Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals
Reliance Industries had evolved into a major player in the Asia Pacific region, and had begun to make its presence felt in the global petrochemicals and refining business segments. It had also made forays into exploration and production for oil and gas in multiple regions worldwide. This case study addresses the evolution of the company from a family-owned small-scale textile manufacturer to a global powerhouse within a few decades. It provides insights into how the company was able to trade on its competitive advantages at home in building a global strategy. Within the entrepreneurship and family business realm, the case allows for a rich thematic discussion around understanding the role of entrepreneurial leaders, the pros and cons of family control in large corporations, and impact on minority shareholders. From a global strategy perspective, the case provides a rich description of the nuances of building competitive advantage in emerging market contexts, the benefits of late movers in the race to globalize, and the unique modes of competition adopted by companies from newly industrializing countries. Since it is set in India, the case offers a comprehensive look at ground realities in that country, covering topics ranging from capital market conditions, governmental control and regulation as barriers to growth, and the role of external relationships management as a key competitive weapon in driving sustainable advantage
Swot Analysis of "Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals" written by Kannan Ramaswamy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Petrochemicals Family facing as an external strategic factors. Some of the topics covered in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals casestudy better are - – increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, geopolitical disruptions, increasing energy prices, increasing household debt because of falling income levels, supply chains are disrupted by pandemic ,
wage bills are increasing, there is backlash against globalization, etc
Introduction to SWOT Analysis of Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Petrochemicals Family, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Petrochemicals Family operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals can be done for the following purposes –
1. Strategic planning using facts provided in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals case study
2. Improving business portfolio management of Petrochemicals Family
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Petrochemicals Family
Strengths Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Petrochemicals Family in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals Harvard Business Review case study are -
Effective Research and Development (R&D)
– Petrochemicals Family has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Petrochemicals Family is one of the most innovative firm in sector. Manager in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Petrochemicals Family in the sector have low bargaining power. Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Petrochemicals Family to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Petrochemicals Family are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Petrochemicals Family is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Petrochemicals Family is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Petrochemicals Family digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Petrochemicals Family has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High switching costs
– The high switching costs that Petrochemicals Family has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Training and development
– Petrochemicals Family has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Petrochemicals Family
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Petrochemicals Family does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Petrochemicals Family has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Petrochemicals Family has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Petrochemicals Family has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals, it seems that the employees of Petrochemicals Family don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Petrochemicals Family has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals, in the dynamic environment Petrochemicals Family has struggled to respond to the nimble upstart competition. Petrochemicals Family has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Kannan Ramaswamy suggests that, Petrochemicals Family is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Petrochemicals Family needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Petrochemicals Family products
– To increase the profitability and margins on the products, Petrochemicals Family needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals HBR case study mentions - Petrochemicals Family takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Petrochemicals Family has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Petrochemicals Family even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Petrochemicals Family, firm in the HBR case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Petrochemicals Family is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Petrochemicals Family needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Petrochemicals Family to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Petrochemicals Family has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals are -
Buying journey improvements
– Petrochemicals Family can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Loyalty marketing
– Petrochemicals Family has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Petrochemicals Family can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Petrochemicals Family has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Petrochemicals Family to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Petrochemicals Family can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Petrochemicals Family can use these opportunities to build new business models that can help the communities that Petrochemicals Family operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Petrochemicals Family can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Petrochemicals Family can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Better consumer reach
– The expansion of the 5G network will help Petrochemicals Family to increase its market reach. Petrochemicals Family will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Petrochemicals Family in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Petrochemicals Family to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Petrochemicals Family can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Petrochemicals Family can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Petrochemicals Family can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Petrochemicals Family can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Petrochemicals Family will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Petrochemicals Family needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Petrochemicals Family can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Petrochemicals Family high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology acceleration in Forth Industrial Revolution
– Petrochemicals Family has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Petrochemicals Family needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Petrochemicals Family.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals, Petrochemicals Family may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Petrochemicals Family is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Petrochemicals Family in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Petrochemicals Family can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals .
Weighted SWOT Analysis of Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Reliance Industries: An Indian Family Business Comes of Age in Global Energy and Petrochemicals is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Petrochemicals Family needs to make to build a sustainable competitive advantage.
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