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BUSINESS POLICY
1
ACKNOWLEDGEMENT
Head of Department
report.
2
TABLE OF CONTENT
1. Introduction of industry
2. Macro
3. Political Environment
b. Demographies
c. Present status
4. Micro
a. Competitors
b. Suppliers
c. Buyers
d. Substitute / by product
e. New entrants
5. Internal analysis
6. Structure
7. Culture
8. Scanning
a. Swot analysis
3
b. Mission, vision, objective (review)
9. Strategies
a. Business
b. Corporate
c. Functional
10.Execution
12.Recommendations
13.Future of industry
14.Conclusions
INTRODUCTION OF INDUSTRY
CIGARETTE
4
Unlit filtered cigarettes
through smoking and manufactured out of cured and finely cut tobacco leaves and
reconstituted tobacco, often combined with other additives,[1] then rolled or stuffed
diameter). The cigarette is ignited at one end and allowed to smoulder for the
purpose of inhalation of its smoke from the other (usually filtered) end, which is
inserted in the mouth. They are sometimes smoked with a cigarette holder. The
term cigarette, as commonly used, refers to a tobacco cigarette but can apply to
use by pregnant women use has also been shown cause birth defects (which
5
Rates of cigarette smoking vary widely. While rates of smoking have leveled off or
declined in the developed world, they continue to rise in the undeveloped world.
A cigarette is distinguished from a cigar by its smaller size, use of processed leaf,
and white paper wrapping. Cigars are typically composed entirely of whole-leaf
tobacco.
Cigarettes are the most frequent source of fires in private homes and the European
6
HISTORY
The earliest forms of cigarettes have been attested in Central America around the
9th century in the form of reeds and smoking tubes. The Maya, and later the
Aztecs, smoked tobacco and various psychoactive drugs in religious rituals and
frequently depicted priests and deities smoking on pottery and temple engravings.
The cigarette, and the cigar, were the most common method of smoking in the
Caribbean, Mexico and Central and South America until recent times
7
Cigarettes were largely unknown in the English-speaking world before the
Crimean War, when British soldiers began emulating their Ottoman Turkish
The cigarette was named some time in the 18th century: beggars in Seville began
to pick from the ground the cigar ends left by the señoritos ("rich, young men"),
wrapped the tobacco remains with paper and smoked them. The first attested use in
Manzanares) and El juego de la pelota a pala (The Ball and Paddle Game).
In the George Bizet opera Carmen, which was set in Spain in the 1830s, the title
The use of tobacco in cigarette form became increasingly popular during and after
the Crimean War. This was helped by the development of tobaccos that are
suitable for cigarette use. During World War I and World War II, cigarettes were
rationed to soldiers. During the second half of the 20th century, the adverse health
effects of cigarettes started to become widely known and text-only health warnings
became commonplace on cigarette packets. The United States and The United
Kingdom have not yet implemented graphical cigarette warning labels, which is
8
cigarette smoking.[10] Canada, Australia, and New Zealand, however, have both
textual warnings and graphic visual images displaying, among other things, the
The cigarette has evolved much since its conception; for example, the thin bands
that travel transverse to the "axis of smoking" (thus forming circles along the
length of the cigarette) are alternate sections of thin and thick paper to facilitate
effective burning when being drawn, and retard burning when at rest. Synthetic
particulate filters remove some of the tar before it reaches the smoker.
Manufacturing
9
Commercially manufactured cigarettes are seemingly simple objects consisting
mainly of a tobacco blend, paper, PVA glue to bond the outer layer of paper
together, and often also a cellulose acetate–based filter.[11] While the assembly of
components, in particular the tobacco blend, which may contain over 100
ingredients,[12] many of them flavourants for the tobacco. A key ingredient that
Paper
The paper for holding the tobacco blend may vary in porosity to allow ventilation
of the burning ember or contain materials that control the burning rate of the
cigarette and stability of the produced ash. The papers used in tipping the cigarette
(forming the mouthpiece) and surrounding the filter stabilise the mouthpiece from
saliva and moderate the burning of the cigarette as well as the delivery of smoke
with the presence of one or two rows of small laser-drilled air holes.[13]
Sydney, burning agents in cigarette paper are responsible of fires and reducing
them would be a simple and effective means of dramatically reducing the ignition
10
developped fire-safe cigarettes but they didn't market them. Self-extinguising
cigarettes are better value for smokers because a cigarette that burns down to the
filter has to be replaced -- whereas one that goes out on its own can always be relit
The burn rate of cigarette paper is regulated through the application of different
cigarettes. These cigarettes have a reduced idle burning speed which allows them
New York was the first U.S. state to mandate that all cigarettes manufactured or
sold within the state comply with a fire-safe standard. Canada has passed a similar
nation-wide mandate based on the same standard. Many other U.S. states have
European union wishes to ban in 2011 cigarettes that are not fire-safe. According
due to cigarettes between 2005 and 2007. They caused 520 deaths and 1600 people
injured [18]
11
Tobacco blend
The process of blending, like the blending of scotch and cognac, gives the end
country that may change in flavour profile from year to year due to different
environmental conditions.[19]
in the blend. Each cigarette's tobacco blend is made mainly from the leaves of flue-
cured brightleaf, burley tobacco, and oriental tobacco. These leaves are selected,
processed, and aged prior to blending and filling. The processing of brightleaf and
burley tobaccos for tobacco leaf "strips" produces several by-products such as leaf
stems, tobacco dust, and tobacco leaf pieces ("small laminate").[19] To improve the
12
forms where they can then be possibly added back into the cigarette blend without
an apparent or marked change in the cigarette's quality. The most common tobacco
by-products include:
• Blended leaf (BL) sheet: a thin, dry sheet cast from a paste made with
tobacco fines, tobacco stems and "class tobacco", which consists of tobacco
particles less than 30 mesh in size (~0.599 mm) that are collected at any
from the extraction into a paper, and then reapplying the extracted materials
shredded leaf stems that are expanded by being soaked in water and rapidly
heated. Improved stems follow the same process but are simply steamed
after shredding. Both products are then dried. These two products look
13
Whole tobacco can also be processed into a product called expanded tobacco. The
and heating the CO2 saturated tobacco to quickly evaporate the CO2. This quick
change of physical state by the CO2 causes the tobacco to expand in a similar
reducing the density of the tobacco and thus maintain the size of a cigarette while
flavouring products and enhancers such as cocoa, licorice, tobacco extracts, and
various sugars, which are known collectively as "casings". The leaf tobacco will
then be blended into the tobacco mixture to improve the consistency in flavour and
taste of the cigarettes associated with a certain brand name.[19] As well, they replace
lost flavours due to the repeated wetting and drying used in processing the tobacco.
Finally the tobacco mixture will be filled into cigarettes tubes and packaged.
14
In recent years, the manufacturers' pursuit of maximum profits has led to the
practice of using not just the leaves, but also recycled tobacco offal[1] and the plant
stem.[22] The stem is first crushed and cut to resemble the leaf before being merged
Taxation
Cigarettes are a significant source of tax revenue in many localities. This fact has
countries have made cigarettes a state monopoly, which has the same effect on the
attitude of government officials outside the health field.[24] In the United States, the
states partially determine the rate of cigarette taxes, and states where tobacco is a
significant farm product tend to tax cigarettes least.[25] It has been shown that
higher prices for cigarettes discourage smoking. Every 10 percent increase in the
price of cigarettes reduced youth smoking by about seven percent and overall
cigarette consumption by about four percent.[26] Thus increased cigarette taxes are
15
Many people in the UK now illegally import cigarettes due to the increasing tax. A
packet is less than half the price in some other countries, making illegal importers a
large profit, while still providing very cheap cigarettes. The average price for 20
legal cigarettes is £5.20, while imported packs are sold for less than £3; this is due
Sale
Before the Second World War many manufacturers gave away collectible cards,
one in each packet of cigarettes. This practice was discontinued to save paper
during the war and was never generally reintroduced, though for a number of years
16
animals and American historical events; this series was discontinued in 2003. On
April 1, 1970 President Richard Nixon signed the Public Health Cigarette Smoking
Act into law, banning cigarette advertisements on television in the United States
examples included Tijuana Smalls, which came out almost immediately after the
ban took effect, and Backwoods Smokes, which reached the market in the winter
of 1973–1974 and whose ads used the slogan, "How can anything that looks so
Beginning on April 1, 1998, the sale of cigarettes and other tobacco products to
people under 18 has been prohibited by law in all fifty states of the United States.
The legal age of purchase has been additionally raised to 19 in Alabama, Alaska,
New Jersey, Utah, and Nassau, Suffolk, and Onondaga Counties in New York.[27]
The intended effect of this is to prevent upper class high school students from
purchasing cigarettes for their younger peers. Legislation was pending as of 2004
Similar laws exist in many other countries. In Canada, most of the provinces
17
Saskatchewan, Manitoba and Alberta, where the age is 18). However, the
minimum age only concerns the purchase of tobacco, not use. Alberta, however,
does have a law which prohibits the possession or use of tobacco products by all
persons under 18, punishable by a $100 fine. Australia, New Zealand and Pakistan
have a nationwide ban on the selling of all tobacco products to people under the
age of 18.
Since 1 October 2007, it has been illegal for retailers to sell tobacco in all forms to
people under the age of 18 in three of the UK's four constituent countries (England,
Wales and Scotland) (rising from 16). It is also illegal to sell lighters, rolling
papers and all other tobacco-associated items to people under 18. It is not illegal
for people under 18 to buy or smoke tobacco, just as it was not previously for
people under 16; it is only illegal for the said retailer to sell the item. The age
2008. In the Republic of Ireland, bans on the sale of the smaller ten-packs and
confectionery that resembles tobacco products came into force on May 31, 2007 in
a bid to cut underaged smoking. The UK Department of Health plans to follow suit
18
Tabak-Trafik in Vienna. Since January 1, 2007, all cigarette machines in Austria
must attempt to verify a customer's age by requiring the insertion of a debit card or
Most countries in the world have a legal smoking age of 18. Five exceptions are
Austria, Belgium, Denmark, Portugal, and the Netherlands, where the age is 16.
Since January 1, 2007, all cigarette machines in public places in Germany must
Turkey, which has one of the highest percentage of smokers in its population,[29]
has a legal age of 18. Another curiosity is Japan, one of the highest tobacco-
Japan is 20 years old).[30]. Beginning in July 2008, Japan will enforce this age limit
at cigarette vending machines through use of the taspo smart card. In other
countries, such as Egypt, it is legal to use and purchase tobacco products regardless
of age. Germany raised the purchase age from 16 to 18 on the 1 September 2007.
19
Some police departments in the United States occasionally send an underaged
teenager into a store where cigarettes are sold, and have the teen attempt to
purchase cigarettes, with their own or no ID. If the vendor then completes the sale,
the store is issued a fine.[31] Similar enforcement practices are regularly performed
by Trading Standards Officers in the UK and the Gardaí Siochana, the police force
Consumption
Approximately 5.5 trillion cigarettes are produced globally each year and are
smoked by over 1.1 billion people or greater than one-sixth of the world
population. While smoking rates have leveled off or declined in developed nations,
they continue to rise in developing parts of the world. Smoking rates in the United
States have dropped by half from 1965 to 2006 falling from 42% to 20.8% of
adults.[5] In the developing world, tobacco consumption is rising by 3.4% per year.
20
Graphics on cigarette packets
Some countries require cigarette packs to contain warnings about health. The
United States was one of the first. Other countries include most of Europe,
21
Smoking bans
areas. The primary justification has been the negative health effects of secondhand
• Smoking bans
Cigarette butt
The common name the remains of a cigarette after smoking is a "cigarette butt" or
simply "butt." It comprises about 30% of the cigarette's original length. The butt
consists of a tissue tube which holds a filter and some remains of tobacco mixed
with ash. In extreme cases the filter is slightly burned. Cigarette butts are one
22
source of tobacco for minors and low income people. The shape of a butt hinges on
the manner of stubbing out. The intensely pressed butt possesses irregular shape at
the end and wrinkled tissue. Cigarette butts may be a subject of studies over
Cigarette litter
properly.
Cigarette filters are made from cellulose acetate and is biodegradable, however
23
cigarette butts become litter every year.[37] In the 2006 International Coastal
Cleanup, cigarettes and cigarette butts constituted 24.7% of the total collected
Cigarette butts contain the chemicals filtered from cigarettes and can leach into
Cellulose acetate and carbon particles breathed in from cigarette filters is suspected
Cigarette advertising
In many parts of the world tobacco advertising and even sponsorship of sporting
events has been outlawed. The ban on tobacco advertising and sponsorship in the
EU in 2005 has prompted Formula One Management to look for races in areas that
allow the tobacco sponsored teams to display their livery. As of 2007, only the
retail store display of cigarettes is completely prohibited if persons under the legal
24
SCOPE – COMPANY EXTERNAL
ENVIRONMENT
The Cigrate industry is witnessing a spate of new channels being launched every
year. CIGRATE is also penetrating into the rural areas and is a promising
segment. Homes with CIGRATE s are expected to grow from 112 million to 200
• CAGR: 26%
India boasts of being the third largest Cigrate market in the world today. And
pay CIGRATE market is expected to grow from the present 70 million to all
CIGRATE market.
The fact that 40 per cent households of India are still without Cigrate connectivity
highlights the scope of growth in the segment. The majority of the revenue
about US$ 1,067 million and is expected to grow at a rapid rate with the increase in
the number of channels and the Cigrate viewers. Over the next five years, the
subscription revenues are poised to be the growth driver of the Indian Cigrate
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industry. The number of pay CIGRATE homes and the increased subscription
rates will increase the subscription revenues. The spread among the lower- income
groups is very low and offers a wide scope for growth. The Indian Cigrate
industry is currently being dominated by Star India, which is the top player in the
sector at present.
26
Macro
1966, the Commission established rules for all cable systems (whether or not
jurisdiction over cable in United States v. Southwestern Cable Co., 392 U.S.
157 (1968). The Court ruled that "the Commission has reasonably concluded
found the Commission needed authority over cable systems to assure the
In March 1972, new rules regarding cable Cigrate became effective. These
Cigrate broadcast signal. The rules applicable to cable operators fell into
27
several broad subject areas -- franchise standards, signal carriage, network
also required to maintain certain records and to file annual reports with the
rules. Among the more significant actions, the Commission deleted most of
1934 by adopting the Policy Act of 1984. The 1984 Cable Act established
28
policies in the areas of ownership, channel usage, franchise provisions and
increase, and, in many communities, the rates for cable services far outpaced
Consumer Protection and Competition Act of 1992. The 1992 Cable Act
regulated.
In adopting the 1992 Cable Act, Congress stated that it wanted to promote
cable operators do not have undue market power, and to ensure consumer
29
interests are protected in the receipt of cable service. The Commission has
30
Social Consideration and Social Clauses in Public
always be considered, not only a certain unit price. Best value for tax payers
money does not mean the cheapest offer – value for money may also include
programmes.
31
Micro
32
COMPANY PROFILE
Marlboro (cigarette)
Marlboro logo
within the US, and by Philip Morris International (now separate from Altria)
outside the US. It is famous for its billboard advertisements and magazine ads of
1924 they were advertising Marlboro as a woman's cigarette based on the slogan
"Mild As May".
33
The brand was sold in this capacity until World War II when the brand faltered and
was temporarily removed from the market. At the end of the war, three brands
emerged that would establish a firm hold on the cigarette market: Camel, Lucky
Strike, and Chesterfield. These brands were supplied to US soldiers during the war,
During the 1950s Reader's Digest magazine published a series of articles that
linked smoking with lung cancer. Phillip Morris, and the other cigarette companies
took notice and each began to market filtered cigarettes. The new Marlboro with a
filtered end was launched in 1955. In the early 1960s Philip Morris invented
"Marlboro Country" and distilled their manly imagery into the rugged cowboys
The brand is named after Great Marlborough Street, the location of its original
London Factory. Richmond, Virginia is now the location of the largest Marlboro
34
Varieties
Marlboro Reds
• Lights (Gold)
• Flavor Plus (white with red lines): features a sliding lid pack and tobacco in
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• MX4 Flavor (Medium)
production cigarette
• Ice Mint
• Smooth
• Marlboro MST(moist smokeless tobacco): Original, Long Cut and Fine Cut,
All cigarettes are available in the standard 85mm (Kings) or 100mm (100's) size
The type of Marlboro cigarette, No. 27 blend gets its name from the number of
attempts that the company Marlboro spent trying to get the right blend they wanted
for this cigarette. At the time of creation, there was no name specified for the
cigarette. But after Marlboro was satisfied on the 27th attempt, leads to the name
now. This nomenclature follows the pattern used by WD-40. The No. 27 blend
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cigarette was originally released as Marlboro's "Christmas blend", and following
brisk sales, was brought to market in its current packaging. Original cartons and
packs for the blend were black with red, and normally available only during the
holiday season.
ITC
37
ITC is the market leader in cigarettes in India. With its wide range of invaluable
brands, it has a leadership position in every segment of the market. It's highly
Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.
The Company has been able to build on its leadership position because of its single
minded focus on value creation for the consumer through significant investments
distribution.
All initiatives are therefore worked upon with the intent to fortify market standing
in the long term. This in turns aids in designing products which are contemporary
and relevant to the changing attitudes and evolving socio economic profile of the
country. This strategic focus on the consumer has paid ITC handsome dividends.
38
ITC's pursuit of international competitiveness is reflected in its initiatives in the
has become a key player in the GCC markets through growing volumes of its
brands.
Saharanpur and Kolkata. These factories are known for their high levels of quality,
ITC's Cigarettes business has been winning numerous awards for its quality,
'Best Manufacturer of Cigarettes for the year 2007' by the Tobacco Board
Management to the Bengaluru, Saharanpur and Kolkata factories from the Royal
39
5 Star Health and Safety Rating in 2007 from the British Safety Council to the
Greentech Gold Award for excellence in Safety Management for the year
2007 to the Bengaluru, Kolkata and Saharanpur cigarette factories for the high
level of performance that the units have achieved in Environment Health and
Safety (EHS). Saharanpur along with Kolkata and Munger factories were honoured
with the Gold award and the Bengaluru Factory with the Platinum Award in
2006.
Safety Innovation Award for 2007 and 2006 for Innovative Safety
and also the Unnatha Suraksha Puraskara Award 2006 from NSC Karnataka
Chapter.
Golden Peacock Award for Occupational Health and Safety from the Institute
Health and Safety from the CII and the Suraksha Puraskar Award from the
40
National Safety Council, Mumbai to the Kolkata factory in 2007 and the "1st
National Security Today Award " in the category of Best Maintained Fire
Occupational Health and Safety Gold Award from the ROSPA, UK; the
Winners Trophy – Safety Health and Environment Award from the CII Eastern
Project Award Initiatives for Energy Conservation from the CII to the Munger
factory in 2007 and also the Excellence in Water Management Award from
All the four factories are certified by Det Norske Veritas (DNV) for ISO 14001,
for their Environment Management Systems, OHSAS 18001 for their Occupational
Health and Safety Management Systems (OHSMS) and the ISO 9000-2000 for
Quality Management Systems. The Kolkata factory is the first cigarette factory in
ITC's R&D Centre at Peenya, Bengaluru has the distinction of being the first
independent R&D centre in India to get ISO 9001 accreditation and certified
with ISO 14001 for Environment Management Systems by DNV. The R&D
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Accreditation Board for Testing and Calibration Laboratories (NABL). This
certification is awarded for "General requirement for the competence of Testing &
Callibration Laboratories"
42
BALANCE SHEET ITC
Assets
Investment in Associated
6.3% 6.4% 6.5% 6.2% 5.3%
Companies
43
Fiscal Year 2007 2006 2005 2004 2003
- Gross
Dividends Payable
44
Fiscal Year 2007 2006 2005 2004 2003
Capitalized Lease
0.1% 0.2% 0.2% 0.3% 0.0%
Obligations
Deferred Income
ESOP Guarantees -
Preferred Issued
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INTRODUCTION
Buying Behavior is the decision processes and acts of people involved in buying
Need to understand:
firm's success.
mix(MM) that satisfies (gives utility to) customers, therefore need to analyze
46
strategies.
Six Stages to the Consumer Buying Decision Process (For complex decisions).
Actual purchasing is only one stage of the process. Not all decision processes lead
the marketer through product information— i.e, see a commercial for a new pair
of shoes, stimulates your recognition that you need a new pair of shoes.
2. Information search-
External search if you need more information. Friends and relatives (word of
etc.
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3. Evaluation of Alternatives you need to establish criteria for evaluation
features the buyer wants or does not want. Rank/weight alternatives or resume
search. May decide that you want to eat something spicy. If not satisfied with
your choices then return to the search phase. Can you think of another
alternative? Look in the yellow pages etc. Information from different sources
store, method of purchase etc. Purchase May differs from decision, time lapse
Cognitive Dissonance, have you made the right decision. This can be reduced by
48
Buyer's level of involvement determines why he/she is motivated to seek
information about a certain products and brands but virtually ignores others.
visible to others, and the higher the risk the higher the involvement. Types of risk:
Personal risk
Social risk
Economic risk
frequently purchased low cost items; need very little search and decision
Examples include Clothes know product class but not the brand.
Information from the companies MM; friends and relatives, store personnel
In order to produce successful ads, you must give people exactly what they want.
This article will teach you why people buy the things they do so you can design
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SWOT
The diagnosis of a firm’s strengths and weakness can be fruitful only if the
environment factors and market conditions are considered along with the internal
capabilities. This approach essentially involves matching of the internal
capabilities with the environmental opportunities and threat and is known as
SWOT (Strength and Weakness, Opportunities and Threats) analysis.
STRENGTHS :
Well trained and highly qualified manpower (both technical & non-technical).
51
Financial status of the company is very strong and sound.
WEAKNESS :
OPPORTUNITIES:
Since, company’s financial profile is quite sound & strong, hence there is lot of scope
to develop.
THREATS :
impediment to the firm’s current or desired future positions. The entrance of a new
52
The danger of being priced out.
53
OBJECTIVES OF THE PROJECT
Cigrate .
54
STRATEGIES
Business
overambitious expansion and the Asian financial crisis, ITC acquired rival
DaimlerChrysler and severed its partnership with the ITC. In 1956, the ITC
ITC has invested in manufacturing plants in the North America India as well
the Pacific Rim. In 2004, ITC had $57.2 billion in sales in India making it the
2,533,695 units, an 11 percent increase over the previous year. ITC has set
as its 2006 target worldwide sales of 2.7 million units (excluding exports of
surpassing.
55
ITC are sold in 193 countries through some 5,000 dealerships and
showrooms. After a recent survey of cigrate industry, ITC is now the fifth
ITC Company’s brand power continues to rise as it was ranked 72nd in the
value estimated at $4.5 billion. Public perception of the ITC brand has been
Cigrate.
56
CONCLUSION
The cigarette is taking many initiatives to take advantage of the opportunities as
well as to meet the challenges. The cigarette initiatives in the area of FMCG.
its clientele base and business volumes. The cigarette has also recently appointed a
management system. All these efforts will help the cigarette to improve upon the
In the above research I found that the maximum respondent are smoker.
In the above research I found that the respondent are giving any important
caution statement on cigrate packet
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SUGGESTIONS AND RECOMMENDATIONS
‘prevention of loss.
advertising.
58
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LIMITATIONS:
60
BIBLIOGRAPHY
MAGAZINES:
BUSINESS TODAY
BUSINESS INDIA
BUSINESS WORLD
NEWS PAPERS:
ECONOMIC TIMES
THE HINDU
WEBSITE:
www.google.com
www.itc.com
www.marlboro.com
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