ITC is one of India's biggest and
best-known private sector companies. In fact it is one of the World's most high
profile consumer operations. This SWOT analysis is about ITC. 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 is now
diversifying into new FMCG (Fast Moving Consumer Goods) 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. Examples of its successful new FMCG products include:
Aashirvaad
- India's most popular atta brand with over 50% market share. It is also
present in spices and instant mixes.
Mint-o - Mint-0 Fresh is the largest cough lozenge brand in India.
Bingo! - a new introduction of finger snacks.
Kitchens of India - pre-prepared foods designed by ITC's master chefs.
Sunfeast - is ITC's biscuit brand (and the sub-brand is also used on
some pasta products).
Strengths:
ITC 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.
Weaknesses:
The company's 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.
To fund its cash guzzling FMCG start-up,
the company is still dependant upon its tobacco revenues. Cigarettes account
for 47 per cent of the company's turnover, and that in itself is responsible
for 80% of its profits. So there is an argument that ITC's 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.
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.
Chairman Yogi Deveshwar's strategic vision
is to turn his Indian conglomerate into the country's premier FMCG business.
Per capita consumption of personal care
products in India is the lowest in the world offering an opportunity for ITC's
soaps, shampoos and fragrances under their Wills brand.
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.
ITC's 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.
ITC was incorporated on August 24, 1910
under the name of 'Imperial Tobacco Company of India Limited'. Its beginnings
were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of
the Company's existence. The Company celebrated its 16th birthday on August 24,
1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed
J.L. Nehru Road) Kolkata, for the sum of Rs 310,000.
