Itc Limited Porters Five Forces Marketing Essay
Consumer faces low buying power because of fragmented and have littleinfluence on product price. Comparing the buyer power retailers it is very high since they are needed to negotiate the price with their competitors.
ITC Consumer product faces few quantity of supplier power simply due to the cost they effected when switching supplier. Suppliers are doing high volume of business with these companies are also positive value totheir customers.
Threat of new entrants
The amount of capital investment required to enter in certain house holdconsumer products needs more, so the threat of new entries may results fairly low.
Threat of substitutes
Within the business sector, brand name proceeds to get success with building a competitiveadvantage, but even though the pricing power of the products can be eroded.
Degree of rivalry
It does not price anything for a consumer to buy one brand of shampoo instead of another, preparing the industry quite competitive. Consumer in this class enjoys variable choices.
(Trend analysis tries to predict a trend like a bull market run and ride that trend until data suggests a trend reversal (e.g. bull to bear market). Trend analysis is useful in business because fallowing with trends, and not against them, will profit for a business investor. Trend Analysis is the practice of gathering information and attempting to current pattern, or trend, in the knowledge.)Project Management Book of Knowledge, PMBOK, PMI, 1997, page 334.
A. Internal Analysis
Value chain Analysis
ITC target to refine its environmental impacts by 2020 not only applies to its industries, but also to its total value chain, from the sourcing of raw materials to the disposal of product packaging. For example, in its production industries, initiatives have been taken to reduce water, waste and carbon emissions.
ITC industry in Coimbatore is now preparing biogas energy from the waste by-product of the manufacturing products. Such initiatives of ITCS Business Principles’, which need the company to work forward to the goal of developing a sustainable business. The business benefits are increase in sales, build consumer preference and business benefits for suppliers by sustainable supply chain projects.
Internal strengths and weaknesses
Leveraging more unremarked resources: ITC has been trying to improve a capacity to manage their portfolio which will finally in a need of huge funds.
Upgrading financial management: As ITC is being achieved funds from different sources; it needs to maintain an ideal flow of cash and proper project budget control. As flow of cash is important for every organization, the decisions making by the administration must be very accurate and flexible according to the market trends.
Investing in people: ITC consider their staff as their heart of the organization in order to reach the business targets and objectives which require a good personal management.
Improving communications and information system: ITC is expanding its market area, it should keep a proper communication level in order to regulate a smooth flow of business.
ITC leveraged its businesses to introduce new brands for new products. For example, ITC used its experience of logistics in tobacco products to remote and other parts of India as the advantage of its FMCG products. ITC master chefs from its food industry are often ready to prepare new food items for its FMCG business.
ITC is a diversified industry who trading in a number of business sectors including cigarettes, restaurants, agro business, bakery and confectionary, branded apparel, cosmetics, cards, Information Technology, incense sticks, paper and stationery products.Its Gold Flake cigarettes brand is the largest brand in India which takes over 70% of the tobacco market.
The company's traditional business was traded in tobacco. It is surprising that a business now involved in branding continues to use its original name, despite the negative connection of tobacco with cancer and death.
To fund its cash guzzling FMCG start-up, the company is still stands upon its tobacco income. Cigarettes takes place 47 per cent of the company's cash flow, and that in itself is source for 80% of its profits. So there is a conflict that ITC's move into Fast Moving Consumer Goods is being subsidised by its tobacco revenues.
III. Strategy formulation-800
Strategy formulation is major to the well-being of an organization. There are two types of strategy: (1) corporate strategy, in which companies decide in which sector of business to engage in; and (2) business or competitive strategy, which sets the objectives to get success in a particular business. Even business strategy receives more attention than corporate strategy in the forms of planning, market analysis, goal fixing and monitoring.
Buy over the competitor
In 1975, the Company starts its Hotels business with the acquisition of a hotel in Chennai which was named as 'ITC-Welcomgroup Hotel Chola’.Then ITC's Hotels business has grown to get a position of leadership, with over 100 owned and managed properties spread across India under four brands namely, ITC Hotels -, Welcome Hotels, Welcome Heritage, Luxury Collection and Fortune Hotels.
In 2004, ITC occupied the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd near Coimbatore, Tamil Nadu. This Unit allows ITC to develop in customer service with reduced lead time and a variety range of products.
In 1990, ITC take over the Tribeni Tissues Limited, a Specialty paper production company and a major supplier of tissue paper to the cigarette industry. The merged company was named the Tribeni Tissues Division.
Find a partner
In 1985, ITC starts Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited. In 2004, the company entered into production and exports of branded garments.
Being a partnership with SAP, ITC InfoTech offers extensive SAP related services to companies like Enterprise Resource Planning software solutions,testing services, Product Lifecycle Management solutions, , Sustainability management and reporting toolsoftware,IT infrastructure outsourcing, risk management solutions, retail technology services, logistics supply chain management, Supply Chain Management solutions, Data Warehousing and engineering solutions,offshore software development centers, application development services and Business Intelligence.
The Tobacco leaf business partnership with the farmer is the truly Company's commitment beyond the market, ITC has enhance the Indian farmer to produce quality tobacco leaf and linked them to global markets. It has a group of experienced, highly qualified and lead buyers which classifiers the source to segregate tobaccos to customer expectations. A huge inventory base of quality tobacco leafs providingan boundary in serving customers through product customization, product bundling and value added products. This strategy influences the customers from crop fluctuations, a key 'winning proposition' through all over the world.
Cut the price
ITC is compressing costs due to the impact of raw material prices. The manufacturer of brands including Vivel, Fiama and face cream are raised to higher costs for vegetable oil and chemicals in 2011. In February it forecast price rose to 11-13%, but now estimates that it will have to pay 14-16% much important for raw materials in this year. The group also includes soap, halls and fair and lovely, said it would find an extra Rs.300 cores in cuts this year.
Because of slow growth and rise in material cost, consumer goods industries are implementing different strategy to hold back price hikes. As industries begin to accomplish with the standard packaging specifications, they are reducing the volume of packs to the nearest standard volume in a bid to keep product cost unchanged, which technicallyknown as compressing in trade market
Even in some relevant cases where gram mages have been raised to conventional volumes, industries are targeting on cost absorption to ensure that the standards of product should not effect. For customers, this spells positive news. Due to raise in the cost of raw materials and the rupee fluctuation, which treats imports more expensive, FMCG industries have increased its cost by 8-10% since July 2011.
III. Strategy Implementation-1600
The process of manipulating and evaluating costs and benefits of an assignment or project called cost-benefit analysis. It has two major purposes: 1. to eliminate if it is a favor investment/decision 2. It involves by matching the total budgeted cost of each option verses the total expected benefits, to analyze either the benefits outweigh by how much in its price.
Availability of raw materials
Because of the Indian agro-climatic forecast, there is a mass production of raw material recourses base suitable for food processing companies. India is the largest producer of milk, canes, coconuts, spices, paddy, rice and cashew nuts. It is one of the largest growers of rice, wheat and fruits &vegetables. India also produces washing soda and soda ash, which are used in the manufacturing of soaps and detergents. The productivity of these raw materials makes India the location advantage.
Low cost labor
Low cost labor makes India a competitive advantage value. India's labor cost is very low amongst the other countries in the world, after China & Indonesia. Low labor costs make the advantage in low cost of mass productions. Many international companies have established their production units in India to outsource for domestic and export markets.
On basis of above statement the cost benefit of ITC can be analyzed as follows with current market situation
People lost jobs in existing retail businesses of other firm
Supposed Benefit #1
Vacancies of new jobs at ITC retail shops
Either ITC retail shop results in the closure of other existing retail businesses in the surrounding regions or makes it dull.
Supposed Benefit #2
Make ITC as ranked retailing shops in India and these leads the company to next stage in business.
As a result existing retailers will be out from remaining in a market in which a huge discount chain receives competitive situations.
1. Lower tax rates of products
2. Zoning waivers allows a lot which is twice what other retailing shoppers allow
3. Grades from infrastructure improvements
4. Zoning waivers permits for a store volume that is larger than the average store in the nearby surrounding area
5. The small volume retail businesses have generates a climate that is responsible for the customers who draw to ITC – shopping in the unique market is the rated reason by customers for coming to ITC. These are the difficult businesses risk from a retail development.
Supposed Benefit #3
ITC becomes a national retailer which fills a gap in an underserved retail markets.
In the consumer-driven approach, customer needs are the vital drivers of all strategic marketing decisions. No strategy will won until it passes the test of customer research. Every segment of a market, including the nature of the product itself, is driven by the expectations of customers. The initial point is always the customer. The approach is that there is no valuable reason to spend funds in research and developing products that consumer will not buy. There were possibilities of commercial failures in the marketing plan due in spite of technological breakthroughs.4Ps supply is act as side model as product, price, placement, promotion of marketing management.
ITC should engage world-class production standards through HACCP certification. By fixing of international benchmarked quality standards, ITC can won rapidly gain market standing in all its brands.
ITCs should cover number of customers all over in India and to be believed in the assurance that the products they using are ethically sourced and produced responsibly. A more sustainable brand in the market is preferred as a most wanted brand.
The eco-friendly or chemical free products to be continued for deliver good levels of services to consumers.
By making aesthetic design packaging, ITC products can makes its consumer more accessible and attractive. Contrast colours, a smiling icon and cute looking size remind customers every time tempt to use ITC products.
Many consumers may not be deciding to buy an ITC product, but they are tried to use the ITC products. By selling products with lower entry costs, it generates a good opportunity for new users to be displayed ITC products. If these users started to enjoy their products, they're more likely to consider for buying all ITC products regularly in the future.
ITC need to set high price when they introduce new products in markets and then slowly down the price to make available of the product reasonable; when compare with other competitor products in same market.
ITC has been troubled by big-box sales shoppers, who are not well informed about its products, a problem that made it critical for ITC to sell its products in the competition market crowd. By franchising a store strictly devoted to ITC products, the company has not only able to dilute this problem but has made a fantastic customer-loyalty move.
Many retailers keep their sustainability goals according their own wish and need to enhancement suppliers like ITC to implement it. So by this mutual understanding between ITC and retailers should deepen including the relationships what we have with their customers.
With increasing discount rates or volumes on the products and can balance their expenses through put down their marketing and advertising costs. This strategy may increase the buying power of the customer with current price-driven.
Push- placing advertising camps in public malls, product demonstration shows in crowd place, trade shows, conducting seminars on related products, direct mail and door-to-door sales.
Pull- providing free samples to customers for test, public promotional activities such as contests and lucky draws, Internet marketing and telemarketing technologies.
By introducing 24 hour working system or seasonal and annualize working system for higher position ITC staffs will get independent in his work with responses.
Prepare staffs by give training to take on new task opportunities and motivating current staff to practise them for future jobs in the company.
The ITC should encourage employees to upgrade their knowledge and skills by means of sending the employee to on-the-job training or allow him to take academic course for study.
The knowledge, skills and efficiency of ITC current staff need to be identified. This can be achieved by placing employee in multi sections.
ITC should circulate skills profiles for most of its designation and make manager perfect to adapt them to handle local needs.
ITC should make individual inputs of its staffs ideas and plans voluntary but finally managers will be placed the data to set promotions and international projects to perform it well.
The skills inventory should go beyond the skills needed for the particular position. List all skills each employee has demonstrated. For example, recreational or volunteer activities may involve special skills that could be relevant to the organization. Education levels and certificates or additional training should also be included
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1. Annual report of NBPOL-2009, 2010, 2011
Total words used:
For A= 1500
For B= 2480
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