SWOT - ITC

SWOT ANALYSIS

Strengths:
Cigarettes are the main business. Introduction of VAT on cigarettes could have affected the sales. But the company managed to maintain market leadership and increase volume sales by 16 % last year
Cigarette business: Company uses a unique IT-enabled ‘Six Sigma’ based product development process. This product development process and the deep consumer insights give the company the unique understanding of positioning and brand development of its products.
Cigarette business: initiatives such as contemporary, internationalised packaging for ‘India Kings’ and ‘Gold Flake Kings’, multiple limited Edition Packs and flavour variants for ‘Classic’, etc have resulted in considerable fortification of your Company’s strong position in the premium, value-plus segment of the market.
Cigarette business : Modernization of Primary Manufacturing in Munger, introduction of sophisticated material handling systems at Bengaluru and implementation of cutting edge Norwegian technology – Cold Plasma Odour Abatement Systems – at the Bengaluru and Saharanpur primary manufacturing departments.
FMCG business: Relentless focus on providing consumers well-differentiated best-in-class products, supported by significant investments in product development, innovation, manufacturing technology and unmatched distribution infrastructure have dramatically enhanced brand equity of this business.
FMCG business: Ashirwad and Sunfeast continue to draw upon the agri sourcing strengths of e-Choupal network to gain competitive advantage by obtaining superior quality wheat at competitive costs.
Hotel and lifestyle retail business have shown strong growth because of booming Indian economy.

Weakness:
Cigarette business: The year ahead is fraught with extreme uncertainties, since for the first time in the history of the industry, manufacturers will not be able to position viable offers for consumers of non-filter cigarettes in view of the massive increase in excise duty rates in this segment.
Cigarette business: Harsh regulatory climate for cigarette business presents a daunting operating environment that will, undoubtedly, test the resilience of all legitimate players in the industry.
FMCG business: The year ahead presents a unique challenge to the business in the shape of an unprecedented rise in commodity prices across the board, including wheat, vegetable oil, maize and skimmed milk powder.
FMCG business: Soaring fuel prices and the need growing volumes without adversely impacting margins has been rendered extremely challenging.

Opportunities:
Big Indian market with huge consumption capacity.
ITC is moving into new and emerging sectors including Information Technology, supporting business solutions.
e- choupal is a well thought of initiative taken by ITC which can also be used in other sectors in many other parts of the world. ITC leverages the concept of e-choupal in a novel way. The company researched the tastes of consumers in the northern, western and eastern India of atta, and then used the network to source and create the raw materials from farmers and then blend them for consumers under purposeful brand names. This concept is quite difficult for competitors to emulate.

Threats:
The obvious threat is from competition both domestic as well as international. ITC’s opportunities are likely to be opportunities for other companies as well. Therefore the dynamic of competition will alter in the medium term. Western companies might see India as an exciting opportunity for themselves to find new market segments for their own offerings.
The company is more or less still dependant on its tobacco revenues to fund up its cash guzzling FMCG start up. Cigarettes account for about 47 percent of the company’s turnover. The increasing tax on cigarettes and the growing concern of people regarding the health hazards being caused by smoking can eat up most of the profits of the company.