ITC's e-Choupal: Taking E-Business to Farmers

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Case Details:

Case Code : ITSY023
Case Length : 15 Pages
Period : 2000-2002
Pub Date : 2003
Teaching Note :Not Available
Organization : ITC
Industry : Varied
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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A Quiet Digital Revolution Contd...

ITC's success in this endeavor becomes all the more commendable, considering the fact that many similar initiatives undertaken by leading Indian companies including Tata Chemicals, Mahindra & Mahindra, Rallis and EID Parry had failed badly (Refer Exhibit I). Commenting on the revolutionary concept, Mohanbir Sawhney of the Kellogg School of Management said, "ITC's long-term vision for e-choupals is grand. But the company started with a modest and focused value proposition - helping farmers gets a better price for their crops. This phased approach allows ITC to gain credibility through early successes and learn from its mistakes." What set ITC apart from other similar initiatives was the manner in which it implemented this project.

Prof Krishna Palepu, Professor of Business Administration, Harvard Business School said, "It is a brilliant idea. If this experiment works, you will have for the first time, enough communication capacity to connect with a market segment that is currently underserved, but clearly had the purchasing power. On this backbone, one can imagine other FMCG services and products being offered. But, like everything else, it depends on execution."

Background Note

ITC was incorporated in August 1910 as the Imperial Tobacco Company of India Ltd (Imperial) by the UK based tobacco company BAT. During the next six decades, the company primarily concentrated on growing and consolidating its cigarette and leaf tobacco businesses and soon emerged as a leader in the cigarette industry. However, Imperial realized that operating only in the cigarette business would become risky in the long run, as the product was considered injurious to the health of consumers. Moreover, the constant increase in the excise duty on cigarette was beginning to affect the company's profitability.

Thus, the company took a conscious decision to diversify into other businesses and entered the marine products export business in 1971. In 1974, the company's name was changed to I.T.C. Ltd and soon after the company diversified into several businesses. The company entered the hotel business in 1975, the textile business (with Tribeni Handlooms) in 1977 and the paper business (with Bhadrachalam Paperboards) in 1979. In 1981, the company diversified into the cement business by buying a 33% stake in India cements from IDBI.

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