After completion of the case study, students will be able to understand the role of utility theory and prospect theory in corporate investment decisions; recognize the importance of diversification and financial strategy in business expansion; apply the concept of utility and risk analysis to international investment decisions, considering political and economic uncertainties; and create or develop a strategic solution. Tools like PESTLE and SWOT assess macro and microenvironments before making investment decisions.
ITC was one of the most admired companies in India because of its robust performance. As per the reports of 2024, it was found that the ITC Group generated revenue of ₹ 69,446.20 crores (1 crore = US$114,478.23) from tobacco to non-tobacco; the transformation was not at all easy. The company diversified the business keeping in mind that the major threat would come to tobacco business due to societal pressure. Shareholders of ITC agreed to the demerger of its hotel business. The company invested $500m in Sri Lanka for the expansion of its hotel business. However, the economy of Sri Lanka was not fully recovered from its economic crisis taken place in 2022. New political party came into the power in Sri Lanka in September 2024. Previous government was accused of corruption charges, and the foreign reserves reached the rock bottom level even. The poverty level and unemployment, debt restructuring, policy reforms, monetary and fiscal decisions were crucial. Now, amid this situation, whether investment in the hotel ITCRatnadipa was rational for the company? This case was developed from secondary data sources, such as various newspapers, website of the company, World Bank as well as Asian Development Bank data.
This case study is suitable for MBA students.
Teaching notes are available for educators only.
CSS 5: International business.
