ITC Limited is an Indian company headquartered in Kolkata, West Bengal. ITC operates in various industries such as cigarettes, FMCG, hotels, packaging, paperboard and speciality paper, and agribusiness. The company has a total of 13 business units across 5 segments.
Let us look into the Overview of Nestle and then we can move on to the BCG Matrix of ITC.
Overview Of ITC
ITC Limited is an Indian company headquartered in Kolkata, West Bengal. ITC operates in various industries such as cigarettes, FMCG, hotels, packaging, paperboard and speciality paper, and agribusiness. The company has a total of 13 business units across 5 segments. ITC also exports its products to 90 countries. Its products are available in 6 million retail outlets.
Established in 1910 as Imperial Tobacco Company of India Limited, the company was renamed India Tobacco Company Limited in 1970 and later as I.T.C. Limited in 1974. Today, the company has been renamed ITC Limited, though “ITC” is no longer an acronym. The company turned 100 in 2010 and had annual revenue of $10.74 billion and a market capitalization of $35 billion in 2019-20.
It employs over 36,500 people in more than 60 locations across India and is part of the Forbes 2000 list. Within a relatively short period, ITC has built 25 parent brands, many of which are market leaders in their segments. This dynamic portfolio of brands today represents annual consumer spending of over H19,700 million. ITC’s world-class Indian brand’s anchors competitive and inclusive value chains that create, capture and sustain the greater value within the country.
What is BCG Matrix?
BCG growth-share matrix classifies different business units or products into 4 different categories like Dogs, Stars, Cash Cows and Question Mark.
These classifications are based on the growth rate of the industry and the market share of the respective businesses which are relative to the largest competitor present, for that reason, BCG Matrix is also called as Growth-Share Matrix
Also, Read the BCG Matrix of Nestle in a Simplified Way.
BCG Matrix of ITC
BCG Matrix of ITC contains the Dogs, Stars, Cash Cows, and the Question Mark. In this reading of the BCG Matrix of ITC, we will analyse the company’s low growth products, products that attract sales, high growth products, and products that may attract sales or may become low growth products in future.
Dogs are products that were believed to have the potential to grow but could not work any magic due to slow market growth.
The lack of expected results makes the product a loss-maker for the company and causes management to withdraw future investments in the company. With no significant return on investment expected from the product, future investments are seen as a waste of company resources that could instead be invested in a question mark or star category.
ITC Infotech is a specialized full-service global provider of IT consulting and outsourcing solutions focused on creating value for supply chain-based industries, etc.
Strong competition from companies like Infosys, TCS, Accenture, HCL etc. has led to a decline in ITC Infotech’s market share, making it difficult for the company to survive in this tough market scenario.
Products with a high market share in a high-growth industry are considered stars of the company.
ITC’s carton and packaging business, agribusiness and hotels are the stars of the company.
Cash cows are products that have a high market share in a low growth market. For ITC, there is one product which was undoubtedly the cash cow and that is FMCG cigarettes.
With a market share of 80-85%, ITC Cigarettes has a very strong position in the market.
The product requires very little investment to maintain its market share and fend off the competition.
Some products make up a part of the industry that is still in the development stage and the company has not managed to create a significant position for itself in this industry. Due to the small market share that the company has achieved, the prospects for the product are uncertain and therefore investing in such areas is considered a risky decision.
Stiff competition and growing demand for Ayurvedic products have prompted ITC to go back to the drawing board, invest in research and development and look for improvements in their products.
ITC’s FMCG business, the personal care business, is located in the Question Mark quadrant of ITC’s BCG Matrix.
Declining market share due to new entrants and the introduction of new Ayurvedic products and their growing demand are the main reasons why these businesses have become Question Marks.