Strategic Paper Reliance Industries Ltd - Jamnagar Complex

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Strategic Direction Paper
1993
Reliance Industries Ltd – Jamnagar Complex

Prepared by John Stevens

Contents

Introduction4
Current Manufacturing Position5
Global Crude Oil Production5
Global Oil Consumption5
Global Oil Refineries Capacity5
Key problems/opportunities currently facing the Oil Refinery Industry6 A limited supply of the natural resource crude oil6
Problem6
Opportunity6
Decline in Oil refinery numbers & a significant decrease in new refineries being built6 Problem6
Opportunity6
Demand is forecasted to drastically increase globally7
Problem7
Opportunity7
Threats of new replacement energies constantly emerging7
Problems7
Opportunities7
Concern over decreasing Profit Margins within the industry8 Problem8
Opportunity8
Environmental Issues are playing a stronger part in shaping the Industry8 Problem8
Opportunity8
A shift in product demand and new quality standards being set for new and existing products9 Problem9
Opportunity9
Recommended course of action and a timeline for the implementation of the solutions proposed10 Conclusion11
Appendices12
Graph 1.112
Graph 2.112
Graph 2.213
Graph 2.313
Graph 3.114
Graph 3.214
Graph 4.115
References16

Introduction
This strategic paper is offered as an opportunity for Reliance Industries to move forward into a new “chapter” for this illustrious and prestigious company. A chapter that if successful, as planned, will ensure that not only Reliance Industries position as India’s premier company will be enhanced, but also thrust the company onto the Global stage as a major player worldwide. The oil refinery business is at the crossroads. New factors that have not been an issue in the past are drastically affecting the field of play. These factors are as follows; a limited supply of the natural resource crude oil, declining oil refinery numbers and a significant decrease in new refineries being built, demand is forecasted to drastically increase globally, threats of new replacement energies are constantly emerging, concern over decreasing profit margins, environmental issues, a shift in product demand and new quality standards. This Strategic Direction Paper will demonstrate that the proposal of building the Jamnagar Complex in an environment of industry confusion is an opportunity in disguise to good to miss. By reviewing the current environment and systematically identifying the industry problems & demonstrating Reliance’s unique advantage in these cases compared to its competitors and providing a timeline for implementation that fits within this window of opportunity. The field is much clearer and by eliminating these factors what is left is a field of growing demand that, if Reliance can supply, will open a small and short window of opportunity that if taken could establish Reliance Industries as a major player in the Oil Refinery business, figuratively speaking, “overnight”.

Current Manufacturing Position
Global Crude Oil Production
Global Crude Oil Production has been very stagnant since 1980 to today at around 60 million barrels per day. •The start of the 1990’s has seen the Middle East take up most of the slack left by the fall of the USSR. Refer Appendix Graph 1.1

Global Oil Consumption
Global Oil Consumption currently shows not much change since 1980 with a demand of 62 million barrels per day to today’s current demand in 1993 of around 65 million barrels per day hence demonstrating a stagnant market. •Although 1992 to 1993 has shown a major swing in consumption trends with a major decrease in demand from Eastern Europe (mainly due to the fall of the USSR) and a sharp increase in demand from the Far East and Oceania Region balancing out the decrease in Eastern Europe. •Assumption - Forecasts from Analysts indicate a continuing sharp increase in demand in the Far East Oceania Region driving significant demand in the total market. Refer Appendix graph 2.1, 2.2 and 2.3...
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