Change Management & O.D. Intervention @ ITC Ltd.

By Sumit Kumar (10MBMA51)

ITC Ltd
History ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited.

Title
As the Company's ownership got progressively Indianized, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974.

Business Portfolio
Company's multi-business portfolio encompasses a wide range of businesses Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care.

About ITC
ITC is one of India's foremost private sector companies with a market capitalisation of over US $ 33 billion and a turnover of US $ 7 billion. 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.

Vision & Mission

Vision : To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value. Mission: Sustain ITC's position as one of India's most valuable corporations through world class performance, creating growing value for the Indian economy and the Companys stakeholders

Journey of ITC Ltd.

The Companys beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business.

 The Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company. In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITCWelcomgroup Hotel Chola.

 ITC chose the hotels business for its potential to earn high levels of Income & foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Now ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India.

 In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu.

 In 1990, leveraging its agrisourcing competency, ITC set up the Agri Business Division for export of agri-commodities. The Division is today one of India's largest exporters.

 In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards. A line of premium range of notebooks under brand Paperkraft was launched in 2002. Company launched popular range of notebooks under brand Classmate in 2003.

 ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth.

It began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian dishes.

 In 2002, ITC entered the confectionery and staples segments with the launch of brands Minto and Candyman confectionery and Aashirwad atta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment.

 ITC's entered the fast growing branded snacks category with Bingo! in 2007. In Ten years, the Foods business has grown to a significant size with over 200 differentiated products under six distinctive brands.

Reasons of Transformation
ITC entered hotels business for its potential to earn high levels of Income & foreign exchange & create tourism infrastructure. Healthy financials back up by attractive tobacco margins that can absorb the pressure of loss.

 In the early 1990s, India witnessed a radical change in economic policies to make the country globally competitive. ITC saw this turning point in the country's economic history as a great opportunity. To create multiple drivers of growth in the "businesses of tomorrow" to leverage the opportunities of this emerging Indian economy.

 Huge untapped market. To reduce its dependence on tobacco products. Tremendous growth opprtunities for FMCG business.

How ITC Managed Diversity

Managing diversity is critical to the success of a multi-business enterprise. The challenge was how do they diversify and focus on each business at the same time.

 To manage diversity they fashioned a unique strategy of organization and governance based on the principles of distributed leadership. A three-tier governance structure was formed with: 1) Board of Directors for strategic supervision. 2) A corporate management committee with the responsibility of strategic management of the company.

3) Divisional management committees for executive management of each business.

Corporate Governance
Each Business of ITC is different from others in its type, the state of its evolution and the basic nature of its activity , which influence the choice of the form of governance. So ITC introduced a model that addresses the uniqueness of each of its businesses and yet strengthens the unity of purpose of the Company as a whole.

Definition and Purpose of C.G.

ITC defines Corporate Governance as a systemic process by which companies are directed and controlled to enhance their wealth generating capacity. ITC believe that the governance process should ensure that its companies are managed in a manner that meets stakeholders aspirations and societal expectations.

Core Principles
ITC's Corporate Governance initiative is based on two core principles. These are : 1) Management must have the executive freedom to drive the enterprise forward without undue restraints.

2) This freedom of management should be exercised within a framework of effective accountability.

Cornerstones
From the above definition and core principles of Corporate Governance emerge the cornerstones of ITC's governance philosophy, namely : Trusteeship Transparency Empowerment and Accountability Control Ethical corporate citizenship