ITC Limited

Presented By
Anuradha Srivastava (13PGP065)
Chandresh Jain (13PGP074)
Minu Pandey (13PGP091)
Sneha Srivastava (13PGP110)
Sushant Singh (13PGP115)


Case Facts



ITC was incorporated in Kolkata in 1910 as Imperial Tobacco as an
Indian Subsidiary of the BAT Group.
Demand for the traditional products was twice the production
levels.
Diversification in marine products and textile was not successful.
Printing and Packaging and Hotel division were successful.
Investment in hotel division by using the cash flow from
traditional divisions.
Shortage of fitters.
Bangalore had the least unit cost production a widest production
mix.
Capacity:
Rated Capacity: 52 million
Actual Capacity: 33 million
Estimated Capacity: 60 million


Case Facts



ITC renowned for its excellent human resource management and
industrial relations.
Three years long term contract with the trade unions.
ITC workers union was the recognized union but a second union
was formed but not recognized by the company.
Excess manpower in the semi-skilled category
Shortage of skilled mechanics and technicians
Career progression and growth from within was the company
policy.
Heirs of retiring and deceased employees were recruited at the
junior most unskilled level.
Caused technical erosion.



CASE A:
Problem
Statement
Situation 1: If company expands
High Investment.
Time Horizon : 3 years
Conversion Cost reduction by 60%.
Situation 2: If the company improves on the existing production
capacity
Resolves the existing bottlenecks
Human Resource the key driver


Case A:
Resource
Analysis
Capacity:
Rated Capacity: 52 million
Actual Capacity: 33 million
Estimated Capacity: 60 million

Case B:
Problem
Statement
The Dilemma
Allow the Strike
Prevent the
Strike
Concede to the
demands of
Worker
Using the Second
Union
Case B:
Possible
Solution
The Dilemma
Do not concede
Prevent the
Strike
Concede to the
demands of
Worker
Using the Second
Union

Do Not
Concede
Pros:
1. Strong message to Union that company is not going to
succumb under pressure.
2. Company will be able to change its recruitment policy which
will be helpful in the long run.

Cons:
1. Loss of production of about 10 million in value.
2. Threat of losing market share to competitors.

Case B:
Possible
Solution
The Dilemma
Allow the Strike
Prevent the
Strike
Concede to the
demands of
Worker
Using the Second
Union
Case B:
Possible
Solution
The Dilemma
Allow the Strike
Prevent the
Strike
Concede to the
demands of
Worker
Using the Second
Union

Concede to
The Demands

Pros:
Preventing the loss of production.
Cons:
Harmful for the company in long run as it will not be able to
change its recruitment.

Case B:
Possible
Solution
The Dilemma
Allow the Strike
Prevent the
Strike
Concede to the
demands of
Worker
Using the
Second Union

Using the
Second Union
Pros:
Use the second union to communicate the benefits of the new
recruitment policy and commitment of management to share the
benefit.
Cons:
Encouraging a second union might lead to union politics and loss
of industrial harmony.

Recommendation
Improve on the capacity utilization of the present system.
Process improvement.
Cost Reduction.
Change the Recruitment policy.
Prevention of skill erosion.
Removal of bottlenecks.
Appendix 1
BCG Matrix
Stars

Hotels
Paperboards-Packaging
Agri Business

?

FMCG-Others


?
Cows

Cigarettes
Dogs
Thank You