SWOT Analysis of ITC in a Simplified Way

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 agriculture sector. 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.

Let us look into the Overview of ITC Limited and then we can move on to the SWOT Analysis of ITC.

Overview of ITC Ltd.

” ITC Limited ” was originally named ” Imperial Tobacco Company of India Limited ” and succeeded W.D. & H.O. on August 24, 1910. Wills as a British owned company registered in Calcutta. Relying largely on agricultural resources, the company entered into partnerships with farmers from the southern part of India to source leaf tobacco in 1911. In 1912, the Indian Leaf Tobacco Development Company Limited was established under the company’s umbrella in Guntur district of Andhra Pradesh. The company’s first cigarette factory was set up in Bangalore in 1913.

Founded in 1910 as Imperial Tobacco Company of India Limited, the company was renamed as 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 an 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 span of time, 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 brands anchor competitive and inclusive value chains that create, capture and sustain greater value within the country.

SWOT Analysis Of ITC

The SWOT Analysis of ITC includes its strengths, weaknesses, opportunities, and threats. And in this reading of the SWOT Analysis of ITC Ltd., we will examine this beauty and wellness company in terms of its internal and external factors.

S Stands For Strengths ( Internal Factor )

• Portfolio of Business Units: ITC has 6 strong and diverse business units under its name that drive its overall revenues and enable ITC to innovate and explore more business opportunities.
• Effective Social Business Initiatives: ITC has developed a triple bottom line strategy that focuses on developing the economic, social and environmental capital of the nation. ITC has launched initiatives like E-Choupal, Choupal Pradarshan Khet (CPK) that benefit the people at the grassroots level i.e. farmers. These initiatives have also helped ITC improve its corporate image from a traditional tobacco manufacturer.
• Synergy between and within business units: ITC has successfully leveraged the strengths of its existing business to move into new products or categories. ITC used the strong distribution system of cigarette brands to create a channel for its FMCG products. In addition, ITC leveraged the food and bakery knowledge from its hotel business to enter the packaged food category.
• Strong Brands Across Products: ITC is a strong branded company whose products are leaders in most of the segments in which they operate. ITC owns some of the most popular cigarette brands such as Gold Flake and Classic. ITC also owns Sunfeast, which is one of the best selling biscuits in India. Similarly, Aashirvaad, Yippee!, Engage, John Players and Bingo are among the market leaders in their respective categories.

ITC’s hotel and real estate business is also performing well.With such a portfolio, ITC has become one of the most powerful conglomerates in India and is admired all over the world.

• Employees: ITC limited employees Just Over 25,000 people.
• Strong Brand Image: Over 6500 E-Choupal CSR activities and sustainability initiatives enhance ITC’s brand image reaching over 4 million farmers

W Stands For Weaknesses ( Internal Factor )

• Mostly Dependent On Tobacco: ITC has made continuous efforts to decouple its FMCG business from over-dependence on tobacco products and has been successful to some extent. However, tobacco products continue to be the major source of revenue, accounting for more than 60% of the total revenue from FMCG business.
• Brand Image: ITC has made great efforts to improve its corporate image, but the fact that ITC has many tobacco products in its portfolio affects its corporate image.
• Tax Increase: Increase in tax on tobacco products affects prices and hence revenue.
• Low Market Share in Hotel Industry: The hotel industry has not been able to build an enormous market share.

O Stands For Opportunities ( External Factor )

• Strategic Acquisitions: ITC should continue with strategic acquisitions as they have done in the past with the acquisition of Savlon from Johnson & Johnson and B Natural from Balan natural Foods. As the product fits into the existing distribution network, ITC can look to expand its product portfolio and grow its non-tobacco FMCG business, thereby strengthening its revenue base.
• Growth in Purchasing Power: ITC should take advantage of the growing purchasing power and improvement in lifestyle of customers in India. This could help increase revenues across all business segments.
• Food and Personal Care Products: ITC should leverage its distribution channels in the personal care and food processing industries to benefit from the growth in these categories to increase revenue.
• Rural Market: The growing rural market in India and other emerging markets offers tremendous opportunities to improve the company’s bottom line.
• Influencer Marketing: More publicity of hotel chains to increase market share.

T Stands For Threats ( External Factor ) 

• Intensified Competition in FMCG Sector: ITC faces intense competition in its FMCG business from large multinationals like HUL and P&G and Indian FMCGs like Patanjali and Dabur. This restricts ITC’s market share.
• Stringent regulations & Rise in Taxes in Cigarette Business: the tobacco and cigarette industry in India continues to be threatened by stringent government regulations and tax regimes. This poses a threat to ITC’s highly profitable cigarette business.
• Growing Health Awareness: Health awareness has increased, leading to a decline in demand for tobacco products in India. Anti-smoking campaigns across the country are also impacting the sale of cigarettes.

Also, Read Nestle SWOT Analysis in a Simplified Way.

SWOT Analysis Of ITC Key Takeaways

The SWOT Analysis of ITC Ltd highlights where the brand currently stands and its threats in this era. Following the detailed SWOT Analysis of ITC Ltd. Here are a Few Important Key Points.

1. Strong Market Share
2. Strong Brand Share
3. Founder Of Meme Marketing in Stock Market ( Free Marketing )

Suggestions:

Following the detailed SWOT Analysis of ITC Ltd., we have a few suggestions from Business Mavericks:

1. ITC needs to focus on personal care and instant food products more to increase its market share.
2. Penetrating into rural market with pricing strategy.

ITC Ltd STP & USP

• Segment:Products and services for daily needs
• Target Group:Every Indian household, especially the middle class
  
• Positioning:Permanent value. For the nation. For the shareholder

ITC Limited USP

ITC is one of the best large companies in the world

ITC List of Products:

Consumer goods 1. fiama di wills 2. vivel 3. superia

Food and drink 1. sunfeast 3. mint-o 3. bingo

ITC Ltd. Competitors

1. Nestlé S.A. is a Swiss multinational food and beverage company headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the world by sales and other metrics as of 2014. It ranked 64th in the 2017 Fortune Global 500 list and 33rd in the 2016 Forbes Global 2000 list of largest publicly traded companies.
2. Hindustan Unilever Limited (HUL) is a consumer goods company headquartered in Mumbai, India. It is a subsidiary of Unilever, a British company. Its products include food, beverages, detergents, personal care products, water purifiers and other fast moving consumer goods.HUL was founded in 1931 as Hindustan Vanaspati Manufacturing Co. and was renamed Hindustan Lever Limited after a merger of the separate groups in 1956. The company was renamed Hindustan Unilever Limited in June 2007.
3. Marico Limited is an Indian multinational consumer goods company that provides consumer goods and services in the health, beauty and wellness sectors. Headquartered in Mumbai, Maharashtra, India, Marico has operations in over 25 countries in Asia and Africa. With its portfolio of brands like Parachute, Saffola, hair & Care, Parachute Advanced, Nihar Naturals, Mediker and many more, the company touches the lives of one in three Indians. The company owns brands in the categories of hair care, skin care, edible oils, health food, men’s care and textile care.
4. The Procter & Gamble Company (P&G) is an American multinational consumer products company headquartered in Cincinnati, Ohio, founded in 1837 by William Procter and James Gamble. The company specializes in a wide range of personal health, personal care and hygiene products. These products are divided into several segments, including beauty, personal care, health care, textile and household care, and baby, feminine and family care. Prior to the sale of Pringles to Kellogg’s, the product portfolio also included food, snacks, and beverages. P&G is based in Ohio.
5. L’Oréal S.A. is a French personal care products company headquartered in Clichy, Hauts-de-Seine, with a branch in Paris. It is the largest cosmetics company in the world and has developed activities in hair color, skin care, sun protection, makeup, fragrance and hair care.
6. Nirma is a group of companies based in the city of Ahmedabad in the Indian state of Gujarat that manufactures products such as detergents, soaps, cement, cosmetics, salt, soda, LAB and injectables. Karsanbhai Patel, an entrepreneur and philanthropist, founded Nirma in 1969 as a one-man operation.