SWOT ANALYSIS OF ITC LIMITED- 100 YEARS JOURNEY (Manita Yadav & Ankur Awasthi, MBA 2010-12 -I year,

First India School of Business)

ITC Ltd. is one of the Indias largest multinational corporate enterprises. It was registered in Calcutta with a small office in Radhabazar Lane, with one expatriate manager and one acquired cigarette manufacturing facility in Munger, in 1910. Now, ITC is one of India's biggest and best-known private sector companies. In fact it is one of the World's most high profile consumer operations organisations. This article is a SWOT analysis of this organisation in its 100th year of operation. Strengths: The organisation has some major strengths that give it a competitive advantage over its rivals. 1. Strong Financial Performance: On 31st march, 2010, ITCs market cap was Rs. 114000 crores with a Gross income of Rs. 26,863 crores and Profit after tax of Rs. 4061 crores. The company continues its impressive record of financial performance. 2. Products Portfolio: ITCs portfolio of products and services is represented by over 50 energetic Brands in a range of more than 650 stock keeping units (SKUs). 3. Distribution Network: ITCS products are available in over 6 million retail outlets in the country. Its formidable Distribution organisation directly services more than 2 million of these retail outlets. It used its experience of transporting and distributing tobacco products to remote and distant parts of India to the advantage of its FMCG products. 4. Environmental Friendly: ITC has a status of being Water Positive for the 8th consecutive year, Carbon Positive for the 5th year in succession and solid waste recycling positive for 3 years in a row. ITC is the only enterprise in the world of its size to have achieved and sustained these three global environmental distinctions. As consumers and investors become more environment friendly, these considerations will provide the organisation an opportunity to create USPs and stronger brand loyalty and brand equity.

5. Research & Development: ITC recognises that cutting edge R&D can foster breakthrough innovation and create powerful sources of sustainable competitive advantage. This vision has led to the establishment of a state of the art R&D centre at Bengaluru with over 50 world- class scientists. Its R&D program will create new game changing business opportunities. 6. Socially Responsibility: ITCs initiatives to build social capital through extensive community engagement have led to the creation of sustainable livelihood opportunities for over 5 million people. ITC has helped create more than 20,000 rural women entrepreneurs. ITCs supplementary education initiative has reached out to over 200000 school children in rural areas. ITCs value chain supports over 5 million livelihoods. 7. Brand Equity: ITC is one of the best known brands in India. The above factors definitely make the company a strong corporate organisation. Weaknesses: In spite of several strengths, there remain some areas of weakness and concern for the organisation. 1. Dependency on the tobacco business: To fund its cash guzzling FMCG start-up, the company is still dependent upon its tobacco revenue. Cigarettes account for 47% of the companys turnover and for 80% of its profits. So there is an argument that ITCs move into FMCG is being subsidised by its tobacco operations. 2. Not present in many important sectors: Although ITC is a diversified company trading in a number of business sectors such as cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care and other FMCG products, greeting cards, Information Technology, safety matches, incense sticks and stationery etc. Yet, it does not have presence in many important sectors such as insurance, infrastructure, banking and financial services, BPO, telecom, automotive etc. and thus becomes comparatively weak when compared with other conglomerates like the Bharti group, the Tata group and the Ambani groups. 3. Local Company: ITC is a local company. It does not have a large portfolio of exports in either products or

services. This makes the company comparatively weak in terms of being able to leverage global opportunities, talent & financing. The above represent some of the major weaknesses the company has. Opportunities What does the future have as areas of opportunities for the company? 1. Leveraging its brand equity ITCs products & services are of high quality. If ITC enter into any business or launch any product, consumer know its ITCs product, consumers shall trust these to be of good quality. ITCs brand equity would make ITC successful in most sectors. 2. Right size at the right time: A corporate must have the right organisational and investment capability and this must coincide with a growth stage in the economy in which it operates. This seems to be a perfect setting for ITC. Given the consumption of most products and services in India at a level far below the global standards and that the Indian economy is on a roll make it a perfect platform for a company like ITC which already is at a fairly strong stage in its own growth with the necessary organisational and financial muscle. For example, the FMCG sector is expected to triple in size to over Rs. 355000 crores by 2018. ITC is a major player in this sector. ITC has investment opportunity of up to Rs. 8000 crores over the next 7 to 10 years to drive growth in this sector.