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    Reliance Jio - Diversification

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    Manas Kapoor
    Reliance Industries diversified into telecoms through Reliance Jio, an unrelated area from its previous businesses in oil and gas and retail. This represents an initial phase of heterogeneous (conglomerate) diversification aimed at appealing to new customer groups and high returns in new industries. Once established in telecoms, Reliance will pursue a second phase of concentric diversification to fully utilize its new technologies and marketing capabilities through related new businesses leveraging its telecom networks and apps ecosystem. This two-phase strategy allows Reliance to profit from economies of scope by creating multiple revenue streams from a single telecom capability.

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    Reliance Jio - Diversification

    Uploaded by

    Manas Kapoor
    586 views1 page
    Reliance Industries diversified into telecoms through Reliance Jio, an unrelated area from its previous businesses in oil and gas and retail. This represents an initial phase of heterogeneous (conglomerate) diversification aimed at appealing to new customer groups and high returns in new industries. Once established in telecoms, Reliance will pursue a second phase of concentric diversification to fully utilize its new technologies and marketing capabilities through related new businesses leveraging its telecom networks and apps ecosystem. This two-phase strategy allows Reliance to profit from economies of scope by creating multiple revenue streams from a single telecom capability.

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    What kind of diversification is followed by Jio

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    Reliance Industries diversified into telecoms through Reliance Jio, an unrelated area from its previous businesses in oil and gas and retail. This represents an initial phase of heterogeneous (conglomerate) diversification aimed at appealing to new customer groups and high returns in new industries. Once established in telecoms, Reliance will pursue a second phase of concentric diversification to fully utilize its new technologies and marketing capabilities through related new businesses leveraging its telecom networks and apps ecosystem. This two-phase strategy allows Reliance to profit from economies of scope by creating multiple revenue streams from a single telecom capability.

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    Download as docx, pdf, or txt
    586 views1 page

    Reliance Jio - Diversification

    Uploaded by

    Manas Kapoor
    Reliance Industries diversified into telecoms through Reliance Jio, an unrelated area from its previous businesses in oil and gas and retail. This represents an initial phase of heterogeneous (conglomerate) diversification aimed at appealing to new customer groups and high returns in new industries. Once established in telecoms, Reliance will pursue a second phase of concentric diversification to fully utilize its new technologies and marketing capabilities through related new businesses leveraging its telecom networks and apps ecosystem. This two-phase strategy allows Reliance to profit from economies of scope by creating multiple revenue streams from a single telecom capability.

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    © All Rights Reserved
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    of 1

    Q) Reliance Industries has entered the telecom sector via Reliance Jio.

    What kind of
    diversification is it? Analyze.

    Reliance Industries has diversified into unrelated area by diversifying into the telecom business,
    where they cannot leverage any kind of capabilities that they have developed via previous
    ventures of Oil & Gas. Historically, they have always ventured into unrelated diversification
    when they entered the retail business after Oil & Gas.

    First phase of diversification strategy is called as Heterogeneous (conglomerate)


    diversification. The main aim of this type of diversification strategy is moving to new products
    or services that have no technological or commercial relation with current products,
    equipment, distribution channels, but which may appeal to new groups of customers. The
    major motive behind this kind of diversification is the high return on investments in the new
    industry. Furthermore, the decision to go for this kind of diversification can lead to additional
    opportunities indirectly related to further developing the main company business - access to
    new technologies, opportunities for strategic partnerships. The main aim of this business is to
    venture into a sector where they could leverage the existing network of Reliance Retail &
    launch a series of new services which would then benefit the company to grow its core business
    & service like reliance retail can now have new technological capabilities of E-commerce as well
    as the use the new series of new technologies of LTE network for supply and other activities.
    Also the company is going to create new capabilities in a new field which would allow it to enter
    new business by using the capability created by reliance Jio.

    Once reliance Jio is into the market and its capabilities in the field of LTE networks & Services
    like TV & music is created, Reliance would than go into Concentric Diversification in stage 2 of
    Reliance JIO. Concentric Diversification can termed as enlarging the production portfolio by
    adding new products with the aim of fully utilizing the potential of the existing technologies and
    marketing system. The concentric diversification can be a lot more financially efficient as a
    strategy, since the business may benefit from some synergies in this diversification model. It
    may enforce some investments related to modernizing or upgrading the existing processes or
    systems. Here reliance Jio would enter a series of new businesses which are related to its
    existing capabilities which includes networks & Apps ecosystem.

    Thus they are going to use the economies of Scope to enter multiple business by just creating
    a capability for a single business i.e. Telecom which would ultimately give them profitability
    by creating multiple streams of revenue from a single capability i.e. of LTE Towers.

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