BCG Matrix for ITC Ltd.

Ranjan Varma

Structure

Act I Lights! ITC- A Background

Act II Camera! The BCG matrix

Act III Action! Learning points and conclusions

Act –I [Lights!]

Governance structure Strategic supervision Strategic management Executive management

Core values Nation Orientation; Trusteeship; Excellence; Customer focus; respect for people; Innovation

Vision & Mission statements Vision: Sustain ITC’s position as one of

India’s most valuable corporations through world class performance, creating growing value for the Indian economy and the Company’s stakeholders.

Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

Business Mix of ITC Ltd.

FMCG • Cigarettes • Foods • Lifestyle Retailing • Greeting, Gifting & Stationery • Safety Matches • Agarbattis

Paperboards & Packaging • Paperboards & Specialty Papers • Packaging

Business Mix (Cont’d)

Agri - Business• Agri-Exports• e-Choupal• Leaf Tobacco

Hotels

Group Companies • ITC Infotech; etc.

Business wise Sales dataBusiness/ Year Growth

%

Value (Rs in Crore)

2005 2004

FMCG-Cigarettes 8.4 10002.54 9230.27

FMCG-Others 85.2 563.39 304.16

Hotels 124.1 577.25 257.53

Agribusiness 4.2 1780.07 1708.77

Paper & pkg. 24.9 1565.31 1253.29

Net revenue 12.99 13349.58 11815.04

CAGR during FY 2005-2008

Category CAGR Growth parameters

Cigarettes 10.9 % Pricing power

Hotels 22.7% Inward traffic, occupancy

Paper 17.2 % Capacity utilization, value added products

Agri business

34.3 % E-choupal, choupal sagar,

FMCG-Others

60.2 % Fast track, decent share.

Market share of ITC Ltd.

Outstanding market leader Cigarettes, Hotels, Paperboards,

Packaging and Agri-Exports.Gaining market share

Nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.

Segment Dominance Contribution %Revenue PBIT

Cigarettes 70% share 77.0% 87.7%

Paper & Packg.

Packaging board – No. 1 in Asia

7.3% 10.7%

Agri business

1of the largest xporters from India

7.0% 3.7%

Hotels ITC Group ranks No.2 4.3% 5.4%

FMCG(Others)

20% share of greeting cards market, 'Aashirvaad' atta is No.1 in branded segment

4.4% -7.5%

Market attractiveness & Competitive

strength is also important.

Act 2

Limitations

Assumes market growth rate. A firm may grow the market.

A “Dog” may be helping other products. High market share/Growth is not the only

success factor. Linkage between market share and

profitability is questionable.

The BCG Matrix for ITC Ltd.Stars•Hotels•Paperboards/ Packaging.•Agri business.

?•FMCG- Others

Cows•FMCG-Cigarettes

Dogs •Maybe ITC Infotech.

Act III - Action- Learning points and conclusions

? - To be handled with care. Strategic forays into emerging high growth

markets. E-Choupal is a transformational strategy. Strong brand building capability will be

tested.

Learning points (Cont’d)

Corporate strategy of creating multiple drivers of growth anchored on its core competencies and distribution reach.

Embracing difficult and challenging corporate strategy. (Ex: Paperboards).

EHS philosophy: Contribution to the triple bottom line- Economic, Environment and social capital.