Reliance Big Entertainment: The challenges

Reliance ADAG has experienced tremendous success in the past however the pace and scale of their operations has already attracted enough critics. They have successfully entered new industries with disruptive business models and have been able to garner a big market share by effecting business-synergies through backward and forward integrations. However an equally compelling argument is to say that their recent successes can be attributed to the phenomenal growth of India as a whole. With the growth rate slowing down the world over, Reliance-ADAG needs to make strategic choices, develop an appropriate work-culture and actively seek out synergies. With ADAG getting into so many different lines of businesses, it also needs to carefully balance its corporate image, strive for external and internal fit of its strategic choices and work on creating an enriching work environment so as to be able to attract and retain top managerial talent.

 

Reliance Big Entertainment (http://www.rbe.co.in ) is inspired by the great vision of end-to-end integration in this highly attractive yet competitive ‘Media and Entertainment’ industry. Despite of its large footprint, it is still struggling to establish itself as the dominant player. Below is a (non-exhaustive) list of key challenges it is facing:

 

·        Reliance-ADAG is one of the most powerful corporate in India however RBE it is yet to establish itself as significant player in international markets. There are many well-entrenched players like NewsCorp and Disney hence establishing its international presence is one big challenge for Reliance-ADAG.

·        RBE has a very turbulent growth story that does not present coherent strategic choices. Its new businesses, tie-ups and acquisitions are isolated zigsaw pieces that are yet to be put together. The challenge is significant because it doesn’t appear to have paid much attention to organization culture while building / buying isolated businesses in ‘Media and Entertainment’ industry. These individual businesses have to pull together and present themselves as one brand, e.g. Disney. My take is that the change management is going to be challenging and painful. Recruiting and retaining top managerial talent is also going to be a problem.

·        As I mentioned about the isolated jigsaw pieces in above point, there is huge potential of synergy. However synergies don’t just happen, they need to be derived, and achieving that remains a big challenge. There is no significant cross-promotion as of now.

·        Reliance-ADAG still carries the Reliance legacy in terms of brand image. It just cannot shake off that to become an innovative and fun-loving company overnight. Its brand image is definitely at odds to becoming a player in entertainment industry. The most critical factor in its success, and its biggest challenge, is in successfully associating itself with youth.

·        One key reason of its target group’s alienation is probably the history Rel-ADAG has inherited from Reliance. The company is still viewed with deep-skepticism as is obvious by going through various blogs. It needs to invest heavily in social-capital as that is essential for its success in Media and Entertainment industry.

·        Media and Entertainment industry thrives on innovation and creativity, which is traditionally not a stronghold of Reliance-ADAG. There needs to be a concerted effort to inject it in organization’s DNA. Its present offering sorely lack on creativity.

·        As this industry is getting more lucrative and Indian growth story is gaining currency, there is an eminent threat of international biggies entering Indian market.

·        Rel-ADAG has been investing heavily in its tie-ups and other acquisitions. Some businesses like DTH have very long gestation period and Rel-ADAG is offering these services at unsustainable low rates. This puts a big question mark on its profitability and ability to keep pumping in money in new ventures.

·        Reliance-ADAG’s current businesses in Media and Entertainment industry are weak-brands at best. Big FM is ranked 6^th, Adlabs doesn’t compare favorably with PVR and bigadda.com ranks close to 3000^th in terms of site traffic. All these are lagging way behind their respective market leaders. There is intense competition in the market and leaders have had first-mover advantage (Radio Mirchi, PVR and Orkut). Beating the competition and becoming one of top two or three players is still elusive and probably the most critical challenge for Reliance-ADAG. It also needs to remember that leadership positions cannot be bought in the new economy. It is a user driven market and ADAG needs to respect the power of social-networks while attempting to beat competition and become market leader.

·        As alluded above, the consumer is currently spoilt for choice. There is intense competition and users hold inordinate bargaining power. In such case, building and retaining user base is one of the primary challenges.

 

President of Boeing-India visits ISB

Dr Ian Thomas, Vice President, Boeing International and President, Boeing-India interacted with the Indian School of Business (ISB) community recently at a talk hosted by the General Management Club. Dr Thomas talked about the aerospace industry and Boeing’s operations in India.Dr Thomas, who has a Master’s degree in international relations and a PhD in history from the University of Cambridge, started off the talk with insights into his transition from academia to government and then to the private sector, when he started working with Boeing.He then went on to talk about Boeing’s relationship with India. “We like to say that India joined the jet age on Boeing wings because Air India was the first all jet carrier in the world and that has been a very proud partnership,” he said. He added that Boeing was moving on from the previous model of being an offshore company that was focussed on resource exchange.As Boeing transitions towards an onshore model, he said they were committed to building a $100 million facility in Nagpur in partnership with the TATA group and an $80 million pilot training facility in Mumbai.He said that as India assumes a major political and economic role in the world, its legitimate needs for defense are going to increase, which bodes well for companies like Boeing.He added that Boeing sees India as the potential aerospace giant of the 21st century, with buying power being a key factor. “I think that some of the figures that I have seen are that less than 1% of the population is flying every year. So the opportunity to grow passenger figures is very compelling,” he said.Dr Thomas added that the biggest challenges that the aerospace industry faced in India were infrastructure, tax regime, policies and regulations, and manufacturing consolidation. He added that the proliferation of world class airports, easy access to support activities and immense potential buying power would support the growth of the sector in India.He ended the speech by saying that they were focussed on the next quarter century. “What we are laying down here in India, I think is going to position us for the next quarter century,” he said.