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SWOT Analysis of ITC

ITC Limited is an Indian conglomerate with 6 business verticals including FMCG, hotels, paper, and agribusiness. ITC's cigarette business contributes significantly to its FMCG revenue, with gross revenue exceeding 50,000 crore rupees in 2016. Some of ITC's strengths are its diverse portfolio of businesses, strong brands, and effective social initiatives. However, it remains highly dependent on tobacco products for revenue and faces threats from increased regulation, taxation, and health awareness related to smoking.

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461 views

SWOT Analysis of ITC

ITC Limited is an Indian conglomerate with 6 business verticals including FMCG, hotels, paper, and agribusiness. ITC's cigarette business contributes significantly to its FMCG revenue, with gross revenue exceeding 50,000 crore rupees in 2016. Some of ITC's strengths are its diverse portfolio of businesses, strong brands, and effective social initiatives. However, it remains highly dependent on tobacco products for revenue and faces threats from increased regulation, taxation, and health awareness related to smoking.

Uploaded by

Jinu john
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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SWOT Analysis of ITC

January 13, 2018 By Hitesh Bhasin Tagged With: SWOT articles

ITC Limited is an Indian conglomerate involved in the various diversified


business. ITC has 6 different verticals of businesses, FMCG, Hotel,
Paperboards, Speciality papers and packaging; IT and agribusiness. ITC’s
cigarette business contributes a major proportion of its FMCG revenue. ITC’s
gross revenue crossed the mark of Rs. 50000 crore in 2016.

Strengths in the SWOT Analysis of ITC :


Portfolio of Business: ITC has 6 strong and diverse businesses under its name
which boasts its total revenue and allows ITC to innovate and explore other
business opportunities.

Strong Brands in various businesses: ITC is a strong house of brands with


most of its productsleading the segments in which they operate. ITC owns some
of the most popular cigarette brands like gold flake and Classic. It also
owns Sunfeast, which is amongst the top selling biscuits in India. Similarly,
Aashirvaad, Yippee!, Engage, John Players and Bingo are also amongst
the market leaderin their respective categories. ITC’s hotel and property
businesses are also doing well.

With a portfolio like this, ITC has become one of the most powerful
conglomerates in India and is admired all over the world.

Effective Social Business Initiatives: ITC has developed a triple-bottom-


line strategy through which concentrates on developing the nation’s economic,
social and environmental capital. ITC has brought in initiatives like E-Choupal,
Choupal Pradarshan Khet (CPK) which benefits the people at the grass root
level, i.e. farmers. These initiatives have also helped ITC to improve its corporate
image from a traditional tobacco manufacturer.

Inter and Intra-divisional Synergy: ITC has successfully utilised the strengths
of existing business to foray into a newer products or categories. ITC leveraged
the strong distribution system of cigarette brands to create a channel for its
FMCG products. Furthermore, ITC leveraged the knowledge of food and bakery
items from its hotel business to enter into Packaged Food category.
Weaknesses in the SWOT Analysis of ITC :
High Proportion of revenues from Tobacco products: ITC has been
continuously making efforts to divert the FMCG business from over dependence
on tobacco products and have been successful in doing so to an extent. But,
tobacco products remain to be the major source of the revenue contributing more
than 60% of the total revenue from FMCG businesses.

Association with Tobacco Products affects the image: ITC has made a lot of
efforts to improve its corporate image but the fact that ITC has many tobacco
products in its portfolio impacts its corporate image.

An increase in Tax on Tobacco affects revenue: Due to the increase in


taxation on tobacco products, the prices and hence revenues get affected.

Opportunities in the SWOT analysis of ITC


Strategic Acquisitions: ITC should continue making the strategic acquisition
like they have done in the past by acquiring Savlon from Johnson & Johnson and
B Natural from Balan natural Foods. Keeping in mind that the product fits into the
existing distribution network, ITC can look to increase its portfolio of products and
expand its Non-Tobacco FMCG business and thereby strengthening the base of
revenue.
Growth in Purchasing power and improving lifestyle: ITC should tap on the
increasing purchasing power and improving the lifestyle of customers in India.
This could help in increasing revenue for all its businesses.

Growing Personal Hygiene as well as Food processing Industry in


India: ITC should utilise its distribution channel in Personal Hygiene and Food
Processing Industry to capitalise on the growth in the categories and hence
increase revenue.

Tap opportunities created in the Rural Market: The growing rural market in
India and other emerging nations create huge opportunities to improve the
bottom-line of the company.

Threats in the SWOT Analysis of ITC :


Intensifying Competition in FMCG businesses: ITC faces intense competition
in its FMCG business from large MNCs like HUL and P&G and Indian FMCGs
like Patanjali and Dabur. This limits the market share for ITC.

Strict Regulations and Increasing Taxation in Cigarette Business: The


Tobacco and Cigarette Industry in India continue to be targeted by strict
government regulations and taxation system. This possesses a threat to the
highly profitable Cigarette business of ITC.

Increasing awareness on health: There has been an increase in the health


consciousness which has resulted in the decrease in demand for tobacco
products in India. Also, anti-smoking campaigns throughout the country affect the
sales of cigarettes.

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