STRATEGIC MANAGEMENT

COMPANY PROFILE
ITC Limited

Prepared by,
BALAMURUGAN M (14MBA003)
DINESHKUMAR S (14MBA005)
DIVYA K (14MBA006)
KISHOREKUMAR M K (14MBA009)
RAJKUMAR T (14MBA016)

PEST ANALYSIS of ITC

POLITICAL FACTORS: The political arena has a huge influence upon the regulation
of businesses, and the spending power of consumers and other businesses. The Indian polity
is increasingly seen by political observers as the problem. When populist political appeals stir
the passions of the masses, government institutions appear less capable than ever before of
accommodating conflicts in a society mobilized along competing ethnic and religious lines.
Budget impact - Among the FMCG stocks, ITC is one of the biggest gainers. Due to Govt.
new conditions, ITC Maurya won the 'Best eco-friendly hotel Special Prize' award by the
Ministry of Tourism, Government of India. Some recent Political Factors ITC had to face in
some previous years are mentioned as below:
Huge burden of VAT increase in prices may affect the sales.
Excise duty raised by union budget by 5 %.
Ban on communication.
Luxury tax in 10 states making it difficult for ITC to maintain the consistency
level in prices for different places.
Smuggling - regarding Tobacco products.
100% FDI allowed - as it will allow several Foreign Brands to enter the Indian
Markets, and thus, may affect the share of ITC in the Indian Markets.

ECONOMIC FACTORS : Marketers need to consider the state of a trading economy in

the short and long-terms. This is especially true when planning for international marketing.
India has been one of the best performers in the world economy in recent years, but rapidly
rising inflation and the complexities of running the worlds biggest democracy are proving
challenging. Indias economy has been one of the stars of global economics in recent years,
growing consistently over the past decade. Growth had been supported by markets reforms,
huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a
flourishing capital market. ITC is rated among the World's Best Big Companies, Asia's 'Fab
50' and the World's Most Reputable Companies by Forbes magazine, among India's Most
Respected Companies by Business World and among India's Most Valuable Companies by
Business Today. ITC ranks among India's 10 Most Valuable (Company) Brands', in a study
conducted by Brand Finance and published by the Economic Times. ITC also ranks among
Asia's 50 best performing companies compiled by Business Week. ITC employs over 25,000
people at more than 60 locations across India. Some Economic Factors ITC had to face in
some previous years are mentioned as below:
Bidee : cigarette ratio = 10:1 which means they are the producers of a very less
level of tobacco products as compared to overall consumed.
Profit margin is high and thus, it will yield higher level of returns over
comparatively lesser inputs.
Other forms of cheap tobacco intake the economy of India is not as strong which
leads to people consuming cheap tobacco products. This means they can have higher
returns as production of cheap tobacco products is comparatively cheaper.
Indias top producer of cigarettes. and it can be concluded that since ITC is the
leading producer of tobacco products in India, they earn a higher proportion of their
income by selling these tobacco products.

SOCIAL FACTORS : The social influences on business vary from country to country. It
is very important that such factors are considered Envisioning a larger societal purpose has
always been a hallmark of ITC. As a corporate citizen with enduring relationships in rural
India, ITC has a history of collaboration with communities and government institutions to
enhance farm productivity and the rural resource base. Some Social Factors ITC had to face
in some previous years are mentioned as below:
Becoming status symbol for many, intake of tobacco is a status symbol. They feel
that the usage of Cigars and high-branded Cigarettes gives an increase to their status
in the society. ITC banks on it and makes highly-prices tobacco products as well in
addition to the cheaper ones.
Companions mounted by W.H.O.
Changing attitudes towards tobacco Many people are becoming aware about the
ill-effects of intake of Tobacco. This may lead to the industry suffering some amount
of loss in the years to come.
Restrictions by government Several restrictions on tobacco and it advertising has
made the promotion of tobacco brands almost impossible, thus leading to a decline in
their sales.

TECHNOLOGICAL FACTORS : Technology is vital for competitive advantage, and

is a major driver of globalization. Technology in India accounts for a substantial part of the
country's GDP and export earnings while providing employment to a significant number of its
tertiary sector workforce. ITC's development of its Integrated Quality Management
System (IQMS) is based on its strong foundation of implementing ISO 9001:2000, ISO
14001, OHSAS 18001, SA 8000, HACCP (for Foods) and IQRS (performance rating and
benchmarking of the quality management system). Likewise, ITC's strategic initiatives for
developing its people have been based on participative management concepts like QC
(Quality Control), TQM (Total Quality Management), KSS (Kaizen Suggestion
Scheme), 5S, Six Sigma etc. All ITC manufacturing units have ISO quality certification.
Almost all contract manufacturing units in the Foods Business and all large hotels have food
safety and quality systems certified by accredited 'third party' in accordance with 'Hazard
Analysis Critical Control Points' (HACCP) standards. Additionally, the quality of all FMCG
products of the Company is regularly monitored through 'Product Quality Rating System'
(PQRS). The Leaf Tobacco and Printing & Packaging businesses have achieved world-class
ratings in the 'International Quality Rating System' (IQRS) for business excellence in which
key processes are rated against international benchmarks and certified by accredited 'third
party' independent assurance providers. IT also plays a very critical role in driving the ITC
business strategies. IT is an enabler of the business process to ensure business growth through
efficient management of operations in the value chain. IT creates new business process or
restructures the current business process to enhance customer service availability, efficient
manufacturing / supply chain operations etc. Some Technological Factors affecting ITC in
some previous years are listed as below:
State-of-the-art factories.
Cheap labour supply It has often been noticed that labour is very cheap and in
abundance in India. Thus, ITC gets large number of labour supplies from underdeveloped areas for a comparatively cheaper cost and thus, their margin on the
product increases significantly.
Development of IQMS i.e. Innovative Quality Products and Systems. The basic
principle of ITC is to produce quality products and thus, systems are set-up in order to
obtain them.

Adapting other concepts like QC and TQM Various techniques such as QC

(Quality Control) and TQM (Total Quality Management have regularly been adopted
by ITC so as to ensure the Quality is maintained and managed regularly.
Hardware investment High amount of investment is done in hardware such as
large Storehouses, high shelves, etc.
Software investment such as GPS monitoring circuits, long-distance clients landing
enquiries, GIS circuit optimization, and online method of electronic clearing, etc.

Miscellaneous along with good Hardware and Software investment, ITC also
possesses a great Logistic as well as Inventory support.