DIVERSIFICATION .

INTRODUCTION..

Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry that the business is already in. At the corporate level, it is generally very interesting entering a promising business outside of the scope of the existing business unit.

INTRODUCTION

ITC Limited which previously stood for Imperial Tobacco Company one of India's foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover of over US $ 4.75 billion. ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Continues in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is gaining market share in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.

CONCENTRIC DIVERSIFICATION

This means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage. For example, a company that manufactures industrial adhesives might decide to diversify into adhesives to be sold via retailers. The technology would be the same but the marketing effort would need to change.

HORIZONTAL DIVERSIFICATION

The company adds new products or services that are often technologically or commercially unrelated to current products but that may appeal to current customers. In a competitive environment, this form of diversification is desirable if the present customers are loyal to the current products and if the new products have a good quality and are well promoted and priced.

CONTD..

ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing. ITC's Agri-Business is one of India's largest exporters of agricultural products.

ITC's Agri-Business is one of India's largest exporters of agricultural products.

DIVERSIFICATION

ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods, personal care, hotels and paper. With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG-others division from FY10E, we expect the non-cigarette businesses to become selfsufficient. The agriculture division continues to provide a strong support as an excellent raw material sourcing base. Hotels segment though is likely to register slower growth in FY10E due to economic slowdown and terror attacks.

DIVERSIFIED BUSINESS
Bran ded Appa rel Statione ry Hotel Ciga rette s Ince nse Stick s Pers onal Care Agri cultu ral Indu stry Safet y Matc hes

Pack aged Food s Pape rboa rds

Infor mati on Tech nolo gy

STRATEGY OF ORGANIZATION TO MANAGE DIVERSITY OF PORTFOLIO

Formal 3-tiered governance structure:

Board of Directors :

Comprising executive (4) and non-executive directors (11) Strategic supervision Corporate Management Committee : Comprising executive directors and senior managers Strategic management Divisional Chief Executive & Divisional Management Committee :

Executive management

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