The Business Environment And Strategic Analysis Marketing Essay

The Business Environment And Strategic Analysis Marketing EssayITC is champion of Indias foremost private sector companies with a commercialise capitalization of nearly US $ 19 billion and a turnoer of over US $ 5 billion.* ITC is rated among the beingnesss Best Big Companies, Asias Fab 50 and the Worlds Most Reput competent Companies by Forbes magazine, among Indias Most Respected Companies by Business World and among Indias Most Valuable Companies by Business Today. ITC ranks among Indias 10 Most Valuable ( caller) Brands.SWOT is an acronym used to specify the particular Strengths, Weaknesses, Opportunities and Threats that ar strategic factors for a particular(prenominal) company. SWOT analysis should non only result in the identification of a companys distinctive competencies, the particular capabilities and resources that a tighten possess scarcely also in the identification of opportunities that the firm is currently able to take advantage of due to lack of appropriate resources. SWOT analysis is an analytical technique used in strategic precautionBCG MATRIXThe Boston Consulting Group (BCG) reflects the companys portfolio of investments. Each of the companys product lines are bizted in a matrix according to its growth rate of the industry and its relation market shareThe BCG matrix results in four types of decisions they are Question marks, Stars, Cash Cows and Dogs.PEST ANALYSISPest term is used to describe macro environmental factors namely political (legal), economic, social and technological. It helps the firm in understanding market growth or decline, its market position, its potential and its directionPORTERS 5 FORCES MODELMichael Porters famous Five Forces of Competitive Position model provides a simple perspective for assessing and analyzing the competitive strength and position of a corporation or fear put one crosswiseupITC- INTRODUCTIONITC is one of Indias foremost private sector companies with a market capitalization of over US $ 19 billion and a turnover of US $ 5 billion. Rated among the Worlds Best Big Companies, Asias Fab 50 and the Worlds Most Reputable Companies by Forbes magazine, among Indias Most Respected Companies by Business World and among Indias Most Valuable Companies by Business Today, ITC ranks third in pre-tax profit among Indias private sector corporations.As one of Indias most valuable and respected corporations, ITC is astray perceived to be dedicatedly nation-oriented. Chairman Y.C. Deveshwar calls this source of inspiration a commitment beyond the market. In his own words ITC believes that its aspiration to create enduring observe for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its byplayes towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part.HISTORY EVOLUTIONThe story of the Imperial bacc y society of India Ltd. extraordinarily though it may sound, starts long before the company was established, or even thought of. It starts not in India, but in the US. It was started by pile Buchaman Duke in 1881. W. Duke Sons Company was doing a flourishing business around 1889 merged with other four players in the market and set up the Ameri bath Tobacco Company ( ATC ). ATC looked at the British market along with Imperial Tobacco Company Ltd. floated a natural company, the British American Tobacco Company Ltd.( palpitate ) which was to handle switch over outside USA and Britain. With India having centuries old tradition of tobacco, BAT looked into this market.ITC was in corporated 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 Companys existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated a t 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more(prenominal) ways than one. It was to mark the beginning of a long and lively journey into Indias future.The Companys headquarter building, Virginia House, which came up on that plot of land cardinal years later, has be set out Kolkatas most venerated landmarks. The Companys ownership progressively indianised, and the name of the Company was changed to I.T.C. Limited in 1974. In recognition of the Companys multi-business portfolio encompassing a wide range of businesses Cigarettes Tobacco, Hotels, Information Technology, Packaging, Paperboards Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting Stationery the full stops in the Companys name were removed effective September 18, 2001. The Company now stands rechristened ITC Limited.ITC- MISSION STATEMENTAn agreements mission is the purpose or reason for the organizat ions existence. it tells what the company is providing for the society. A advantageously conceived mission statement defines the fundamental, unique purpose that sets the company apart from other firms of its type and identifies the scope of the companys operations in terms of product, services put uped and market served. meet ITCS AS ONE OF INDIAS MOST VALUABLE CORPORATIONS THROUGH WORLD CLASS PERFOMANCE, CREATING GROWING VALUE FOR THE INDIAN ECONOMY AND THE COMPANYS STAKEHOLDERSITC-VISIONA vision statement describes wat the organization would ilk to become in the future. It helps in creating a sense of direction for the company and its employees and leads them towards attaining the goals.TO ENHANCE THE WEALYH GENERATING CAPABILITY OF THE ENTERPRISE IN A GLOBALISING ENVIRONMENT DELIVERING outstanding AND SUSTAINABLE STAKEHOLDER VALUEITC LEADERSHIP- somatic GOVERNANCEThe governance framework determines whom the organization is there to serve and how the purposes and priorities of the organization should be decided. It is concerned with both the functioning of the organization and the dispersal of power among different stake holders.Governance chain- the governance chain identifies all those groups that have a legitimate influence on the organizations purposes. There are likely to be several(prenominal) conflicts of interest both between different stake holder groups and for singular managers of directors as they try to balance these various interests. The type of the governing bodies- the primary statutory responsibility of the governing body of an organization is to ensure that the organization actually fulfills the wishes and purposes of the owners.THE ITC WAYITC defines Corporate Governance as a systemic form by which companies are directed and controlled to enhance their wealth generating capacity. Since large corporations employ vast quantum of societal resources, ITC believes that the governance process should ensure that these companies are man aged in a manner that meets stakeholders aspirations and societal expectations. ITC has won the National Award for Excellence in Corporate Governance 2006 from the Institute of Company Secretaries of India.Leadership indoors ITC is exercised at three directs.The board of directorsCorporate anxiety committeeDivisional management committeeThe Board of Directors at the apex, as trustee of shareholders, carries the responsibility for strategic supervision of the Company. The strategic management of the Company rests with the Corporate Management Committee comprising the whole time Directors and members drawn from senior management. The administrator management of each business division is vested with the Divisional Management Committee (DMC), headed by the tribal chief Executive. Each DMC is responsible for and totally focused on the management of its assigned business. This three-tiered interlinked leadership process creates a wholesome balance between the need for focus and execut ive large-mindeddom, and the need for supervision and control. Since the commencement of the liberalization process, Indias economic scenario has begun to alter radically. Globalization provide not only significantly heighten business risks, but willing also compel Indian companies to adopt international norms of transparency and good governance. Equally, in the resultant competitive context, freedom of executive management and its ability to respond to the dynamics of a fast changing business environment will be the new success factors. ITCs governance policy recognizes the challenge of this new business reality in India.CORE PRINCIPLESITCs Corporate Governance initiative is based on two core principlesManagement must have the executive freedom to drive the enterprise forward without undue restraintsThis freedom of management should be exercised inwardly a framework of effective accountabilityITC believes that any meaningful policy on Corporate Governance must provide empowerme nt to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management is not only not misused, but is used with concern and responsibility to meet stakeholder aspirations and societal expectations.CORNERSTONESFrom the supra definition and core principles of Corporate Governance emerge the cornerstones of ITCs governance philosophy, namely trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship. ITC believes that the practice of each of these leads to the creation of the right corporate culture in which the company is managed in a manner that fulfils the purpose of Corporate Governance.The governance social structure of ITC,Strategic supervision by Board of DirectorsStrategic management by Corporate Management CommitteeExecutive management by the Divisional Chief Executive assisted by the Divisional Management CommitteeT he 3-tier governance structure thus ensures thatStrategic supervision (on behalf of the shareholders), being free from involvement in the task of strategic management of the Company, can be conducted by the Board with objectivity, thereby sharpening accountability of management.Strategic management of the Company, uncluttered by the day-to-day tasks of executive management, remains focused and energized.Executive management of the divisional business, free from collective strategic responsibilities for ITC as a whole, gets focused on enhancing the quality, efficiency and effectiveness of its business.CORPORATE SOCIAL RESPONSIBILITYCorporate social responsibility is the detailed issues on which an organization exceeds its minimum required obligations to stake holders. It has been noted that companies increased their awareness of and level of activity in some aspects of social responsibility but they seemed to limit their involvement to a relatively narrow range of issues. It was also indicated that most organizations failed to attempt out best practice elsewhere and this they suggested, indicated that social responsibility considerations were not pursued as keenly as commercial activities.ITC believes that an effective growth dodge for our nation must address the needs of rural India, home to 75% of our poor. It is imperative to ensure that Indias economic growth is inclusive, embracing its villages, so as to free millions of our disadvantaged citizens from the indignity of poverty.It is ITCs belief that Indias rural transformation cannot be brought about by the government alone. Nor can the efforts of a few enterprises make a decisive difference. solitary(prenominal) an inspired public-private partnership can transform lives and landscapes in rural India. ITCs humble endeavors have demonstrated that it is possible to create and sustain a model that can harmonize the need for shareholder value creation with making a substantial contribution to society.For ITC , these are expressions of a commitment beyond the market. Of a condemnation that country must come before corporation of a true pride in being Citizen First.E-CHOUPALThe e-Choupal model has been specifically designed to tackle the challenges be by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, among others.E-Choupal, launched in June 2000 unshackles the potential of Indian farmer who has been trapped in a vicious cycle of , pitiable risk taking abilityLow investmentLow productivityWeak market orientationLow value additionLow marginLow risk taking abilityThis made Indian farmers and Indian agribusiness sector globally uncompetitive, despiterich broad natural resources.The Model in ActionAppreciating the imperative of intermediaries in the Indian context, e-Choupal leverages Information Technology to virtually cluster all the value chain participants, delivering the resembling benef its as vertical integration does in mature agricultural economies like the USA.With a judicious blend of click mortar capabilities, village internet kiosks managed by farmers called sanchalaks themselves, enable the agricultural community access ready information in their local language on the weather market prices, disseminate cognition on scientific farm practices risk management, facilitate the sale of farm inputs (now with embedded knowledge) and purchase farm produce from the farmers doorsteps (decision making is now information-based).Real-time information and customized knowledge provided by e-Choupal enhance the ability of farmers to take decisions and align their farm output with market demand and secure quality productivity. The aggregation of the demand for farm inputs from individual farmers gives them access to high quality inputs from established and reputed manufacturers at fair prices. As a direct marketing channel, virtually linked to the mandi system for pric e disco precise, e-Choupal eliminates wasteful intermediation and multiple handling. Thereby it significantly reduces transaction costs.e-Choupal ensures world-class quality in delivering all these goods services through several product / service specific partnerships with the leaders in the respective fields, in addition to ITCs own expertise.While the farmers benefit through enhanced farm productivity and higher farm opening prices, ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer) having eliminated costs in the supply chain that do not add value.ITC has taken deal to involve farmers in the designing and management of the entire e- Choupal initiative. The active participation of farmers in this rural initiative has created a sense of ownership in the range among the farmers. They see the e-Choupal as the new age cooperative for all practical purposes.This enthusiastic response from farmers has encouraged ITC to plan for the exte nsion of the e-Choupal initiative to altogether 15 states across India over the next few years. On the anvil are plans to channelise other services related to micro-credit, health and education through the same e-Choupal infrastructure.CAUSE OF UNDERPRIVILEGED CHILDRENITC launched its notebooks brand class fellows, deliberately pricing itself 10-15 per cent higher than the competition, between Rs 10 and Rs 40. This ensured that it created an affordable-yet-aspirational image and also send a hidden means of being a superior product (60 gsm paper, bleached without using chlorine). Then, ITC focused on the design elements of notebooks each Classmate notebook has a theme on the cover and related information inside.Then, the last two pages of the notebook have trivia and the back cover highlights the corporate social responsibility initiatives of the companyRe 1 from each notebook sold is set aside for the cause of underprivileged childrenITC bet ons 60,000 children in rural India. P roviding uniforms and books, improving school buildings, adding electricity connections, lights and fans and running over 674 Supplementary Learning Centers, helping rural children aspire to a better tomorrow. This is one of the many ways in which ITC expresses its belief that country must come before corporation.WOMEN ENTREPRENEURSThe need of the hour is to diversify rural livelihoods. Towards this end, ITC has forged an empowering partnership with rural women the most effective development workers. ITCs intervention leverages micro-credit and skills training to generate jump off employment opportunities. Increased income in the hands of rural women means better nutrition, health care and education for their children.Working with NGOs, ITC has organized village women into micro-credit groups. Group members make monthly contributions to create a savings corpus. The corpus is used to extend soft loans to group members, thereby eliminating the stranglehold of the moneylender. ITC pr ovides training to group members to handle confide accounts and understand the nuances of government development programs.Empowered groups function autonomously and take their own decisions, including sanction of loans to fellow-members and collection of repayments. Well-managed micro- credit groups with no default records receive further support from ITC in the form of seed money for self-employment activities. Venture funds provided by ITC have already spawned hundreds of women entrepreneurs. Their earnings, ranging from Rs 70 to Rs 150 per day, not only supplement abode incomes but also significantly enhance their self-esteem.ITC also conducts skills training to enhance employability. Pickle-making, fish- processing, vermicomposting, spice processing and agarbatti-rolling in rural areas and chikankari, garment-sewing, driving and computer-aided secretarial training in semi- urban areas are some of the examples. ITC goes a step further to help find employment for these trained w omen in areas related to its operations. This program is helping women across Andhra Pradesh, Karnataka, Madhya Pradesh, Uttar Pradesh and Bihar. Through its various initiatives, ITC touches the lives of 4 million villagers and has proved that it is socially responsibleITC STRATEGIESITCs diversified status originates from its corporate schema aimed at creating multiple drivers of growth, anchored on its above mentioned time-tested core competencies. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India.CONGLOMERATE diversificationWhen the management feels that the firms outstanding capabilities or skills can be better utilized and transferred into other industries, though unrelated to the current one, the firm then adopts conglomerate diversification strategy. ITC has adopted Conglomerate (Unrelated) Diversification strategy and accordingly has entered into an array of business apart from its traditional tobacco industry that includes stationery, FMCG, branded apparel, agri-business and packaging and paperboards.STRATEGIC business sector UNITIt is that part of the organization which is a cruicial unit for implementing its strategies. It is also that part which fetches largest revenues. In ITC, tobacco industry is its SBU, as it fetches largest revenue and is its commencement ceremony business which has minded(p) the conglomerate a national identity. Also it has empowered ITC with an excellent distribution meshing which is vital for its success. This network is shared by all other business units of ITC.BACKWARD INTEGRATIONITCs Packaging Printing Business Division was set up in 1925 as a strategic backward integration for ITCs Cigarettes business. It is straightaway Indias most sophisticated packaging house. State-of-the-art technology, world-class quality and a highly skilled and dedicated team have combined to position ITC as the first-choice supplier of high valu e added packaging.ITCs Packaging Printing Business is the countrys largest convertor of paperboard into packaging. It converts over 35,000 tonnes of paper and paperboard per annum into a variety of value-added packaging solutions for the nutrition beverage, personal products, cigarette, liquor, cellular phone and IT packaging industries. It has also entered the Flexibles and Corrugated Cartons business.The Division supplies value-added packaging to the Companys Cigarettes business. Its client list includes several well-known national and international companies like British American Tobacco, Surya Nepal Private Limited, VST Industries, , UB Group, Shaw Wallace, Seagrams, Allied Domecq, Whyte Mackay, Hindustan Lever, Tata Tetley and Nestle, Reckitt Benkiser India Limited, etc.STRATEGIC BUSINESS UNITIt is that part of the organization which is a cruicial unit for implementing its strategies. It is also that part which fetches largest revenues. In ITC, tobacco industry is its SBU, as it fetches largest revenue and is its first business which has given the conglomerate a national identity. Also it has empowered ITC with an excellent distribution network which is vital for its success. This network is shared by all other business units of ITC.FORWARD INTEGRATIONITC Limited, the tobacco-cum-hotels major which has been fast transforming itself into a FMCG company, is targeting students by customizing notebooks for schools under the Classmate brand name and this is a part of the companys diversification plans to foray into the other sectors.Classmate notebooks, a sub-brand of Expressions has been customized for schools and is available at retail stores across the country.For this purpose, ITC has entered into arrangements with 150 historied ICSE schools across the country. A portion of the money coming from the sale of the notebooks would be contributed to some social. The division is targeting the revenue of 100 crore.The business division of ITC is primarily a f orward integration of the companys paper manufacturing activity.With ITC having a state of the art paper manufacturing plant at Bhadrachalam in Andhra Pradesh the division has been using the high quality extracellular fluid paper for its notebook to make it more eco friendly.MARKETING schemaThe marketing logic by which business unit hopes to achieve its marketing objectives.PROMOTION dodgePromotion strategy is the strategy used to communicate the merits of the products and to persuade the target customers to buy it. Wills Lifestyle offers a complete lifestyle wardrobe for the premium consumers incorporating the current fashion trends. Their clothing is not only the latest in fashion but they also come out with clothing for different seasons. They are very active in promoting their products by conducting fashion shows in national and international levels and sponsoring many fashion shows like India Fashion Week etc.PUSH STRATEGY THE MYSTERY SHOPPERA push strategy involves pushing the product through distribution channels to the final consumer. The firm directs its marketing activities (primarily personal selling and trade promotions) towards channel members to induce them to carry the product and to levy it to final consumers. Companies spend a large amount of money on trade promotion in order to gain or hold shelf space in retail outlets. Trade promotion includes discounts, in-store special offers designed to push products through the distribution system. As a part of its promotional strategy, ITC put up posters in the kiranas and used the concept of mystery shopping in case of the tobacco industry. Promoters were displace to the kiranas in town to inform the kirana owners of the mystery shopper, who will visit them at any time, any day and ask for a cigarette. The shop owner has to offer him only an ITC brand cigarette first, even if he requests for another brand. If he insists on another brand, then the shop owner can give him the call for brand. If he does so, he will be rewarded with gifts like lighters. He will then be qualified to enter into a lucky draw and if he becomes lucky will get a fan or radio set. Also a bumper prize comprising of a trip to Mumbai or Singapore was offered. ITC adopted this strategy to increase its sales and awareness and to gain favoritism from the kirana owners. In anticipation of the mystery shopper, the kirana owners kept offering ITC cigarettes to all customers first and only upon a request or insistence they sold the requested brand. This increased the awareness and sales, while the prizes gathered the favoritism of mystery shoppers.PULL STRATEGYThe Pull strategy is where the producer directs its marketing activities (primarily advertizing and consumer promotion) towards final consumers to induce them to buy the product. If the pull strategy is effective, consumers will then demand the product from channel members, who will in turn demand it from producers. Thus under a pull strategy, consumer d emand pulls the product through the channels. The sunfeast Ready to Eat Pasta came into the market recently. They have been able to establish its presence with 6 per cent in volumes of the branded noodles market and they come number two behind MTR foods in the ready-to-eat market. This has been achieved by excessive advertising which pulls the products through the distribution channels. The strategy adopted is to spend more money on consumer advertising designed to build brand awareness so that shoppers will ask for the products.COMPETITIVE TACTICSPIONEER FIRST MOVERTiming tactic- The first company to manufacture and sell a new product or service is called first operator or pioneer. The advantage of being a first mover is that the company is able to establish a reputation as industry leader, gain cost leadership, and achieve high profits from buyers. The first mover can also set standards for all subsequent products. The first mover has sufficient resources to both exploit the n ew markets and defend its position against its late rivals.ITC-Welcomgroup pioneered a holistic concept of branded accommodation in the hospitality industry. It was the first to launch the powerful idea of a Hotel within a Hotel by segmenting and branding the hotel services. It created exclusives hotels and executive clubs each catering to the needs of the global business traveler with unmatched quality and a range of services.ITC-Welcomgroup was also the first to brand its cuisine. The Bukhara, the Dakshin and the Dum Pukht are today powerful cuisine brands, which delight connoisseurs in restaurants in several ITC-Welcomgroup hotels.LATE MOVERLate Movers are those who are able to imitate the technological advance of others, keep risks down by waiting until a new market is established and take advantage of the first movers inclination to ignore market segments.ITC entered the biscuit business very late when the two major players Britannia and Parle were bustling biting of chunks of the national market among themselves, with a host of smaller brands in various regions. The strategy that the company followed was to find loopholes in the industry into which they can tap. so before entering the segment, ITC dug into market research. Research revealed that the category had gaps which ITC could settle into. Findings revealed that consumers wished to taste new and innovative products. That was precisely what the competition had not done in a big way. ITC launched Sunfeast with six ranges. But it was a calculated risk. ITC stuck to category favorites like Glucose, Marie and Bourbon skim. Along with that, it also launched innovations such as orange-flavored Marie, Marie light and butterscotch-flavored cream biscuits. Sunfeast followed this up with the launch of Sunfeast Milky Magic. More recently, it also has launched the Sunfeast Snacky and SunfeastIn August 2003, a month after its launch, the company undertook a major sampling exercise to promote the product. For two years then, the brand did all the usual rounds riding behind buses, blocking television spots, booking that corner space in your favorite theme and so on. Well differentiated advertisements, some which showed a complete cream world with cream rivers, cream mountains and cream trees, were targeted at kids watching cartoon channels. At the same time, on general entertainment channels, mothers received information on the importance of glucose, the wholeness of wheat and so on. Also, the company tied up with Bey Blades, the democratic television series that was a rage among children, to promote itself.PRICING MODEL TWO PRONGED STRATEGYThe biscuits industry is very competitive and the players fight for market shares. One way of gaining market share is by pricing the products attractively. The industry now has two clear models. Parle products play the low price game at all varieties of biscuits from glucose to cream. Sunfeast looks at a two-pronged strategy where it looks for high margins in cream variants and volumes from the Marie and Glucose segments. It does this as it cannot expect volumes of sales in the cream variant business and so they have a higher margin of profit. In the marie and glucose segment there is heavy competition and the biscuits hardly have any differentiation like the cream biscuit market and the consumers dont pay extra if there is no innovation in the product, so they look for having a lower margin of profit and more volume of sales. The strategy adopted by them is very profitable for the company.FUNCTIONAL STRATEGYOutsourcing is purchasing from someone else a product or service kinda of provided it internally. The key to outsourcing is to purchase from outside only those activities that are key to the companys distinctive competencies.ITCs agarbatti SBU and Cottage Industries, Aurobindo Ashram, Pondicherry, which makes the Spriha brand of handmade incense sticks have a strategic obligateThe agarbatti SBU, which recently launched t he Mangal Deep range of agarbattis through 100 per cent outsourcing from the small, medium and cottage sector, has launched an assorted Spriha gift pack product.The gift packs, designed and developed in-house by ITC and specially created (with handpicked materials) by Cottage Industries, Aurobindo Ashram, will be in two sizes, and will contain items like high quality incense sticks in two fragrances, a perfumed designer candle, a collection of choice dhoops and a handy ceramic agarbatti/dhoop holder (all hand-made) in a compact box pack. Priced at Rs 100 and Rs 150 (two sizes), the gift packs have been launched in Bangalore as part of a test marketing exercise through outlets stocking ITCs Greetings Cards (Expressions).Planned as a stand-alone gift item, especially for festive occasions, the plan is to utilize the available in-house greeting cards distribution channel to position the product, and gradually case up visibility at various gift shops through a national roll-out. Cottag e Industries, Pondicherry, produces half-a-million packs of handmade Spriha agarbattis per month for ITC under a contractual agreement. ITC follows unmitigated quality parameters in all its sectors and in this sector has expressly stated that it will buy from any cottage industry that agrees to adhere to their quality standards. offshoot STRATEGIESGrowth strategies are defined to achieve growth in sales, assets profits or