Wednesday, May 3, 2017

My strategies for ITC Limited

The case “ITC Limited’s Dairy Development Initiative” is written by Vidhi Chaudhri and Asha Kaul on ITC Limited, one of India’s foremost multi-business enterprise with a market capitalization of US $ 45 billion and a turnover of US $8 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 and as 'India's Most Admired Company' in a survey conducted by Fortune India magazine and Hay Group. The study is about all the factors which have brought the company to which it has transformed into today and its’ unique business models which have always centered on the principle of creating shared value rather than being socially responsible.

From 2012, ITC started considering the new social initiative in the diary sector. To create societal value and increase poverty, ITC was already helping farmers increase milk production from six to nine times. Now the company wants to go beyond societal value to create a model of shared value and it can definitely extend its existing business model to incorporate dairy development. Although there might be few difficulties that need to be overcome due to dairy development being an unorganized industry and perishable nature of product also meant many logistical problems.

ITC prided itself on its key competencies but wondered whether the company had capabilities to enter and compete in the diary business. Many approaches were mapped so that any company could pursue independently or in co-existence of such a business model. One of the options suggested was that the company should realize that by delivering CSR as a business model, it could increase its scalability and sustainability. The pilot project in Bihar definitely gave a lot of insights on its value chain productivity. There were many issues that were deliberated including whether there was a market specifically for the diary and whether the company had the capability of serving that market.

But, ITC could make farmers produce their own milk, develop Milk Producer’s Group (MPG) and later get integrated into Agri-Business Division. ITC not only could enjoy its shared value but also help farmers earn a livelihood by providing suitable compensation for the product they provide. Many things needed to be figured out in regards to logistics. But the brand and presence of ITC might give them a certain edge when compared to the other small businesses. ITC would not have an advantage in the market because Amul who had already built a service like this was already leading in the market. The company might need to figure out strategies like offering competitive prices so that it would not be a failure.

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