Reliance Industries Overseas Market Entry Actions

Globalization has led to “the increase in international mobility of financial capital”. (Milward, 2003:49). This inspires businesses to expand to be able to operate in the global market; therefore, expansion to the international market of any business is a critical issue that is always on the strategic plans of most businesses. However, it’s important to note that internationalization is not an easy task for majority of the retail businesses. A business is required to meet several preconditions that may be internal or external to the business in order to have its way on the global market. Most domestic business sees entrance to the global market as a potential growth strategy. However, Akehurst and Alexander (1996:16) suggests that “these forces must include maturity in the home market, enhanced communication technology, financing opportunities, lowered barriers to free trade and the changing faces of retailing through mergers and acquisition”. It’s therefore evident that international market entry should take a gradual process following systematic growth and good performance of the business domestically before landing on global sphere.

This paper is therefore going to outline plans that Reliance Insustries has put in place for the strategic entrance into the international market. The plans are geared to make Reliance Insustries stable, competitive and continue in the expansion mode to all corners of the world.

Proposals concerning the effective management of the proposed action to enter into the overseas Market by Reliance Insustries

According to Doole, Lowe and Philips (1994:198) states situational analysis to be “the process where by a company develops an understanding of each individual market and then evaluates its importance for the company”. To begin with, before settling on the decision of entering international market, the marketing team of Reliance Insustries evaluated its stakeholders expectations, carried a thorough analysis of the company’s strengths, weaknesses and opportunities available in the external environment and possible threats. They also carried out some market analysis about the company’s regions of interest. Some of the analysis included a study on the target market. The study was indented to establish the target group cultures, the familiarity of the target market with the company’s products and the infrastructure development of the target market. It’s as a result of the market analysis that this expansion plan was crafted to facilitate the growth of the company in the global market. Therefore, the expansion plan of Reliance Insustries follows a six step as per Doole, Lowe and Philips (1994:198) that prioritizes stakeholder expectations, situational analysis of environment and opportunities, resources and capabilities, corporate objectives, marketing strategies, implementation of the plan and control and feedback as the major steps in entering international market.

Stakeholders Expectations

Any advancement of the company is shaped and guided by the expectations of its stakeholders since they have both direct and indirect determination of how the company resources are used in the accomplishment of the company’s strategic goals. Stakeholders of Reliance Insustries expect that within the first two years after entering into international market, the company will have attained a breakeven point in its operation. It’s also in the expectation of the stakeholders that in the process of expansion to international market, the company will only use its already accumulated resource base and it will not go further for external aid.

Basing into account these expectations, the company expansion plan to international market is intended to cost $1,000,000,000 from its own resource base. External grants and loans are therefore out of question for this expansion exercise. The break even point is estimated to be met after one year within its first phase of operation in the international market. The faster rate of break even point is attributed to the limited level of competition in these regions and stronger marketing strategies that the company will employ.

Resources and Capabilities

Reliance Industries management team considered the resources and the capability of the company to be able to flex into an international market. Resources and capability are intended to bring about a differential advantage. According to Akehurst and Alexander (1996:18) Differential advantages are “key elements which a firm can exploit in its pursuit of customers and profits for successful long term performance”. How a company’s resources are managed determines the company’s successes in terms of revenue turnover. In respect to resources and capability, Reliance Insustries boosts of a strong resource base which include strong human resource of most qualified personnel in the field and also a strong capital base for its operation. The company plans to put into optimum use its already accumulated resources in the expansion process by purchasing new machinery and technology in order to meet the increased demand of the products in its new exploited regions.

The company also intends to put up new production plants in these regions by the end of the first two years. This will reduce exportation costs of these products as it’s the case right now and also guarantee availability of these products in the market. Currently, the company is in the position of producing and supplying of the products in all of its niche markets, but installation of new plants is necessary since the market is expected to grow even further. In addition, Reliance Insustries has strong communication technologies in place. Therefore, the company plans to use it as a competitive advantage over its existing competitors who do not have sophistication in their communication systems. The company also plans to invest more in the communication sector in order to be a head of their competitors. This is designed to maintain and improve further profitability of the company even in the process of expansion.

Corporate Objectives

Reliance Industries objective have been crafted based on the expectations in performance. The company’s objectives have been established where by profitability of the company have been compromised for the market share during the initial entry stage to the international market. However, the company’s objectives shifts in dimension after the first two years in the international market to emphasize more on quality and high image value of the company on the market. To achieve the company’s objectives in this globalization process, the firm resorted to use came up with a detailed activities which include; good marketing strategies and development strategies.

Marketing Strategies

Internationalization means penetration of the product to foreign lands. It is therefore imperative to come up with good marketing strategies in order to realize corporate objectives. In the case of the Reliance Insustries, it will employ penetration market style, market development and product development and diversification as according to Akehurst and Alexander (1996:203). On the part of market penetration, the company will employ exportation method.

Export of the products will be used as the initial step in reaching international markets. It’s in the plan of the company to use services of the Export Trading Company to buy our product and sell on our behalf to the target clients abroad. However, this will only be used as entry mechanism to the market. According to Snow et al (2010:209), services of Export Trading Company (E.T.C) aid business as it “helps them export through a relatively simple inexpensive channel, in the process of providing feedback about overseas market potential of their products”. However, the services of E.T.C will only be sought during the initial stages of internationalization, after the business stabilizes in those regions; Reliance Insustries will withdraw the services of E.T.C and therefore be charged with the responsibility of exporting its own products. It’s also agreed that the withdrawal will be gradual to avoid shocks during the changeover that might have negative effects to the company business.

The company will also use agents and distributors in these new regions of expansion. Agents and distributors are one of the best options of using in expanding business in the global market. In utilizing the services of the distributors, the company will require them to treat the company’s products as its primary line. However, it is important to note that in the case where “distributors adds your line to competitive lines, overprices your products and then effectively locks you out of the market in favour of your competitors” (Koslow, 1996:94). With the emphasis that our company products take first line, it will help the company to have its feet on the market. The company will also put into consideration unique legal consideration of specific region in selecting these agents and distributors since there are different legal requirements and limitations in these regions. Specific area of concern will be on distributor termination terms since in most cases it’s costly to terminate a distributor especially if there is interest of replacing the distributor with another. This will be handled carefully to prevent court tussles that may result from such incidents which may be costly to the company in terms of compensations.

Development Strategies

These strategies will guarantee a continued existence of the firm in these regions and ensure its continued growth. Therefore, besides use of E.T.C, Reliance Insustries intends to acquire foreign license in the operating regions. This is intended to give the company the permission to distribute its products, use its trademark and the patent in these regions. Acquisition of the license according to Snow et.al (2010) is meant to protect the business against any legal barriers and to provide access to the local partnership in these regions. Schaffer, Augusti and Early (2009:42) affirm that “acquisition of the license, the firm will have obeyed private international law that deals with the rights and responsibilities of private individuals or corporations operating in an international environment”. Its important to the firm to obey international law so as to avoid being involved in breach of these laws which may lead to heavy fines and sanctions that can affects the business in a greater extend.

In addition, Reliance Insustries appreciates the fact that it will be operating in the environment where there are different codes of conduct and general ethical issues. In most cases as postulated by Travis (2007:82), “companies can find themselves in a grey zone where ethical standards vary from one region to region”. To be able to cater for these shocks, the firm has decided that in its expansion, it will be able to recruit the locals from these new regions to its human resource team so that they may facilitate quick penetration of the company activities in their regions.

Implementation of the Plan

For the expansion process to be realized, these plans need to be executed and implemented in the agreed procedures. The implementation of the plans is geared toward realization of the plans and in the long run increasing scale of income returns of the firm. Implementation of the plan will seek to increase the growth of the products on the market. This implementation will focus on increasing the number of customers and increasing the quantity purchased by customers (Pradhan, 2009:144).

To improve on number of customers, marketing strategies will be intensified in all corners of the firm’s presence. For example advertisements will be employed in all types of media i.e. print and non print, electronic and non electronic. However, advertising using the company website will be given priority since this can reach a wide range of clients despite dispersion of geographical locations. The main advertising objective is to meet corporate strategic objectives. The company will therefore use advertising to “give an added value to brand by appealing to the consumers reasoning, their senses and emotions” (Bootwala, Lawrence and Mali, 2007:32). However, each and every promotional technique will be tied to a specific marketing objective that must be attained through its implementation.

It’s therefore important to mention here that in implementing the firm’s marketing objective, a promotional mix strategy will be used. These include advertising where comprehensive advertisement will be used through paid air time of local media operating in these regions, there will be sales promotion where by the firm will be giving out incentive and offers on its goods to encourage clients to purchase it’s products. The company will also raise publicity campaigns in these regions using several celebrities in respective regions. In addition, the firm will also employ use of direct marketing where company prospects, personal presentations, use of call centers will be used to reach more clients in the market. According to Cummins and Mullin (2008:37), “the division of communication tools within the promotional mix helps in a number of ways. It gives a rough and ready definition of what each marketing tool is able to contribute”. This will help the image of the company and ensure that there is value added to its products.

The firm will also acquire new information systems in order to modernize its operation in this expansion process. This is important since technology is rapidly changing and it’s always advantageous to keep company’s systems up to date to ensure efficiency and effectiveness in the business operations. To be viable in the competition arena, organizations are required to be at abreast of technological changes and therefore, the company will adopt distributed workforce systems to be able to manage the distributed nature of business that the company has ventured into. The distributed system will bee useful in the business operation since it will enable employee to work from their virtual offices especially the marketing team which spends most of its time in the field with clients.

However, in the implementation of the plans, there are several challenges that the company should be ready and prepared to handle in the process of expansion. Dunning(2010:219) state that “we live in a world characterized by geographical spread of market based economic democracy, tempered to some degree or other by the intervention of national and supernatural regimes to protect or enhance extra market political or social objective”. It therefore important to note that despite the initial analysis made that showed a viability of the company business in these new ventured regions, the sailing will not be smooth in this entire environment. The firm has therefore crafted some counteractive measures incase things do not work out as earlier predicated. Some of the regions that the firm is venturing into are corruption zones and therefore, the company has crafted policies, rules and regulations to guard against this vice and anybody in the company fraternity who will be influenced will be disciplined according to the company laid down procedures. Business is also being operated in an environment with political turbulence. In preparation of any uncertainty in relation to these kinds of political environments, the company has insured its business processes against political uncertainties. This will ensure company’s business continuity even in the event of unfavorable political environment.

Control and Feedback

For the purpose of controlling and maintain the company’s products standards in the new ventured regions, the company will encourage its clients to “examine the goods for defects within a reasonable period of time after their delivery and notify the seller immediately of any defects found during the examination” (Campbell, 2004:427). This will help the company to respond swiftly to the concerns of the clients in relation to the company’s products and therefore, any hinge will be addressed instantly. Products that will be found with defects will require that the company replaces them with better tested products on the cost of the company and not on the client’s cost. This means that all expenses that are incurred for example shipment of the goods will be done on the company’s expenses. This will be done to maintain the clients trust and faith in the company’s products.

It is important to note that “companies creating and selling a product are held responsible for some level of due diligence regarding their product’s safety” (Kline, 2010:119). In respect to this, the company will pay optimum attention to procedure in production of its products to ensure that it meets the set international standards and quality controls so as to prevent court tussles that may result due to some violation of these standards. This will guarantee clients faith and trust in the company products.

Conclusion

To wind up, it’s important to understand that “expansion on business structure cannot be understood without identifying the major operations of the business and his strategies to achieve such expansion” (Chan, 2006:27). Without strategic plans in place, things are likely to be done in a haphazard manner that is likely to turn the business into a loss venture. Its therefore important to put priorities right in the expansions plan to ensure that the core objectives, values, mission and vision of the company are realized in the expansion process.

However, globalization in business poses several challenges despite having some benefits. According to Luo (1999:7) “a major challenge for global strategic management today is improving the competence and sustaining the superior performance of MNEs”. In the global market, there is more competition and therefore, the business is required to perform competently against other players in order to maintain and advance its business goals and objectives.

It’s also necessary to continuously determine whether the expansion process is going to the right direction, “financial performance of the business in contribution to the stakeholders” (Dlabay & Burrow, 2008:129). Good financial turnover indicates that business expansion to the international market is meeting its aims and that it’s healthy to the business. However, a continued negative turnover in the revenue is a pure indication that the expansion process is harmful to business operation.