Bcg Matrix

BCG Matrix for ITC Ltd.

Structure ITC- A Background

Act I

Lights!

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 & • Safety Matches • Agarbattis

Stationery

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 data Business/ 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,

FMCGOthers

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

Cigarettes

70% share

Contribution % Revenue PBIT 77.0%

87.7%

Paper & Packaging board – No. 1 Packg. in Asia Agri 1of the largest xporters business from India Hotels ITC Group ranks No.2

7.3%

10.7%

7.0%

3.7%

4.3%

5.4%

FMCG (Others)

4.4%

-7.5%

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

A c t 2

Market attractiveness & Competitive strength is also important.

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

•FMCG- Others

•Paperboards/ Packaging. •Agri business. Cows

Dogs

•FMCG-Cigarettes

•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.