COMPANY

PROFILING REPORT
FROM PORTER’S
ANALYSIS

EFFORTS BY: KRISHNA J SANTHOSH

 BRITANNIA INDUSTRIES
Britannia Industries Limited is an Indian company specialised in food industry, part of
the Wadia Group headed by Nusli Wadia. Founded in 1892 and headquartered in Kolkata,
it is one of India's oldest existing companies and best known for its biscuit products. The
company sells its Britannia and Tiger brands of biscuits, breads and dairy
products throughout India and abroad. Beginning with the circumstances of its takeover
by the Wadia Group in the early 1990s, the company has been mired in several
controversies connected to its management. However, it still has a large market share
and it is profitable.

The company was established in 1892 by a group of British businessmen with an

investment of ₹295. Initially, biscuits were manufactured in a small house in central
Kolkata. Later, the enterprise was acquired by the Gupta brothers, mainly Nalin Chandra
Gupta, an attorney, and operated under the name "V.S. Brothers." In 1918, C.H. Holmes,
an English businessman based in Kolkata, was taken on as a partner and The Britannia
Biscuit Company Limited (BBCo) was launched. The Mumbai factory was set up in 1924
and Peek Freans UK acquired a controlling interest in BBCo. Biscuits were in high demand
during World War II, which gave a boost to the company's sales. The company name was
changed to the current "Britannia Industries Limited" in 1979. In 1982, the American
company Nabisco Brands, Inc. acquired the parent of Peek Freans and became a major
foreign shareholder.

In September 2022, Varun Berry was named as the Executive VC and MD of Britannia. The
company also announced the appointment of Rajneet Kohli as its executive director and
chief executive officer. The market capitalization of Britannia Industries Limited as in
December 2022 stood at Rs. 1,08,992.90 crore.

Between 1998 and 2001, the company's sales grew at a compound annual rate of 16%
against the market, and operating profits reached 18%.  More recently, the company has
been growing at 27% a year, compared to the industry's growth rate of 20%.

 At present, 90% of Britannia's annual revenue of Rs 22 billion comes from biscuits.
Britannia is one of India's 100 Most Trusted brands listed in The Brand Trust
Report. Britannia has an estimated market share of 38%. Britannia acquires a controlling
stake in Kenya's Kenafric Biscuits.
 BRITANNIA INDUSTRIES

Formerly Britannia Biscuit Company Limited

Type Public

Traded as BSE: 500825
NSE: BRITANNIA
NSE NIFTY 50 Constituent

ISIN INE216A01030

Industry Food processing

Founded 1892; 131 years ago in Calcutta

1918; 105 years ago as Britannia Biscuit Company Limited

Headquarters Kolkata, West Bengal, India

Area served Worldwide

Key people Nusli Wadia (Chairman)

Varun Berry (Managing Director)

Products Bakery products including biscuits, bread, cakes and rusk

dairy
products including milk, butter, cheese, ghee and dahi
Revenue  ₹11,878.95 crore (US$1.5 billion) (2020)
Operating income  ₹1,860.87 crore (US$230 million) (2020)

Net income  ₹1,402.63 crore (US$180 million) (2020)

Total assets  ₹7,253.34 crore (US$910 million) (2020)
Number of 4,480 (as on 31 March 2019)
employees
Parent Wadia Group
Subsidiaries Manna Foods Private Limited
International Bakery Products Limited
Website www.britannia.co.in
 PORTER’S ANALYSIS
Threats of new entrants

Threat of new entrants reflects how new market players impose threats to the
existing market players. If the industry will be profitable and barriers to enter the
industry will be low, it will attract more players and hence, the threat of new
entrants will be high.

Here are some factors that reduce the threat of new entrants for Britannia
Industries Ltd:

 Entry in the industry requires substantial capital and resource investment. This
force also loses the strength if product differentiation is high and customers
place high importance to the unique experience.
 Britannia Industries Ltd will face the low threat of new entrants if existing
regulatory framework imposes certain challenges to the new firms interested
to enter in the market. In this case, new players will be required to fulfil strict,
time consuming regulatory requirements, which may discourage some players
from entering the market.
 The threat will be low if psychological switching cost for consumers is high and
existing brands have established a loyal customer base.
 New entrants will be discouraged if access to the distribution channels is
restricted.

Britannia Industries Ltd will be facing high new entrants threat if:

 Existing regulations support the entry of new players.

 Consumers can easily switch the brands due to weak/no brand loyalty.
 Initial capital investment is high.
 Building a distribution network is easy for new players.
 Retaliation from the existing market players is not a discouraging factor.
 How Britannia Industries Ltd can tackle the Threat of New Entrants?

 Britannia Industries Ltd can develop brand loyalty by working on customer

relationship management. It will raise psychological switching costs.
 It can develop long-term contractual relationships with distributors to widen
access to the target market.
 Britannia Industries Ltd can also an investment in research and development
activities, get valuable customer data and introduce innovative
products/services to set strong differentiation basis.

Threat of Substitute Products or services

The availability of substitute products or services makes the competitive

environment challenging for Britannia Industries Ltd and other existing players. High
substitute threat shows that customers can use alternative products/services from
other industries to meet their needs. Various factors determine the intensity of this
threat for Britannia Industries Ltd

The Threat of Substitute Products or services increases when;

 A cheaper substitute product/service is available from another industry

 The psychological switching costs of moving from industry to substitute
products are low.
 Substitute product offers the same or even superior quality and performance
as offered by Britannia Industries Ltd’s product.

However, this threat is substantially low for Britannia Industries Ltd when;

 The switching cost of using the substitute product is high (due to high
psychological costs or higher economic costs)
 Customers cannot derive the same utility (in terms of quality and
performance) from substitute product as they derive from the Britannia
Industries Ltd’s product.
 How Britannia Industries Ltd can tackle the Threat of Substitute Products or
services?

 Britannia Industries Ltd can reduce the Threat of Substitute Products or

services by clearly emphasising how its offered product/service is better than
the available substitutes.
 It should provide convincing reasons to the customers by offering a better
experience and high value for money.
 It can raise switching costs by working on loyalty.
 Lastly, it can improve the quality, maximise value for money and set strong
differentiation basis to discourage customers from using the substitute
product.

Rivalry among existing firms

The Rivalry among existing firms shows the number of competitors that give tough
competition to the Britannia Industries Ltd High rivalry shows Britannia Industries
Ltd can face strong pressure from the rival firms, which can limit each other’s growth
potential. Profitability in such industries is low as firms adopt aggressive targeting
and pricing strategies against each other.

The Rivalry among existing firms will be low for Britannia Industries Ltd if;

 There are only a limited number of players in the market

 The industry is growing at a fast rate
 There is a clear market leader
 The products are highly differentiated, and each market player targets
different sub-segments
 The economic/psychological switching costs for consumers are high.
 The exit barriers are low, which means firms can easily leave the industry
without incurring huge losses.

Similarly, there are some factors that increase the Rivalry among existing firms for
Britannia Industries Ltd For example, the company will face intense Rivalry among
existing firms if market players are strategically diverse and target the same market.
The rivalry will also be intense if customers are not loyal with existing brands and it
is easier to attract others’ customers due to low switching costs. Competitors with
equal size and offering undifferentiated products with slow industry growth tend to
adopt aggressive strategies against each other. These all factors make the Rivalry
among existing firms a major strategic concern for Britannia Industries Ltd

How Britannia Industries Ltd can tackle the Rivalry among existing firms?

Britannia Industries Ltd should focus on the implicit needs and expectations of its
customers to strengthen the differentiation basis. It should raise switching costs by
developing long-term customer relationships. The organisation should also invest in
research and development activities to identify new customer segments. In some
cases, collaborating with competitors can be mutually beneficial. The organisation
can look for this option as well.

Bargaining Power of Suppliers

Bargaining power of suppliers in the Porter 5 force model reflects the pressure
exerted by suppliers on business organisations by adopting different tactics like
reducing the product availability, reducing the quality or increasing the prices. When
suppliers have strong bargaining power, it costs the buyers- (business organisations).
Moreover, high supplier bargaining power can increase the competition in the
industry and lower the profit and growth potential for Britannia Industries Ltd
Similarly, weak supplier power can make the industry more attractive due to high
profitability and growth potential.

Bargaining power of suppliers will be high for Britannia Industries Ltd if:

 Suppliers have concentrated into a specific region, and their concentration is

higher than their buyers.
 This force is particularly strong when the cost to switch from one supplier to
other is high for buyers (for example, due to contractual relationships).
 When suppliers are few and demand for their offered product is high, it
strengthens the suppliers’ position against Britannia Industries Ltd
 Suppliers’ forward integration weakens the Britannia Industries Ltd’s position
as they also become the competitors in that area.
  If Britannia Industries Ltd is not well educated, does not have adequate
market knowledge and lacks the price sensitivity, it automatically strengthens
the suppliers' position against the organisation.
 Other factors that increase the suppliers’ bargaining power include-high
product differentiation offered by suppliers, Britannia Industries Ltd making
only a small proportion of suppliers’ overall sales and unavailability of the
substitute products.

Contrarily, the bargaining power of suppliers will be low for Britannia

Industries Ltd if:

 Suppliers are not concentrated

 Switching costs are low
 Product lacks differentiation
 Substitute products are available
 Britannia Industries Ltd is highly price sensitive and has adequate market
knowledge
 There is no threat of forward integration by suppliers.

How Britannia Industries Ltd can tackle the Bargaining Power of Suppliers?

Britannia Industries Ltd can strengthen its position against suppliers by decreasing
the dependency on one or a few suppliers. It will increase its price sensitivity.
Developing the long-term contractual relationships with suppliers from different
regions not only lowers their bargaining power but also allows Britannia Industries
Ltd to improve its supply chain efficiency. Finally, Britannia Industries Ltd can find
the alternate ways of producing the product if product demand is high enough and
the firm has required competencies and expertise. However, it requires detailed
cost-benefit analysis to determine its feasibility. Product redesign and diversification
of the product lines can also help the organisation reduce the suppliers’ power in the
market.

Bargaining Power of Buyers

Bargaining power of buyers indicates the pressure that customers exert on the
business organisations to get high quality products at affordable prices with
excellent customer service. This force directly influences the Britannia Industries
Ltd’s ability to accomplish the business objectives. Strong bargaining power lowers
profitability and makes the industry more competitive. Whereas, when buyer power
is weak, it makes the industry less competitive and increase the profitability and
growth opportunities for Britannia Industries Ltd

There are some factors that increase the bargaining power of buyers:

 A more concentrated customer base increases their bargaining power against

Britannia Industries Ltd
 Buyer power will also be high if there are few in number whereas a number of
sellers (business organisations) are too many.
 Low switching costs (economic and psychological) also increase the buyers’
bargaining power.
 In case of corporate customers, their ability to do backward integration
strengthen their position in the market. Backward integration shows the
buyers' ability to produce the products themselves instead of purchasing them
from Britannia Industries Ltd
 Consumers’ price sensitivity, high market knowledge and purchasing
standardised products in large volumes also increase the buyers' bargaining
power.

Some factors that decrease the bargaining power of buyers include lower customer
concentration (means the customer base is geographically dispersed), customers’
inability to integrate backwards, low price sensitivity, lower market knowledge, high
switching costs and purchasing customised products in small volumes.

How Britannia Industries Ltd can tackle the Bargaining Power of Buyers?

Britannia Industries Ltd can manage the bargaining power of buyers by increasing
and diversifying their customer base. It can be done by introducing new products,
targeting new market segments and adopting the product diversification strategies.
Marketing and promotional strategies can also be helpful in this regard. Building
loyalty by embedding innovation and offering excellent customer experience can
raise the switching costs, which will ultimately reduce their bargaining power.
 HDFC BANK
HDFC Bank Limited (also known as HDB) is an Indian banking and financial services
company headquartered in Mumbai. It is India's largest private sector bank by assets
and world's 10th largest bank by market capitalisation as of April 2021. It is the third
largest company by market capitalisation of $127.16 billion on the Indian stock
exchanges. It is also the fifteenth largest employer in India with nearly 150,000
employees. HDFC Bank was incorporated in 1994 as a subsidiary of the Housing
Development Finance Corporation, with its registered office in Mumbai,
Maharashtra, India. Its first corporate office and a full-service branch at Sandoz
House, Worli were inaugurated by the then Union Finance Minister, Manmohan
Singh.
As of 30 June 2022, the bank's distribution network was at 6,378 branches across
3,203 cities. It has installed 430,000 POS terminals and issued 23,570,000 debit cards
and 12 million credit cards in FY 2017. It has a base of 1,52,511 permanent
employees as of 30 June 2022.
HDFC Bank provides a number of products and services including wholesale
banking, retail banking, treasury, auto loans, two-wheeler loans, personal loans,
loans against property, consumer durable loan, lifestyle loan and credit cards. Along
with this various digital products are Payzapp and SmartBUY. HDFC Bank merged
with Times Bank in February 2000. This was the first merger of two private banks in
the New Generation private sector banks category. Times Bank was established by
Bennett, Coleman and Co. Ltd., commonly known as The Times Group, India's largest
media conglomerate.
In 2008, Centurion Bank of Punjab (CBoP) was acquired by HDFC Bank. HDFC Bank's
board approved the acquisition of CBoP for ₹95.1 billion in one of the largest
mergers in the financial sector in India.
In 2021, the bank acquired a 9.99% stake in FERBINE, an entity promoted by Tata
Group, to operate a Pan-India umbrella entity for retail payment systems, similar
to National Payments Corporation of India.
In September 2021, the bank partnered with Paytm to launch a range of credit cards
powered by the global card network Visa.
On April 4, 2022, HDFC Bank announced merger with HDFC Limited.
 HDFC BANK

Type Public

Traded as NSE: HDFCBANK
BSE: 500180
NYSE: HDB (ADS)
BSE SENSEX Constituent
NSE NIFTY 50 Constituent
ISIN INE040A01034
Industry Financial services
Founded August 1994 (28 years ago)
Headquarters Mumbai, Maharashtra, India
Area served India
Key people Atanu Chakraborty
(Chairman)
Sashidhar Jagdishan
(CEO)
Products Credit cards
Consumer banking
Commercial banking
Finance and insurance
Investment banking
Mortgage loans
Private banking
Private equity
Wealth management
Revenue  ₹167,695 crore (US$21 billion) (2022)
Operating income  ₹68,798 crore (US$8.6 billion)
Net income  ₹38,151 crore (US$4.8 billion) (2022)
Total assets  ₹2,122,934 crore (US$270 billion) (2022)
Total equity  ₹246,771 crore (US$31 billion) (2022)
Owner Housing Development Finance
Corporation (25.7%)
Number of 1,41,579 (2022)
employees
Subsidiaries HDFC Securities
HDB Financial Services
Website www.hdfcbank.com
 PORTER’S ANALYSIS
Threats of new entrants

Threat of new entrants reflects how new market players impose threats to the
existing market players. If the industry will be profitable and barriers to enter the
industry will be low, it will attract more players and hence, the threat of new
entrants. will be high.

Here are some factors that reduce the threat of new entrants for HDFC Bank
Limited:

 Entry in the industry requires substantial capital and resource investment. This
force also loses the strength if product differentiation is high and customers
place high importance to the unique experience.
 HDFC Bank Limited will face the low threat of new entrants if existing
regulatory framework imposes certain challenges to the new firms interested
to enter in the market. In this case, new players will be required to fulfil strict,
time consuming regulatory requirements, which may discourage some players
from entering the market.
 The threat will be low if psychological switching cost for consumers is high and
existing brands have established a loyal customer base.
 New entrants will be discouraged if access to the distribution channels is
restricted.

HDFC Bank Limited will be facing high new entrants threat if

 Existing regulations support the entry of new players.

 Consumers can easily switch the brands due to weak/no brand loyalty.
 Initial capital investment is high.
 Building a distribution network is easy for new players.
 Retaliation from the existing market players is not a discouraging factor.
 How HDFC Bank Limited can tackle the Threat of New Entrants?

 HDFC Bank Limited can develop brand loyalty by working on customer

relationship management. It will raise psychological switching costs.
 It can develop long-term contractual relationships with distributors to widen
access to the target market.
 HDFC Bank Limited can also an investment in research and development
activities, get valuable customer data and introduce innovative
products/services to set strong differentiation basis.

Threat of Substitute Products or services

The availability of substitute products or services makes the competitive

environment challenging for HDFC Bank Limited and other existing players. High
substitute threat shows that customers can use alternative products/services from
other industries to meet their needs. Various factors determine the intensity of this
threat for HDFC Bank Limited

The Threat of Substitute Products or services increases when;

 A cheaper substitute product/service is available from another industry

 The psychological switching costs of moving from industry to substitute
products are low.
 Substitute product offers the same or even superior quality and performance
as offered by HDFC Bank Limited’s product.

However, this threat is substantially low for HDFC Bank Limited when;

 The switching cost of using the substitute product is high (due to high
psychological costs or higher economic costs)
 Customers cannot derive the same utility (in terms of quality and
performance) from substitute product as they derive from the HDFC Bank
Limited’s product.
 How HDFC Bank Limited can tackle the Threat of Substitute Products or
services?

 HDFC Bank Limited can reduce the Threat of Substitute Products or services by
clearly emphasising how its offered product/service is better than the
available substitutes.
 It should provide convincing reasons to the customers by offering a better
experience and high value for money.
 It can raise switching costs by working on loyalty.
 Lastly, it can improve the quality, maximise value for money and set strong
differentiation basis to discourage customers from using the substitute
product.

Threat of Substitute Products or services

The availability of substitute products or services makes the competitive

environment challenging for HDFC Bank Limited and other existing players. High
substitute threat shows that customers can use alternative products/services from
other industries to meet their needs. Various factors determine the intensity of this
threat for HDFC Bank Limited

The Threat of Substitute Products or services increases when;

 A cheaper substitute product/service is available from another industry

 The psychological switching costs of moving from industry to substitute
products are low.
 Substitute product offers the same or even superior quality and performance
as offered by HDFC Bank Limited’s product.

However, this threat is substantially low for HDFC Bank Limited when;

 The switching cost of using the substitute product is high (due to high
psychological costs or higher economic costs)
 Customers cannot derive the same utility (in terms of quality and
performance) from substitute product as they derive from the HDFC Bank
Limited’s product.
 How HDFC Bank Limited can tackle the Threat of Substitute Products or
services?

 HDFC Bank Limited can reduce the Threat of Substitute Products or services by
clearly emphasising how its offered product/service is better than the
available substitutes.
 It should provide convincing reasons to the customers by offering a better
experience and high value for money.
 It can raise switching costs by working on loyalty.
 Lastly, it can improve the quality, maximise value for money and set strong
differentiation basis to discourage customers from using the substitute
product.

Rivalry among existing firms

The Rivalry among existing firms shows the number of competitors that give tough
competition to the HDFC Bank Limited High rivalry shows HDFC Bank Limited can
face strong pressure from the rival firms, which can limit each other’s growth
potential. Profitability in such industries is low as firms adopt aggressive targeting
and pricing strategies against each other.

The Rivalry among existing firms will be low for HDFC Bank Limited if;

 There are only a limited number of players in the market

 The industry is growing at a fast rate
 There is a clear market leader
 The products are highly differentiated, and each market player targets
different sub-segments
 The economic/psychological switching costs for consumers are high.
 The exit barriers are low, which means firms can easily leave the industry
without incurring huge losses.

Similarly, there are some factors that increase the Rivalry among existing firms for
HDFC Bank Limited For example, the company will face intense Rivalry among
existing firms if market players are strategically diverse and target the same market.
The rivalry will also be intense if customers are not loyal with existing brands and it
is easier to attract others’ customers due to low switching costs. Competitors with
equal size and offering undifferentiated products with slow industry growth tend to
adopt aggressive strategies against each other. These all factors make the Rivalry
among existing firms a major strategic concern for HDFC Bank Limited

How HDFC Bank Limited can tackle the Rivalry among existing firms?

HDFC Bank Limited should focus on the implicit needs and expectations of its
customers to strengthen the differentiation basis. It should raise switching costs by
developing long-term customer relationships. The organisation should also invest in
research and development activities to identify new customer segments. In some
cases, collaborating with competitors can be mutually beneficial. The organisation
can look for this option as well.

Bargaining Power of Suppliers

Bargaining power of suppliers in the Porter 5 force model reflects the pressure
exerted by suppliers on business organisations by adopting different tactics like
reducing the product availability, reducing the quality or increasing the prices. When
suppliers have strong bargaining power, it costs the buyers- (business organisations).
Moreover, high supplier bargaining power can increase the competition in the
industry and lower the profit and growth potential for HDFC Bank Limited Similarly,
weak supplier power can make the industry more attractive due to high profitability
and growth potential.

Bargaining power of suppliers will be high for HDFC Bank Limited if:

 Suppliers have concentrated into a specific region, and their concentration is

higher than their buyers.
 This force is particularly strong when the cost to switch from one supplier to
other is high for buyers (for example, due to contractual relationships).
 When suppliers are few and demand for their offered product is high, it
strengthens the suppliers’ position against HDFC Bank Limited
 Suppliers’ forward integration weakens the HDFC Bank Limited’s position as
they also become the competitors in that area.
  If HDFC Bank Limited is not well educated, does not have adequate market
knowledge and lacks the price sensitivity, it automatically strengthens the
suppliers' position against the organisation.
 Other factors that increase the suppliers’ bargaining power include-high
product differentiation offered by suppliers, HDFC Bank Limited making only a
small proportion of suppliers’ overall sales and unavailability of the substitute
products.

Contrarily, the bargaining power of suppliers will be low for HDFC Bank
Limited if:

 Suppliers are not concentrated

 Switching costs are low
 Product lacks differentiation
 Substitute products are available
 HDFC Bank Limited is highly price sensitive and has adequate market
knowledge
 There is no threat of forward integration by suppliers.

How HDFC Bank Limited can tackle the Bargaining Power of Suppliers?

HDFC Bank Limited can strengthen its position against suppliers by decreasing the
dependency on one or a few suppliers. It will increase its price sensitivity.
Developing the long-term contractual relationships with suppliers from different
regions not only lowers their bargaining power but also allows HDFC Bank Limited to
improve its supply chain efficiency. Finally, HDFC Bank Limited can find the alternate
ways of producing the product if product demand is high enough and the firm has
required competencies and expertise. However, it requires detailed cost-benefit
analysis to determine its feasibility. Product redesign and diversification of the
product lines can also help the organisation reduce the suppliers’ power in the
market.

Bargaining Power of Buyers

Bargaining power of buyers indicates the pressure that customers exert on the
business organisations to get high quality products at affordable prices with
excellent customer service. This force directly influences the HDFC Bank Limited’s
ability to accomplish the business objectives. Strong bargaining power lowers
profitability and makes the industry more competitive. Whereas, when buyer power
is weak, it makes the industry less competitive and increase the profitability and
growth opportunities for HDFC Bank Limited

There are some factors that increase the bargaining power of buyers:

 A more concentrated customer base increases their bargaining power against

HDFC Bank Limited
 Buyer power will also be high if there are few in number whereas a number of
sellers (business organisations) are too many.
 Low switching costs (economic and psychological) also increase the buyers’
bargaining power.
 In case of corporate customers, their ability to do backward integration
strengthen their position in the market. Backward integration shows the
buyers' ability to produce the products themselves instead of purchasing them
from HDFC Bank Limited
 Consumers’ price sensitivity, high market knowledge and purchasing
standardised products in large volumes also increase the buyers' bargaining
power.

Some factors that decrease the bargaining power of buyers include lower customer
concentration (means the customer base is geographically dispersed), customers’
inability to integrate backwards, low price sensitivity, lower market knowledge, high
switching costs and purchasing customised products in small volumes.

How HDFC Bank Limited can tackle the Bargaining Power of Buyers?
HDFC Bank Limited can manage the bargaining power of buyers by increasing and
diversifying their customer base. It can be done by introducing new products,
targeting new market segments and adopting the product diversification strategies.
Marketing and promotional strategies can also be helpful in this regard. Building
loyalty by embedding innovation and offering excellent customer experience can
raise the switching costs, which will ultimately reduce their bargaining power.
 RELIANCE INDUSTRIES
Reliance Industries Limited is an Indian multinational conglomerate company,
headquartered in Mumbai. It has diverse businesses including energy,
petrochemicals, natural gas, retail, telecommunications, mass media, and textiles.
Reliance is one of the most profitable companies in India, the largest publicly traded
companies in India by market capitalisation, and the largest company in India as
measured by revenue. It is also the one of the largest employers in India with over
300,000 employees in the world.
The company is ranked 100th on the Fortune Global 500 list of the world's biggest
corporations as of 2022. Reliance continues to be India's largest exporter, accounting
for 7% of India's total merchandise exports and it has access to markets in over 100
countries. Reliance is responsible for almost 5% of the Government of India's total
revenue from customs and excise duty. It is also the highest income tax payer in the
private sector in India. The company has relatively little free cash flows.
The company's petrochemical, refining, and oil and gas-related operations form the
core of its business; other divisions of the company include cloth, retail,
telecommunications, and special economic zone (SEZ) development. In 2012–13, it
earned 76% of its revenue from refining, 19% from petrochemicals, 2% from oil & gas
and 3% from other segments.
In July 2012, RIL informed that it was going to invest US$1 billion over the next few
years in its new aerospace division which will design, develop and manufacture
equipment and components, including aircraft, engine, radars, avionics and
accessories for military and civilian aircraft, helicopters, unmanned airborne
vehicles, and aerostats.
On 31 March 2021, the company had 347 subsidiary companies and 150 associate
companies.
In February 2022, Reliance terminated the leases of hundreds of Future Retail
locations, the next largest retail chain in India, and took possession of those brick-
and-mortar shops. Future Retail had a deal to sell its assets to Reliance, but that deal
was contested by Amazon.com, which in 2019 acquired a stake in a subunit of Future
Retail along with certain rights with respect to the transfer of the retailer's assets.
 RELIANCE INDUSTRIES

Type Public

Traded as BSE: 500325
NSE: RELIANCE
LSE: RIGD
BSE SENSEX Constituent
NSE NIFTY 50 Constituent
ISIN INE002A01018
Industry Conglomerate
Founded 8 May 1973; 49 years ago
Founder Dhirubhai Ambani
Headquarters Mumbai, Maharashtra, India
Area served Worldwide
Key people Mukesh Ambani
(Chairman & Managing Director)
Products Petroleum
Natural gas
Petrochemicals
Solar Energy
Retail
Telecommunications
Media
Television
Entertainment
Music
Financial Services
Software
Telecom
Revenue  ₹792,756 crore (US$99 billion) (2022)
Operating income  ₹98,446 crore (US$12 billion)  (2022)
Net income  ₹67,845 crore (US$8.5 billion) (2022)
Total assets  ₹1,770,665 crore (US$220 billion) (2022)
Total equity  ₹772,720 crore (US$97 billion) (2022)
Owner Mukesh Ambani (49.46%)
Public (50.54%)
Number of employees 3,42,982 (2022)
Subsidiaries Jio Platforms
Reliance Retail
Reliance Petroleum
Life Sciences
Reliance New Energy Solar Ltd
Jio Payments Bank
Network18 Group
Mumbai Indians
MI Emirates
MI Cape Town
 PORTER’S ANALYSIS
Threats of new entrants

Threat of new entrants reflects how new market players impose threats to the
existing market players. If the industry will be profitable and barriers to enter the
industry will be low, it will attract more players and hence, the threat of new
entrants. will be high.

Here are some factors that reduce the threat of new entrants for Reliance
Industries:

 Entry in the industry requires substantial capital and resource investment. This
force also loses the strength if product differentiation is high and customers
place high importance to the unique experience.
 Reliance Industries will face the low threat of new entrants if existing
regulatory framework imposes certain challenges to the new firms interested
to enter in the market. In this case, new players will be required to fulfil strict,
time consuming regulatory requirements, which may discourage some players
from entering the market.
 The threat will be low if psychological switching cost for consumers is high and
existing brands have established a loyal customer base.
 New entrants will be discouraged if access to the distribution channels is
restricted.

Reliance Industries will be facing high new entrants threat if

 Existing regulations support the entry of new players.

 Consumers can easily switch the brands due to weak/no brand loyalty.
 Initial capital investment is high.
 Building a distribution network is easy for new players.
 Retaliation from the existing market players is not a discouraging factor.
 How Reliance Industries can tackle the Threat of New Entrants?

 Reliance Industries can develop brand loyalty by working on customer

relationship management. It will raise psychological switching costs.
 It can develop long-term contractual relationships with distributors to widen
access to the target market.
 Reliance Industries can also an investment in research and development
activities, get valuable customer data and introduce innovative
products/services to set strong differentiation basis.

Threat of Substitute Products or services

The availability of substitute products or services makes the competitive

environment challenging for Reliance Industries and other existing players. High
substitute threat shows that customers can use alternative products/services from
other industries to meet their needs. Various factors determine the intensity of this
threat for Reliance Industries

The Threat of Substitute Products or services increases when;

 A cheaper substitute product/service is available from another industry

 The psychological switching costs of moving from industry to substitute
products are low.
 Substitute product offers the same or even superior quality and performance
as offered by Reliance Industries’s product.

However, this threat is substantially low for Reliance Industries when;

 The switching cost of using the substitute product is high (due to high
psychological costs or higher economic costs)
 Customers cannot derive the same utility (in terms of quality and
performance) from substitute product as they derive from the Reliance
Industries’s product.
 How Reliance Industries can tackle the Threat of Substitute Products or
services?

 Reliance Industries can reduce the Threat of Substitute Products or services by

clearly emphasising how its offered product/service is better than the
available substitutes.
 It should provide convincing reasons to the customers by offering a better
experience and high value for money.
 It can raise switching costs by working on loyalty.
 Lastly, it can improve the quality, maximise value for money and set strong
differentiation basis to discourage customers from using the substitute
product.

Rivalry among existing firms

The Rivalry among existing firms shows the number of competitors that give tough
competition to the Reliance Industries High rivalry shows Reliance Industries can
face strong pressure from the rival firms, which can limit each other’s growth
potential. Profitability in such industries is low as firms adopt aggressive targeting
and pricing strategies against each other.

The Rivalry among existing firms will be low for Reliance Industries if;

 There are only a limited number of players in the market

 The industry is growing at a fast rate
 There is a clear market leader
 The products are highly differentiated, and each market player targets
different sub-segments
 The economic/psychological switching costs for consumers are high.
 The exit barriers are low, which means firms can easily leave the industry
without incurring huge losses.

Similarly, there are some factors that increase the Rivalry among existing firms for
Reliance Industries For example, the company will face intense Rivalry among
existing firms if market players are strategically diverse and target the same market.
The rivalry will also be intense if customers are not loyal with existing brands and it
is easier to attract others’ customers due to low switching costs. Competitors with
equal size and offering undifferentiated products with slow industry growth tend to
adopt aggressive strategies against each other. These all factors make the Rivalry
among existing firms a major strategic concern for Reliance Industries

How Reliance Industries can tackle the Rivalry among existing firms?
Reliance Industries should focus on the implicit needs and expectations of its
customers to strengthen the differentiation basis. It should raise switching costs by
developing long-term customer relationships. The organisation should also invest in
research and development activities to identify new customer segments. In some
cases, collaborating with competitors can be mutually beneficial. The organisation
can look for this option as well.

Bargaining Power of Suppliers

Bargaining power of suppliers in the Porter 5 force model reflects the pressure
exerted by suppliers on business organisations by adopting different tactics like
reducing the product availability, reducing the quality or increasing the prices. When
suppliers have strong bargaining power, it costs the buyers- (business organisations).
Moreover, high supplier bargaining power can increase the competition in the
industry and lower the profit and growth potential for Reliance Industries Similarly,
weak supplier power can make the industry more attractive due to high profitability
and growth potential.

Bargaining power of suppliers will be high for Reliance Industries if:

 Suppliers have concentrated into a specific region, and their concentration is

higher than their buyers.
 This force is particularly strong when the cost to switch from one supplier to
other is high for buyers (for example, due to contractual relationships).
 When suppliers are few and demand for their offered product is high, it
strengthens the suppliers’ position against Reliance Industries
 Suppliers’ forward integration weakens the Reliance Industries’s position as
they also become the competitors in that area.
  If Reliance Industries is not well educated, does not have adequate market
knowledge and lacks the price sensitivity, it automatically strengthens the
suppliers' position against the organisation.
 Other factors that increase the suppliers’ bargaining power include-high
product differentiation offered by suppliers, Reliance Industries making only a
small proportion of suppliers’ overall sales and unavailability of the substitute
products.

Contrarily, the bargaining power of suppliers will be low for Reliance

Industries if:

 Suppliers are not concentrated

 Switching costs are low
 Product lacks differentiation
 Substitute products are available
 Reliance Industries is highly price sensitive and has adequate market
knowledge
 There is no threat of forward integration by suppliers.

How Reliance Industries can tackle the Bargaining Power of Suppliers?

Reliance Industries can strengthen its position against suppliers by decreasing the
dependency on one or a few suppliers. It will increase its price sensitivity.
Developing the long-term contractual relationships with suppliers from different
regions not only lowers their bargaining power but also allows Reliance Industries to
improve its supply chain efficiency. Finally, Reliance Industries can find the alternate
ways of producing the product if product demand is high enough and the firm has
required competencies and expertise. However, it requires detailed cost-benefit
analysis to determine its feasibility. Product redesign and diversification of the
product lines can also help the organisation reduce the suppliers’ power in the
market.

Bargaining Power of Buyers

Bargaining power of buyers indicates the pressure that customers exert on the
business organisations to get high quality products at affordable prices with
excellent customer service. This force directly influences the Reliance Industries’s
ability to accomplish the business objectives. Strong bargaining power lowers
profitability and makes the industry more competitive. Whereas, when buyer power
is weak, it makes the industry less competitive and increase the profitability and
growth opportunities for Reliance Industries

There are some factors that increase the bargaining power of buyers:

 A more concentrated customer base increases their bargaining power against

Reliance Industries
 Buyer power will also be high if there are few in number whereas a number of
sellers (business organisations) are too many.
 Low switching costs (economic and psychological) also increase the buyers’
bargaining power.
 In case of corporate customers, their ability to do backward integration
strengthen their position in the market. Backward integration shows the
buyers' ability to produce the products themselves instead of purchasing them
from Reliance Industries
 Consumers’ price sensitivity, high market knowledge and purchasing
standardised products in large volumes also increase the buyers' bargaining
power.

Some factors that decrease the bargaining power of buyers include lower customer
concentration (means the customer base is geographically dispersed), customers’
inability to integrate backwards, low price sensitivity, lower market knowledge, high
switching costs and purchasing customised products in small volumes.

How Reliance Industries can tackle the Bargaining Power of Buyers?

Reliance Industries can manage the bargaining power of buyers by increasing and
diversifying their customer base. It can be done by introducing new products,
targeting new market segments and adopting the product diversification strategies.
Marketing and promotional strategies can also be helpful in this regard. Building
loyalty by embedding innovation and offering excellent customer experience can
raise the switching costs, which will ultimately reduce their bargaining power.