Analyzing Business Strategies: A Case Study of ITC Limited (MGT 703)

This report provides an analysis of ITC Limited's business strategies. Beginning with an introduction to ITC's history and mission, the report delves into the company's functional level strategies, including marketing, research and development, human resource management, and financial strategies. It further explores ITC's business level strategies, focusing on cost leadership, differentiation, focused low cost, and focused differentiation. The report considers ITC's adoption of conglomerate diversification, forward and backward integration, and competitive advantages. The analysis concludes with recommendations for ITC to enhance employee satisfaction and generate economic value, suggesting a shift away from tobacco investments towards FMCG and agricultural businesses. Desklib offers a wide range of solved assignments and past papers for students.

Running Head: STRATEGIC MANAGEMENT 0
BUSINESS STRATEGY

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Executive Summary
There is no fact laid down that some of the crterias are considered while forming the business
level strategies. However, a strategy is used to win and aquire greater market share. A
strategy is an plan which is integrated to the company`s goals, actions, policies with a
sequence of resources and embedding it into viable external environment by complying with
the internal competencies (Davies, Mete, and Whelan, 2018). It is one of the India`s top
private sector organisation that has great place in the market. Recenttly, the company has
entered in hotel industry in 1975 as it is considered as one of the most reputable company in
the business world as well as the Forbes magazine. The company offers infortmation
technology, cigrettes, Food, Lifestyle retailing, personal care, safety measures, and
agricultural products (Riva, Villar, Ramos, and Marañón, 2015).

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Table of Contents
Introduction................................................................................................................................3
Strategies of ITC........................................................................................................................4
Functional Level Strategy..........................................................................................................4
Business level strategies.............................................................................................................5
Recommendation........................................................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................11

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Introduction
ITC limited was incorporated on 24th August 1910 with the name Imperial Tobacco Company
of India, however, with the change in ownership of the company in 1970, it was renamed to
India Tobacco Company Ltd (ITC limited, 2018). Initially, the brand has a limited business
of leaf tobacco and cigarettes, however, with rise in competition and internalisation of
various global companies, the company has diversified into various businesses such as
hospitality sector, printing and packaging, agribusiness, IT and lifestyle retailing and branded
packaged foods. At present, the company headquartered is situated in Kolkata (ITC limited,
2018).
As per the list of Fortune India 500, ITC ranked as a 36th position having more than 25,000
plus employees worldwide (ITC limited, 2018). As per 2018 revenue figure, the company
earned 44,673.52 crores with net income of 11,271 crores. The company mission stands out
to enhance wealth generation capability of firm in relation with global environment, offering
sustainable and superior value to the stakeholders (ITC limited, 2018).
This assignment presents brief overview of company functional and business level strategies
in align with several theoretical framework and theories. For the fulfilment of functional level
strategies, there are various classified departments such as finance, marketing and HR
(Perkins, Inger, Bearhop, and Sanders, 2018). Moreover, business level strategies of ITC
Limited is also stated below under the operational scope of the firm such as focused
differentiation, cost leadership and focused cost leadership inclusive of bringing competitive
edge to the firm. In last, several recommendations are also being suggested in light of their
current and future potential strategy benefit ITC in its future sustainability (ITC limited,
2018).

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Strategies of ITC
ITC Limited is having strong research and development department facilities that help the
management to formulate various necessary strategies as per the prevailing competition and
trend in the market. Being one of the most valuable brands of India, the company believe in
planning significant strategies proactively aimed at creating multiple drivers of growth by
addressing customer challenges through innovative solutions (Ciric, Wolf, Power, Roalf,
Baum, Ruparel, Shinohara, Elliott, Eickhoff, Davatzikos, and Gur, 2017).
Functional Level Strategy
The strategic level would be effective to improve the overall importance of the enterprise of
ITC Limited in the global market and produce positive results for the enterprise in relation to
market competitiveness and share (Matt, Hess, and Benlian, 2015)
Strategic management at ITC Limited is the responsibility of the board of directors headed by
a chairman. The functional level management is the responsibility of the functional head and
consists of two types of structure – decentralised and centralised. ITC Limited formulated a
new global realignment under which it will build up brands and streamline product offerings
across the world and the subsidiaries will sell the product (ITC limited, 2017). The company
emphasize to limited number of international brands instead of large range of local brand. For
example, under functional level management, marketing manager comprises of team of
managers looking after individual brand (ITC limited, 2017). On the other hand, in
centralised structure, it comprises of human resource management , finance, technology,
research and legal affairs.
In addition, considering functional level strategy, ITC limited could identify market niches
that may generate higher profits for the organisation by increasing its product sales. The first
significant strategy at functional level includes marketing strategy that deals with pricing,
selling and distribution of product. Here, ITC uses two types of tactics, i.e. market

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development and product development. For instance, the company plans to invest RS10,000
crore to launch at least one new product every quarter in their existing segment in relation to
product development strategy.
In relation to research and development strategy, ITC focuses on product innovation and
process improvement. In 2017-18, over 700 patents were filed by the company. Moreover,
the company is also constantly increasing its R&D expenditure year by year to follow up the
innovative trend (Joyce, and Paquin, 2016). Other than this, the company is also taking out
HRM strategy by valuing the most important asset of the company i.e.- People. For instance,
the company is providing direct employment to over 26,000 people and also increases
expenditure towards benefits of employee to nearly 2,500 crores that will not only increase₹
employee loyalty towards the brand but also brings out various other benefits to the company
(Joyce, and Paquin, 2016).
Other than this, the company is also undertaking its financial strategy with full alignment to
gain strategic advantage in the industry. Considering their business model, the company is
planning, forecasting and using their capital investment methods and systems reduce their
operational costs and shifts that benefit to the customers by lowering product prices (Joyce,
and Paquin, 2016).
Business level strategies
Business level strategies is an course of decisions that help the company to achieve partcular
and specific business goals. It is important to master it as it will help to achieve competitve
position in the industry in order to carry out operations (Samad, Johns, Richards, Lanigan,
Klein, Clough, and Morales, 2017). It is an long term formulation of desired image and
direction with a plan to achieve effectvieness, mobalise the resources, perceiving and finally
using the opportunities, secure vits advantageous position, meet the challenges and threats,

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gain greater command or hold over the circumstances and direct the efforts. The theortical
framework considers differentiation, cost leadership, focused differentiation, and focused low
cost. The company strongly commits with the cost leadership and high differentiations
(Chungyalpa, and Bora, 2015).
The company has adopted conglomerate diversification strategies. The company`s diverse
strengths have been leveraged against the product groups such as lifestyle, greeting cards,
retailing, gift cards, and several branded packaged products (Chungyalpa, and Bora, 2015).
The company have adopted with both forward as well as backward integration. The products
for which forward integration has been done is the classmates, sunfeast. The products where
backward integration has been followed as it was done as per the ITC printing through ITC
infotech (McAdam, Bititci and Galbraith, 2017).
Cost leadership
ITC has huge base of customers on the basis of price. Price is decided afdter the determining
the potential of its internal management to earn the margin which will help to sustain and
continue to standardise the product (MacDonald, 2016). This stage can be achieved by
maintaining control over the production and more overseas costs or minimising the cost of
sales, research and development cost, and the service cost. In regards to its FMCG sector, it
will cut down thew prices in the biscuit domain, penetrate the market (Joyce, and Paquin,
2016). ITC has been focusing on acquisition of the rivalries with enabling it with the latest
technology and conduct on global. The company undertakes an strategic acquisitons and
finally go through government contracts with the help of controlled prcing (Osiyevskyy, and
Dewald, 2015). ITC company has been focusing on the delivery of the value st the
competitive prices. The company believes that it should avail the goods to the customer
centric and friendly products by major emphasies on the quality of the products (Samad,
Johns, Richards, Lanigan, Klein, Clough, and Morales, 2017).

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Differentiation
This value has been created with the unique characteristics of the ITC products rather than
relying everytime on low costing and pricing (Matt, Hess, and Benlian, 2015). This has to
achieved by the company when it maintains high quality, high customer services, production
innovation, advanced technological characteristics, and image management. ITC has
competitive advantage with the help of differentiation (Joyce, and Paquin, 2016). The
company focus on not only selling the products but also it will undertake high range of
promotional strategies (Joyce, and Paquin, 2016). The company will use new distribution
network so that it can undertake strategies to widen itys range of customers such as rural
areas (Matt, Hess, and Benlian, 2015). In FMCG domain, the company will produce low fat
chips with promotions and conduct public events (Meyer, and Peng, 2016). The company is
tring to produce and offer other flavor cigarettes and usage of other business operations to
avail high visibility (Matt, Hess, and Benlian, 2015). It will name its other brand named as
Wills Lifestyle (Joyce, and Paquin, 2016). The company has been launching new products
and other brand extensions with the investment as being made towards the brand building and
finally increasing the market share (Joyce, and Paquin, 2016).
Focused low cost
The main basis of competition not only rely on the price but also on differentation (Matt,
Hess, and Benlian, 2015). The company should select a small fragment at the marketplace in
order to provide services and goods. The company has been focusing on customer as it
delivers what actually it needs in regards to serve needs in terms of value, quality, and the
satisfaction (Ciric et al., 2017).
Focused differentiation
Organisation`s activities are not only based on differentation as it selects small segment to
avail them goods and services. While undertaking the goods, the company has been providing
the differentated products in several sectors (McAdam, Bititci, and Galbraith, 2017). Other

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differentiation that has to be considered in regards to trusteeships such as the professional
managers are quite conscious in regards to when ITC maintains its trust among all the
stakeholders. The company will actually implement actions so thast it can implement values
for long term sutainable basis (Osiyevskyy, and Dewald, 2015).
Apart from the business level strategy, it will undertake new more strategies such as no more
investment in tobacco products because it has to face more taxation issues because of
legislations (Perkins, Inger, Bearhop, and Sanders, 2018). In order to enhance its FMCG
sector and fragment, the company will undertake new investments in Agricultural business.
The company is planning to undertake more joint venture business options and grow more
explore the real estate sector, political contacts, and tie-ups with the arline sector (Meyer, and
Peng, 2016).
Recommendation
The company has always remained very much result oriented while setting up high
performance standards for the self while considering the team as well as the individuals. The
company should be quite aware of the responsibility to regards to generate unlimited
economic value to the nation (Joyce, and Paquin, 2016). The company has been conducting
training intiatives, building trust, and the development of the sector such as tobacco in India.
Below mentioned are various recommendations provided to the company ITC in order to
grow and succeed in the target market (Joyce, and Paquin, 2016).
Effective Employee Satisfaction Strategies: The fact should be noted that the employees are
the most important resources for any business that helps them to grow. So, the company ITC
should effectively make use of human resource management activities to grow and succeed in
the target market (ITC limited, 2017). The business should initiate performance management
program so as to determine the performance of the employees and reward them accordingly.

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This aspect will increase the satisfaction level of employees in the target market and will
motivate them to grow and work in the direction of the business objectives (Davies, Mete,
and Whelan 2018).
Use of Open Innovation: The Company should make use of open innovation strategy in the
target market to attain competitive advantage (Matt, Hess, and Benlian, 2015). Open
innovation refers to the process of making use of external as well as internal ideas in the
business process for its growth (Matt, Hess, and Benlian, 2015). Thus, the business should
effectively make use of open innovation to manage the activities of the business process and
align the diversified functions in such a way that the employees do not face difficulty in the
target market (Vanhaverbeke, Roijakkers, Pop, and Cross 2018).
The company has to deal with the debt as its capital structure is relatively disturbed. The
main issue is to face the declining trend of the industry (ITC limited, 2018). The company has
to face the issue of outdated technology. The staff turnover of the company is relatively high
due to high staff turnover (Joyce, and Paquin, 2016). The company lacks its scale. As per the
recent reports, it is seen that the company faces ineffective servcies for the customers as it
lacks to offer effective services on the customers in the competitive market (Vanhaverbeke,
Roijakkers, Pop, and Cross, 2018).
Conclusion
From the above discussion, it is seen that company has bene leading its industry with prime
recognition among its competitors. The company has huge competitive advantage through its
differentiation. The company focuses on not only the selling its products to meet the basic
demand but also for the ultimate customer satisfaction. As the consumers have popularily
concern for their environment and health. The company have developed a plan such as

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sustainable living plan. It has been seen that with three crucial purpose. The company can
develop an sustainable living plan (Reynolds, and Yetton, 2015).
The first thing to consider is that it improves health and well-being by availing them balanced
nutrition with good hygiene. The second objective is to recue the severe impact of
environment by manufactuing products where they are sustainably source and use them in
such a way that it could protect the environment`s natural resources (Reynolds, and Yetton,
2015). The last purpose is to enhance the business level strategies and functional level
strategies in order to get an competitive strategy (Reynolds, and Yetton, 2015). Although, it
holds good position so it already has the strong functional and business level strategies. It has
to powerfully get good management where it is important to maintain the smooth operations
in the business. In regards to FMCG sector, it is seen that there is an huge range of related
diversification so as to get maximum customer base as compared to other competitors to
other industry (Reynolds, and Yetton, 2015).

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References
Chungyalpa, W. and Bora, B., 2015. Towards Conceptualizing Business
Strategies. International Journal of Multidisciplinary Approach & Studies, 2(1).
Ciric, R., Wolf, D.H., Power, J.D., Roalf, D.R., Baum, G.L., Ruparel, K., Shinohara, R.T.,
Elliott, M.A., Eickhoff, S.B., Davatzikos, C. and Gur, R.C., 2017. Benchmarking of
participant-level confound regression strategies for the control of motion artifact in studies of
functional connectivity. Neuroimage, 154, pp.174-187.
Davies, G., Mete, M. and Whelan, S., 2018. When employer brand image aids employee
satisfaction and engagement. Journal of Organizational Effectiveness: People and
Performance, 5(1), pp.64-80.
de la Riva, E.G., Villar, R., Pérez-Ramos, I.M. and Marañón, T., 2015. Functional strategies
to cope with resource limitation in Mediterranean woody plant communities.
ITC limited, (2017) Annual report, 2017. Available on:
https://www.itcportal.com/about-itc/shareholder-value/annual-reports/itc-annual-report-
2017/pdf/ITC-Report-and-Accounts-2017.pdf [Accessed on: 13/05/19]
ITC limited, (2018) Annual report, 2018. Available on:
https://www.itcportal.com/about-itc/shareholder-value/annual-reports/itc-annual-report-
2018/pdf/ITC-Report-and-Accounts-2018.pdf [Accessed on: 13/05/19]
Joyce, A. and Paquin, R.L., 2016. The triple layered business model canvas: A tool to design
more sustainable business models. Journal of Cleaner Production, 135, pp.1474-1486.
MacDonald, S., 2016. Assessment of higher level cognitive-communication functions in
adolescents with ABI: Standardization of the student version of the functional assessment of
verbal reasoning and executive strategies (S-FAVRES). Brain injury, 30(3), pp.295-310.