A Comprehensive Report on Strategic Management for ITC Limited

This report provides a comprehensive analysis of ITC Limited's strategic management, focusing on its corporate strategies, governance, social responsibility, and ethical practices. The report begins with an overview of ITC Ltd, including its mission, vision, and business units. It then delves into the company's corporate-level strategies, such as horizontal and vertical integration, cooperative relationships, and diversification. The analysis further examines ITC's governance policies, CSR initiatives, and ethical conduct, using annual reports to support arguments. Additionally, the report evaluates the company's organizational structure, culture, and performance measurement through a balance scorecard. The report concludes with recommendations for improvement and references. The analysis is primarily based on secondary information, providing a detailed overview of ITC's strategic approach and its implications.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
Student’s Id:
Name of the Organization: ITC Ltd.
Lecturer’s Name:
Word Count:

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Executive Summary:
The report has been designed in four sections. First it started with the introduction of the
report topic to explain the corporate analysis of the Indian Tobacco Company Limited. It
provide the brief overview of the company and its strategic business units and discussed
about the purpose, scope and limitation of the report. The discussion section opened up with
the topic on a nte to bring out the strategic functions that the company had applied for each of
its SBUs to operate successfully in the domestic market of Australia. The strategies working
and making profit for the conglomerate. It discussed on the company’s corporate governance,
social responsibility and ethics with the representation of the five years of company’s annual
report to compare and present arguments. Then it came to conclude with the potential
findings. Recommendations were put up followed by the appendices to refer.

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Table of Contents
Introduction:...............................................................................................................................3
Company overview:...................................................................................................................4
Corporate level strategies...........................................................................................................5
Horizontal Integration............................................................................................................5
Vertical Integration................................................................................................................6
Cooperative relationships.......................................................................................................6
Diversification........................................................................................................................7
Governance, Social Responsibility, Stakeholders and Ethics:...................................................8
CSR and Ethics:.....................................................................................................................0
Organisational Structure, Culture, Diversity and Performance Measurement...........................0
Recommendations......................................................................................................................1
Conclusion:................................................................................................................................1
References:.................................................................................................................................3

3STRATEGIC MANAGEMENT
Introduction:
The importance of the ethics in the modern world of business is seen to increase in a
notable manner and that is evident with the increasing concern of the modern organizations
towards the formation of the corporate governance policies. With a precise focus on the
increasing level of competition in the modern business industries, Crane and Matten (2016)
highlighted the significance of the ethical practices in the business operations of the
companies and portrayed the influence it has over the preferences of the customers. Crane
and Matten (2016) further added that modern organizations are considering the business
ethics to be one of the important strategies such as the pricing or the quality improvement for
attracting the customers and considering the intense level of competition of the modern
market, the practice of ethics not only helps the organizations in the development of a strong
corporate image but also places the companies at the perfect position for influencing the
customers in selecting them for their purchases. Hence, it is evident that the corporate ethics
plays a crucial role for the improvement of the business activities of the modern
organizations. Trevino and Nelson (2016) commented that the success of the companies in
the development of the sustainable business is significantly dependent on the corporate
structure of the companies along with the strategies. Apart from this, Trevino and Nelson
(2016) claimed that the corporate culture of the companies has great significance in
influencing the various elements of the companies starting from the employees, suppliers to
the managers in the practice of the ethics. Hence the linkage between the ethical practices and
the corporate level strategies of the companies is pretty prominent.
The paper discusses regarding the business activities of a chosen company in the form
of ITC Limited formerly known as the India Tobacco Company Limited. The paper provides
a brief overview of the company’s business operations and along with that, saes the mission

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and vision statement of the company. Other than this, the paper includes a significant
discussion regarding the corporate level strategies of the company with precise focus on the
cooperative relationships, diversification strategies, horizontal and vertical relationships that
the company managed. In addition to this, the paper provides crucial assessment of the
company’s governance policies, CSR activities and the ethical practices that the company
introduced. The paper uses a balance scorecard for the evaluation of the performance
strengths and weakness of the company. Apart from this, the paper analyses the
organizational structure of the company along with the diversity and inclusion practices
conducted for promoting the diversification inside the organizations. On the basis of these
discussions, the paper presents a set of crucial recommendations for the improvement of the
company’s approach in maintaining the ethics and socially responsible business activities.
The analysis is primarily limited conducted on the basis of the secondary information and the
viability of these information is beyond the scope of the research.
Company overview:
The mission of the company is to increase the capability of the company in the global
environment to intensify the financial growth of the company. Along with that, the company
is observed to be determined in delivering improved and higher values for the efforts of their
stakeholders.
The vision of the company to grab the top position in India through providing world
class performances that contributes in the rapidly growing economy of the mentioned nation.
ITC Limited operates in the conglomerate industry. The predecessors of the company
was W.D. & H.O. Wills and the company was founded in the year 1910 (Itcportal.com.
2019). The company is currently headquartered in Virginia House, Kolkata. Sanjiv Puri, the
chairman and the managing director of the company, is able to spread the business activities

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of the company across the Gulf countries along with Indian Subcontinents (Itcportal.com.
2019). The excellence in the leadership of the managerial team of the company and the
service brilliance of 26,147 number of employees of the company played a crucial role in the
achievement of an increased revenue of 17,401 crore rupees in the year 2018 (Itcportal.com.
2019). The company currently serves the customers with a series of products starting from
the consumer goods, cigarettes, apparel products, hotels and resorts to the solutions in the
Information and Technology domain.
Corporate level strategies
Corporate Social Responsibility is a strategy that are taken by companies to bolster
their relationship with the stakeholders (Cheng, Ioannou and Serafeim 2014). A company that
is carrying out corporate social responsibility successfully is recognised as an ethical
institution for the diverse groups of stakeholders who are associated to the company. CSR is
carried out by companies go boost their efficacy in gaining acceptance from the diverse
groups of stakeholders (Crowther and Seifi 2018). It must be recognised that CSR helps in
generation of goodwill which finally contributes to the revenue generation of the company.
Hence by catering to the needs of the people and the community through corporate social
responsibility, companies can be on the receiving end of appreciation which ultimately results
in generation of profit that further contributes to the satiation of the needs of the stakeholders
of the company.
Horizontal Integration
ITC is an FMCG company and hence has a huge line of products that the company
offers. Even though the company is big on its owns, the company is owned by a comany
called the Imperial tobacco company. Acquisitions are operation when a company acquires
another company (Bena and Li 2014). Merger is an activity that takes place when two

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companies merge as with the aim to dethrone some other companies in terms of coping with
the existing competition in the industry that the company are operating in (Twilton et al.
2017). ITC has been able to gain acquisition of the hospitality industry and the food and
beverages industry with the help of diversification related strategies. Both mergers and
acquisitions have not taken place at the company and the stature of the company has been the
reason behind the success of the company.
Vertical Integration
The base of operations of the company penetrates to the ground level. Most of the
products that are available for the consumption of the company are dependent on farmers at
the very grass root level. Hence, it can be said the supplier relationship of the company starts
from the very bottom as a result of which clear communication has been established between
the top and the grass root level of the chain of the company (Atalay, Hortaçsu and Syverson
2014). The suppliers at the low or grass root levels are given access to the ITC portals
through which they can communicate their requirement to the top level of the company. This
results in the establishment of smooth communication between the suppliers and the
company’s top management or concerned department and its starts as low as the level of the
farmers.
Cooperative relationships
The CSR strategies that has been taken up by the company helps in satiating the needs
of the diverse groups of stakeholders of the company (Abdulkadiroğlu, A. and Bagwell
2013). The company has been recognised as one of the first carbon positive companies in the
world. The have been able to carer to the need of the environment and the diverse
communities which the CSR activities that are being carried out by the organisation on a
regular basis. It has been recognised that CSR activities can benefit the environment, diverse
communities which can in turn satisfy the needs of the company in terms of gaining visibility

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and awareness that will help in development of both the communities and the company as a
whole.
Diversification
Even though diversification is crucial in terms of gaining profitability in the long run,
companies must choose the diversification strategies carefully. Diversification is associated
with high levels of risks (Benur and Bramwell 2015). Risks involved overspreading of the
assets of the company, loosing control over the industry that a company is operating and the
cost of replacement that is launching a new product in the market might be responsible for the
downfall of other products of the company.
The core business of the company is still centred on cigarettes and nearly 60% of the
revenue of the company still comes from cigarettes and the profit market would shift as a
result of loss of business from the market. The company has been rated as one of the top most
companies in the country and the diversification that the company has been subject to. With
diversification the company has been able to acquire the considerable portions and segments
of the market. Since, the company is a FMCG company, they have been able to diversify the
product line of the company. Diversification is the gateway to development of brand value
and gaming understanding of the markets and segments that the company are operating in
along with the most important consideration that affects the sustainability of a company in the
long run that is the consumer behaviour. It can be said that by analysing the behaviour of the
consumer community the companies can work effectively in terms of restructuring the nature
of the services and the industry that the company is operating in. This gives the company
opportunities for increasing thru return on investment and helps the company in sustaining
their future goals related with expansion. The company has catered to the needs of the masses
by introducing penetration pricing as their corporate level strategy for attracting the masses.
Furthermore, they have been able to attract gain acceptance from the niche by catering to the

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needs of the crème consumers with shampoo sachets and Luxury hotel chains respectively.
The company was positioned as Cigarette Company, however, with diversification they have
been able to restructure and reposition themselves in the market.
Governance, Social Responsibility, Stakeholders and Ethics:
With a precise focus on the vision of the company, it is evident that if the vision of the
company succeeds, then the company will be able to deliver improved quality products to the
customers in accordance to the preferences and the demands of the customers (Itcportal.com.
2019). As the products that are designed in accordance to the preferences of the customers
will be able to influence the purchase intention of the customers in a more significant manner,
the sales of the company will increase and it will also increase the profit of the company in an
efficient manner. With a precise focus on the internal process, the effective implementation
of the vision statement of the company enables the company in providing optimum quality
products to the customers and strives towards the continuous development of the products
and the services that they offer to their customers (Itcportal.com. 2019). Other than this, the
implementation of the vision statement of the company places it perfectly in the position to
provide the required training for meeting the developmental needs of the employees.

Running head: STRATEGIC MANAGEMENT
Perspectives Success Factors Critical Measurement Feedback and Rewards
Financial Considering the increment in the revenue of the company to be an
important success factor of the financial performances of the
company, it is evident that the company has failed in a significant
as the revenue of the company decreased to 47,362 crore rupees
in the year 2018 (Itcportal.com. 2019). Hence the financial
performances of the company can be considered to be major
weakness of the company.
The measurement of the
company’s financial
performances is to be conducted
on the basis of the capability of
the company in maintaining the
growth rate and their ability in
increasing the revenue of the
company.
The business reports of the
company and the general
meetings of the company are
the prime occasions for the
shareholders of the company to
provide the feedback regarding
the financial performances of
the company.
Customer The company is able to increase their product chain which
enables the company to meet the diverse requirements and the
demands of the customers in an efficient manner. This creates
significant amount of value amongst the customers regarding the
business activities of the company.
The measurement of the
company’s customer perspective
is seen to be measured on the
basis of the ability of the
company in meeting the diverse
product requirements of the
customers.
The store managers of the
company are required to
provide the information
regarding specific requirements
of the customers.
Internal The company is able to increase the product chain, however, the
variety in a particular product category is limited for almost all of
the categories of the company which limits the sales of the
company.
The ability to produce different
variety products on the basis of
the flavours and the quantity.
The internal audit of the
company’s product chain
provides the scope for the
feedback.
Innovation and
Learning
One of the main factor that influences the company’s sales is the
service excellence of the employees of the company. The
shareholders of the company are seen to invest a significant
amount in training and developmental activities for the
The measurement of the customer
satisfaction is conducted on the
basis of the quality ratings
acquired by the customer
The company has efficient
rewards plan in place for
recognising the good work of
the employees. The presence of

1STRATEGIC MANAGEMENT
employees which enables the company to provide the required
level of quality in their products and services.
relationship management
department of the company.
the intrinsic and extrinsic
rewards in the rewards plan of
the company plays a crucial role
in motivating the employees of
the company.

Running head: STRATEGIC MANAGEMENT
CSR and Ethics:
With a precise focus on the policies related to the CSR and the corporate ethics in the
company, it is visible that the senior management of the company is able to put strong
emphasis on the transparency in the business operations of the company. Other than this, the
establishment of the code of the conduct for the employees of the company is significant in
influencing the employees of the company in the practices of the ethics. The corporate
governance policy of the company reflects the urge of the senior management in aligning
their business procedures with the health and safety policies for the employees,
environmental policies (Itcportal.com. 2019). Other than this, the code of conduct of the
employees is significant in stating the company’s concern in managing the conflict of
interest, transparency, protection of the confidential information and the safety and security
issues of the employees of the company.
Organisational Structure, Culture, Diversity and Performance
Measurement
The company is headed by the Chairman followed by the executive directors, the
secretarial whip is followed by the functional department of the company. The management
structure of the company is different to the functional structure of the company and it has
been recognised that as a result of the same, the company has been able to establish a smooth
flow of communication within the organisation. The functional departments of the company
is segregated to cigarettes, foods, personal care, lifestyle, stationary, hotels and others
(Gastelú, Kiss and Domínguez 2015). All of the functional divisions of the company have
been able to incorporate CSR activities such as the water shed programs, the E-choupal, the
health and sanitation programs, empowerment of communities, use of renewable industry,
education for all and others. All the business units have dedicated management operations