Reliance Industries Limited Business Environment Analysis

belief Industries Limited Business Environment AnalysisBusiness environment is the constraints and opportunities that hedge our businesses. This is astir(predicate) exploring the nature of the business in which it is being carried out.The abbreviation in this essay will be on business environment in which Reliance Industries Limited ope localizes.Reliance Industries Limited or RIL is comm simply known as Reliance. The order was founded by Shri. Dhirubhai H. Ambani in 1977 the company was initi bothy sidetracked as a cloth company and lead its evolution as a world leader in materials and the energy value chainThe Companys operations can be classified into four segments namelyPetroleum Refining and Marketing businessPetrochemicals businessOil and Gas Exploration Production businessOthersThere argon ii types of business environment INTERNAL and EXTERNAL environmentBefore coming on to the external forces, the internal forces should be made clear.The internal forces are those forces which are controlled by the memorial tablet itself much(prenominal) as the resources knowledge and decision makingReliance in the above context has a wide variety of resources such as swell up do employees and infrastructureAs far as knowledge and decision making is concerned Because Reliance recruits very well qualified persons thereby it reflects when it comes to the decision making process of the companyExternal business environment comprises of Political, Economic, Social and Technological factors. These factors can have appositive as well as a negative impact on the company. There are two types of external business environment i.e. micro and macroExternal micro factors are companys suppliers, transporters, agents, distributers, and wholesalers.External macro factors comprises of Political, Economic, Social and Technological factors.The external micro factors can be influenced by the geological formation whereas macro factors cannot be influenced by the organisationP olypropylene market in IndiaOver the past forty years polypropylene growth has exceeded that of other major plastics and has become the largest masses commodity resin. finishedout the history of PP through seek efforts of various companies, PP has continued to rapidly evolve with brisk generation of catalyst and post reactor technology. Because of the improvements made to process and coat technology, this polymer has developed into one of the cost- in effect(p) bulk thermoplastic. Polypropylene is the worlds fastest growing polymer with an average growth rate of active 7-8%.It is very instantant for a company to understand and try to manage the external micro factors i.e. PEST forces as discussed above(P)OLITICAL FACTORSPolitical factors include government policies relating to the industry, tax policies, laws and regulations, trade restrictions and tariffs etc. As in any part of the world, political influence is highly essential to start a business in India. Especially if you are planning to start a multi-billion business, some sort of political patronage is an absolute necessity. Not only for safeguarding the disport of the company but even to begin the process of acquire the required sanctions, one requires hold in the high echelons of politics and administrative circles.Reliance industries excessively hold a high echelon of political and administrative circles so as to safeguard the interest of a company and for getting the required sanctions.(E)CONOMICAL FACTORSThe economic factors relate to changes in the wider economy such as economic growth, interest rates, exchange rates and inflation rate, etc. These factors comprise of Government intervention in the free market, infrastructure quality, economic growth rate, availability of labour, wage rate of labour.(S)OCIAL FACTORSSocial factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, changes in tastes and buying patterns, etc.Safety o f a person overrides all the production targets is the Health, Safety and Environment Policy of Reliance.Occupational Health Centres (OHCs) have been established to provide education on health and knowingness issues, diagnostic camps and health exhibitions are besides arranged. RIL besides offers periodic medical examination of all the employees (including Contractors employees) along with their family members. In case of any hospitalisation RIL employees are supported by consistent co-operation and cashless hospitalisation amenities from one corner of a country to another. The company also provides fully equipped hospitals in all its major townships. The company also helps conduct Periodic potable water sampling analysis and health audits for the canteens and guest houses.A new initiative was launched by RIL called (CASHe) programme i.e. Change Agents for Safety, Health workplace Environment. This initiative was launched to promote healthy workplaces and reduce health and safety risks. It has also facilitated the Syndicate to advance its enactment on the occupational health and safety front.The companys long term objective is to address all environmental initiatives as they want to become more positive about water conservation, carbon neutral and conduct the maximum possible recycling and reuse of wastes. The company has further been reinforced in context of companys management framework with roles responsibilities, group standards and defined structures.RILs Patlganga plant has changed over to use of a cleaner fuel. This resulted in substantial reduction of suspended particulate substance and sulphur dioxide releases in the air.RIL has indoctrinated a practice to be in coordination with nature and in this circumstance, afforestation, upkeep of green belts and promoting lush green surroundings as they have decided to set around 1,00,000 plants at the OT, gardens, vermin-compost of waste and its use as manure, they also reuse treated water for horticultur e activities as a routine.(T)ECHNOLOGICAL FACTORSThe technological factors relate to the application of new inventions and ideas such as RD activity, automation, technology incentives and the rate of technological change.RIL has always laid emphasis on RD, technology development and innovation. The reliance Group (RTG) undergoes various research and technology functions which help them produce improved value supply by leveraging all the abilities, and creating new prospects at the interfaces.At the time of recession also RIL did not even step back their zeal to innovate helped them convert the adversity into an opportunity. The company launched a ground-breaking initiative called mission kurukshetra which was aimed at emerging the organisation to rise to the occasion and also help the company to emerge stronger.This initiative not only helped in combatting the challenges with a win but also set serial ideators the enterprise facilitated them by rewarding them for their leadership. The Leading Expert Access Programme (LEAP). The people at RIL are inspired by leaders and also provide them access to global thought.The RIL draws an agenda on innovation with the help of The Reliance Innovation Leadership Centre (RILC) which helps the company to stay amongst one of the near innovative companies in the world. RIL continues its journey to make improvement a way of life and want to confirm that the growth of the next generation are led by innovation.Advantages of PEST analysisPEST analysis is an effective and efficient tool, which provides a framework to an organisation for effective decision making. By making effective use of PEST analysis, one can ensure affirmative orientation of the business organisation. PEST analysis also helps an organisation in avoiding decisions which should not be taken. PEST analysis helps in making lawful decisions for the companies which are willing to enter into a new market.Disadvantages of PEST analysisPEST analysis considers only the external business factors, but in reality all the factors should be considered in order to make effective decisions for an organisation. Most of the data gathered through this analysis is based on assumptions, which sometimes may not prove to be fruitful for an organisation. The rapid changes in the world economy can also make it difficult in analysing PEST factors for an organisation.Another factor which comes under consideration is the SWOT analysis of the company SWOT stands for strengths weakness opportunities and threats.RILs SWOT analysis is as follows(S)TRENGTHSConsolidationsThere are only two main players of in petrochemicals and a solid consolidation has been seen in last few years as 85% of polymer capacity is with these companies namely reliance and haldia(W)EAKNESSLow bargaining power from the suppliersThe input prices form nearly 50-60% of the raw material costs. Reliance being a petrochemical player does not have much of a negotiating power counter to the suppliers. T herefore they always remain unprotected to the prices of the raw material.Low bargaining to from the customersAs there is an increase in the input cost therefore the companies are not able to offer any price reductions or bargains to the customers.(O)PPORTUNITIESLow per capita incomeCurrently, domestic per person polymer consumption is nearly 4 kgs while if we see the global average it is nearly 20 kgs. This tells the fact that there is huge scope of volume expansion in INDIA as the market to be selected is very massive.therefore there is a massive scope of product development. Also, currently, India has a chemicals trade deficit of about US$ 1.5 bn a year, which leaves enough investment opportunities in the industry.(T)hreatsCustoms dutiesThe polymer industry has a protection from overseas competition by leveraging high import duties imposed by the government. However, of late, Import duty on polymers has been steadily reduced and is currently at 20%. As part of its commitment to various four-lobed and bilateral trade agreements, the government is likely to reduce duties.