Indian Oil Core Competency Business Essay
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Indian oil came forth as a top oil trading company among national companies in Asian pacific region as per the survey done by applied trading system (ATS). The survey is conducted among 80 major oil companies. The prestigious Deutsche Bank has featured only Indian Oil as one of the global stock picks in the oil & gas sector. Indian Oil owing to its solid fundamentals and also the proactive Strategies adopted by the Management to deal with the various challenges facing the oil sector". Platts World Energy Rankings 2005. Indian Oil has moved five places up in the Platts 'Top 250 Global Energy Company' rankings from 26th in 2004 to 21st this year. Indian Oil, India's flagship oil company, has retained it number one position by sales in the latest corporate rankings released by the Economic Times. The ET500 report goes on to add, "Indian Oil has been the largest Indian company by sales for as long as anyone can remember. India's most valuable brand Indian Oil and SERVO selected Super brands (2004-06). Indian Oil has emerged as the most trusted petrol pump brand in the country in the prestigious Economic Times Brand Equity Survey of India's Most Trusted Brands (ET, Dec. 15, '04). This company maintains a score of 80 out of 100 which symbolizes that it maintains a good corporate equity.
INDIAN OIL CORPORATION
In India there is no policy for oil consumption despite having an energy policy. The factors which constitute these are as follows: Public transportation getting privatized for the reduction of cost and better efficiency, many companies such as Tata introducing Rs 1 lakh cars and enormous investment to improve the infrastructure for railways.
The government can take good initiatives by introducing policies to reduce the demand for the petrol and diesel consumption to prevent the people of India from getting addicted to petrol. The government can also impose high duty on automobiles.
The Labor unions of India will be unhappy if the public transportation systems are privatized because they can no longer enjoy their influence to monetize their personal wealth.
The political party also determines the change in price. For example when congress won the elections it came as a boost in the value of the oil companies.
The major developments in the areas of automobile industry and aviation industry have got a multiplier effect and this will eventually increase the Gross National Product (GNP) of India.
Sometimes the government has to deliberately raise the prices of gasoline and oil in order to reduce the country's deficit. And at times the forecasts of the inflation rate made by the government exceed due to the rise in fuel prices. The inflation has a significant impact on the oil industry.
The unemployment rate in India is 10.8%. Study has shown that the unemployment rate is inter connected with the fuel prices. If there is more employment then people buy more cars and bikes and this impacts the fuel prices.
When there is a rise in inflation then there is an impact even the country's interest rates. The Reserve Bank of India recently reduced the interest rates due to high inflation. So the fuel price inflation and interest rate are interconnected.
India has a population of about 1.1 billion. There is a significant growth in the consumption of oil every year. As of 2009, it is estimated that the oil consumption is about 2.68 million barrels/ day.
India after its independence has experienced complete transformation. The major areas of transformation are Aviation industry, IT industry, Infrastructural industry, Telecommunication industry, Steel industry, Oil Industry and Automobile industry. The change in the lifestyle and the influence of more western culture has made India buy more and more bikes and Cars. This has resulted in the increased consumption of oil.
Today many foreign companies are coming to India and this has impacted the employment rate. This has helped in creating more jobs and the income distribution has increased. There is a also a significant rise in the disposable income which has increased the consumption of oil.
India is spending huge amounts of money in Research & Development. The R&D centre is equipped with state of the art technology which has helped producing more than thousands of formulations of lubricating oils.
These help to cater to different fields of Indian oil industry such as Public utilities, Defense, Railways and Transportation.
India has also won many awards for the success in focused research in the sections of lubricants, refining process, additives, grease formulations, biotechnology, emission studies, pipeline transportations and engine evaluations.
The R&D centers are fully operational to provide mechanical support to operating parameters, development of fresh processes, and evaluation of feedbacks and catalysts and licensors system know-how.
The R&D centre's refinery machinery and installations is an extremely dedicated service to Indian Oil Corporation and other oil companies.
The refineries in India are equipped with the best technology for the refining process. Government has allocated more than Rs 32000 crore for the up gradation of the machinery in the refineries in order to produce good quality of petrol. In Indian we now use Euro-IV type petrol all over the country.
Today environmental factors are one of the most important factors in the oil industry. The environmental analysis has to focus more on critical issues inbuilt in cleanups programs as they affect the refining process in today's oil industry. The environmental monitoring also affects the transport systems, storage, recovery options and utilization.
The oil spills from the tankers affects the ecosystems and damages it. Oil spills in sea is more damaging when compared to the oil spills on land. It destroys the marine life and to control these oil spills the government is taking initiatives. The control of oil spills is quite difficult because it requires complicated methods and a very large amount of manpower.
Many environmental engineers and environmental scientists are working together by the use of productive methods for the improvement of environmental effects, waste disposal and waste management.
The government is very strict in a check list which includes: gaseous emissions, solid waste and liquid effluents.
Since the year 2000 India has passed a law for every vehicle to carry out an emission test every 6 months. This was followed mostly in the European countries. It is done to check the fitness of the vehicle and to check the amount of emissions released.
The petrol stations in India should abide by the strict rules and laws for the safety of the storage of fuel. Therefore the licensing process becomes difficult.
The government has also imposed competition laws in order to protect the monarchy of competition in the market. The act also ensures there is standardization in the prices and cartelization.
Key drivers of change:
The Indian economy is the 11th largest economy in the world and is booming. This gives good image for automobile industry for their investments in the country. The FDI gives good returns to equity.
The government's proposal for more IT companies in India has resulted in more employment and this has increased the purchasing power and their buying behavior for more cars and bikes.
The aviation industry in India is booming with more players coming in. The air passenger's traffic has increased by 19% this year. The fuel used in the aviation sector is Aviation fuel.
India also accounts to more than 26% of the world reserves of thorium. It is expected to increase the country's nuclear program in the future.
Industry analysis: Porter five force analysis:
Porter five forces model is the one which helps in finding out the efficiency as well as the productivity which are faced by many companies while they are in the oligopolistic environment. The 3 major forces are from the horizontal competition and the other two are from the vertical competition. Under the horizontal factor forces that factor in are threat of new entrants, substitutes and finally threat of existing players. Under vertical, bargaining power of buyers as well as suppliers do arise. So, the porter's five force analysis goes thus:
Power of suppliers:
In the oil industry the major power is held by the supplier of oil. Here the major supplier is the ONGC which supplies approximately 40% of the total oil produce all over the world. Among the top oil importing countries India stands at 9th position with a requirement of 1.5 million barrels from OPEC. So, looking at the dependence we can say that the supplier in this industry enjoys more power and also it is having more power with regard to even fixing prices. But comparatively the bargaining power these days is becoming low as the purchase is happening from many suppliers. For ex. Indian oil has a method of purchasing. It calls tenders and who so ever bids lower price would be given the deal. For the month of October it bought a millions of barrels from Tunisian Zarzaitine crude base. After that it even bought from 4 mn barrels from Nigeria and also from the fields of bonga. So, as and when demand is there Indian oil is purchasing from different suppliers. So, from the above analysis we can say that top Indian companies like Indian have given very less scope for suppliers to hold power as they purchase from various suppliers through tenders.
Power of buyers:
For the oil industry there are two types of buyers. One is the industrial buyer and the other is the individual buyer. They both together constitute downstream buyers. These buyers get supplies from the upstream buyer for ex. Indian oil. They do have an incentive to limit supply so they keep prices as high as possible due to shrinking downstream margins. They do this because there are other competitors for them. Say for example: Indian oil is having competitors like BP, SHELL and RELIANCE in the diesel and petrol segment. Whereas, in the lubricants segment they face intense competition from: CASTROL, SHELL and VALVOLINE products. So the industrial customers who do bulk purchase is having good bargaining power as they order in huge quantity and on top of it they have good number of other suppliers too. And for the individual consumers they have got wide variety of choices. So they can switch to some other brand as there is no switching cost involved. So, we can say that buyers are having considerable bargaining power in the oil industry.
Threat from existing players:
In the oil industry the competition is very fierce as the there is trading of commodities. And there is competition even from the other industries also who supply chemicals and other fuel which acts as substitute for the oil industry products. There is an estimation that the industry would grow at around 4%. Just because it is a commodity market it gets competitive advantage by giving products to public at lower cost. This can be done by achieving efficiency in the productions and operations. Focusing on just lubricants there has been distribution of market by various competitors. Gulf oil has full acquired the buses segment, servo's share consists of Lorries and trucks. With regard to valvoline it has its market share from the drillers and other heavy equipment users. And finally Castrol has targeted bike segment and high end users. So, from the above scenario we can say that there is more rivalry among existing players in this oil industry.
Threat from substitutes:
If we see substitute for oil industry there are many. The other energy generating fuels such as coal, solar energy, nuclear power pose as a substitute for oil industry. With the countries getting more and more liberalized there arises chances for smaller firms to import oil at less price and reach out to customers at lower price who are mainly focused on price factor. So by this the market share for the larger companies like Indian oil, and shell will reduce. So some small aspects appear to be threat. And also in the oil industry some refine the used oil and sell it as the normal ones, because of this the price of the oil also would be lower and customer may opt for it. This also slightly poses as a threat to the regular oil companies. And finally there are many substitutes which pose as a threat like solar energy. Recently many are going green so as to reduce the carbon emission. So by that extent their consumption of oil will reduce. Thus, this finally poses as a threat to oil industry.
Threat of new entrants:
This is also one of the factors that look in to while analyzing the oil industry attractiveness. The threat appears to be low because to enter in to industry one should have the financial muscle and should have good distribution channels. Apart from all these this industry asks for so many environmental regulations to be followed which itself is a cumbersome process. It also requires high level of expertise in the areas of extraction and exploration and also the refining. There is more fixed cost involved in the upstream, downstream and also the other chemical products. All these factors make new entrant to think twice to enter this industry.
From the above porters analysis we can say that the oil industry is very attractive. The threat from the new entrants to the industry is low and also the bargaining power of buyers. Whereas bargaining power of the supplier is high. This won't affect much because sometimes big players would be handling suppliers' segment as well as the buyer segment. But the attractiveness is slightly reduced by the internal rivalry between existing players which is high in the oil industry.
SWOT Analysis: - A Strategic Analysis
India totally has 19 refineries out of which 10 are owned by IOCL. This is certainly strength to Indian Oil Company because it has able to get 46% of the market share.
55% of the refineries are in the northern and western areas of India which is where the demand is high, market is huge and the growth is more.
Distribution Network of IOCL a product are very well-built and by having this it has able to achieve a 49% of the market in the product pipelines and the capacity of this is 50 mmt.
IBP, the marketing company was acquired by IOCL in order to strengthen its operations in marketing activities. In the marketing infrastructure it has dominated the market such as it has 5000 distributors, 18,000 fuel stations and 6500 kerosene dealers.
By having joint ventures the company has been able to enter into areas such as storage of petroleum, lube addictives, training and consultancy, exploration, gas and petrochemicals.
The company has its presence in international markets such as Bahrain, Maldives, Bhutan, Nepal, Sri Lanka, Kuwait, Bangladesh and African countries.
The company's marketing activities in the area of lubricants are not upto the mark.
The petrochemicals industry and the technology used in another weakness.
The technology what IOCL uses is not as good as the foreign players such as Shell and British Petroleum.
The petroleum products nowadays have become a necessity for everyone. As Indian Oil Corporation is spread all over the country it has a great opportunity and wide scope in the present situation.
Since IOCL has the largest number of fuel stations, largest number of dealers and largest number of distribution network it has a superior advantage to launch new products and can go for expansion of the business any time.
Schemes such as Xtra Power can bring more ease to the customers during their buying process. And these schemes are different and unique from other companies.
IOCL is coming up with its own pipelines for the ease to supply the fuel to the aviation sector.
If the Government of India allows the private oil companies to set their own price then this can harm the market of IOCL.
The crude oil is mostly imported and sometimes it has to face loss as it is not in the hands of the company to fix the price.
The foreign oil companies are much more advanced in the field of technology and this is a threat to IOCL.
This analysis is done so as to find out the resources of Indian Oil Corporation so as to operate successfully in the external environment.
The physical infrastructure of Indian oil is wide spread all over India. It has nearly 40% share in the petroleum industry market. It has got very good sophisticated distribution channel so as operate efficiently. More and more research is going on so as to increase the product range in the petroleum segment. Recently they have started the LNG which is much better than the LPG.
The physical resource of Indian oil constitutes good infrastructure like land and buildings and also the plant and machinery.
Sophisticated Refinery centers
Ksk's (petrol bunks)
Oil quality control machines.
Grading and refining machinery.
The reputation of Indian oil is very good as it is at the 105th position among the top fortune 500 companies. This is because of its huge volume of sales. This shows that people trust in Indian oil much.
Having larger employment and has got good position among the public sector units.
Due to its performance, Indian oil has won many awards.
On the non-financial sector Indian oil holds no1 position. This was according to the week magazine publishing.
Indian oil has some foremost divisions such as R&D, Marketing, IBP, Refinery and Pipe Line.
These divisions are done according to their respective area wise in locations like Chennai oil corporation, Mauritius Indian oil, Middle east IOC and Sri Lanka IOC.
Some of the organizational resources are the machineries and equipments.
Organizational resources: the coordination and the control aspect is very good in Indian oil. It has structured its distribution channel very well. The culture across the entire organization is very friendly which is making many to give their best. Because of the friendly environment even the attrition rate is also low. On the other hand the productivity is very good from the employees.
Some of the major divisions which Indian Oil Corporations has are Refinery, Marketing, R&D, Pipe line, and IBP division.
Divisions are also done area wise such as They are also divided according to the locations like Chennai oil corporation, Indian Oil(Mauritius)Ltd for Mauritius, IOC middle east FZE, for middle east countries, Lanka IOC PLC for sri lanka.
The machineries, equipments used in Indian oil is also a organizational resource.
The major part of the capital for IOC is been fetched by equity and also debt through issues like debentures or through loans from banks. Most of the capital derived from this is deviated to R&D. This is actually done to be technologically advanced in their process of making high graded oil by the use of sophisticated technologies.
IOC holds a market share of more than 43% and it the largest public sector unit in India.
The shareholders have been given good dividends due to the good performance in their quarter 3 report.
One of the other ways by IOC for generating funds is by disposing off the old machineries and underperforming machines.
But most of the income is generated by the sales of its products such as diesel, engine oil and petrol.
Intellectual and Human Resource analysis
IOC is one of the biggest companies in India and is also one of the biggest employers. Their main strategy for recruitment of employees is by campus selection and through the publication of the jobs in their websites.
For technically qualified employees they recruit from technical institutes such as NIIT and for also they go the country's premium b-schools for their requirement of Management grads.
CA's are also recruited from ICAI. And they are the highest paid in the public sector unit.
There will be a management training program which would help the new recruits to cope up with their respective jobs.
Technology is one of the major areas where IOC has prime focus on. It's because it has to stay competent in the rapidly changing technological world. This would help them in their mining process and exploring more and more opportunities in energy.
The R&D is been given the prime importance and have also opened a separate division for it. This is located in the outskirts of Haryana. The company is always finding new ways in which they can have better products.
Up to date machineries have been uploaded so that they can improve the quality in whatever they do and have advanced machineries.
The distribution network of Indian oil is highly appreciated and the reason behind this is because of the coverage of the IOC in every state in the most efficient manner. Literally they are in every nook and corner.
The IOC is making sure that the products which they offer are of the best superior quality and they also recommend their best products to their customers. This has built the trust among the people in rural areas and they prefer Indian oil rather than other competitor.
They also try to ensure that the complaints by their customers are listened carefully and acted upon it accordingly.
IOC has always been trying to work hard so that they satisfy their customers, stockiest and their distributors.
For giving more value to the customers the organization has always thought of coming up with new products.
Through their route sales task they do door delivery for their products.
The incentives given by Indian oil is quite high when compared to the industry standards. To cite an example here, it gives 2ltrs of servo 4T free if we sell 1 case of servo 4T. (12 pieces).
For maintaining long term relationship with their customers the IOC keeps coming up with new schemes. One such scheme is reward scheme. In this Xtra reward scheme if the customers make a purchase of 2ltrs of oil then they get 2 points. So when the customers reach 100 points they can redeem the points by exchanging some gifts.
In the oil segment it is the only company which has come up with and has moved forward in bringing about eco friendly pesticides.
HARD TO IMMITATE (H):
Indian Oil Corporation has been able to reach the customers in such a unique way without having advertised so much which is a feature and is hard to imitate. This reputation created by IOC has been done over a period of time.
The distributor's relationship with the IOC is so unique and has good relationship with each other. And whenever IOC sets target the distributors make sure that they achieve it.
The handling of the distribution network of IOC is very hard to imitate.
NON SUBSTITUTABLE (N):
IOC has created such a brand image over a period of time and is non substitutable for other companies or any foreign players.
The dominance in the market by IOC over its other competitors is highly non substitutable.
Business level strategy:
Perspective of outside in:
Industry structure along with the market demand: The products of Indian oil have got demand in India as well in many other countries to which it has expanded. The market is growing at very rapid pace and also from Indian oil side there is tremendous growth to match the demand. There is an estimation that the growth rate of oil industry in India is expected to grow by 43% by 2019. And from this opportunity we can say that Indian oil can bag some of customers and increase customer base.
Gaining advantageous position: Indian oil right from its inception has understood the gap that is prevailing in the market. It is offering the products at very less price compared to its competitors. So with this customers often prefer Indian oil products rather than the Castrol or shell or any product for that matter.
Acquiring required resources: Indian oil with its constant growth has been acquiring many resources so as to match the demand as well to be very competitive. it has made many tie ups with other companies and also it has acquired many to expand in the market. Some of the acquisitions include NPCIL and many. Indian oil along with ONGC has got approval from the government to spend five times more on the acquisitions. So this is a contributing factor for Indian oil.
Mobility barriers as well the bargaining power: Indian oil's bargaining power is very good right from the beginning. People who are using Indian oil products are less likely to shift to other products as the product quality is very good. And there is general tendency among people that if they switch to some other brand they think it is going to affect the performance of the machinery. So Indian oil can use this as a lock-in factor and move ahead. But side by side the service quality has been increasing drastically.
Hybrid strategy: this strategy company is following right from its inception. Not to say that it want to somehow peep in to market. It is coming in with only motive of providing quality service at less cost. But side by side it is also keeping an eye on the achieving volumes of sales. Because as it is providing products at lesser cost in oder to be profitable and reduce fixed cost t has to achieve large volume of sales. And it is striving to reduce cost as price of crude oil is slowly hiking in the global market. So we can say that company follows hybrid strategy in its business level strategy.
Growth using Hybrid Strategy:
When Indian oil started in 1960's it had very small customer base. But if see now the customer base has increased like anything before. Currently it is having customer base of more than 1.2 million customer base. Even the global ranking it got through award of fortune 500 companies its brand image also has changed contributing to its customer base. With this awareness among people helps Indian oil to go for the hybrid strategy.
Indian oil has over 10 out of 17 refineries in India among the total of 17. With this advantage it is able to be cost effective as it can reduce cost through new technology and it can cut down its cost and offer product at lesser cost.
Price Based Strategies:
Comparative to the other players in industry Indian oil is playing on price. For ex: 1 liter of servo lubricant is priced at Rs.140 whereas Castrol is selling at Rs.180. so Indian oil is making huge price difference and they are creating customer value.
Compared to its competitors it not advertising much this is helping Indian oil to price at lower levels giving good margins to the distributors and inspiring them to promote Indian oil products.
In the diesel and petrol segment it is selling at Re.1 less compared to shell which is also playing at large in the recent years.
The new product launch with regard to pesticides is given to farmers at very low price compared to the other pest control chemicals. This product is very much beneficial to both the farmers and society at large.
Since it is state owned it gets subsidies from the government and in turn it is passed in to the customers at large.
The way it operates is different to that of others because all the packaging activities have been outsourced to others through tenders helping Indian oil to concentrate on its operational activities. By doing this it is able to work efficiently.
Because of its huge operations and volume of sales it is able achieve economies of scale.
It was incorporated in 1964 and it has been concentrating on huge machineries that would use oil. All the Lorries always prefer servo for their engine oil rather than any of the other brands which are available in the market.
It's a state owned company and people will obviously rely on it instead some other brands.
The engine oil as well as the petrol and diesel is available in almost all the states of India and also even in villages we can find it, in villages they have opened kisan seva Kendra's which are very much for the benefit of rural areas. It is present in almost 138 cities all over.
With all these Indian oil is able to attain sustainable competitive advantage in consideration of the above factors.
Market share of Indian oil:
Speaking about Indian oil market share is a cumbersome process as it has got numerous shares in the different segments. To start with Indian oil along with its subsidiaries hold more than 46% share in the petroleum related products market. Whereas in the terms of refining it hold nearly 40% share in this market. Out of some 19 refineries it holds 10 refineries which are very huge for any company for that matter. Looking at the downstream it holds nearly 65% share in the market. And it has got widest network of fuel stations numbering to about 17500 plus. To sum up the market share of Indian oil in the oil industry of India is very huge comparatively with the other companies in the same field.
IOCL has many strategic alliances under its bag. Recently it made a ratio of 50:50 alliances with the Gulf of Sudan and Iran for it's out of the country projects. This gives IOCL the opportunity to explore the market and increase its production and has made IOCL to make a good synergy with its operations sector. It has made many strategic alliances with the local distributor in every city to ease the supply of its products to its customers. Recently in the year 2009 IOCL made a strategic alliance with the "Petro Algae ltd". This was done by signing a MOU to license the agreement for supplying microchips technology for its future expansion to large scale production in the field of renewable fuels. For its Indane product (LPG) it has made several alliances with the best companies to market its product throughout the country. Some of the other Strategic alliances by IOCL are as follows:
AVI-Oil India ltd: To make synthetic lubricating oil for aviation and defense purposes.
Indo Cat ltd: To manufacture addictives.
Lubrizol India Pvt Ltd: To manufacture chemicals and market them for the use as addictives in Greases and diesel.
Petro net India Ltd: To implement petroleum projects through Special purpose vehicles.
Major Petroleum segment and lubes
Petrol, diesel, servo lubricants, marine fuels, Indane gas, and much more
LPG, lubes, petrol, diesel and also in to retail and much more
Petrochemicals, petrol, diesel and solvents, lubricants, LPG and much more
Petrochemicals, petrol, diesel and much more
many pipeline projects so as to reduce cost and ease of product availability
Lube Oil Base Stock projects and pipeline projects under
Revamp of existing Diesel Hydrodesulphurization unit, Refinery Modernization Project
Polyethylene Expansion Project, Oil &Gas Project, Residue Up gradation Project and much more
Price: with regard to price, Indian oil holds the strong position. The current price which is prevailing are Indian oil's SERVO lube is selling at Rs.150/ liter where as Castrol is selling at Rs.180/liter whereas shell is selling at Rs.155/liter. So we can say that Indian oil has got good advantage with regard to price.
Technology: Indian oil has been striving very hard to match up to the recent technology. Just because it is very large organization any sudden implementation of technology takes time. But on the other side the lube segment competitors are doing wonders with new technology especially the Castrol. It has created customized packaging which would help the customers at large.
In the lube segment Indian oil has got fierce competition from the shell company as both have got good specification of oil and the quality level of oil has been kept very high. With this we can say that in terms of quality shell is giving fierce competition and in the recent days even Castrol also has come with very good specification of oil and doing wonders. It has improved even the packaging and has improved the service quality.
Indian Oil Corporation is the largest oil company in India and is ranked 105th in the fortune 500 companies. It has the widest market of petrol stations in India. It has various products such as Oil, Natural gas, Petroleum, Lubricants and fuel. The Indane cooking gas has a customer base of more than 50 million and they have 5000 distributors all over the country. The logistics model followed by Indian Oil is very robust and this has been the key to the success of the company. The facilities are also out in the right place as soon as the products are dispatched by sea, rail and road to the customers. The company is also considering capturing the domestic market of petrochemicals which is a booming and they are planning to take on this through a ground-breaking supply of logistics. Indian Oil also caters to the country's aviation fuel requirements by giving the best quality matching with the global standards. It takes care of fuel handling and storage. It also serves to the Defense services of India and also to the VVIP's. Because of the service and the quality provided by the IOC many international and domestic flights wants to get fueled by IOC and everyday it fills about 1,600 flights in metros and remote places such as Andaman & Nicobar islands to Leh.
Approach to their Customers:
Indian Oil Corporation has 10 refineries of the total 19 refineries in India. It has a total of 18,000 fuel stations all over the country and due to this it has been able to market itself by having its presence all over the country and has been successful in reaching the customers proficiently. From the beginning Indian Oil has always believed that ethics is the key to victory. It has also believed that new technology, environment and innovation are one of its foundation stone to attract more customers.
Service provided for their Customers:
The services provided by Indian Oil Corporation have been very attractive towards the customers. To provide good service and enhanced convenience to their customers the IOC has introduced a toll free number and to take the customer feedback they also introduced an electronic feedback system. They are also giving a personal accident insurance scheme to its customers under the IOC loyalty programs. It also has a vibrant website which helps customers to know more about the company's product and services. In the product line of LPG they also give a unique user id to every customer so that the customer has more access to its account and order when ever required.
Technology used and implemented:
Indian Oil Corporation has state of the art technology in their refineries and has a well equipped Research and Development centers. The R&D centers have expertise in the field of petroleum industry. They have also set up operational green field refineries and brown field projects have been established for expansion purpose. The IOC has also initiated the pipeline transportation experience in India and also marketed the product throughout the country to ease the reach of their petroleum products to every customer everyday. The IOC has also lead their R&D expertise to countries such as Kuwait, Sri Lanka, Tanzania, Malaysia, Abu Dhabi, Bhutan, Iraq, Zambia, Nepal, Algeria, Bahrain and Nigeria. In the downstream sector of the company the IOC has a unified sync with the R&D operations. Some of the operations are as follows: planning, execution, monitoring, quality control, quality check, technical services, logistics, and safety of industrialized hygiene.
Recruitment of Employees:
As of 2009, IOCL has 37,000 employees. The IOCL visits reputed institutions such as NIT's, IIT's and other technical universities recruiting students of final year students of engineering. For their business management they go to reputed management institutions to recruit MBA's. Also they go to Institute of Chartered Accountants of India (ICAI) to recruit CA's to look after the auditing and taxes benefits of the company. IOC also post advertisements in the newspapers. The candidates can apply online if they are interested and the company will respond to the desired candidate after meeting all the criteria and eligibility. The growth of an employee depends upon its individual performance. The IOC also gives many perks and benefits to its employees and also a few welfare measures.
The IOCL infrastructure is one of the biggest in India. As mentioned earlier it has 10 refineries of the total 19 refineries in India. It is planning to invest 48,000 crore in the new refinery which has a capacity of 16 million tonnes a year. This also includes pipeline infrastructure in the whole country. The company has always been growing in terms of fuel stations in India. The IOCL has also established new infrastructure for its product storage and for the ease of distribution network.
The strategic entrance of Indian oil with new products happens through hybrid strategy. The products from the lube sector are priced low with huge features attached to the product matching that of competitors. But, its competitors products are priced very high compared to Indian oil products. This has been followed all over India and the price per liter of engine oil falls at Rs.130/liter. Castrol one of the competitor in recent years is pricing the same engine oil at Rs. 180/liter. This shows that it is offering its products to public at 25-28% cheaper price compared to its other competitors. This has affected the strategies of Castrol as well as the shell. As a huge massive organization it can achieve huge volume by offering at the lower price. Recently Indian oil came with product called agro spray for this they have used differentiation strategy. Its features are very good compared to the other related products which are in the market. The specialty is that when this spray is been used it helps in preventing the fruit from getting contaminated. Other pesticides which were used by the farmers were very much dangerous to health. The specialty of the agro spray is that it won't kill pests by poisoning but this kills by making them suffocate. And it is not health hazardous kind of thing when compared to other pesticides. It has been priced very low compared to the other competitor products which are prevailing in the market. The major factor which can seen for pricing low are:
Its advertising expenditure is very less compared to its competitor. They are into giving more benefit to the distributor as well as the customer because they are achieving their profit through large volume sales.
The organization is very huge and it can achieve profits through economies of scale.
Innovation has always been a key towards the success of IOCL. IOCL has also bagged many awards such as 'Safety Innovation Award" and "Golden Peacock Innovation Award". The R&D team is one of the main contributors towards Innovation. This department was presented with the award of "Petro Fed Innovator of the year". This was given because of R&D's contribution towards developing and marketable addictive for Diesel engines which is SERVO. Servo is very cost effective and gives good performance with less maintenance. This is patented by IOCL. IOCL has as many as 60 innovation patents along with international patents in different countries. The technology used in Liquefied Natural Gas (LNG) is a new and innovated process. It proposes to reach bulk customers at their doorstep to deliver its product through pipelines. The proposed terminal for LNG has been identified to be in Chennai. IOCL has also promoted innovation in the field of Hydrocarbon sector. The Oil and Gas sector in IOCL recognized that innovation is something which is need of the hour for the survival of the business.
Benchmarking is something IOCL has always and continuously believed in when compared to its peer and other corporate companies. Thus it has been one of the most admired companies in India. This gives IOCL the opportunity to make others aware of the best practices followed with the company. IOCL made a benchmark by setting up a Hydrocracker unit in 2009. It was the fastest mechanical completion in a very short time of 59 days which was a benchmark execution in the refinery industry of India. It has also made a remarkable innovation in the HRD systems by pioneering the labor practices which it uses in its organization which is again a benchmark made by the company. Even in the operations it has made a benchmark by having a quality check in the day to day activities.
One of the biggest leading public sector units in India is the Indian Oil Corporation. The IOC and many of its other entity units owe more than 43% of the market share in the petroleum products, about 40% share in the refining process and more than 69% in the pipe line capacity in India. The IOC owns and operates 10 refineries efficiently which encompass about 61% of the overall refineries.
It was in the year 1959 when the IOC had started its operations. It initially started off as an Indian Oil company but later it was renamed and changed to Indian oil refineries. Later it was in the year 1964 when it was named as the Indian Oil Corporation along with the mergers of Indian refineries.
In India it owns and operates the largest number of fuel stations i.e. it has crossed more than 17,000. In addition to this the Indian Oil Technologies Limited (IOTL), which is basically a subsidiary of the IOC, was formed in 2003. This was formed in order to develop the technologies and market it. These technologies are built in the R&D centre of IOC.
The product line of Indian oil Corporation is huge. Some of the variety of products are like diesel, petrol, naphtha, kerosene, aviation turbine fuel, paraffin, lubricants and bitumen. And their most prominent brands are Indane LPG, Xtra premium petrol, Auto gas, Servo lubricants and Indian oil aviation.
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