcportal.com/about-itc/newsroom/pressreports/PressReport.aspx?id=992&type=C&news=beating-the-odds

A STUDY ON STRATEGIES ADOPTED BY ITC

4) Downsizing the premium brand image of its cigarettes to attract customers and later piggybacking on the price cut and hiking prices so that consumers who were attracted earlier remain with the company due to addiction to taste of the cigarette. 5) Established a well networked distribution network- Direct servicing of 1,00,000 markets and 2 million retail outlets across the country 6) Intensive investment in terms of research and development w.r.t consumer tastes and preferences, technology and distribution network.

Factors affecting ITC Cigar brands:

1)

Increasing health awareness- After its initial success, the growth for tobacco industries reduced by a great margin by increasing perception of tobacco as injurious to health.

2)

Increased tax regime- The continuous policy of government to curb the consumption of tobacco in India, has led various stringent measure to be taken in terms of higher taxes levied on tobacco industry players6.

3) 4)

Presence of unorganised sector Strong brand equity and brand loyalty of consumers are important strengths for the company.

5) 6)

Use of world class state of art technology is an important strength Government ban on brand extensions under Tobacco Bill under which if a brand name is strongly associated with a tobacco product, then as per law, it cannot be used for a different line of business.

7)

ITC is the biggest and largest player in cigarette industry with 80% market share and Gold Flake holding 70% of the market alone.

8)

Developing economies are a huge opportunity for exports.

In terms of taxes, data suggests that cigarettes are taxed at thirty times the level of other tobacco products.
6

A STUDY ON STRATEGIES ADOPTED BY ITC

II.

Education and Stationery:

ITC made its entry to the education and stationery business with its Paperkraft brand in the premium segment in 2002 aimed at working executives and college going youth; and later expanded into the popular segment with its Classmate brand in 2003 targeted at school going children. Classmate portfolio comprises notebooks, pens, pencils, geometry boxes with more to come. The Paperkraft portfolio consists of copier and printer paper, notebooks, notepads, markers and highlighters. By 2007, Classmate became the largest Notebook brand in the country. Together, Classmate and Paperkraft offer a range of products in the Education & Stationery space to the discerning consumer, providing unrivalled value in terms of product & price. The company started with Expressions Greeting Cards prior to 20037 and then diversified into stationery products such as notebooks and notepads in soft, hard and spiral form under the brand name Expressions Paper Craft across the nation.

Strategies followed: 1) Backward Vertical Integration- USP of the stationery range is that paper and boards used in both stationery and greeting cards comes from the ITC stable itself. . ITC supplies the paper, cover designs, inner designs and the covers. Thus, Classmate and Paperkraft leverage ITCs back-end synergies. 2) Nominal Pricing- Consumer products which mostly include notebooks and notepads will be sourced from national vendors and priced between Rs 15 and Rs 100. 3) Well established distribution network- Stationers and use of retail outlets where Expressions cards were already beings old. The company has 30,000 stationery stores and 100 distributors. 300 exclusive Expressions stores were established across metros and major cities to promote all stationery products. This increased visibility and helped step up sales. Tie ups with multi brand stores such as Planet M, Music World etc. with similar target consumers and environment wherein consumers spend substantial time to choose a product of their choice.

Lighting a New Venture with Stationery Products, the Financial Express, February 21, 2003, http://www.itcportal.com/about-itc/newsroom/press-reports/PressReport.aspx?id=820&type=C&news=ITCforays-into-incense-stick-market

A STUDY ON STRATEGIES ADOPTED BY ITC

4) Market development strategy- Diversified into Gulf and SAARC countries for export opportunities based on the fact that people there have a lot in common with Indians and there is a sizeable Indian population as well 5) Product Development- Launched ball point, gel pens, geometry boxes priced at Rs. 75 similar to that of competitior Camel, pencils from 2H to 8H versions, school bags 6) Variants of current products- New consumer acquisition by introduction of greeting cards in Hindi and other regional languages. Occasion specific cards printed to increase sales in peak season like Diwali, Christmas, New Year, Friendship Day, Teachers Day etc. Expressions Matrubhasha was launched with cards printed in Hindi and Marathi. The Classmate range, which stands for quality and dependability, is available in more than 180 variants and comes in hard as well as soft covers. Besides, it is available in different rule formats- single, double, square and unrule format. The entire range has cover designs and graphic visuals that range from birds, flowers, animals, sports, space, transport and monuments. The last two pages of the notebook are totally devoted to trivia on various subjects adding fun to learning. 7) Free courier scheme- Tie up with DTDC courier for free delivery of ITCs "Expressions" brand of greetings cards to any destination in India under which all a customer has to do, is buy an "Expressions" greetings card from any of the select outlets, address it and drop it into the assigned DTDC box kept at that outlet after which it will be couriered to the specified destination free of cost. 8) Derivative strategy of marketing department was to conduct Classmate Young Author Contest to discover talent among budding writers and create awareness of the Classsmate brand. 9) Brand ambassadors- Soha Ali Khan and Yuvraj with the aim of attracting the target audience which comprises students and young adults who tend to be easily influenced by youth icons. 10) Business Unit Strategy- Since Stationery is a strategic business unit of ITC, one of its overall strategy called the business unit strategy is to project all its products as eco friendly products and to increase the customers awareness of the social benefit schemes started by ITC such as donation of Re 1 on purchase of every 4 registers etc that support rural development initiative and primary education in villages. The stationery segment of ITC competes with Navneet and Neelkanth publication in organised stationery and Archies and Hallmarks cards in greeting cards segment. It is

A STUDY ON STRATEGIES ADOPTED BY ITC

currently faced by the threat of increasing popularity of SMS and ecards culture which is convenient and gives a feeling of instant gratification for the consumer and also the threat of consumers preferring local brands from the unorganised sector especially regional players.

III.

Foods:

ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of theKitchens of India brand. A more broad-based entry was made in June 2002 with brand launches in the Confectionery, Staples and Snack Foods segments. ITC had over the last 100 years established a very close business relationship with the farming community in India and was able to link the Indian farmers to global markets, through the eChoupal initiative, and produce the quality demanded by its customers. This long-standing relationship was leveraged in sourcing best quality agricultural produce for ITC's Foods business. It launched 6 brands under 4 categories of food segments which are Ready to eat foods, Staples, Confectionery, Snack Foods. The 6 brands launched by ITC were Kitchens of India, Bingo, Aashirwad, Sunfeast, Mint-O and Candyman. In biscuits business, which is largely dominated by Parle and Britannia with over 80% market share, ITC's brand Sunfeast, endorsed by Bollywood star Shahrukh Khan, gained a 10% share of the total market. Also Aashirvaad atta became the market leader in its segment ousting Annapurna the atta brand of HLL. ITC bought the brand Minto from Candico in 2002 and presently has over 30% of the market share. ITC is also looking at more acquisitions of small FMCG businesses to expand its portfolio. Strategies followed: 1) Entering into less competitive or unexplored markets (Ready to eat, Staples, Wafers): When ITC entered into the foods business in 2001, it focused on unleashing the areas where the competition is very less or there is no competition. It started with packaged ready to eat food and later extended that to Aashirvaad brand of edible salt and Atta. Recently ITC has announced its desire to forge in the frozen foods category in the domestic market. Players in this category are limited and ITC hope to exploit this fact. Also, in Bingo, although the competition is tough but there is only one player with whom ITC has to compete i.e. Frito Lay.

A STUDY ON STRATEGIES ADOPTED BY ITC

This strategy has helped ITC to quickly establish itself in the above mentioned businesses. 2) Well established distribution Network: ITC already had a huge distribution network due to its tobacco business. ITC used this network to distribute their biscuits and wafers. This not only provided a good launch to their products but also helped in boosting sales. Today, ITCs Bingo and Sunfeast are available at nearly 1.8 million outlets whereas Parle is available at only 1.5 million outlets. 3) Market differentiation (Ready to eat, Biscuits): ITC started packaged foods business with the KoI brand of ready-to cook products. They were positioned as premium products with target groups including tourists, NRIs, etc. In Biscuits also, ITC launched differentiated products in each and every segment. For e.g. it introduced an Orange Marie, a butterscotch cream biscuit, chilli flakes in a biscuit and even honey flavor under the Sunfeast brand. In March 2005, ITC Foods launched Sunfeast Pasta, a whole wheat based product targeted at children. It was expected to compete with products like Nestles Maggie noodles. With this strategy ITC built for itself new markets. 4) Cost control strategy (all products): When ITC started the foods division, its main challenge was to compete with the players who were already there. To overcome this challenge, ITC realized that they have to offer products at a price which is either equal or less than what the competitors are offering. To do this, they planned to capitalize by leveraging the strength of the groups other businesses. ITCs printing and packaging business provided high-quality, costeffective, and innovative packaging. ITC also enjoyed cost advantages over its competitors owing to its electronic procurement system called e-Choupal. This helped ITC to compete with the best. 5) Backward vertical integration- Raw material for its food segment w.r.t. agricultural products and packaging material was easily made available by its choupal initiative and papers and packaging segment of the company. 6) Strategic use of Hotels segment- Already existing restaurants and hotels of ITC like Welcome Group, Luxury Collection etc. were used as distribution channel for various food products. 7) Diversification of products (Biscuits, Wafers, and Ready to Eat): One of the ITCs successful strategies has been the method of diversifications among its

A STUDY ON STRATEGIES ADOPTED BY ITC

various products. If we talk just about Bingo, ITC has come up with 16 flavors in comparison to its competitor Lays of Frito Lay which has only 4 major flavors. Same is the case with Ready to Eat food category and Biscuits. 8) Extensive advertising (Biscuit, confectionary, wafers): Just like a Bollywood movie needs good publicity to be a super hit, every new product launched in the market needs to be known to the consumers before it is launched. Advertising is where ITC made the difference in comparison to its competitors. They hired the best professionals and the best ambassadors in the country to make their products famous. This is evident form the award winning marketing campaign for Bingo and Minto Fresh. The tagline "Jab Laila ko karna tha impress to majnu ne khayi mint o fresh" has stood the test of times and is still widely known and remembered. Hiring the best people from the film industry and sports (Sharukh Khan and Sachin Tendulkar for Biscuits, Rakhi Sawant for Minto Fresh) showed ITCs urge to be the best. On television, the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news channels. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product. According to industry estimates, ITC spent close to Rs 100 crore on marketing. 9) Regular introduction of new products (all products): Having acquired reasonable scale in a relatively short span of time, ITC realized that, to remain in the competition it had to introduce new products regularly. ITC has been expanding its distribution network aggressively and also their product range. In biscuits and wafers range, it is launching new products or flavors week after week. Same is the case with Ready to Eat and Kitchen of India. 10) Innovation (all products): When the need to introduce new products arrived, ITC shifted its focus on to the innovation. Also, ITC was innovative in identifying the market or niche for all its products. 11) Maintenance of freshness and hygiene (all products): ITC positioned its wheat flour on the health & hygiene and value for money terms. Success in the staples business, especially in the branded and packaged wheat flour business, depended on two factors an effective distribution network and the quality of the product. Therefore, ITC attempted to ensure that the supply chain was responsive, and laid

A STUDY ON STRATEGIES ADOPTED BY ITC

emphasis on making accurate sales forecasts using inputs from distributors, sales personnel and a well-managed MIS system. To maintain freshness of the product, the company strove to minimize the transit time by regulating the shippers to maintain company-specific transit norms. The physical aspects of the supply chain like warehouses and trucks were closely monitored to maintain cleanliness. 12) From Analyzers to Prospectors (Biscuits): When ITC entered the biscuits market with Sunfeast in 2003, with three varieties of biscuits - glucose, marie, and cream, they did what any new player in the market does, imitating and emulating the leader that was Britannia. Their strategy was to manufacture those products which are already a success in the market. But, as ITC got hold of the market, it started to manufacture flavors which were never heard of. This was the result of ITCs desire to exploit new product and market opportunities. 13) 14) 15) Promotion of Kitchens of India recipes as authentic Indian recipes representing various cuisines like Bukhara, Dakshini and Dum Pukht. Gifting packs like desserts, fruit and spice conserves, chutneys, cookies Market development strategy- foray into international market by targeting connoisseurs of Indian food in the US, UK, Switzerland, Bhutan, Bangladesh, Hong Kong, Tanzania, Canada and Australia.

IV.

Lifestyle Retailing:

ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through itsWills Lifestyle (premium brand) chain of exclusive specialty stores. Wills Lifestyle, the fashion destination, offers a tempting choice of Wills Classic work wear, Wills Sport relaxed wear, Wills Clublife evening wear, fashion accessories and Essenza Di Wills - an exclusive range of fine fragrances and bath & body care products and Fiama Di Wills - a range of premium shampoos and shower gels. Wills Lifestyle has also introduced Wills Signature designer wear, designed by the leading designers of the country. Alongwith apparels, a wide choice of fashion accessories such as cuff links, socks, caps, handbags, wallets, belts, eyewear and shoes are offered.

A STUDY ON STRATEGIES ADOPTED BY ITC

With a distinctive presence across segments at the premium end, ITC has also established John Players (middle class)as a brand that offers a complete fashion wardrobe to the male youth of today. With its brands, ITC is committed to build a dominant presence in the apparel market through a robust portfolio of offerings. ITC launched an exclusive range of personal care products including fragrances and bath and body care products under the brand names of Essenza Di wills, Fiama Di Wills, Superia and Vivel Di Wills which particularly includes bath and shower gels which are designed by leading international fragrance houses in France. A nationwide chain of exclusive specialty stores provides the Indian consumer a truly 'International Shopping Experience' through world-class ambience, customer facilitation and clearly differentiated product presentation. Currently there are 65 Wills Lifestyle stores in 35 cities across the country. Strategies followed:
1)

Shorter product life cycle of apparels- Wills Lifestyle introduced a wider assortment of ranges with a shorter product lifecycle of 6-8 weeks, as opposed to 3-4 months earlier, so that customers could find differentiation, newness and variety in the brand.

2)

Establishing stores in ITC hotels- Wills Lifestyle store was opened in ITC Maurya, Delhi and other hotel properties which helped in blending synergies with the hotel team and gaining from each others strengths

3)

Market penetration by establsihing retail stores across Amritsar, Guwahati, Nashik, Vizag, Bhopal and Mangalore from the earlier 65 stores in 35 cities across India.

4)

Visual Merchandising- Tie up with Elemental Design and Friedman group to improve store design to give customers a leisured shopping experience. At the exclusive Wills Lifestyle outlets, customers can browse at leisure and shop in a relaxed and pleasing atmosphere. Wills Lifestyle has developed an international format for the store to provide a clearly differentiated and pleasurable shopping experience. The use of space is refreshing, which is reflected even in the spacious changing rooms.

A STUDY ON STRATEGIES ADOPTED BY ITC

5)

Association with fashion designers like Rohit Bal, Manish Malhotra, Rohit Gandhi-Rahul Khanna, Monisha Jaising and Rajesh Pratap Singh association with the Wills Lifestyle brand.

6)

Two pronged strategy for Miss Players- ITC set up independent stores and penetrated multibrand outlets and large-format retailers,

7)

Sub branding- To cater to requirements of apparels on for various occasions sub-branding was done in Premium Apparels category by expanding portfolio from Wills Sports (relaxed wear) in 2001 to Wills Classic (work wear) in 2002 to Wills Clublife (evening wear) in 2003. Portrayal as aspirational fashion brand- By becoming the title sponsor of FDCIs (Fashion Design Council of India) Wills Lifestyle India Fashion Week, a pan-India event that entered its seventh edition this season it showcased its products in an aspirational manner and trusted that association of leading designers and celebrities with the Wills Lifestyle India Fashion Week will make the brand high on glamour and desirability.

8)

9)

Personal care products also used the synergy of ITC as a conglomerate brand and they are promoted by placing them in ITC Hotels across the country as well as selling them in Wills Lifestyle stores which adds to both businesses: Wills Lifestyle offers premium lifestyle products to its customers and the personal care business gets exclusive access, shelf space and visibility across a premium lifestyle chain which has in excess of two million footfalls per annum.

From the above it is clear that the overall strategy followed by ITC in its FMCG sector is Growth strategy owing to the fact that prior to diversifying into FMCG sector, it was a tobacco major and all its efforts in FMCG required intensive investment and growth oriented strategies. As is clear from the above, all startegies under Ansolfs Matrix like Market penetration, market development and product development have been utilised w.r.t needs of various products.

A STUDY ON STRATEGIES ADOPTED BY ITC

The key point to be noted is that ITC has banked on its already established chain of hotels, restaurants, cigarette retailers (in case of Food segment) and retail outlets of Expressions greeting cards (in case of Stationery segment) to effectively create a well planned out and cost effective supply chain. This has involved both forward and backward vertical integration. Effective backwards vertical integration has been achieved by utilising the chuopal inititave in its various FMCG businesses like Cigars and cigarettes, Foods segment like Aashirwad and Kitchens of India brand and also stationery segment.

HOTELS
ITC entered into hotel industry with the acquisition of a hotel in Chennai which was later christened as ITC Chola Sheraton in October 1975. Since then the ITC-Welcomgroupbrand has become synonymous with Indian hospitality. With over 100 hotels in more than 80 destinations, ITC-Welcomgroup has set new standards of excellence in the hotel industry in Accommodation, Cuisine, Environment and Guest Safety. It has pioneered in the concept of branded accomodation. Brand ITC Hotel: Luxury Collection Welcome Hotel: Sheraton Fortune Hotels Upper upper class Lower upper, Upper middle class Welcome Heritage Heritage Unique Experience Passion for quality Promise of True Value Category Luxury Positioning Mansions of Luxury

Strategies followed: Since its stepping into hotel industry, ITC has majorly followed an extensive investment led growth strategy.
1)

Go together split joint venture strategy- As a part of Internal- External growth strategy, to increase its international Presence, in 2007 ITC entered into a joint Venture with Starwood Hotels and Resorts in bringing the premium brand in India

A STUDY ON STRATEGIES ADOPTED BY ITC

with super deluxe hotels located at strategic business and leisure locations. These hotels go by the name of ITC Maurya in Delhi, ITC Maratha in Mumbai, ITC Sonar in Kolkata, ITC Grand Central in Mumbai, ITC Windsor &ITC Royal Gardenia in Bengaluru, ITC Kakatiya in Hyderabad and ITC Mughal in Agra.
2)

Market Development Strategy- By opening of Fortune Hotels catering to middle class and mid market segments at various business and tourist locations spread over major metros, state capitals and tier-2 cities like Ahmedabad, Chennai, Darjeeling, Gurgaon, Indore, Jaipur, Jammu, Jamshedpur, Kolkata etc. it has adopted a market development strategy i.e. entering new market with the current product.

3)

Product Development Strategy- With its growth over time, ITC expanded into Welcome Heritage Hotels which cater to current market of leisure travelers and tourists but with a new product on the offering i.e. royal houses, forts, havelis and palaces. It serves a double fold purpose of preserving the cultural heritage of such places of historic importance and also offers a world class experience of authentic Indian culture to travelers, thus making this strategy very successful.

4)

Forward Vertical Integration- It is used as a part of internal growth strategy wherein a distribution channel for its end products under Food segment like Kitchens of India, organic spices and Aashirwad has been created by using these products in gourmet world renowned ITC restaurants like Dum Pukht, Gharana, Dakshin and Bukhara

Factors affecting ITC hotels currently: 1) Increasing demand for room capacity- Current imbalance of demand supply for rooms in India and requirement of hotels catering to middle class target segment will lead to expansive opportunity for growth. 2) Opportunity in the form of Indias vast cultural heritage which provides many heritage sites capable of being converted into hotels. 3) Global economic turn up and boom in tourism industry also leads to increased demand for hotels. 4) Increasing government support and increase in income level of consumers acts as attractive opportunities. 5) Fluctuations in international tourists due to increased political turbulence and recent terror attacks as well as spread of H1N1 flu are major threats.

A STUDY ON STRATEGIES ADOPTED BY ITC

6) Increased competition in form of organized hotels and international players entering like Shangri-La and Indian competitors following aggressive growth strategies pose substantial threats for ITC.

PAPERBOARDS AND PACKAGING:

ITC's Paperboards and Specialty Papers Division is India's largest, technologically advanced and most eco-friendly, paper and paperboards business. The business caters to a wide spectrum of packaging, graphic, communication, writing, printing and specialty paper requirements through its four world-class manufacturing units, 6 sales offices and a network of more than 50 dealers in India, along with an international trade network of 15 distributors / agents. Having pioneered many specialty applications like cigarette tissues, opaque papers, food grade packaging boards and tele-card boards, ITC's Paperboards and Specialty Papers business enjoys market leadership in the value-added paperboards segment, and also has a significant share of the Indian fine papers market. It is the largest exporter of coated boards from India. It serves a large cross section of the industry like from cigarette tissues to FMCG cartons, from electrical insulation papers to gypsum board liners, from decorative laminate base to writing and printing papers and much more. Strategies followed:
1)

Innovative variants with better technology- With the commissioning of a new wood free paper machine in May 2008, ITC has made its entry into the writing, printing and copier papers segment in its Bhadranachalam unit.

2)

Vertical integration- Integrated with IT Infotech to provide IT solutions for handling business.

3)

Minor Strategies- Wealth out of waste campaign involves reaching out directly to consumers on a day to day basis for collecting and recycling post-consumer waste from residential localities, corporate and educational institutes, paper also supplied to

A STUDY ON STRATEGIES ADOPTED BY ITC

stationery and cards segment i.e. Expressions cards and Classmate and Paperkraft brands
4)

Particular focus on similar products at various manufacturing plants- Only a certain kind of products with similar raw materials and technology are produced at one plant and other plants are dedicated to other similar products with similar requirements. Eg. Kovai unit entirely focuses on recycling boards whereas Tribeni unit specialises in fine papers and tissues.

AGRICULTURE PRODUCTS
ITC sells agricultural products both in Domestic and international markets. Its International Business Division (IBD) is Indias second largest agri products exporter. It currently exports and sells the following:
1) 2) 3) 4) 5)

Feed Ingredients- Soya meals Foodgrains- Rice, wheat, pulses Edible Nuts - Sesame, Groundnuts, Castor Marine products- Shrimps and prawns Processed fruits- Purees, Concentrates, Frozen fruits, fresh fruits, organice fruit products

6)

Coffee and spices- Coffee, black pepper, chilly, Turmeric, Ginger, Celery etc.

Strategy followed1) Backward vertical integration - The major strategy followed by ITC in its agriculture business is that of extensive backward vertical integration in its intensive growth strategy under which backward linkages are created with farmers in order to produce raw material for sale. It has created networking with the farming community which enables it to build a highly cost effective procurement system.

It has also established Choupal Saagar in Madhya Pradesh, Uttar Pradesh and Maharashtra which provide a platform for farmers to sell their products locally. Its countrywide procurement systems and contemporary warehousing facilities help in faster servicing of orders.

A STUDY ON STRATEGIES ADOPTED BY ITC

2) Forward vertical Integration- ITC has also created a very effective distribution channel for its agri products by supplying the same in its Hotels and restaurants.

3) Extensive use of technology to provide updated information- E-choupal is another initiative taken by ITC which provides vital information like weather conditions, crop, best farming practices etc. provided to farmers by internet kiosks in rural areas.

4) Market development strategy- ITC has created new users for its products and exports to western Europe, North Africa, Mid-East, Japan and North America, a vast host of products ranging from fruits to spices.

Positioning of Products in the Boston Consultancy Group (BCG Matrix)- The Boston Consultancy Group Product Portfolio Matrix provides a graphic representation for an organization to examine different businesses in its portfolio on the basis of their related market share and industry growth rates to make a choice of strategies to be used based on their position in the matrix.

A STUDY ON STRATEGIES ADOPTED BY ITC

The position of various segments of ITC i.e. FMCG, Hotels, Agri Business, Information Technology and Paperboards & Packaging can be placed in the BCG matrix as follows:

A STUDY ON STRATEGIES ADOPTED BY ITC

Stars: Hotels Paperboards and Packaging Agri Business Information technology Fast Moving Consumer Goods- Non Tobacco based goods

FMCG-Cigarettes

None

A STUDY ON STRATEGIES ADOPTED BY ITC

CHAPTER 6- RECOMMENDATIONS

Based on the positioning of products in BCG matrix, the following strategies are suggested: 1) Hotels, Paperboards & Packaging and Agri Business of ITC have high industry growth rate and a market share meaning with such products should use growth strategy. a) Market Development Strategy- With the current product i.e. hotels, ITC can enter international markets with its Luxury Collection hotels emphasizing on the authentic Indian-ness of cuisine and hospitality. b) Based on guest feedback and experience, new room concepts, new service concepts and new restaurant concepts can be established in the hotels. c) Tie-ups with Airlines and international tourism agencies to increase flow of customers d) Tie-ups with corporate houses and other institutions for accommodation and conferences etc. in ITC hotels e) Ensuring sustained availability of high quality wood-based raw materials for paperboard manufacturing is an integral part of the growth strategy. f) Training to farmers and tribes in nutrient rich- soil areas in the country and organising them into groups for providing training to cultivate better crops to be used both for choupal initiative and for manufacturing raw material for its paper segment. g) To convert wastelands into cultivable areas by providing tools, machinery for the same and also combining technology with agriculture and giving high yield saplings with organic fertilisers to farmers. h) Development of cold storage chains, warehousing facilities, technology for ascertaining demand and number of says required for products to reach from warehouse to market, better and efficient processing and reduction in product loss while handling. i) Packaging segment can be expanded by collaborations with state governments and institutions for supply of packaging raw material i.e. papers, boards etc.

2) FMCG segment in its non tobacco based products is a question mark for ITC because they have been introduced recently and have not been able to gain a firm market share

A STUDY ON STRATEGIES ADOPTED BY ITC

although they have a bright future. These products must also use growth strategy as follows: a) Providing customized greeting cards by combining technology with its business. Also online solutions like placing of orders online, design-yourself cards etc. can be made to increase reach to consumers. b) Market Penetration strategy- Tie up with malls and multi brand stores under go together split strategy like Landmark, Odyssey, Crossword etc. to penetrate market for Expressions Greetings cards. c) For the entire stationery segment, institutional sales must be taken up by providing customised orders for schools and companies stationeries like the Tatas, Wipro, IBM, HSBC and ICICI Prudential and school chains like DPS, Ryan etc. with institutional logos embossed on the products. d) Tie up with government for providing steady supply of notebooks and other required stationery in various states for Sarya Shiksha Abhiyan of the Government. e) In foods segment, concentric diversification into instant noodles and chocolates is suggested. f) In case of lifestyle retailing and personal care segment, there exists a diverse product offering but more market penetration is required which can be achieved by tapping on loyal customers by issuing Loyalty cards providing exclusive schemes and offers, opening more boutique stores in existing hotel properties, intensive promotion, tapping on the internet revolution by promoting on facebook, twitter etc. and by consumers who prefer buying products online. Mobile route must also be taken to give regular updates about new season ranges, highlights of the range, schemes, offers etc. 3) The cigarette and cigar FMCG segment of ITC being hit by rising government regulations, increasing health awareness and ban on advertising has become a cash cow for the company and it must use a stability strategy for these products. An incremental sub strategy must be adopted for this segment to remain stable overall in tobacco segment but not lose its market share simultaneously. Slow growth may be achieved by coming up with new variants and flavours of cigarettes time to time based on consumer tastes and preferences. In the future, if government regulations become more adverse, then a sustainable growth strategy must be adopted.

A STUDY ON STRATEGIES ADOPTED BY ITC

CONCLUSION

On a careful reading of the above analysis it is clear that ITC has developed from a one business entity to a vast conglomerate business having many types of business ventures under its umbrella. What is pertinent to note is that it diversified at the right time into FMCG and other areas. It was clear by the stance of the government that the tobacco industry would not remain as profitable as before and it was the need of the hour that ITC capitalised on and entered into areas like foods, retailing, agriculture, papers etc. which had high industry growth rate and which did not have many established competitors. Hence, it was easy to establish its brand name and it is clearly identifiable that ITC undertook a growth strategy for all its new ventures. As for the present, it must adopt growth for hotels, paper, agriculture and FMCG industry whereas for its cigarettes, it must undertake a stability strategy because it brings high revenues to the company but has very low potential due to adverse environment. Based on the analysis and suggestions, the objectives of the project have been justified.

A STUDY ON STRATEGIES ADOPTED BY ITC

BIBLIOGRAPHY

BOOKS: 1. Francis Cherunilam, Strategic Management- A book on business Policy/ Corporate Planning (Himalaya Publishing House, New Delhi, 5th edn., 2005). 2. N.S Gupta, Business Policy and Strategic Management (Himalaya Publishing House, Mumbai, 2004). 3. John A Pearce II & Richard B Robinson, Jr, Strategic Management (Tata McGrawHill Publishing Co. Ltd, New Delhi, 9th edn., 2005) 4. L.M. Prasad, Business Policy: Strategic Management (Sultan Chand & Sons, New Delhi, 3rd edn., 2001)
5. Thomas L. Wheelen & J David Hunger, Strategic Management & Business Policy,

(Addison Wesley, Longman Inc., 6th edn., 2002)

WEBSITES:

1) 2) 3) 4) 5) 6) 7)

www.itcportal.com www.icmrindia.org www.fiamadiwills.com www.essenzadiwills.com www.itcibd.com www.google.com www.jstor.com