On Jawaharlal Nehru Road in Kolkata (India) stands ITC (India Tobacco Company Limited). Incorporated, August 24, 1910, it boasts a multi-business portfolio of Consumer Goods which include Foods, Personal care, Branded Apparel, Education, and stationery Products, Hotels, Paperboards & Specialty Papers, Agri-business, Packaging and information technology. However, one the companys biggest products are Cigarettes. With revenue of $4.77, profits before taxes are totalizing to $164.65 billion. ITCs reliance on Tobacco as the main product is the companys mains strengths and its greatest weakness. In an effort to curve the consumption of tobacco usage, citizen groups and Indias government has implemented various restrictions which include taxation, increasing the minimum age of smoking from 18 years to 25, stopping the sales of loose cigarettes, banning advertisements outside shops and increasing the fine for smoking in public a hundred times the original number. Technically, the pressure to curb the sales and usage of tobacco products falls on the heels that currently India is home to the second largest number of smokers in the world, this one of the advantages the company has taken into consideration when it comes to achieving their market target.
From its early history tobacco has been used as a stable commodity and acceptable trade item as well as a form of currency. In addition to that it has also been known to be used for medical treatment of physical conditions, for example, it can be used as the pain killer and the general advantage in treating colds. But even than health concerns and consumption of the product has been a serious issue.
Tobacco users impose a great burden of disability and death on the subcontinent of India. On the other hand, Tobacco-related deaths have in the past increased in India, and it can be viewed to be accounting for approximately a sixth of the global tobacco-related deaths. The demand of tobacco in India is perceived to be greater showing no signs yet to some level, it is viewed reducing. Generally, ten percent of the worlds tobacco smokers are identified to becoming from India, showing the second largest group of smokers globally (India Report, 2010). Such findings have brought on grave concerns to Indias government and WHO.
However, to bring about change, ITC has set its sails toward continued diversification, starting with building the agri-business, bringing more commodities such as potatoes and onions to the market. We would like to go forward with growing contribution to the economy on areas of national priorities.One of the objectives was to make growing contributions to the economy, which means getting into newer segments, Sanjiv Puri, CEO and Executive Director, ITC. Could this move be due to the rise of tobacco products through excise tobacco increases? Growing concern over the health and well-being of Indians population has prompted the WHO organization and other concerned Health Organizations to act. As stated in above India has the second largest group of smokers in the world, over 120 million Indians smoke, and 10% of the world tobacco smokers live in India. ITC CEO and business partners have been talking to remove its cigarette business from due to government regulations on tobacco industry
According to Abhoy K Ojha, despite significant opposition to the consumption of tobacco products by citizen groups, and government efforts to restrict their consumptions through a variety of legislation, India has been a beautiful market for the tobacco industry in general, and the cigarette industry in particular.In recent years ITC has been moving closer to diversification when it comes to the products and the strategies the company has been demonstrating to the world.
One of Indias leading multi-business enterprise with a capitalized market is ITC LTD is known to be the most reputable company by Forbes and as Indias most respected company. In this case study, we will explore the possibilities and challenges within the cigarette industry in India. There are great potentials for development in the cigarette industry but faces challenges such as the hazards connected with smoking cigarettes, misrepresentation of the tax system, and limitations on smoking placed by new government. Other possible challenges on the market will include smuggling contraband items.
ITC LLC is presented in the case study as an important dependence on tobacco and its items. By focusing on the economic, environmental, and social values, ITC is anticipating a triple bottom line. There's defense for the organization to select some directions for future years to meet the commitment of a triple bottom line approach. The case allows students to access to the problems the firm faced in attempting to satisfy the social demands to prohibit or restrict smoking. Any decision to prevent creating and selling cigarettes has negative implications for that business. So how exactly does ITC Limited reach the right balance?
As a top company, ITC has much strength that will allow the company to prosper. For example, their competitiveness business has a strong foundation which allows the company to expand. The second strength ITC LTD has going for them is their diversified presence of the business. The insight of the strengths that ITC possesses, there are a few weaknesses that can be potential treats. The first weakness is the readiness to provide larger warning labels for consumers on the cigarette packs. Putting larger labels on the packets is more time consuming, and costly (Christensen Hoffman & Carrier, 2007). The second weakness ITC faces is, they are unfairly targeted by the health officials. In my opinion, I believe its primary corporate social responsibility (CSR) issue is placing larger health risk labels on the packaging. This will not only save the company backlash but will provide consumers the freedom to choose with a visually enhanced warning label.
As a big corporation possessing a wide range of business units and portfolio in over 60 locations, ITC has a significant number of stakeholders who include the shareholders, employees, contractors, government and its administrative bodies, customers, local communities, and suppliers. All these stakeholders are part of ITC where they are affected by any operation carried out in the company. ITC with all its sections aims to attain its stakeholders expectations where it consistently works towards capturing interests of new stakeholders. As such, ITC commits itself by providing on-time disclosure of reliable and relevant information on its financial accomplishment, environment-related activities, social initiatives, and health and safety precautions carried out by the company (ITC Limited, 2017). ITC presumes that the declaration of all the essential and useful information concerning the company operations has a direct effect on the stakeholders as it is the core aspect of quality governance.
The shareholders and the employees constitute internal stakeholders who determine production in ITC. The shareholders are the owners and the providers of the company capital who are driven by growth and profitability of a company. As such, ITC has its shareholders who strive to acquire the largest profitability from the company through its everyday growth (Chatterjee, 2010). To achieve the goals of ITC, that of growth and maintaining a competitive advantage in the market, it has a skilled pool of employees. The company ensures good communication with its employees via a direct interaction system which facilitates good employee performance. Additionally, ITC provides an exceptional working environment, medical facilities, and career growth opportunities.
Focusing on social corporate social responsibility, ITC external stakeholders include the government which regulates and make policies governing businesses. The government collects taxes from companies which are used in developing social amenities and economic development besides ensuring that companies adhere to statutory compliances.
Customers who constitute another external stakeholder act as the sole sustenance for businesses. It is the customers who determine a companys growth or failure. As a result, ITC prioritizes its customers needs where it ensures a top-notch quality of its products. The company engages in research and product development, facilitates effectiveness and efficiency, advances its supply chain management, and takes in use customers feedback all aimed at giving their customers the best quality products.
Additionally, ITC takes into account the welfare of the community which is directly affected by its operations. As such, the company checks on the environmental impacts on the community through its expanding projects. Also, ITC develops the infrastructure, supplies drinking water, improve sanitation and health, and helps solve natural disasters faced by the community (ITC Limited, 2017). The company does so in its efforts to maintain a sustainable corporate social responsibility anchored in its vision statement. The suppliers also form part of ITC external stakeholders who play a critical role in the companys value chain. Suppliers connect the company with the farmers and contractors completing the supply chain cycle. Farmers who also form part of the external stakeholders develop agricultural produce quality on behalf of the ITC which ensures high quality for final products made by the company.
ITC LTD has in place a corporate social responsibility which is directed towards compliance with the present acceptable norms and standards which apply to todays corporate social responsibility. The corporate social responsibility includes a wide range of national and international standards that are tailored towards achieving common goals. As a result, corporate social responsibility incorporates aspects of environment and ethics. ITC has CSR policy follows the current norms and standards which enhances the environment and the natural capital (ITC Limited, 2017). Additionally, the company aids in promoting education, environment advancement, and protective healthcare. The company also operates in line with international standards where it engages in human resource activities like affirmative actions. The human resource actions under affirmative policy incorporate vocational training and skill building which facilitates employment of disadvantaged people in the society.
The company strategy has some gaps in the corporate social responsibility which may act as potential risks to external and internal stakeholders. One of the gaps is lack of initiatives which work towards enhancing sustainable development. The gap results from the fact that internal and external stakeholders like the government go for enforcement and regulation policies that advance sustainable development.
ITC strategy plan has both positive and negative effects on the stakeholders. The company strategy of developing self-reliance and capability in the grassroots has enabled massive economic development. Having been directed to women and disabled, the approach has facilitated self-help among these groups which have necessitated economic growth. Further, ITC strategy of providing protective healthcare, drinking water and sanitation, aiding in rural development, offering livelihoods to the people and promoting education has been subject to the numerous positive impacts on the Indian society (ITC Limited, 2017). Moreover, the company CSR strategy plan provides equal job opportunities where employment is based on merit. As a result, the company does not discriminate employees based on the gender or physical appearance but rather on qualifications and experiences towards the job. Nevertheless, the company cor...
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