Indian Tobacco Company Analysis

Indian Tobacco Company AnalysisIndian Tobacco CompanyITC Limited, a Rs. 8000-crore Indian conglomerate, and a commercialize leader in the baccy industry has been strategic solelyy diversifying into other related and unrelated seames since 1970 in the order to reduce its colony on its tobacco business. It has forayed into the argonnas of FMCG (fast moving consumable goods), information technology and agri business to obtain the different revenue streams and also to enhance the brand image. The corporation has been favored in its hotel business cognize as the ITC-Welcome and collaborated with the international groups market its hospitality serve. IT has also packaged foods, branded apparel, greeting cards and stationary, pieceboards, packaging and incense sticks businesses in its portfolio. Through the application of effective diversification of its corporate portfolio, ITC has successfully spread its business and market risks across the whole spectrum of the Indian economy a nd abroad.ITC Group is known as to be one of the most successfully diversified companies, and is also known for its projects on social upliftment like womens empowerment, direct education, and integrated divide development program. It has 15,000 employees in India, 3500 in Europe and 2500 in USA. It was incorporated on 24th august 1910 under the name Imperial Tobacco Company of India Limited. As an Indian management team took ownership of the company from its British counterparts in 1974, its name was changed to I.T.C limited.In 1975 ITC entered in HotelsIn 1988 entered in agro business.In 2000 entered in counterfeit Retail shopIn 2000 entered in Software business.In 2001 common base like greeting cards and stationary market.MARTIN-make worries into ash.The new brand of ITC fagNew brands viz., MARTIN is introduced. Long-term agreements were entered into with the unions of factories located at Calcutta, Saharanpur and Munger.ITC CIGARETTE and tobacco is the core business of ITC an d market leader in India with a market shell out of 60% some(prenominal) respect of value and volume. It earns 78% of its total revenues from this business and has a profit margin of 40%. It accounts for two-third of Indias presend annual cigarette sticks market of 90 millions of which 18% is exported in cigarettes in country. The company markets popular cigarette brands are available in the market but some are Wills, insignia, India kings, Classic, sumptuous chip shot, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake etc.The companys focus has been to deliver the highest result quality and value to consumers in the cigarette and tobacco business, which has helped the company prevent its leadership in that industry. To boost the sales growth momentum, it has helped the company maintain its leadership in that industry. To boost the sales growth momentum, it has introduced festival packs of brands like Flake Filter, Bristol Filter, and Scissors Filter in select markets of Kerala.ITC Cigarette is coming with new brand and i.e MARTINThe company had that much of capability to build a leadership position because of its single minded focus on to create the value for the node to make the guest most valuable person in the company by attractive product design, quality, and innovation in the product, production technology, marketing and dispersal in the market.Due to all reason ITC is serving the customers from the considerable period of time. This strategic focus on the consumer has paid ITC fantastic profits.ITCs has international competitiveness is reflected in the overseas markets too. In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes on ready to serve the customers. In West Asia, ITC has become a key player in the GCC markets through increment volumes of its brands.ITCs cigarettes are produced in state those are Bangalore, Munger, Saharanpur and Kolkata. These factories are known for their high a ims of quality, by their technology and work environment. trade Leadership.Powerful brands across whole segment.Consumer acceptable prices.Extensive distribution networkOver 900 wholesale dealers serving more than 1 million retail outlets.World- class state-of-the-art technology and product.Investment Rs.10 billion in sise years.Leaf Tobacco ITC pioneered the cultivation and development of leaf Tobaccos in India. The Leaf Tobacco business partnership with the farmer is almost 100 years old. ITC is the largest buyer, fulfilor and exporter of leaf tobaccos in India- creating a global bench mark for the single largest integrated source of quality tobaccos.CompositionFilter is made of 95 % cellulose acetate.Tipping paper to cover the filter.Rolling paper to cover the tobacco.Tobacco blend.BUSINESS MISSION AND VISIONMission is To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.Vision is Sust ain ITCs position as one of Indias most valuable corporations through world class performance, creating growing value for the Indian economy and the Companys stakeholders.ITCs CORE VALUESHonesty towards work.Customer Focus.Respect for People.Excellence in quality and service. design in ideas Product.MARKETING OBJECTIVETo make the world class or world known brand by providing the best quality and satisfy the customer need with delightful feeling. To retain the position as a market leader in marketplace. And make more than 85% revenues of Cigarettes in the year 2010-2011. dress hat in Internal Vitality, market standing, profitability.SITUATION ANALYSISCOMPETITIORSIn India, three major cigarette players dominate the market, primarily ITC with 75% market share, Godfrey Phillips with 14% and VST with 4% share of the market.SEGMENTATION, TARGETTING POSITIONINGAs concern about segmentation, they are segmented according to the needs and taste of the customer. In every business they segmen ted the products with the level of income. Products are available according to their purchasing capacity. Products are available with the lowest price as well as higher price. As in the hotel ITC fork out categories of the hotel rooms.As indicateing is concern ITC targeting the youth mainly with the taste for trendy style and started offering quality they are concern about the quality not quantity. picture CHAN MANAGEMENTThe following components are in supply range of a function management.Production It all about where business focus on how much to produce, where to produce it and what are the suppliers to use.Inventory It all about where the business decides where to store their products, and how much to store.Distribution where the business address questions about how their should be moved and stored.Payments It concern about where business look for the best ways to suppliers and get paid by customers.Manufacturing ProcessCigarette manufacturing process involves processing of t obacco leaf and stem to different tobacco blends, which is cut tobacco.Cut tobacco is then converted to cigarette using other raw materials for making cigarettes and packing them in various forms as per the transaction requirement.ITD receives various grades of Tobacco Leaf and stem from Indian Leaf Tobacco Division (ILTD) based mainly in Guntur, Andhra Pradesh.The cut tobacco is then sent to the secondary manufacturing division (SMD) for making and packing cigarettes.At SMD, there are two processes Making and PackingMaking is the process is the rolling of cigarette.Packing process is packing of these cigarette sticks in the cigarette packets of various pack styles.MARKETING STATERGYCORPRATION STATERGY Do the right things to the right place at the right time. Sustain twofold drivers of growth matching internal capabilities with emerging market opportunities. Pursue world class competitiveness in all businesses and across the entire value chain.As we talk about the pricing strategy ITC cigarettes using Pricing penetration because of their high name in the market. Form the starting they taking the high prices. And later getting the relevant profit they low down the prices. But with that the price range is widely varied catering to the low and high-class consumer segment, ITC has made capital investments of Rupees 700 crores in its cigarette business to upgrade and modernize its manufacturing and research and development facilities. Additional rs. 450 crore has been spent towards building a new and state of art manufacturing whole kit and caboodle on Bangalore. The decision to raise prices of some cigarette brands has led to increased sales revenue. The packs are designed in such a way that customer got attracted.Diversification Strategy It has been observed that ITCs opt the diversified strategy have been heraldic bearingfully implemented in order to optimize the synergies obtained through both backward and vertical integration of its business. The company had felt need to diversify from the early 1970 and had started the process by entering into the business that provided a good recurrence on investment and a potential for future expansion. In March 2005, ITC stands as a multi-business enterprise, with an impressive market share in almost all the FMCG segment, Hotels, Paperboard and agri-Business sectors. It has successfully crafted a strategy of value addition by entering into related segments, which adds to the competencies and resources of the company. ITC also come with up the diversified brands of cigarette too. ITC obtain the diversified strategy by the deep understanding of the markets and consumer tastes.ITC cigarettes come up with the differentiated strategy because they come up with differentiated brands.MARKETING MIXmerchandising mix is apply in business to gain the reaction it is seeking from its targeting market in relation to its marketing objectives. Marketing mix is including the 7Ps Price, Product, Promotion, Pl ace, People, Process, and Physical environsTraditional approach is 4 ps and from the following ps people is very important in the market. Because in marketing we number one identify the demand of people then try to satisfy them with their goods and services.PRODUCT Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g. Extension strategies.PRICE Pricing strategy using by ITC is penetration strategy. As ITC also take care of price according to the income of the people. Its also important to know about the market condition of their product.PROMOTION/ADVERTISMENT Advertisement and promotion is used to make aware and increase the sales of the product respectively through print media, on internet etc. It help to make aware of the introduction of a product.PLACE Place is where the customer get the product and the services from the producer. Selection of the place is depend on the market research what th e demand of the customer, contest in market and geographical condition is also matter. And in which place consumer is easy to buy the product.Positioning of ITC Cigarettes in the marketBCG Matrix In this capital of Massachusetts consultant group it tells about the market share and growth of the product. In this we take four i.e. stars, dogs, question mark, and cash cow. Cash cow is when market share and growth is on the top. And dogs show both are lessSTARSAgri BusinessPaperboardsHotelsQUESTION MARKFMCG- OtherCASH COWSFMCG CigarettesDOGSITC InfotechIn product tone cycle ITC cigarettes is in the maturity stage of existing brands of cigarettes.SWOT ANALYSISSWOT is mainly told about the strengths, weakness, opportunities and threats evoke face by the company. It also helps to shout the future of the company. Whereas strength and weakness are controllable and opportunities and threats are uncontrollable in nature.ITC is one of Indias biggest and well known private sector companies. In fact it is one of the Worlds most high profile consumer operations. It is business and brands are focused almost entirely on the Indian markets, and despite being most well-known for its tobacco brands such as navy cut, silk cut, the business is now diversifying into new FMCG brands in a number of market sectors.(S)TRENGTHSMarket leadership is the one of the biggest strength of the company.ITC leveraged it traditional businesses to develop new brands for new segments. For e.g. ITC used its experience of transporting and distributing tobacco products to remote and distant parts of India to the advantages 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 business is also strength of the ITC itself. Its CSR, social responsibilities like women empowerment, water shed development, primary education also the strengths for ITC.Six Sigma based product development process.Provide the best c lass products in quality and quantity.E-chopal is biggest strength for ITC.(W)EAKNESSESThe companys true business was traded in tobacco. ITC business i.e. now so involved in branding continues t use its original name, despite the negative connection of tobacco with poor health and premature death.Even today, ITC depend on the tobacco business revenues. Cigarettes account for 49% of companys turnover and responsible for 82% of revenues. One single brand Gold Flake is gaining 72% of tobacco market.(O)PPORTUNITIESFMCG product like Aashirvaad, Bingo, and Sun feast has the increasing growth in the market. This can be good opportunities for the future of ITC.ITC is moving into new and emerging sectors including IT with supporting business solutions.E-Choupal, the unique web based initiatives of ITCs International business division, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local a nd global information on weather, scientific farming practices as well as market prices at the village itself through this web portal in hindi.It is the biggest opportunities for ITC.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.(T)HREATSFirstly threat is the competition in domestic as well as international market. Dynamic nature of government policies like sudden banned on the advertisement of the cigarette cigarette is main source for ITC, for revenue and if they are banned by the government law then it will put the very bad impact on the ITC Company. So dynamic government policies is also a biggest threat for the ITC. Basic threat is geographical conditions. Highly dependency on tobacco business can be the threat for ITC.Future expectationCompany stands to gain between Rs. 5 billion and 5.5 billion in the form of future earnings.ITC is focused on acquiri ng leadership in IT areas of product life cycle management(PLM), Hospitality, Customer relation management(CRM), manufacturing services.Rural sector development has been high on priority with regard to its future projects.The company is focusing on moving ahead with e-Choupal.