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Reliance Case Study

Reliance Industries Ltd grew spectacularly due to horizontal and vertical integration strategies. It set up large refineries and petrochemical plants, established its own port, and acquired technology to produce high quality products. Reliance focused on quality, control of its value chain, and reinvested profits into growth. It pursued economies of scale by building high capacities and economies of scope by producing varied outputs. Reliance diversified into new businesses like retail, media, telecom, and power using its brand name, management techniques, and process expertise. It assessed advantages of entering industries directly versus collaborating with existing players.

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G Sreenivas Reddy
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73 views

Reliance Case Study

Reliance Industries Ltd grew spectacularly due to horizontal and vertical integration strategies. It set up large refineries and petrochemical plants, established its own port, and acquired technology to produce high quality products. Reliance focused on quality, control of its value chain, and reinvested profits into growth. It pursued economies of scale by building high capacities and economies of scope by producing varied outputs. Reliance diversified into new businesses like retail, media, telecom, and power using its brand name, management techniques, and process expertise. It assessed advantages of entering industries directly versus collaborating with existing players.

Uploaded by

G Sreenivas Reddy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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RELIANCE

CASE
STUDY
What contributed to the spectacular growth of Reliance?

Horizontal Integration Vertical Integration


1. Setting up Refinery in Jamnagar 1. Vertical Integration to produce high
2. Versatility in product output depending quality Synthetic yarn
on prevailing market conditions 2. Launching Clothing brand ‘Vimal’
3. Constructing India’s largest private 3. Plants for PFY and PTA
port
4. Establishing Power Generation Grid

Leadership Outlook Contracts/ Acquisition


1. Focus on quality and control of value 1. Acquisition of technology from DuPont
chain
2. Capacity augmentation and improving
technology
3. Investing all earned profits into
growth
4. Changing corporate culture in
Reliance
5. Prioritising Opportunity Cost of the
time delay in establishing factories
What has been the underlying logic of its growth strategy? Has the growth logic
changed over the years? In what way?

Growth Strategy
• Wisely chosen Corporate Strategy
• Vertical integration - downstream (‘Vimal’) and upstream (PTA and PFY
production)
• Horizontal integration of multiple base products
• Cross-selling of products
• Relationship specific investments

Change in Growth Strategy


• Economies of Scale
• Setting up capacities higher than the entire domestic market
• Selling products globally
• Economies of Scope
• New plants configured to produce in multiple outputs as per changing market
conditions
• Moving away from Downstream freeriding
• Mukesh Ambani’s decision to have each business unit independently run
• Horizontal integration of multiple base products
Diversification into new areas of business such as Insurance, Power, Telecom
and Information Technology? How should the company enter new businesses?

Reliance can diversify into new business areas. In doing so it can take forward the
following:

• Use the concept of Cost-Leadership through efficient management techniques

• Use process know how from the industrial set up in Jamnagar to establish Power and
IT projects

• Bring the organizational value of non-bureaucracy to the new industries

• Use the Reliance Brand name to gain trust and acceptance in the new industries

• Assess if it has significant advantage entering the new business or collaboration with
an existing player would accrue greater benefits

• Carefully assess whether the business can be scaled for global presence

• Assess if entering the new business will complement existing businesses


How have Reliance grown during this period? What lessons do you learn from
them same?

Growth from 2010 – 2020


• Reliance refineries and petrochemicals remain the main revenue source
• Reliance Retails – Third highest revenue generating business of RIL
• Reliance acquired Network 18, a media house in 2012
• Reliance Jio – Entered telecom in 2016 and in 5 years it has acquired over 400 mn
users. Used cost leadership to penetrate the wafer thin margin telecom industry
• Acquired technology for future growth with focus only of 4G and above. Horizontally
integrated Network 18 with mobile service.
• Collaboration with BP in oil exploration
• E-vehicle charging facility
• Reliance also intends to enter the e-commerce sector

Lessons Learnt

• Reliance has used its distribution network very effectively in all businesses
• It has valued quality, timeliness and technological prowess over cost saving
whenever it entered a new business or expanded its capacity
• It has carefully assessed the industries it wants to take ownership of and those
where it can collaborate with existing leaders
• It has ensured focus on grooming younger employees

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