STRATEGIC MANAGENENT

RELIANCE CASE STUDY

NON-FINANACE BATCH
GROUP NO.1

Q.1) What are the reasons for phenomenal growth of Reliance? What
are its unique capabilities and competitive advantage(s)?

Ans) Reliance was started by Dhirubhai Ambani , a small town boy with a passion
to be an entrepreneur and because of his dedication, values and hard work ,
Reliance stands out to be one of the largest Company in various sectors like
textile, petrochemical, telecommunication etc. The reasons for its phenomenal
growth can be highlighted as follows:
The agility and promptness of Dhirubhai Ambani to be able to seize the
opportunities made available by the Govt , was a very big factor for the
success of Reliance. For example, Reliance trading started with spices but
as soon as a new scheme came up for trading rayon fabric, he took the
decision to venture into fabric trading.
 The Company worked in close association with the schemes coming up
from the government and accordingly expanded its business into various
sectors. The vision to expand with the needs of the international market
contributed to the growth of Reliance industries.
The developing Indian market where demand was on a continuous
increase was another reason for the growth of reliance. Reliance
understood that Indian Market was looking more towards having quality
products and current industries were not advanced enough in terms of
technology, efficiency of working and so it grasped this opportunity to
provide good quality products to the consumers of domestic market.
The passion to beat the competitors in Taiwan, China, Japan etc. was
another driving force for the Industry to expand its business to meet the
needs of its customers, domestically as well as internationally.
The unique capabilities that give Reliance its competitive advantage are the
values on which the Company has been working from the time of its genesis. The
most differentiating factor here being the uncompromised quality of
products offered by Reliance. Dhirubhai Ambani always focussed on this factor
and for achieving this, he made sure that he invested in latest technology
and quality labour so that no cost of inefficiency in manufacturing gets added
up to the price of the product. And so, his idea of investment was also always
focussed on getting the best technology and increasing the capacity. Another
factor that gives Reliance a competitive advantage over others was the ability of
Dhirubhai to maintain trust and relationship with the Govt. of India. He was
well aware of the fact the Govt. is the only external force that can drive his
business either to success or failure and so he maintained good relations with
people at all levels of the Govt.
These are some of the factors which contributed to the growth of Reliance and
gave it the competitive edge on which it stands till date.

Q.2) Should Reliance abandon its current growth strategy in favour of

diversification into the new emerging industries? If so, which
businesses it should enter? (Contrast the scenario for 'questions 2' in
2006-7 and 2016; is it same or different)

Ans) No, Success has no meaning without continuous growth. So, Reliance
should stick to its strategy of diversification because that is how the Reliance
Empire was established. From yarn trading to textiles to petrochemicals to oil
refining, Reliance has proven itself best in almost all fields where it has shown its
presence.
After the death of Dhirubhai Ambani, the RIL businesses got split between two
brothers where Mukesh Ambani got Reliance industries and IPCL and Anil Ambani
got Reliance Communications, infrastructure, Capital, Natural Resources and
Power and a non-compete agreement was signed between the two. However,
this agreement soon got dissolved by mid-2010 and so both the brothers can
now enter any business they prefer to venture in.

Growth strategy for Reliance can be suggested after understanding the current
scenario of Reliance group in contrast with that in the year 2006-07.

A major point of contrast in the year 2006-07 and 2016 is the dissolution
of non-compete agreement, as a result of which Mukesh Ambani & RIL
got the right to enter in the domain of industries owned by Anil Ambani.
The result of which is the launch of Reliance Jio.
Difference in the market conditions then and now is another factor that
drives Reliances growth strategy. Ex. Retail presence: Reliance entered
the retail market in the year 2006 and since then its giving tough
competition to Future Group, Shoppers Stop etc. which are core players in
organised retail from around 20-25 years.
Greater ease of starting JVs with international companies. Ex. RIL set up a
joint venture with a Russian company Sibur for setting up a Butyl rubber
plant in Jamnagar Gujarat.
Reliance has a tradition to work in close coordination with the Indian Govt.
so ,the change in scenario of the rules & regulations of the Indian Govt.
still influences the decision to diversify in other sectors of the industry. For
ex. Reliance Jio claims that the launch of its 4G services is directed to the
vision of Digital India.

On the basis of above study , we can say that Reliance should keep following
its growth strategy of diversification into new industries as it is the core value
of the company to grow and diversify. Reliance is present in almost all sectors
in India. Few sectors which are yet to be explored by the Company are
Aviation/Airline industry, Jewellery Space, Hotels, Tourism etc. Moreover, RIL is
also in news to enter into the business of technology based cab service
providers to compete with Ola & Uber.

The Growth strategy for the company will thus be to follow its classic strategy
to maintain and develop more its current business in various industries as
well as explore the options available in order to stay at the topmost position
in the market.