ITC Limited: India First SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of ITC Limited: India First
The case traces the evolution of ITC Limited (ITC) from its inception as a marketing subsidiary of British American Tobacco (BAT) in 1910 to one of India's most valued diversified corporations. Remarkably, despite being a dominant market leader in the socially undesirable tobacco business, ITC is regarded as a responsible corporate citizen. Even more significantly, ITC which regards itself as an "Indian" company in which BAT, its ''erstwhile parent'' is a large and important ''shareholder'', can be held out as an exemplar of the India Way - looking beyond stockholders' interests to public mission and national purpose - articulated by Professor Peter Cappelli and his colleagues at Wharton. The century long story is captured in five sections. While first section traces the early years of the company, the next four sections present ITC's evolution under its four Indian chairmen. The "Haksar Era" outlines the strong nationalist context in which BAT's stake in ITC was diluted, and the company's diversification into hotels and paperboards businesses. "The Sapru Era" describes the consolidation of market leadership in cigarettes and the company's foray into agri-business. "The Chugh Era" captures the tumultuous relationship between BAT and ITC, and the aborted takeover attempt by BAT. "The Deveshwar Era" traces his initiatives to strengthen the core businesses, diversify into new areas and embed a strong focus on social imperatives. The case concludes with questions on the company's goal to become the No. 1 FMCG (fast-moving consumer goods) company in the country, and the succession challenges faced by Deveshwar.
Swot Analysis of "ITC Limited: India First" written by J Ramachandran, K S Manikandan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Itc Bat facing as an external strategic factors. Some of the topics covered in ITC Limited: India First case study are - Strategic Management Strategies, Government, Leadership and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the ITC Limited: India First casestudy better are - – wage bills are increasing, increasing government debt because of Covid-19 spendings, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing household debt because of falling income levels, central banks are concerned over increasing inflation,
talent flight as more people leaving formal jobs, increasing energy prices, etc
Introduction to SWOT Analysis of ITC Limited: India First
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ITC Limited: India First case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Itc Bat, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Itc Bat operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of ITC Limited: India First can be done for the following purposes –
1. Strategic planning using facts provided in ITC Limited: India First case study
2. Improving business portfolio management of Itc Bat
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Itc Bat
Strengths ITC Limited: India First | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Itc Bat in ITC Limited: India First Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the ITC Limited: India First Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Itc Bat has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study ITC Limited: India First - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Itc Bat is one of the most innovative firm in sector. Manager in ITC Limited: India First Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Itc Bat has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Itc Bat digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Itc Bat has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Itc Bat is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Itc Bat is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ITC Limited: India First Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Itc Bat has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Itc Bat to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Itc Bat has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Itc Bat has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Itc Bat in the sector have low bargaining power. ITC Limited: India First has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Itc Bat to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Itc Bat in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– ITC Limited: India First firm has clearly differentiated products in the market place. This has enabled Itc Bat to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Itc Bat to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Itc Bat is present in almost all the verticals within the industry. This has provided firm in ITC Limited: India First case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses ITC Limited: India First | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ITC Limited: India First are -
Low market penetration in new markets
– Outside its home market of Itc Bat, firm in the HBR case study ITC Limited: India First needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Itc Bat has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Itc Bat has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Itc Bat is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Itc Bat needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Itc Bat to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study ITC Limited: India First has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Itc Bat 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ITC Limited: India First, is just above the industry average. Itc Bat needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study ITC Limited: India First that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case ITC Limited: India First can leverage the sales team experience to cultivate customer relationships as Itc Bat is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As ITC Limited: India First HBR case study mentions - Itc Bat takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Skills based hiring
– The stress on hiring functional specialists at Itc Bat has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Itc Bat needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study ITC Limited: India First, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities ITC Limited: India First | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study ITC Limited: India First are -
Buying journey improvements
– Itc Bat can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ITC Limited: India First suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Itc Bat is facing challenges because of the dominance of functional experts in the organization. ITC Limited: India First case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Itc Bat can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Itc Bat has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Itc Bat can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, ITC Limited: India First, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Itc Bat can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Itc Bat in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Itc Bat to increase its market reach. Itc Bat will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Creating value in data economy
– The success of analytics program of Itc Bat has opened avenues for new revenue streams for the organization in the industry. This can help Itc Bat to build a more holistic ecosystem as suggested in the ITC Limited: India First case study. Itc Bat can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Itc Bat can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Itc Bat to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Leveraging digital technologies
– Itc Bat can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Itc Bat to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats ITC Limited: India First External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ITC Limited: India First are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Itc Bat can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study ITC Limited: India First .
High dependence on third party suppliers
– Itc Bat high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing wage structure of Itc Bat
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Itc Bat.
Shortening product life cycle
– it is one of the major threat that Itc Bat is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Itc Bat has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Itc Bat needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Itc Bat demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Itc Bat in the Leadership & Managing People sector and impact the bottomline of the organization.
Environmental challenges
– Itc Bat needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Itc Bat can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Stagnating economy with rate increase
– Itc Bat can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Itc Bat with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Itc Bat needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Itc Bat.
Weighted SWOT Analysis of ITC Limited: India First Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study ITC Limited: India First needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study ITC Limited: India First is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study ITC Limited: India First is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of ITC Limited: India First is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Itc Bat needs to make to build a sustainable competitive advantage.