Reliance Industries

Growth Strategy
Oct 2006
Gr owt h St ra te gy & Philo sophy

 Identify Industries With Latent Demand,

Poised for Expansion
 Vertically integrated and focused

* Buy Technology - rather than JV

 Effective tapping of financial markets

 Efficient project execution

 Targets world levels of capacity to achieve

scale and cost leadership
 Modernisation and technology upgradation to
keep ahead of rivals and mop up incremental
demands
 Gr owt h St ra te gy & Philo sophy

 Creates capacity ahead of demand

– nurtures “latent demand” through business
development groups
– gets first mover advantage
– good capacity utilization
– Flexibility in marketing ( switched between
exports / imports ).
 Reli ance: Ve rt ical In tegration
issues

 Vertical Integration as an entry barrier??

 Backward Integration of Reliance
– From textiles to oil exploration
– Dominant producer of differentiated fabrics, close
to the consumer of a final product
– Backward Integration to increase it’s market power
 Differences in the scale (MES) at the various stages
– Reliance is now a petrochemical company which
also makes fabrics
– Have to sell intermediate products to competitors
 The changing
Environment

 Deregulation of Industries

 Reduction in Tariffs

 Increased Competition

 Importance of Cost Reduction

 Nature of industry and market
potential

Petroleum:
• Cyclical industry
• Huge gestation period
• Growing market
• No control over raw material
• Global exposure
Telecom
• Few players
• Fast paced – technology
Power
• Huge untapped market
• No variability in demand
 The road ahead
 To diversify or not?
 If yes :

– The Telecom?

– -Insurance?

– Power Generation & Distribution?

 Div ersific ation

 L&T - Synergistic from the viewpoint of project

management

 Power & Telecom -

– Tapping on core competence of large scale
project management
 Project financing

 Project execution

– Assured returns / can be future “cash cows”

 Risks
 Structures uncertain
 Policy in flux

 Entry of Global Giants

 Long Gestation periods

 Issues
 Organization Structure
 Attracting Talent

 Time of entry

- Premature
- Delayed
Ma nagement a nd o rganiza tion
str ucture
 First Generation entrepreneur
 Lesser Bureaucratic hurdles, fast decision making
 Flexible organization structure

 Pressures for change

– No in-house career planning and progression
– The top management overwhelmed with
operational decisions
– Reliance has grown out of the present
organizational structure
 Restructuring
 Restructuring
– Multi-Divisional structure
 SBU ( Operational + Tactical Decisions )

 Functional divisions (Manufacturing, HRM

etc.)
 Executive Committee ( co-ordination )

 Top management ( Strategic decisions )

– Career planning and shift in recruitment policies