ASSIGNMENT ON MARKET STRUCTURE
Company Overview: ITC Group
ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 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, among India's Most Respected Companies by BusinessWorld and among India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Greeting Cards, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and AgriExports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards. MARKET STRUCTURE Market structures refer to the specific social organization that exists between buyers and sellers in a given market i.e. market structures are models of markets that describe a specific social organization between buyers and [Link] structure identifies how a market is made up in terms of: the number of firms in the industry the nature of the product produced the degree of monopoly power each firm has the degree to which the firm can influence price profit levels firms behaviour pricing strategies, non-price competition, output levels the extent of barriers to entry the impact on efficiency Importance of market structure:- There are several reasons why market structures are important to us ie the public. The following are three of these reasons: Households buy final goods and services or commodities in these commodity markets and firms buy factor inputs in these factor markets. Thus it is useful that households and firms know the markets in which they participate as buyers of goods and services. These markets dominate our lives as we purchase foods, airline tickets, clothes, houses, cars, soaps, textbooks, financial services, electricity,
cooking gas, health care services and a wide array of other goods and services for our daily use from firms selling these commodities. These markets are dynamic and as such they are always changing their structures and as such they need to be studied to understand their new structures ie a monopolist market does not always remain a monopolist market they may change to become an oligopolist market if for example one or two other firms succeed to enter a monopolist market as competitors. Types of Market Structures/Market Models:- There are primarily four market structures or market models that we are interested in studying. They are as follows: 1. Perfect Competition 2. Monopolistic Competition 3. Oligopoly 4. Monopoly [Link] Competition:- are those markets in which the competitive market forces of supply and demand determine market prices and output levels of goods and services produced by competitive firms. These are markets in which the competitive free market model of supply and demand discussed in class work to set prices and quantities of commodities produced. They are intensely competitive markets in which no one seller or buyer is powerful enough to determine prices and output levels and so must accept the prices\output levels dictated by the market forces. [Link] Competition:- refer to those markets that are a hybrid or intermediary market structure between two other extremes of market structures; namely Perfectly Competitive Markets on the one hand and Monopolist Markets on the other. Examples of Monopolistic Markets are generally prevalent in repair services such as shoe repair, bag repair, refrigerator repair, tailoring establishments, beauty salons, barber shops, tutoring services etc. [Link] Competition:- refer to those market structures in which a few firms large or small dominate a particular market or industry and there is limited competition and often collusion on the part of these firms to dominate a market or industry. These firms also collude explicitly or implicit to limit or prevent rival firms from entering these markets or industries by erecting barriers to their entry. Examples of oligopolist markets in the US are: Auto industry, Airline industry, Car Rental industry, Credit Card industry, Fast Food industry, Network TV News, Breakfast cereals, Sporting goods industry etc.
[Link] Market Structure:- are those markets in which there is a single firm. There is no competition in these markets and the single firm sets its own profit maximizing price and output where its marginal cost is equal to its marginal revenue. This type of monopolist market is called a Pure Monopolist market or a single firm industry. Examples of Monopolist Markets in the US: Cable, Cooking gas, electricity, sewerage, water markets in several cities and states across the US. Competitors to ITC Ltd:-Some of the main and leading competitors ofITC Ltd. in personal care products are: Hindustan Unilever Ltd Procter & Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
Study of Market Structure of ITC Ltd.:-Market structure of ITC Ltd. is done by a comaparative analysis of the company with its competitors and then analyzing its strengths and weaknesses. Comaparison of ITC Ltd. with other FMCG companies in India in 2010
Name ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd. Sales turnover Net Profit 21167.58
19735.79 1000.27
Last Price 201.90
326.75
Market Capital 156937.61
215.95
Total Assets 16052.67
2,633.25
Networth 15953.57
2,633.92
4987.61
2,305.97
150.88 402.58 471.93 434.96 227.49
1929.25 987.85 99.90 399.90 428.50
6262.49 13434.05 17403.05 12940.37 6843.71
534.65 384.09 1354.51 1806.18 906.88
534.64 384.05 1101.16 1533.68 902.56
2296.86 3287.67 2442.64 1221.15
Name ITC Ltd.
Total Debt 99.20
Total Liabilities Investments 16052.27 5554.66
Inventories 5267.53
Earnings Per Share 6.45
Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
00.00 00.00
2633.92 534.64
1260.68 00.00
2811.26 54.41
10.68 55.38
00.05 253.35 272.49 223.89
384.78 1354.51 1806.17 906.89
38.74 519.23 362.06 7.08
153.70 460.58 306.36 121.91
29.60 2.71 13.44 15.03
SALES TURNOVER
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
Last Price
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
NET PROFIT
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
MARKET CAPITAL
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
NET WORTH
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
TOTAL ASSETS
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
TOTAL DEBT
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
TOTAL LIABILITIES
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
INVESTMENTS
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
INVENTORIES
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
EARNINGS PER SHARE
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
Total Comparison Chart
180000 160000 140000 120000 100000 80000 60000 40000 20000 0
ITC Ltd. Hindustan Unilever Ltd Procter and Gamble Colgate Palmolive Ltd Dabur India Ltd. Godrej Consumer Emami Ltd.
Analysis:-It is very well inferred from above graphs that ITC Ltd. is one of the leading companies in the personal care [Link] Ltd. being one of the last entrant in the market among its competitors like HUL has grown tremendously. With a marginally higher sales turnover and net profit, it makes it clear for one to understand that that the company is growing at a faster rate than the other companies. A higher value of debt and liabilities indicates much obligations on the company and therefore efforts should be made to bring down the debts and liabilities. A higher value of market share and assets ,investments and net worth value indicates a strong position in the market and in the heart of the shareholders.
