Company analysis

Global strategy is able to cover the main three aspects such as global, multinational and international strategies. These strategies help to expand the business of the particular company. It is the report which will focus on the multinational enterprise of India and its subsidiaries. Reliance industries limited will be taken to analyze the marketing strategies of it. It is an Indian conglomerate holding company which headquarters is situated in Mumbai, Maharashtra, India. For the institutional analysis, Reliance Holding USA Inc. will be taken and recommendation will be made to reduce the key operational issues in the parent as well as subsidiary company.

Reliance is the India’s largest business house which is founded by Shri Dhirubai H Ambani (1932-2002), ranks among three top most private companies in terms of net worth. Reliance industry is concerned as the biggest industry of conglomerates with interest widen across refining, oil and gas exploration, petrochemicals, retail, refining and textiles. It is the company which has initiated exploring advantageous application in the business of technical textile for the purpose of commercial usage (Singh and Goodrich, 2006). It has been analyzed in the information report of reliance that company has more than 25,000 employees. The strategy of the company is attractive which focus on taking attention of customer only (Singh and Kulkarni, 2016). The total asset of reliance industry is around ? 7,068 billion. The CEO of the reliance industry holds around 50% shares in RIL. The organization has been divided between two brothers after death of the founder. It resulted in outcome in de-merger of 4 businesses from RIL. The existing shareholders in RIL obtained share in the RIL de-merge company.

A subsidiary is the company with voting stock which is more than 50% controlled by another company which is generally referred as a parent company. Reliance industry has around 100 subsidiaries in all over the world mainly in India. Reliance World Trade Private Limited, Reliance-Grand Optical Private Limited, RIL (Australia) Pty Ltd., RIL Exploration and Production (Myanmar) Company Limited, RIL USA, Inc, Strategic Manpower Solutions Limited, Surela Investment & Trading Private Limited, Transenergy (Kenya) Ltd and so on are some name of subsidiaries of Reliance Company. The position of RIL USA, INC. in the Reliance’s International Network is higher. RIL, USA, Inc., a Delaware corporation, was formed on 16, 2005. The company is entirely owned subsidiary of Reliance global business, whose ultimate parent is Reliance Industries Limited, an Indian corporation. The company profile is related to providing services regarding oil, gas and coal. It has been analyzed from the annual report of reliance that the subsidiary of reliance has entered in the commercial leases for storage tanks and for the space for corporate office. The remaining terms are between one and five years for the leases. There are no limitations exist on the company by involving into these leases. The Company compensates tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities.

Position of the Reliance subsidiaries

Key subsidiaries of reliance industry which involved enhancing revenues and profits were the Reliance Holding USA Inc. (Shale) operations and domestic business.

VRIO analysis is an analytical technique which is able to evaluate the company’s resources and the competitive advantages. It helps to get know about the weakness and the strength of the company. It is being used to assess the situation inside the organization and its resources and competitive implication. The dimensions of VRIO are value, rareness, imitability and organization (Yadav and Jain, 2016).

The resources of reliance industries are considered valuable if it is able to enhance the market share. If the resources of reliance is valuable but not rare, defines competitors possess the same resources, the organization has no inherent profit in this resource. The resource of an organization must also be difficult for competitors to imitate (Hébert and Mincyte, 2014).

The VRIO analysis for reliance industry is as follows:

Value

Reliance is build value and enhances the value of market share by offering the lowest rates to its customer. The way they do it is through having a various kind of business in all over the world which enhance the market reputation of the product and reduce the unnecessary cost of the company (Lin, Tsai, Wu and Kiang, 2012).

Rarity

The value of market share of the reliance industry is highest in India and it offers its customer low rate which is able to attract many customer towards it due to its recognizable presence in the market (Santangelo and Andersson, 2013). It is rare in the market that one company run various businesses with maintaining its corporate image in the view of public.

Imitability

Even though reliance industry is proved to make value in the market and amongst its customer but many of its strategies like low rate of services and using various kind of business are imitable. Thus long run in the same strategy is not sustainable for the reliance industry.

Organization

It is important to make the strong internal and external relationship with the suppliers. It is the responsibility of the organized system exploits to resource making of employees for a health corporate culture. The organization has built a brand value through unique value proposition (Collings, 2014).

Reliance holding USA Inc. involves in production of natural gas and liquid from number of shale deposits in the United States. The company in USA is formed in 2010 which is based in Houston, Texas. Reliance Holding USA, Inc. operates the business of oil, gas and consumable fuels as a subsidiary of Reliance Industries Limited. Walter van de Vijver is the president and chief executive of the Reliance Holding USA Inc. on the basis of supply side, overall crude oil has been enhanced by 2.0 MMBDP in 2014. The main attribute was the enlargement in US oil production which surged by 1.6 MMBDP IN 2014. The price of steep oil has been dropped in second half of 2014; there are various upstream players in USA who have announced very significant cut in their cappex programme. This was able to restrict growth in US shale oil production from the second half of 2015. It has been analyzed in the report of Reliance Annual Report 2014-15 that the steep fall in crude prices which lead to a reduction in arranged upstream investment. It has been expected to have short term as well as long term effects. The refuse in investment in the US shale oil might have an early influence on decreasing in oil production on the other hand reduction in other high cost E &P investments by oil majors could have results which may impact long term basis on potential crude supplies (Dhingra and Aggarwal, 2014)

VRIO framework

Competition is increased due to involvement of various companies in same business. There are some competitors such as ESSAR OIL, BPCL, HPCL & IOCL. ESSAR OIL is an Indian company which is fully integrated oil and Gas Company and has subsidiary on international basis. Along with that it has strong presence across the hydrocarbon value chain which involves exploration, retail and revenue. The revenue of this company in 2010-11 was 47,249 Crores. BPCL is the Indian state controlled oil refining and marketing company which deals in petrol, diesel, fuel and lubricant on international basis. The revenue of this company was ?154,475.36 crores in 2010-11. HPCL is the Indian state owned oil company which has strong presence and has ?139,315.86 crores in 2010-11. IOCL is the owned oil and Gas Company who secured ranked at 98 in 2011. It has 47% share in petroleum market, 35% share in refining capacity and 67% downstream sector such as pipeline capacity. The revenue has analyzed of this company is approximately 310,625 crores.

It has been analyzed that reliance industry has best control over its cost. It has number of shareholders who invest in the company with huge amount due to its well recognized position in the market. RIL USA Inc. is continuing to work for growing and implementation of climate change mitigation projects. It is primarily done with the help of energy efficiency initiatives (Richardson, 2008). Along with that the parent company of this reliance holding USA Inc. has taken up several initiatives for the deployment of renewable energy such as biogas generation project, rooftop solar photovoltaic projects and wind resource assessment for increasing the possibilities of setting up of wind turbines

Import reliance is defined as consumption for United States and consumption for other countries as well. It has been analyzed through Annual Energy Outlook 2014 projects refuse in US imports of oil and natural gas which outcome in the form of increasing domestic production from tight oil and shale plays. The liquid fuel of US net imports as a part of consumption is made to refuse from a high of 60% in 2005 and it has been increased and about 25% by 2016. The United States is also planned to become an exporter of net of natural gas by 2018 appropriately.  

The diamond model is referred by Michael Porter for the Competitive Advantage of the specific nations which would be helpful in the context f reliance industry to understand the position of competition of a nation in global competition. It is the model which can be used for other major geographic regions. The model of porter diamond is based on six elements:

• Factor condition
• Chance
• Demand conditions
• Related and supporting industries
• Firm Structure and rivalry
• Government

Factor condition

It is the first part of diamond model and in the term of reliance industry it defines that there are various kind of resources such as human, physical financial and infrastructure. Reliance industry has these all factors in sufficient manner which make it able to create the field for international competitiveness.

Demand condition

The demand condition of the porter involves market size and growth, early home demand and sophistication. The reliance industry is fulfilling this demand by evolving mobile possibilities with respect of internet. It focuses on the wide users of the oil coal and gas and reaches them by fulfilling their needs as per their comfort.

Industry analysis

Related and supporting industries

Related and supporting industry is liable to produce inputs that can be considered critical for innovation. The success of the Reliance Pvt. Ltd. can be associated with the availability of suppliers and related industries. Reliance has many subsidiaries which is helpful to make effective goodwill of parent company in the view of investors.

Reliance Strategy and Structure

The competitions of reliance industries limited with its competitors are strong and it knows that how to obtain a completive advantages in core competition. Birla, Empire industries and Nilkamal Plastics Ltd are some name of its competitors and it has been analyzed that Reliance Pvt. Ltd would not be successful if it did not compete with these companies.

Chance

It defines the random events that are beyond the control of the company. The company of Reliance is got chance to startup new business and it did. It enhances the opportunity for the company to attain the competitive advantages in effective manner.

Government

The influences of government have strong impact on the international competitiveness of a firm. It can affect the condition of supply of key production. Reliance industry is able to compete with same industry by following the various elements of government which is essential for the company.

The environment of the reliance holding USA Inc. is the effective and there are number of employees are working over there. The CEO of the Reliance Holding USA Inc. Company is Walter van de Vijver. The company is involved in the commercialization of blended products of gasoline of its parent company that is Reliance Industries Limited and its associates in the United States as well as Caribbean markets and domestic spot trading with other companies which can be referred as third party companies. The subsidiary company of Reliance Industries Limited takes ownership of the products upon buy which is liable for providing good quality goods to the customer, maintaining the pricing strategy and bears the credit risk of customer (Wolpe, Ingram, Tsvetanov, Geerligs, Kievit, Henson, Wolpert, Tyler, Brayne, Bullmore and Calder, 2016). The storage tanks of the company are placed in two locations in New York and Bahamas. These places are majorly for inventory storage and blending. It has been analyzed that lease for Bahamas storage tanks which expired in 2014 and still was not renewed. The company contributes its huge amount in the favor of employee benefits and the company contribution’s plan under the 401 (k) plans is defined contribution and its expenses when services are provided by the employees.

The key operational issue in the Reliance Industries Ltd. is responsible to provide a less profit in the business. They are able to drain the resources and energy. Monitoring performance, exploding data, customer service and uncertainty about the future are the major key operational issue in the Reliance holding USA Inc (Business Line, 2017). it is important for the business to us e a meaningful set of rounded performance indicators that is able to give insights about the performance. The company’s data should be kept in the professional hand so that he can facilitate the company to get the most return for the data (Ahmed and Alam, 2015).

Reliance industry is the well known industry which deals in number of country and earns huge profit by attaining the attention of customers. There are so many key operational issues found in the industry and its subsidiary and it is integral to improve it as soon as possible. It is important for the business to improve the quality of disclosure in financial statements. It is vital part of the company to show the financial situation in effect manner so that other investor can analyze appropriately before investing. There is required to have the team of board of directors so that team can build the strong employees group within the company so that innovation and new ideas can arise within the company.  The parents company should promote its subsidiaries in proper manner so that all people get aware about the working style of its subsidiaries along with the parent company should give opportunity to the Indians to get promoted in foreign country, it would be helpful for the national reputation. It is vital for the company to remove its key operational issue by providing the efficient services to its customers. There are a lot of competitors of parent company so it is essential for the parent company to manage the risk appropriately by maintaining its financial position. Reliance Industries is broad company and there are so many customers of it who have high expectation from the company (Centre for global development, e.d.). Reliance should be able to manage the expectations of the company. The level of disbursement is not only the way to measure progress and growth of the company. There are various steps to take before significant resources flow and goals are met.  Reliance should be willing to make strict rules on cost sharing. It has been studied in the article of Business line that corporate governance with executions of shareholders of the Reliance Group Companies has come to the highlighted picture (Butler, Armstrong, Ellinger  and Franke, 2016). Reliance Company should go through with the entire position of the company and its subsidiary and make changes as per demanding word and technology. It would be helpful for the company to stay with the latest technology from which it obtain huge advantages.

Conclusion

It has been concluded that global strategy is helpful to maintain the strategies and activities around the world. It is the report which has been made on reliance industries and its subsidiary. Institutional analyze is being done with the help of showing status of the company. Competitors have been reflected in the report which will be helpful for the further studies to analyze the competitive advantages of the company. The discussion has been made on the company by using model of VRIO’s framework which is considered as an analytical technique which is helpful to identify the strengths and weaknesses of the company.

References

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