Submitted by:Derrick Vijayan (24)

2

INTRODUCTION TO ITC

ITC is a conglomerate established in 1910. Their head quarter is in Kolkatta. With a turnover of 6 billion$ and market capitalization of 22 million $, it is the only Indian FMCG in Forbes 2000. IT has over 26000 employees across 60 centers in India. It also provides sustainable development to over 5 million people, especially in rural India.

ITC was established on August 24, 1910 under the name Imperial Tobacco Company of India Limited. The ownership of the company as transferred to Indian owners and the name was renamed as India Tobacco Company Limited in 1970, I.T.C. Limited in 1974 and to 'ITC Limited' in 2001. India’s most technological Packaging house, ITC’s Printing &Packaging house was established in 1925 as a strategic link up to the ITC’s cigarette business. ITC’s hotels business, launched in 1975 earns high levels of foreign exchange via creation of tourism infrastructure and generates large scale of employment. ITC's Hotels business has over 100 owned and managed properties spread across India. Bhadrachalam Paperboards Division, the market leader in India was promoted by ITC since 1979.

ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture in 1990. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal). India’s largest exporter, ITC’s agri business division was set up in 1990. The unique and acknowledged e-choupal was launched in 2000 at Madhya Pradesh. E-choupal covers 4 million customers throughout India. The company places computers with Internet access in rural farming villages; the e-Choupals serve as both a social gathering place for exchange of information (choupal means gathering place in Hindi) and an e-commerce hub. There are 24 rural markets or choupal bazaars in Madhya Pradesh, Uttar Pradesh and Maharashtra.

In 2000, ITC entered into stationary business with the launch of Expressions range of greeting cards. Premium and Economic note books were launched under the brands ‘Paperkraft’ and ‘Classmate’, which is also India’s largest notebook seller. In 2008, ITC repositioned the business as the Education and Stationery Products Business, with pencils, pens and geometry boxes.

ITC also entered the Lifestyle Retailing business in 2000 with Wills Sport. Wills Classic formal wear (2002) and Wills Clublife evening wear (2003) followed. John Players was ITC most popular brand with offerings in Men’s wear. ITC also sponsors the country's most premier fashion event - Wills Lifestyle India Fashion Week.

ITC's foray into the Foods business began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. The other brands which followed later are mint-o and Candyman confectionery, Aashirvaad atta (wheat flour Sunfeast biscuits segment and Bingo int the fast growing branded snacks category.

ITC introduced Essenza Di Wills range of fine fragrances and bath & body care in July 2005. The company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2007 respectively and Vivel De Wills & Vivel range of soaps in February and Vivel range of shampoos in June 2008.

3

CULTURE IN ITC

Key Characteristics of Culture at ITC

Individual Initiative: ILTD provides high freedom, less responsibility due to set procedures.

Direction: Organisational objectives are very well defined and practiced.

Management Support: Highly supportive management towards employees & their families.

Identity: High degree of identification towards the organisation, especially by workers.

Conflict Tolerance: ILTD offers high tolerance, newer divisions averse to conflict tolerance.

Risk Tolerance: Independence to employees in older divisions like ILTD, less in FMCG.

Integration: Due to interdependent products (in FMCG & ABD), high degree of integration.

Control: FMCG division exerts high degree of control due to highly competitive market.

Reward System: Employee performance highly valued for reward allocation.

Communication Patterns: High degree of formality exists in FMCG divisions, lower in plants.

Core Values

1. Trusteeship: There is a belief in "trust" by all the stakeholders. ITC actualizes stakeholder values and interests on a long term sustainable basis.

2. Respect for People: There are high performance standards for individuals and teams. Simultaneously respect and value for people and uphold humanness and human dignity. Every individual brings different perspectives and capabilities to the team. A strong team is founded on a variety of perspectives. ITC believes in achieving leadership through teamwork and valuing differences.

3. Excellence: ITC is the leading FMCG marketeer in India. It has the second largest Hotel chain in India. It is the clear market leader in the Indian Paperboard and Packaging industry and the country's foremost Agri-business player. All ITC businesses strive to minimize energy consumption and wherever possible use environment friendly sources of energy.

4. Innovation: ITC pursues newer and better processes, products, services and management practices

5. Customer Focus: ITC is highly customer focused and delivers what the customer needs in terms of value, quality and satisfaction.

6. Nation Orientation: ITC feels responsible to generate economic value for the nation. It believes that business exists to subserve larger societal goals. It’s 'e-Choupal' services today reach out to over 4 million farmers. ITC tolerates no compromise in complying with applicable laws and regulations at all levels.

CULTURE: An interdependent set of values and ways of behaving that are common to a community and tend to perpetuate themselves, sometimes over a long period of time - Kotter and Heskett, HBS

4

ENVIRONMENT IN ITC

ITC’s Specific Environment

ITC’s specific environment comprises of its customers, suppliers, contractors, government and its agencies, shareholders, employees and local communities. The aspect of the specific environment which had a major impact on most tobacco companies was the Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act-2003 legislated by the Government of India

1 May 2003 went down in history as the day when cigarette advertising went up in smoke in India. That's the day when the government's diktat stubbing out cigarette and tobacco advertising, and smoking in public places came into force. No more could the stick sellers be huffing and puffing, exhorting you to buy an individual brand from your newspaper, and radio set, the roadside billboard, or the cinema screen. Promoting themselves through ads could be injurious to tobacco companies' health. Starting from May 31, the World No Tobacco Day, all tobacco products in India will carry graphic pictorial warnings

According to industry sources, it was expected the ban would take a heavy toll on tobacco companies, outdoor ad agencies, hoarding suppliers, charity organizations who rely very much on the tobacco companies' sponsorships, etc. Apart from outdoor agencies, tobacco companies who relied heavily on outdoor promotions were expected to bear the brunt.

Ad agencies which handle ITC’s accounts i.e. Lowe, O&M, JWT, Initiative Media and Rediffusion were in deep trouble.

ITC’s Strategy

Though the ban would force them to mellow down on their advertising activities, ITC had already started taking the changes in their stride. The industry was anticipating such a ban for over a year as India had signed and ratified the International Framework Convention on Tobacco Control and hence was prepared for change. The Company was far sighted and ventured into trade mark diversification or brand extensions. It was actually a considered a blessing in disguise by the company as their brands got a higher recall value and they would need to rely much on advertising. ITC diverted the money which used to be spent on advertising to retail signage, promotions inside movies and music, for localized private events and direct-to-consumer initiatives etc. The focus was shifted to smoker contacts, bar & restaurant promotions and lifestyle-related event associations at the upper end. At the lower end, they focused on mean ground level participation in weekly markets, road shows, interactive shows etc. ITC resorted to aggressive marketing campaigns plus new product launches to draw maximum eyeballs as soon as the ban was announced. ITC also forayed into marketing of incense sticks (partnering with cottage industries), launched Sunfeast biscuits, expanded to Wills Clublife Evening Wear to expand its domain in order to get some positive publicity in the eyes of its consumers despite the ban.

SPECIFIC ENVIRONMENT: It is part of the environment that is directly relevant to the organization in achieving its goals. It is made up of those critical constituencies that positively or negatively influence an organization’s

effectiveness. – Robbins & Mathew

5

GREEN TECH AT ITC

Introduction:ITC has committed itself to conducting business with a passionate respect for the environment. Business at ITC, therefore, is conducted at three distinct levels:Ecological Social Economic

Water:

Energy (Temperature Control)

Air Quality:

e-CHOUPAL

ITC's Agri Business Division, has conceived e-Choupal as a more efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis.

The Value Chain - Farm to Factory Gate:

100% of the rain falling on the building is harvested via interlocking tiles through the grass growing in between the tiles ensuring 0% surface run-off.

100% of the water used in the building is recycled through sewage treatment using Fluidised Aerobic Bioreactors

Waterless urinals use biological blocks containing bacteria that reduces odor problems and blockages in the urinals. This annually saved approximately 300,000 litres of drinkable water.

The high albedo roof coating reduces the amount of heat absorbed by reflecting over 90% heat radiations away from the building thereby minimizing AC usage.

The air conditioning operating within ITC Green Centre is Chloro Fluro Carbon (CFC) making it effective and cost-efficient.

free, making the cooling system within the building

During work hours, the CO2 monitoring system maintains carbon dioxide levels based on the number of occupants within the building and the conditions outdoors.

The low levels of Volatile Organic Compounds in the materials used in the construction of ITC Green Centre endures that there aren’t any known harmful substances in the air that might affect inhabitants of the building.

6

STRUCTURE OF ITC

ITC has a formal three tiered governance structure:

1. Board of Directors: It comprises of executive and non- executive directors. Their main purpose is to ensure strategic supervision.

2. Corporate Management committee: It comprises of executive directors and senior managers whose main responsibility is strategic management.

3. Divisional Chief Executive and Divisional Management Committee: it comprises of all the executives who are actively involved in management.

STRATEGIES OF ITC

Corporate Strategy

It pursues world class competitiveness in all businesses and across all value chains It tends to blend its core competencies and leverage ITC umbrella strength to create new

avenues of growth It pursues to be the best in terms of market standing , internal validity and profitability

Innovation Strategy

1. From Mandi to Market – E-choupal

2. Livestock Development

Low Risk

Taking Ability

Low Investment

Low Prductivity

Weak Market

Orientation

Low Value

Addition

Low Margin

ITC realized that by owning the agri-product procurement value chain, they could serve the needs of the end customer better and reduce their "true cost of contract."

This was the birth of e-Choupal—a shift in the business model of procuring from mandis to directly procuring from farmers. It led to substantial reduction in procurement costs, and also brought consistency and predictability in the supply chain.

For ITC, e-Choupal was a channel innovation that was able to extend its reach through a VSAT based IT network, even in villages with no proper road connectivity.

7

The milk marketing co-operatives represent exemplary change in rural enterprise, away from dependence on agriculture and local markets.

3. Social & farm Forestry

ITC has helped to bring nearly 13,000 hectares of wasteland under social forestry benefiting more than 16,000 poor households in 466 villages. ITC’s social forestry program simultaneously addresses the livelihood problems of marginal farmers and the ecological imperative of regenerating biomass and nurturing depleted soils

Marketing differentiation Strategy

1. Segmentation: Creating brands from scratch with no history and lineage, ITC used clear segmentation across its five product lines and the target audience.

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. Essenza & Fiama are meant for the elite, using English, while Vivel & Superia use Hindi.

4. Brand Extension: ITC delves into selective extensions as it doesn’t want to confuse consumers with too many irrelevant brand extension & sub-brands.

5. Brand Ambassador: ITC uses brand ambassadors strategically. For the Fiama and Vivel ranges it has roped in key brand ambassadors.

6. 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.

Breadth Strategy

1. Cigarettes ITC is the market leader in cigarettes in India. It's highly popular portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut.

2. FoodsThe Foods business is today represented in 4 categories in the market. These are: * Ready to Eat Foods * Staples * Confectionery * Snack Foods

3. Lifestyle Retailing ITC’s Lifestyle Retailing Business Division has established a nationwide retailing presence through its retail chains of exclusive specialty stores.

4. Education and Stationery productsThe more popular range to augments it’s offering as "Classmate" and "Paperkraft", with Classmate addressing the needs of school goers and Paperkraft targeted towards college students and executives.

5. Hotels

8

Category Brand PositioningLuxury ITC Hotel Luxury Collection Mansions of LuxuryUpper Upscale Welcome Hotel Sheraton Passion for QualityUpper mid scale Fortune Hotels Promise of True ValueHeritage Welcome Heritage Unique Experiences

EFFECTIVENESS IN ITC

Competing Value Approach

This approach we use return on investment, market share, new product innovation, job security etc. as the criteria depending on who you are and what your interest is.

There are 3 sets of competing values: Flexibility v/s Control:

These are incompatible dimensions of an organisational structure. People v/s Organisation:

They deal with placing emphasis on well-being and development of people or organisation Means v/s Ends :

They stress on internal process and the long term or on inal outcome and the short term.

These values can be combined to form 8 sets of organisation effectiveness criteria within 4 diverse models of OE viz.

i. Human relations model ii. Open systems model

iii. Rational goal modeliv. Internal process model

Analysis

We can rate the effectiveness of ITC in the 8 OE cells.1) OFM (Flexibility): When the number of smokers was reducing due to increase in awareness of

bad effects of smoking, ITC faced the situation by transforming itself from a tobacco firm to a multi business conglomerate. Rating 2/2

2) OFE (Acquisition of resources): They are a big and successful conglomerate, with constant increase in sales as well as profit (6.28% in last four years), implies that acquisition of resources is continually taking place. 2/2

3) OCM (Planning): As mentioned before, ITC has well defined goals in all departments. Rating 1.5/2

Structure is the means for attaining the objectives and goals of an institution. Any work on structure must therefore start with objectives and strategy.

Strategy can be defined as the determination of basic long term goals and objectives of an enterprise and the adoption of courses of action and allocation of resources necessary for carrying out these goals.

9

4) OCE (Productivity & efficiency): They have high productivity and efficiency. ITC paper board has received credits for carbon efficiency with annual energy savings of 13.36 Gwh. Rating 2/2

5) PCM (Availability of information): ITC has a transparent channel to communicate with employees, trade unions etc. Rating 1.5/2

6) PCE (Stability): The firm has a very smooth functioning of operations, based on the goals they have set. 1.5/2

7) PFM (Cohesive work force): ITC emphasizes on employee trust, mutual respect and team work. Rating 2/2

8) PFE (Skilled work force): Most of the employees have training, ability, skill etc. required to do their work and they are provided with workshops, seminars etc. to hone their skills. Rating 2/2

flexibilityofm

ofe

Organisation

ocm

oceControl

pcm

pce

People

pfm

pfe

0

1

2

Series1

Amoebagram of ITC

CONCLUSION

ITC in a nutshell

10

ITC takes pride in its 100 year legacy of sustained effort, unmatched commitment to growth, robust strategy and an unshakable belief in delivering differentiated value and services.