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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

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