Conglomerate

Diversification
Presented by:
Neha Kumar (A029)
Rashi Kapur (A039)
Sonal Rajadhyax (A050)
Tarannoom Rahmani (A053)
Yuvraj Tandon (A059)
NMIMS, PT-MBA, 2nd Year, 2013

Diversification - Conglomerate

A growth strategy in which a company seeks to

develop by adding totally unrelated products and
markets to its existing business

Examples:

About ITC

ITC was incorporated on August 24, 1910 under the nameImperial Tobacco Company
of India Limited. The Company now stands rechristened ITC Limited
Market capitalisation of US $ 45 billion
Turnover of US $ 7 billion
Operates in: FMCG, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business,
and Information Technology
The only enterprise in the world, of comparable dimensions to be carbon-positive,
water-positive, and solid waste recycling positive

Vision
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 Company's stakeholders
Mission
To enhance the wealth generating capability of the enterprise in a
globalising environment, delivering superior and sustainable
stakeholder value

ITC Products

PESTC

Political

IT sector growth rapid

Internet usage access to rural sector
Increased mediums to information available on the ITC provided web portal
Limited mediums available to promote brand building

National
National and
and International
International players
players interested
interested in
in same
same markets
markets
Profits
to
be
made
from
India,
an
emerging
economy
Profits to be made from India, an emerging economy

Porters Five Forces Model

ITC Cigarettes

Porters Five Forces Model

ITC FMCG Sector

Porters Five Forces Model

ITC Hotel

CPM FMCG Sector

P&G

ITC
Sr. Factors
No.

Weight

Rating

Weight Weight Rating

ed
score

Weight
ed
score

R&D expn 0.15

0.6

0.15

0.45

Product
innovatio
n

0.1

0.2

0.1

0.4

Revenue

0.15

0.45

0.15

0.15

Brand
awarenes
s

0.2

0.8

0.2

0.2

Attrition
0.3
rate (top
managem
ent)

0.9

0.3

0.3

Export

0.2

0.1

0.2

0.1

SWOT

TOWS

Affordability
Diversification

Strengths

Emphasize on
Personal Care

Strategic Alliances
with international
players

Weaknesses

Threats

Threats

Market Expansion
Promotion
Awareness

Weaknesses

Opportunities

Opportunities

Strengths

Internal External Matrix

BCG

Ansoffs Analysis
Market Penetration

New

Market
s

Existing

Existing

Products

New

Cigarettes
Packaging
& printing
Hotels
FMCG
IT

Hotels

- Over 100 owned and

managed properties in 67
destinations
- ITC Hotels : Luxury
collection
- WelcomHotels
- Fortune Hotels
- WelcomHeritage

ITC One',
'Towers' and
the 'Executive
Club'
Welcom Cuisine

Welcom Hotels
5 hotels in
Dubai

-Revenues inc by 20% in yr

ending march 13

Luxury
hotel in
Colombo

Welcom
Heritage

ITC Hotels Luxury

Collection
Fortune Hotels

ITC

Net Profit up 21.5%

Net revenue growth of 15.2% year on year

Non-cigarette FMCG segment

registers a healthy revenue growth of 15.7%
their losses are lower by 33%,
foods bringing in 60% of those revenues,
15% market share Vs 36% of HUL

Agri Business records a growth of 8.5%

Paperboards, Paper & Packaging Segment Revenue up 11.7%

Hotels Business continues to be impacted by the weak

macroeconomic environment and a spurt in room additions in
key markets.

Shareholder value creation

*2009 2010 Includes

special Centenary
dividend of ` 5.50 per
share

Conclusion

ITCs reliance on the cigarette division is still large

40% of revenues and 80% of profit contributor

Increased regulatory clamps and taxes levied on the

tobacco industry has led ITC to foray into different
markets

Some investments have paid of well, some have

provided modest results

ITC can prove to be a major player in the FMCG market

in the coming years, because of strong distribution
channels and by ensuring a strong product mix

Recommendations

Further investment into ITC Infotech to expand its

range of operations

Possible collaboration with the Govt. w.r.t agricultural

initiatives

Investments in more R&D w.r.t the FMCG market

Expand market base urban and rural

Implement backward integration in the agricultural

sector to ensure products pass from farmer to the end
consumer reducing prices of its FMCG products

Thank You