Indian Oil company limited

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Background
INDIAN OIL CORPORATION LIMITED
Incorporated in 1959 as Indian Oil Company Limited, the oil marketing
company merged with Indian Refineries Limited in 1964 to form Indian Oil
Corporation Limited (IOCL). As India‟s largest commercial undertaking, IOCL
was engaged in the business of refining,
transporting and marketing petroleum products
throughout the country. From its inception, IOCL
had been a state-owned enterprise with the
mandate to build national oil security and
competence in oil refining and marketing. In fiscal
2002, it was ranked No. 191 and was the only
Indian company in Fortune Global 500.
IOCL had a divisional structure based on business
lines that reflected the individual companies before the merger. Each division
was headed by a director who reported to the chairman.
The marketing division was responsible for the sales and distribution of
various petroleum products to every corner of India IOCL had over 53 per
cent of the market share in petroleum products. The refineries division
operated seven of the country‟s 18 refineries. The pipelines division had been
entrusted with the design, engineering, construction and operations of the
country‟s largest network of pipelines. The research and development (R&D)
division was engaged in research on lubricants, refinery processes and
pipeline transportation. The divisions had wide autonomy in business matters
but were required to operate under broad policy guidelines spelled out by the
government.

Information Technology at IOCL
Electronic data processing (EDP) was
introduced in IOCL in 1966 with punched
cards and unit record machines. These were
replaced in 1986 by personal computers
(PCs). Computers had been traditionally
opposed by IOCL unions, who perceived them
as replacements for workers. It was only in

1|Page

1990, after PCs had become a common feature in the organization that the
unions began to accept the mainframe computer system in the organization.
However, by that time, the technology had progressed, and IOCL decided in
1992 to replace the mainframes with a distributed data processing
environment.
In the first 20 years of computerization, the focus had been on financial
systems, payroll and sales statistics. With the introduction of PCs, several
initiatives were launched to implement EDP in other aspects of work at IOCL.
The first online transaction processing program was implemented in 1989. A
distributed digital control system for refinery process controls was
implemented in 1993 and subsequently replaced by real-time operations
controls in 1996. At the time, key functions in various IOCL divisions were
sustained by different legacy software systems developed over the past
several years. Similarly, the financial management system (FMS), the
materials management system (MMS), and the online maintenance and
inspection system (OMNIS) were in operation in the refineries and pipelines
divisions. There were other legacy systems for stock and sales accounting in
the marketing division and for payroll in all divisions. EDP at IOCL worked on
minicomputer and PC-based platforms, and significant investments had been
made in these basic building blocks. There were also local and wide area
networks, but these operated on a limited scale with little standardization.
Like any other large organization, IOCL generated, collated and stored a vast
quantity of data, but the information was scattered among different legacy
systems, each designed to meet the specific needs of particular
divisions/functions/departments. These “islands” of information systems
lacked commonality, consistency and communicability.

PROJECT MANTHAN
A thought process was initiated by top management in March 1996 for
developing and implementing an integrated information processing,
transmitting and archiving system across the corporation. To initiate the
process of IT-based reengineering, workshops were conducted by the
functional expertise resource group with about 300 representatives from
different areas of the IOCL business.
The knowledge generated from these workshops provided the foundation for
Project Manthan. The project was thus conceptualized as common
information platform across the organization with a view to ensuring the
survival and growth of IOCL in the open market
The core group formulated the scope and objectives of the project, based on
the collective knowledge and experience of its members, a literature scan and
consultant presentations. The upgrade of hardware, use of a common
platform, integration of all functional modules and open architecture was

2|Page

collectively perceived as a synergized system to meet IOCL business
requirements. The expectation was that, on completion of the project, IOCL
would be able to compete with the best in India and abroad on equal terms.
The cost-benefit equation was also seen in a positive light. Puri noted,
That their annual distribution cost and expenditure on project services and
material account for Rs34 billion3 and Rs40 billion respectively; even a one
per cent reduction through optimization and information analysis would entail
a substantial savings to IOCL. Initially they targeted Rs2.3 billion as
annualized savings but they have revised the target as their expectations
have increased with successes in implementation. Until now their focus has
been on standardization; with the rollout of the system to the entire
corporation by 2004-2005, they will be a position to do a benchmarking of the
savings.

The Project Disclosure
In April 1997, Price Waterhouse Associates (now PwC) was assigned the task
of conceptualizing, designing and implementing an integrated information
processing system across IOCL in 29 months. However, the contract
restricted IOCL‟s financial commitment to the initial conception and design
stage of the project.
In July 1998, PWC submitted the conceptual technology plan (CTP) and
recommended the following actionsImplementation of suitable ERP software;
Implementation of add-on software packages;
Installation and commissioning of a robust communication network;
Installation and commissioning of appropriate hardware; and
Transition management.
The project gained momentum after approximately 70 people from various
functional units of all the divisions joined the core group to facilitate the
implementation of the ERP package and add-on software, along with the
commissioning of a communication network and hardware infrastructure.
In October 1999, IOCL selected the internationally-reputed ERP package,
SAP R/3. The system would be accessed company-wide over a hybrid wide
area network. The optimal and efficient performance of the new centralized
approach at IOCL called for a telecommunications network unparalleled in the
history of corporate India. In 1996, not only was the telecommunications
sector controlled by the government, the reliability of connections and
bandwidth adequacy was in doubt. The Manthan team, however, felt that a
multitier communications strategy would provide nearly 100 per cent uptime
with adequate bandwidth. IOCL saw this as an opportunity to implement a
single integrated communication network for the entire organization,

3|Page

dissolving divisional boundaries by providing voice, video and data
connectivity throughout the country.
As per normal policy, they try to have three modes of communication to any
point of sale location. The terrestrial network forms the backbone and meets
the requirements of applications that demand high bandwidth, but as it is not
dependable, they provide VSAT and ISDN connectivity as backups. This is
ideally what they would like to have in the new situation, but their locations are
largely based in remote areas of the country, where the communication
infrastructure is inadequate. During implementation, they found that they
could not generalize and that each location had to be looked at on a case-bycase basis, which resulted in variations from their three-tier communication
setup.
Further, they faced many challenges related to the regulatory environment.
For instance, installing VSAT at their aviation fuelling stations required
approval from a government body that represented several ministries; this
approval was not always forthcoming.
The project was to be completed in fewer stages:

conceptual
design

detailed design

construction

implementation.

Manthan has been a unique project embarked upon for the first time in India
by any organization of comparable size and complexity. The project stipulated
a quantum jump in technology for IOCL. Therefore, they, as they will as PwC,
4 had to face a number of unforeseen and multidimensional problems while
completing various stages. The methodology adopted by PwC in consultation
with the business managers and the IT group was also unique and novel for
IOCL. Therefore, a number of issues had to be revisited and rediscovered
during this stage. All these factors resulted in delays in the completion of the
project. 4PwA was renamed PricewaterCoopers (PwC) and, later in 2002, the
IT consultancy services of PwC they were taken over by IBM Consulting.
One such issue related to add-ons. The core team learned a great deal about
the organization over the course of the project that had not been as clear
earlier, including the fact that add-ons they were going to be far more crucial
than initially envisaged.

4|Page

Adaptation of the new IT system
One of the biggest challenges to adopting the new IT system was the level of
computer proficiency in the organization. Of the nearly 9,500 employees in
executive and supervisory roles, a large proportion had little experience with
computers, let alone with advanced systems such as an ERP. It became clear
to management that corporate-wide visibility for IT and the training of all its
employees on IT systems was going to be a key factor in project success and
the use of IT for business growth.
Apart from launching IT-based training, in 1999-2000, IOCL provided personal
computers for home use to all 9,500 executives and supervisors as a means
to enhance overall computer literacy and skills. Also, as part of the overall
Manthan project vision; the number of PCs in the workplace was increased to
approximately 2.5 computers for every three supervisors/executives.

Going Live
On August 31, 2001, the R&D centre became the maiden go-live site.
According to Rao, Originally, 22 pilot sites were to go live simultaneously on
September 1, 2001, but considering their progress, this looked unlikely;
meanwhile, the implementation had taken quite some time and the general
perception was, „The Manthan group has been doing something for so many
months but nothing has come out. They realized that a quick win was
necessary for both the core team and the organization. They needed to
demonstrate to the organization that Manthan, as a concept, worked in real
time.
This is where the idea of a pilot out of a pilot emerged. The core team favored
the R&D centre as the maiden site as it offered many advantages, e.g.,
transaction opportunities for most of the SAP modules and proximity to the
head office of IOCL and the Project Manthan team. Until the rollout in R&D,
there were issues related to the morale of the core team.
There were no visible results and the team was in its own cocoon. Through
the quick win at R&D, the Manthan team grew in confidence.
With the experience gained at the R&D centre and at IIPM, the Manthan team
was ready to roll out SAP at other major locations. A dozen locations were
short-listed to go live on January 1, 2002. These units together represented
the entire spectrum of business operations in refineries, pipelines and
marketing.

5|Page

The Response Time Issue
The designed response time during the sizing of servers for the production
environment was 2,000 milliseconds. Since the maiden go-live, response
times had been as per the design requirements in general. During the first
weeks of March and April, however, the SAP R/3 system had slowed down
considerably to the point that normal business transactions were disrupted.
The response time of some of the application servers was over 10 seconds.
The 10 seconds translated to eight to 10 minutes at the user end, due to a
cascading effect. They were flooded with calls from almost all their points of
sale complaining that the printing of invoices from the system was too slow
and was resulting in queues of road tankers awaiting dispatch.
The Bijwasan terminal is a life line for Delhi. They supply petrol and diesel to
nearly 85 per cent of the retail outlets in Delhi as well as to the international
airport. Every day, around 350 truck tankers are dispatched from Bijwasan.
They started facing problems during the first weeks of March and April. In
normal operations, the sales and dispatch for a single truck involve five
processes, each taking two to 2.5 minutes. When the system slowed down,
each process was taking nearly 25 minutes and resulted in long queues of
truck 6 SAP R/3 core technologies and its architecture is called Basis.
As the Indian petroleum market continued to undergo deregulation and an
excess refining capacity appeared for the first time, customers had the
flexibility to source their needs from companies that offered the best service at
the least cost and time. One of the key business requirements from Project
Manthan had been its beneficial impact on the customer relationship.
Lengthy transaction processing delays (e.g. the generation of a sales invoice)
could, however, trigger customer migration to other oil companies.
The response time issues had cropped up following the end of a month. The
month-end period in IOCL involved consolidation of all past transactions for
monthly reporting purposes to aid management decision-making. When the
response time issue first came up, the Basis team responded by deferring
processing of reporting applications to free up resources for business
transactions.
This action had improved response time to an extent. Puri learned from his
team, however, that other factors could have contributed to the poor response
times:
Hardware configuration and installation,
Database design and installation,
Loads and communication bandwidth limitations.
Several alternative courses of action appeared appropriate.

6|Page

One option was to schedule all reporting and batch jobs after hours
when the transaction load was light.
Using the SAP message service whenever response time increased,
by requesting them to defer their reporting jobs in favor of business
transaction processing.
Another alternative was to remove the reporting load from the database
server and shift it to a business warehouse server. Although this would
free substantial resources for transaction processes, the reporting
server would require a substantial investment of time and money.

The Dilemma
Given the three-tiered ERP architecture, it
would be challenging to identify which factors
e.g., the SAP application, the database server,
the way in which the database has been
implemented, the communications bandwidth
constraints were bottlenecks. Puri knew,
though, that with more sites going live and
increasing end-user expectations, the efficient
performance of the technological system was
crucial.
Puri also understood that he did not have direct control over several causal
factors, such as the adequate allocation of bandwidth by the government-run
telecommunications provider. Such constraints resulted in several questions
for Puri with respect to the future course of Project Manthan. The primary
decision he needed to make was whether or not to proceed as planned with
implementation at the remaining sites. If he were to recommend continued
implementation, he would have to keep in mind that response times could
worsen due to the additional load of the new sites. If he were to recommend
stalling the implementation, he would have to account for the implications of
such a decision as well as come up with a suitable action plan to bring the
project back on track.
Puri began to consider the factors that pointed to continuing with the
implementation while simultaneously trying to resolve the response time
issues. The implementation exercise had gained considerable momentum,
and the core team was displaying great enthusiasm in the rollout to the
remaining sites. Puri knew that in this environment, any diversion would
impede the implementation and delay project completion. Additionally, Puri
had been feeling pressure from top management to complete the project,
which was already in its eighth year.
With the added load of new sites going live, the response time problem could
worsen. Any further delays in processing transactions could result in poor

7|Page

customer relations and compromise customer service, possibly triggering
customer migration to competitors. There was also the risk of antagonizing a
fresh set of end-users at the sites where implementation had begun after the
response time issues had arisen. Puri felt that the case for not proceeding and
suspending further implementation until the response time issues had been
resolved also had merit. The response time problems, which had cropped up
in the initial weeks of the previous two months, had been unexpected and had
taken the team by surprise. There was uncertainty regarding response times,
and it appeared prudent to halt further implementation. He was, however,
equally aware that management would expect a plan to regain the time lost in
resolving the issue.
The sudden occurrence of the response time problem before all 99 Phase I
sites had gone live pointed to the possibility that the design team may have
given the unique business process requirements of IOCL underestimated
technological requirements such as server sizing and bandwidth. Puri felt that
an in-depth systems study was needed in order to arrive at the optimal system
configuration needed to support the full load of about 6,000 users in over 500
sites and to rectify the ongoing response time problem. Here, too, Puri was
unsure about which vendors to call on. Project Manthan involved partnerships
with several vendors as well as licensing agreements with government
agencies.

The Future Course
In a related but independent decision, Puri had to make recommendations
about the job profile of the IS department and its personnel at various
locations. He was aware that with the adoption of a centralized architecture,
the roles and responsibilities of the IS department and its personnel at all
units and sites would change. Earlier, they had developed and maintained
customized standalone legacy systems in decentralized environments, but
these systems were now being replaced by the centralized SAP R/3 system.
Puri was confident that IS personnel from the various locations could be
retrained in the new technology so that IOCL would have the capabilities to
roll the system out to the remaining sites under Phase II without the aid of
external consultants while supporting end-users and maintaining the entire
system centrally. He was, however, uncertain about how the other divisions
would respond to giving up their IS personnel. He was also unsure about how
IS personnel at the various divisions would respond to their changing roles
and responsibilities and to new management expectations. As Puri pondered
the different issues confronting Project Manthan, he realized that poor
response time was the biggest issue. Any successful resolution had to
address not only the 66 sites currently on SAP R/3 but also had to ensure that
events such as the ones they had faced did not occur when the load from the
remaining 500+ sites was on the new system. Meanwhile, Puri had to decide
how best to proceed with the rest of the implementation.

8|Page

Problem Identification
√ There were a lot of difficulties regarding the remote areas and
government approval.
√ A number of issues had to be revisited and rediscovered during this
stage. All these factors resulted in
delays in the completion of the project
√ The selection of an add-ons vendor
was a long process as integration of
supply chain management
√ One of the biggest challenges to
adopting the new IT system was the
level of computer proficiency in the
organization
√ The Response Time Issue: The poor response time had larger
organizational implications
√ With more sites going live and increasing end-user expectations, the
efficient performance of the technological system was crucial
√ There was uncertainty regarding response times, and it appeared
prudent to halt further implementation
√ Any further delays in processing transactions could result in poor
customer relations and compromise customer service

9|Page

Main issue

W

hat strategic measures should Indian Oil Corporation take in order to
become a major, diversified, transnational, integrated energy
company, with national leadership and a strong environmental
conscience, playing a national role in oil security and public distribution and
sustain customer satisfaction, improving margins by driving down costs and
optimizing operations to improve bottom-line profitability?

10 | P a g e

Narrow SWOT Analysis:
Strengths:
1. As India’s largest commercial undertaking, IOCL was engaged in the
business of refining, transporting and marketing petroleum products
throughout the country.

Incorporated in 1959 as Indian Oil Company Limited, the oil marketing
company merged with Indian Refineries Limited in 1964 to form Indian Oil
Corporation Limited (IOCL). As India‟s largest commercial undertaking, IOCL
was engaged in the business of refining, transporting and marketing
petroleum products throughout the country. From its inception, IOCL had
been a state-owned enterprise with the mandate to build national oil security
and competence in oil refining and marketing. In fiscal 2002, it was ranked
No. 191 - and was the only Indian company - in Fortune Global 500.
IOCL had a divisional structure based on business lines that reflected the
individual companies before the merger. Each division was headed by a
director who reported to the chairman. The marketing division was
responsible for the sales and distribution of various petroleum products to
every corner of India - IOCL had over 53 per cent of the market share in
petroleum products. The refineries division operated seven of the country‟s 18
refineries. The pipelines division had been entrusted with the design,
engineering, construction and operations of the country‟s largest network of
pipelines. The research and development (R&D) division was engaged in
research on lubricants, refinery processes and pipeline transportation. The
divisions had wide autonomy in business matters but were required to operate
under broad policy guidelines spelled out by the government.

2. Information Technology at IOCL was very up to date and up to the
mark as well.
Electronic data processing (EDP) was introduced in IOCL in 1966 with
punched cards and unit record machines. These were replaced in 1986 by
personal computers (PCs). Computers had been traditionally opposed by
IOCL unions, who perceived them as replacements for workers. It was only in
1990, after PCs had become a common feature in the organization that the

11 | P a g e

unions began to accept the mainframe computer system in the organization.
However, by that time, the technology had progressed, and IOCL decided in
1992 to replace the mainframes with a distributed data processing
environment. By the mid-90s, the business processes for identical tasks
differed across divisions and, in many instances, even within the different
locations of a division. This lack of standardization was leading to suboptimal
use of organizational resources. Software developed and procured in the
1980s was still in use in 1996, and it was estimated that the overall
technology gap was of the order of five years, with an even greater gap in
networking and communications technology. Apart from the technological
gap, the IT organization at IOCL also faced the critical challenge of Y2K and
its attendant issues.

3. Various up gradation of the system was strength for the company to
run the project successfully.
In the first 20 years of computerization, the focus had been on financial
systems, payroll and sales statistics. With the introduction of PCs, several
initiatives were launched to implement EDP in other aspects of work at IOCL.
The first online transaction processing program was implemented in 1989. A
distributed digital control system for refinery process controls was
implemented in 1993 and subsequently replaced by real-time operations
controls in 1996. At the time, key functions in various IOCL divisions were
sustained by different legacy software systems developed over the past
several years, (e.g. the marketing division had the terminal documentation
module (TDM) to capture data at point-of-sale units such as bulk storage
terminals, the plant documentation module (PDM) for operations at liquefied
petroleum gas (LPG) bottling plants, and the IndAir system for aviation fuel
stations).

4. PROJECT MANTHAN’s cost-benefit equation was also seen in a
positive light.
A thought process was initiated by top management in March 1996 for
developing and implementing an integrated information processing,
transmitting and archiving system across the corporation. To initiate the
process of IT-based reengineering, workshops were conducted by the
functional expertise resource group with about 300 representatives from
different areas of the IOCL business. The knowledge generated from these

12 | P a g e

workshops provided the foundation for Project Manthan. The project was thus
conceptualized as a common information platform across the organization
with a view to ensuring the survival and growth of IOCL in the open market
The cost-benefit equation was also seen in a positive light. Puri noted, Our
annual distribution cost and expenditure on project services and material
account for Rs34 billion3 and Rs40 billion respectively; even a one per cent
reduction through optimization and information analysis would entail a
substantial savings to IOCL.

Weaknesses:
1. There were a lot of difficulties regarding the remote areas and
government approval.
Sheela Ranjhan, deputy manager of information systems (IS), spoke about
the practical difficulties involved: As per normal policy, we try to have three
modes of communication to any point of sale location. The terrestrial network
forms the backbone and meets the requirements of applications that demand
high bandwidth, but as it is not dependable, we provide VSAT and ISDN
connectivity as backups. This is ideally what we would like to have in the new
situation, but our locations are largely based in remote areas of the country,
where the communication infrastructure is inadequate. During implementation,
we found that we could not generalize and that each location had to be looked
at on a case-by-case basis, which resulted in variations from our three-tier
communication setup. Further, we faced many challenges related to the
regulatory environment. For instance, installing VSAT at our aviation fuelling
stations required approval from a government body that represented several
ministries; this approval was not always forthcoming.
2. A number of issues had to be revisited and rediscovered during this
stage. All these factors resulted in delays in completion of the project.
The project was to be completed in four stages: (1) conceptual design, (2)
detailed design, (3) construction, and (4) implementation. As the project
evolved, Puri reflected on its progress: Manthan has been a unique project
embarked upon for the first time in India by any organization of comparable
size and complexity. The project stipulated a quantum jump in technology for
IOCL. Therefore, we, as well as PwC, had to face a number of unforeseen
and multidimensional problems while completing various stages. The
methodology adopted by PwC in consultation with the business managers

13 | P a g e

and the IT group was also unique and novel for IOCL. Therefore, a number of
issues had to be revisited and rediscovered during this stage. All these factors
resulted in delays in the completion of the project.
3. The selection of an add-ons vendor was a long process as integration
of supply chain management
One such issue related to add-ons. The core team learned a great deal about
the organization over the course of the project that had not been as clear
earlier, including the fact that add-ons were going to be far more crucial than
initially envisaged. As A.C. Mishra, chief manager of IS for the add-ons group,
observed, IOCL is essentially a supply chain organization. In the deregulated
scenario, a package or tool for supply chain management is a must as
decision-making departmentally has led to sub-optimal operation in the past.
With add-ons, IOCL hopes to optimize its entire supply chain, from crude
procurement to finished product distribution. We went in for the add-ons as
the real time needs of IOCL‟s core business functions were not adequately
addressed by ERP software alone. The add-ons were essentially bolt-ons to
SAP R/3. The selection of an add-ons vendor was a long process as
integration of supply chain management was a new concept in India in 1998
and there was no benchmarking data available for the country. In October,
2002, Tata Honeywell was awarded the work. As a result, we embarked on
the prototype development of some select applications, to prove their utility in
the Indian environment and to build confidence amongst end-users. The
project team had taken up the implementation of a few packages such as the
laboratory information management system, crude scheduling packages for
the crude pipelines, demand forecasting for a few selected products in
representative areas, and at various end-user locations.

4. One of the biggest challenges to adopting the new IT system was the
level of computer proficiency in the organization.
One of the biggest challenges to adopting the new IT system was the level of
computer proficiency in the organization. Of the nearly 9,500 employees in
executive and supervisory roles, a large proportion had little experience with
computers, let alone with advanced systems such as an ERP. It became clear
to management that corporate-wide visibility for IT and the training of all its
employees on IT systems was going to be a key factor in project success and
the use of IT for business growth. Apart from launching IT-based training, in
1999-2000, IOCL provided personal computers for home use to all 9,500

14 | P a g e

executives and supervisors as a means to enhance overall computer literacy
and skills. Also, as part of the overall Manthan project vision, the number of
PCs in the workplace was increased to approximately 2.5 computers for every
three supervisors/executives.

Opportunities:
1. Project Manthan’s cost-benefit equation was also seen in a positive
light.
The core group formulated the scope and objectives of the project, based on
the collective knowledge and experience of its members, a literature scan and
consultant presentations. The upgrade of hardware, use of a common
platform, integration of all functional modules and open architecture was
collectively perceived as a synergized system to meet IOCL business
requirements. The expectation was that, on completion of the project, IOCL
would be able to compete with the best in India and abroad on equal terms.
The cost-benefit equation was also seen in a positive light. Puri noted, our
annual distribution cost and expenditure on project services and material
account for Rs34 billion3 and Rs40 billion respectively.

2. Manthan’s vision of becoming the major, diversified, transnational,
integrated energy company was a huge opportunity
Our vision is to become a major, diversified, transnational, integrated energy
company, with national leadership and a strong environmental conscience,
playing a national role in oil security and public distribution. Pre-deregulation,
we focused on market share. Post-deregulation, our strategy is to maintain
our leadership by meeting customer expectations at the lowest cost to both
IOCL and to our customers. Further, we have focused on increasing our
refinery margins and capitalizing on opportunities thrown up by deregulation.
On August 31, 2001, the R&D centre became the maiden go-live site.
According to Rao, Originally, 22 pilot sites were to go live simultaneously on
September 1, 2001, but considering our progress, this looked unlikely;
meanwhile, the implementation had taken quite some time and the general
perception was, „The Manthan group has been doing something for so many

15 | P a g e

months but nothing has come out.‟ We realized that a quick win was
necessary for both the core team and the organization.

3. There was an opportunity to implement a single integrated
communication network for the entire organization
The project gained momentum after approximately 70 people from various
functional units of all the divisions joined the core group to facilitate the
implementation of the ERP package and add-on software, along with the
commissioning of a communication network and hardware infrastructure. In
October 1999, IOCL selected the internationally-reputed ERP package, SAP
R/3. The system would be accessed company-wide over a hybrid wide area
network. A.M. Rao, DGM (IS) noted the difficulty in selling this centralized
approach: “Trying to sell the concept of a centralized system that would
connect the entire country was difficult when we were not sure that a
telephone call to the other end of the city would occur trouble free.” The
optimal and efficient performance of the new centralized approach at IOCL
called for a telecommunications network unparalleled in the history of
corporate India. In 1996, not only was the telecommunications sector
controlled by the government, the reliability of connections and bandwidth
adequacy was in doubt.

4. If everything goes well, they hope to move toward a paperless office
environment and an optimized supply chain
Buoyed by such successes, Puri observed, In the immediate future, if
everything goes well, we hope to move toward a paperless office environment
and an optimized supply chain. The data generated at the central site from all
locations of IOCL will be the backbone for customized portals that will provide
ready day-to-day information on key performance indicators to senior
management while facilitating the launching of data warehousing and
customer relationship management.
We believe that our Manthan experience can be leveraged by floating a new
company to offer consultancy services to our subsidiaries and joint venture
partners on training and implementation related to SAP R/3, networking and
hardware selection, while also becoming a beta testing site for major software
vendors.

16 | P a g e

Threats:
1. The Response Time Issue: The poor response time had larger
organizational implications

The poor response time had larger organizational implications. While the
project was backed by top management and positioned as an IT-based reengineering exercise that would align with the business priorities of IOCL,
end-users facing slow response times had started to question whether their
requirements (such as time required to process a transaction) were being
fulfilled. For end-users with lower computer skills, slow response times
compounded the challenges they faced in adjusting to the new way of
transacting business. These users were now forced to navigate and utilize
computer screens that they considered complex and saw as taking longer to
complete business transactions than their earlier manual processes. Even to
end-users who had been proficient in computer use and accustomed to
customized stand-alone software, the response time delays proved to be
disruptive and a source of frustration. The project and change managers, who
had championed the new system at various units, saw the response time
delays as a source of embarrassment.

2. With more sites going live and increasing end-user expectations, the
efficient performance of the technological system was crucial.
Puri realized there were time and resource costs associated with sorting out
the response time problem. Given the three-tiered ERP architecture, it would
be challenging to identify which factors — e.g., the SAP application, the
database server, the way in which the database has been implemented, the
communications bandwidth constraints — were bottlenecks. Puri knew,
though, that with more sites going live and increasing end-user expectations,
the efficient performance of the technological system was crucial. Puri also
understood that he did not have direct control over several causal factors,
such as the adequate allocation of bandwidth by the government-run
telecommunications provider. Such constraints resulted in several questions
for Puri with respect to the future course of Project Manthan.

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3. There was uncertainty regarding response times and it appeared
prudent to halt further implementation
The primary decision he needed to make was whether or not to proceed as
planned with implementation at the remaining sites. If he were to recommend
continued implementation, he would have to keep in mind that response times
could worsen due to the additional load of the new sites. If he were to
recommend stalling the implementation, he would have to account for the
implications of such a decision as well as come up with a suitable action plan
to bring the project back on track. Puri also had to come up with a strategy to
address the growing discontent of endusers and management related to the
poor response times.
In doing so, he knew that the suitability of a centralized IT architecture at
Indian Oil would be revisited. Puri also had to decide which of the existing
group of vendors should be brought in to help with the problem without
compromising the momentum of the project.

4. Any further delays in processing transactions could result in poor
customer relations and compromise customer service

The downsides to continuing implementation were also evident. With the
added load of new sites going live, the response time problem could worsen.
Any further delays in processing transactions could result in poor customer
relations and compromise customer service, possibly triggering customer
migration to competitors. There was also the risk of antagonizing a fresh set
of end-users at the sites where implementation had begun after the response
time issues had arisen.
Puri felt that the case for not proceeding and suspending further
implementation until the response time issues had been resolved also had
merit. The response time problems, which had cropped up in the initial weeks
of the previous two months, had been unexpected and had taken the team by
surprise. There was uncertainty regarding response times, and it appeared
prudent to halt further implementation. This was a threat for this company
which immediately needed to be resolved.

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Functional Area Analysis
Marketing Analysis

Porter’s five forces model
Porter's 5 forces analysis is a framework for industry analysis and business
strategy development. It uses concepts developed in Industrial Organization
economics to derive five forces that determine the competitive intensity and
therefore attractiveness of a market. Porter referred to these forces as the
microenvironment, to contrast it with the more general term macro
environment.
Bargaining power of customers
(HIGH)
Competitive rivalry within an industry
( LOW)
Threat of new entrants
(MODERATE)
Threat of substitute products
(LOW)

Bargaining power of suppliers
(HIGH)

The Bargaining Power of Buyers: HIGH
In general, when buyer power is High, the relationship to the producing
industry is near to what an economist terms a monophony. Thus the
bargaining power of buyers is one of the most volatile factors in the porter‟s
five forces model.

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 In the case of Indian Oil Corporation Limited the Bargaining Power of
Buyers within industry was founded as moderate because of the
following factors which jointly made up this part of the porter‟s five
forces model:
Buyer Concentration: In the growing markets Water purifier manufacturers
enter with its goal to attain the potential for high profits induce new firms to
enter and incumbent firms to increase production. A point is reached where
the industry becomes crowded with competitors, and demand cannot support
the new entrants and the resulting increased supply.
The industry may become crowded if its growth rate slows and the market
becomes saturated, creating a situation of excess capacity with too many
goods chasing too few buyers. A shakeout ensues, with intense competition,
price wars, and company failures. This factor is vital for any industry to boom.
This has established a huge customer base. This buyer concentration is very
high. This trend shows the High buyers power on the manufacturer
companies
.
 Indian Oil Corporation Limited might face difficulty regarding this buyer
power but it can handle it as the company is operating in this industry
for a long time. But the company may need to keep on investing on
product innovation and customers‟ preference search.

Switching costs: As customers from different countries has multiple options
to choose from the present products of same quality, price and features
offered by different companies, but in this case the switching cost is not
available.

Bargaining Leverage: Competitors had very close position and they can
graft market. Indian Oil Corporation Limited is operating in manufacture
oriented business; it offers water purification plant and provides fresh water,
so there is no room for bargaining in their business operations. If barriers to
entry are high, then there are fewer competitors in the industry and
consequently, profitability is higher. Ideas and knowledge that provide
competitive advantages are treated as private property when patented, and
prevents others from using the knowledge and thus creates a barrier to entry.
Since there are no adjustment or process to patent in this industry and so
profitability is still high.
 Indian Oil Corporation Limited had huge number of buyers. But
competitors had very close position and they can graft market if Indian
Oil Corporation Limited made any mistake.

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The Bargaining Power of Supplier: High
Suppliers, if powerful, can exert an influence on the producing industry, such
as selling raw materials at a high price to capture some of the industry's
profits. The following tables outline some factors that determine supplier
power.
 In the case of Indian Oil Corporation Limited Bargaining Power of
Supplier within industry was founded as moderate because of the
following factors which jointly made up this part of the porter‟s five
forces model:
Suppliers Concentration: As with any commodity suppliers, the bargaining
power of suppliers with would be exerted by either threatening to raise the
price of the raw materials needed or by a threat of reduction in the quality or
quantity of the raw materials. The suppliers of the raw materials needed in the
production process of producing Indian Oil Corporation Limited products were
mostly supplied by individual specific producers. The bargaining power of
suppliers seems negligible due to the small purchasing volume each
individual had to offer the specialty coffee industry. However, as the industry
has grown it is found from the case that many of the growers who sell to
Indian Oil Corporation Limited may unit to increase the price of the raw
materials. This initiative would be designed in expectation to ensure that the
raw materials the specific manufacturers provide would be compensated fairly
for their raw materials, which is the basic raw material for Indian Oil
Corporation Limited products.
 Indian Oil Corporation Limited might face difficulty as they need to buy
some of their raw materials from the local suppliers and High
concentration means Indian Oil Corporation Limited has option to
choose from abroad suppliers.
Dependency on suppliers: Technology based firms are fully dependent on
their customers as quality of the products produced greatly depend on the
supplier‟s ability to supply quality raw materials and at desired amount. So the
dependence is High.
 Indian Oil Corporation Limited has a great opportunity which might
destroy if not supported well by the suppliers by providing quality raw
materials at right amount and at right time.
Credible threat of forward integration: Suppliers cannot do forward
integration. This initiative by Indian Oil Corporation Limited supplier would
disrupt the positive externality through increasing their ability to exert
bargaining power over their buyers. This action to increase the bargaining
power of the raw materials which the firms provide to Indian Oil Corporation
Limited would be a constant threat to look out for.

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Water Purification industry manufacturers like Indian Oil Corporation Limited
generally requires high infrastructure and industry are highly dependent on
usage of natural resources such as labor and land, thereby Indian Oil
Corporation Limited is highly dependent on its suppliers. Hence, the existing
sellers cannot assume any eminence as would be the case in a service
oriented company. Since they are a manufacture-oriented organization, they
are dependent on sellers to buy their product but due to the bulk purchasing
Indian Oil Corporation Limited has managed to keep the price demanded by
the suppliers low. This threat is at low risk.
 Indian Oil Corporation Limited may not lose their brand image and
market share. Its revenue may reduce significantly.
Threat of Substitute Products: NIL
 In the case of Indian Oil Corporation Limited Threat of Substitute
Products were founded as Negligible because of the following factors
which jointly made up this part of the porter‟s five forces model:
Entry Barrier: Entry barriers are not that high in the country for the new
entrants. So it is moderately high.
Switching costs: Substituting product in the country is zero since water does
not have alternative, because the people are very much aware of acquiring
fresh water and are also well informed about the technologies available.
Competitive Rivalry within the Industry: Very High
Economists measure rivalry by indicators of industry concentration. The
Concentration Ratio (CR) is one such measure. A high concentration ratio
indicates that a high concentration of market share is held by the largest firms
- the industry is concentrated and vice-versa.
 In the case of Indian Oil Corporation Limited the Competitive Rivalry
within industry was founded as High because of the following factors
which jointly made up this part of the porter‟s five forces model:
A larger number of firms: The industry shows a great future with potential
growth opportunity. This positive signs of the industry has attracted and is
attracting companies from all over the world. Firms are trying their best to
attract customers and to steal customers. They use price and other possible
ways to do this. That is why this factor is High.
 The huge number of customers present in the India, Vietnam and
France market show intensive competition for Indian Oil Corporation
Limited and its making the firm‟s job tough.

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High fixed costs: Industry needs huge infrastructure and needs investment
at the initial level. And to become competitive a company has to invest in the
infrastructure and a country where the people like to hang around in the shops
so the sizes should be big. For covering the huge fixed cost the firms want to
grab the biggest portion of a market, which boosts up the rivalry among the
competitors. That‟s why we have found the fixed cost very High.
 As Indian Oil Corporation Limited and other firms have already
invested in the market and has established its plants, it has become
very risky for these firms to cover the huge fixed cost, thus boasting the
rivalry. It is not desired for any company.
High exit barriers: The firms operating have to bear huge fixed cost in
technology, infrastructure and building distribution network which are
dedicated to that industry. So we have found the barriers of exit barrier High.
 Indian Oil Corporation Limited has invested a lot in different products in
the coffee industry and is planning to invest more as it has expanding
outside the country. So the exit barrier for the company is high.
Industry Competitive Structure: The competitive structure of an industry to
the number and size distribution of companies in it, something that strategic
managers determine at the beginning of an industry analysis. It is High.
 Indian Oil Corporation Limited has been fighting well in the rural area
like monopoly but in the metropolitan cities the competition was very
tight. So the industry competitive structure is very high.
Product Differentiation: Indian Oil Corporation Limited manufacturers use
almost the similar kind of technologies in their production system which
means the features and usage of their produced products are very much
similar; means the product differentiation is low.
 This similarity in usage and features are threats for Indian Oil
Corporation Limited as customers may buy products from the new
entrants or from other companies.
Industry Demand: The demand for fresh water is simple enormous all over
the world. This demand for high end products is High in the country as the
business sector is expanding and the government has re-designed the whole
setup of its administration and is encouraging to expand even in the rural
area.

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 This demand is encouraging Indian Oil Corporation Limited expansions
plan in the country as well the demand also increasing the rivalry
among Indian Oil Corporation Limited and its competitors. And as we
know rivalry can take nasty form, Indian Oil Corporation Limited would
face great difficulty.
Threat of New Entrants: High
In theory, any firm should be able to enter and exit a market, and if free entry
and exit exists, then profits always should be nominal. In reality, however,
industries possess characteristics that protect the high profit levels of firms in
the market and inhibit additional rivals from entering the market. These are
threat of new entrants.
 In the case of Indian Oil Corporation Limited the Chances of new
entrants were founded as High because of the following factors which
jointly made up this part of the porter‟s five forces model:
Government Policy & Rules: Government has not maintained a very rigid
environment in terms of new investment in the industrial sector. Investments
from local and international firms are very welcoming in terms of getting
financial support and there is not that much information in the case about the
government help. All these elements present in the external environment
made it moderately favorable.
 This moderately favorable government policy and rules are a threat for
Indian Oil Corporation Limited as the policies and rules are not very
lucrative for a firm which is planning to enter. So that is a threat for
Indian Oil Corporation Limited.
Customer switching costs: The product line of Indian Oil Corporation
Limited is not greatly differentiated, as it varies with degrees of quality, taste,
preference, product outlook (packaging), and finally consumer acceptance.
The leverage gain from not having a high degree differentiation made within
the products of the entire coffee manufacturers in the industry enables the
established firms to earn economy of scale and have an efficient production
process, this in turn enables the coffee manufacturers to maintain efficient
production facilities, along with low cost of production which automatically act
as barriers to entry. So it‟s easy for a customer to switch one firm to another
firm. That is why customer switching cost is found Low.
 This threat of customer switching cost is the moderately low threat for
Indian Oil Corporation Limited.
Patents and proprietary knowledge: There is not enough information in the
case about Law and order system so we can say that copy cats are very

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possible in the country which shows the patents and proprietary knowledge is
not highly restricted.
 Patents and proprietary knowledge security is not very high in the
country which is not a benefit for both Indian Oil Corporation Limited
and other competitors in the market.
Absolute Cost Advantages: Market provides the opportunity of first mover
advantage which means the firm who enters in the market at the beginning
period of a particular industry that firm would get the cost advantage over
other. From a strategic perspective, barriers can be created or exploited to
enhance a firm's competitive advantage. So, absolute cost advantage is
Moderately Low.
 Indian Oil Corporation Limited is not having this cost advantage as it
had entered in the country with lots of product varieties which had
impact on the local people‟s consumption as it had entered in the
market after there were some competitors already present.
Asset specificity inhibits entry into an industry: Some industry uses
assets like technologies or raw materials which are very much specific to the
industry. Means no other modification of that technology or raw materials
used in the production process is possible to produce any other product or to
use in any other industry. That is why we found asset specificity very High.
 As the asset specificity is high in the market this means Indian Oil
Corporation Limited doesn‟t have the opportunity to get asset
advantage.
Possibility of merger and joint venture: It is seen previously that not only
present rivals that pose a threat to firms in an industry; the possibility that new
firms or a merger along with joint venture of two small firms may enter the
industry also affects competition, through competitive pricing strategy. New
entrants bring a desire to gain market share and often have significant
resources. Their presence may force prices down and pressure on profits.
Analyzing the threat of new entrants involves examining the barriers to entry
and the expected reactions of existing firms to a new competitor. The
companies in industry has not restricted from merger and joint venture. So the
entry of FDI is not quite restricted which means the FDI‟s possibility is high.
 This possibility of merger and joint venture is a high threat for Indian Oil
Corporation Limited as new entrants can easily grave some market
share.

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Country risk analysis:
India comprises the bulk of the Indian subcontinent and lies atop the
minor Indian tectonic plate, which in turn belongs to the Indo-Australian Plate.
India's defining geological processes commenced 75 million years ago when
the Indian subcontinent, then part of the southern supercontinent Godwin,
began a north-eastward drift across the then-unformed Indian Ocean that
lasted fifty million years.

The subcontinent's subsequent collision with, and subduction under,
the Eurasian Plate bore aloft the planet's highest mountains, the Himalayas.
They abut India in the north and thenorth-east. In the former seabed
immediately south of the emerging Himalayas, plate movement created a
vast trough that has gradually filled with river-borne sediment; it now forms
the Indo-Gangetic Plain. To the west lies the Thar Desert, which is cut off by
the Aravalli Range.

The original Indian plate survives as peninsular India, which is the oldest and
geologically most stable part of India; it extends as far north as the Satpura
and Vindhya ranges in central India. These parallel chains run from the
Arabian Sea coast in Gujarat in the west to the coal-rich Chota Nagpur
Plateauin Jharkhand in the east. To the south, the remaining peninsular
landmass, the Deccan Plateau, is flanked on the west and east by coastal
ranges known as the Western and Eastern Ghats; the plateau contains the
nation's oldest rock formations, some of them over one billion years old.
Constituted in such fashion
The San people were the first settlers; the Khoikhoi and Bantu-speaking tribes
followed. The Dutch East India Company landed the first European settlers on
the Cape of Good Hope in 1652, launching a colony that by the end of the
18th century numbered only about 15,000. Known as Boers or Afrikaners, and
speaking a Dutch dialect known as Afrikaans, the settlers as early as 1795
tried to establish an independent republic.
After occupying the Cape Colony in that year, Britain took permanent
possession in 1815 at the end of the Napoleonic Wars, bringing in 5,000
settlers. Anglicization of government and the freeing of slaves in 1833 drove
about 12,000 Afrikaners to make the “great trek” north and east into African
tribal territory, where they established the republics of the Transvaal and the
Orange Free State.

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The discovery of diamonds in 1867 and gold nine years later brought an influx
of “outlanders” into the republics and spurred Cape Colony prime minister
Cecil Rhodes to plot annexation. Rhodes's scheme of sparking an “outlander”
rebellion, to which an armed party under Leander Starr Jameson would ride to
the rescue, misfired in 1895, forcing Rhodes to resign. What British
expansionists called the “inevitable” war with the Boers broke out on Oct. 11,
1899. The defeat of the Boers in 1902 led in 1910 to the Union of India,
composed of four provinces, the two former republics, and the old Cape and
Natal colonies. Louis Botha, a Boer, became the first prime minister.
Organized political activity among Africans started with the establishment of
the African National Congress in 1912
The dependency on foreign agencies for funding was extremely high in India.
The earlier record of foreign manufacturers in India had been poor with little
success. The lack of infrastructure and resources creates many new
challenges for Indian Oil Corporation.

Exchange & Transfer Risk

Exchange risk usually affects businesses that export and/or import, but it can
also affect investors making international investments. For example, if money
must be converted to another currency to make a certain investment, then any
changes in the currency exchange rate will cause that investment's value to
either decrease or increase when the investment is sold and converted back
into the original currency.
Indian Oil Corporation Environmental is a
Canadian based company that wants to
operate in Indian market
So it is obvious that Indian Oil
Corporation would need to transfer
money to India to give dividend to its
shareholders.
As India and most of the Asian countries have well bilateral relationship we
believe the transfer of money would not face any kinds of restriction from
the Indian government, nether the exchange rate between these two
countries fluctuates that much which could be a matter of worry.

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India‟s foreign exchange reserves are estimated at $21.7 billion in 2008
and fall to $19.6 billion in 2009. The relatively low level of foreign
exchange reserves could limit the government‟s ability to intervene in the
event of a run on the dong, increasing the risk of a currency crisis.

Social Risk

It is now well understood that social unrest
is positively parallel to the poverty.
Assisting individuals, households and
communities to elevate living standard
above the poverty level will harmonize
global economy and strengthen the social
security. So, Social risk is available there
related to this acquisition.

The market where Indian Oil Corporation was planning to serve was directly
connected to the general public, more specifically the society. Asian society
has been very well coming and very moderate in nature.
Indian Oil Corporation need to be very careful about the basic believes
of the society while they introduce any new product mix.
Indian Oil Corporation should be careful about this and do business by
not violating the social values and norms.
However we suggest Indian Oil Corporation should look for opportunity
to introduce products and events focused to the norms of the Asian
society.

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political Risk

The shape of India‟s political environment is
not expected to undergo radical change.
The president, Thabo Mbeki, has fully
consolidated his power base within the
ruling African National Congress (ANC) and
is expected to face little or no opposition
from within the party ranks. The ANC will
make further political gains in 2005-06 and
the tripartite alliance should remain intact.

Economic policy over the forecast period will continue to focus on increasing
both economic growth and investment in order to create employment. The
history of India is one of the grand epics of world history and can be best
described in the words of India's first Prime Minister Jawaharlal Nehru as "a
bundle of contradictions held together by strong but invisible threads". Indian
history can be characterized as a work in progress, a continuous process of
reinvention that can eventually prove elusive for those seeking to grasp its
essential character.

Political risk in Asian market for business firms is really low, means the
government is very welcoming to investment.
But the firms need to follow the Asian countries laws strictly and need to
pass all the regulatory checks Asian countries governments have.
Beside this a firms need to have good relation with the high government
officials for advantages and opportunities.
India benefits from its stable political environment. This lessens the risk of
political instability leading to changes in policy that might have a negative
impact on the business operating investment.

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Technological Risk
Technology enables key processes that a company uses to develop, deliver,
and manage its products, services, and support operations. Understanding
the role that technology plays in enabling core business operations
establishes the framework for understanding where relevant technology risks
lie.
By understanding the role that technology plays in supporting various
business functions, company management is in a better position to determine
the relative importance of these functions and prioritize the systems,
applications, and data involved. Technology risks are present throughout the
company and must be addressed as a whole.

Technological risk in Asian Countries is at a time a high risk factor and a
high beneficiary factor for the companies of the water purification industry.
On one hand the easy access to technology made it possible for the water
purification industry to go for new inventions to provide high quality
products.
But on the other hand the technological advancement made it possible for
anyone to make the same water purification available under different
company. So Indian Oil Corporation needs to be very careful in this
aspect.

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Procedural Risk

Under this risk factor we get risk associated
to do any business or any activity or
government official work, labor related issues
etc.
In Asian countries the government offices
work really slow, but they are very strict
about the fairness and clarity of every
process. Labor dispute is present in Asian
countries.
Labors often go on strike if their demands are not fulfilled within time.

Economical Risk

The economy is highly vulnerable to external shocks arising from the global
financial crisis, which increases the risk that market
oriented reforms will give way to more protectionist
policies aimed at protecting the domestic economy.

India‟s banks are not overly exposed directly to the
crisis in global financial market, but risk had
intensified in the line with home grown problems.
There are concerns that nonperforming loans have
picked up sharply owing to the stock market slump
and the property market downturn.

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Human Resource Planning Process
The Human resources planning model is run in the following for INDIAN OIL
CORPORATION LIMITED: PROJECT MANTHAN:

Forecasting Demand: Considerations

Product/Services Demand

Application:
Since 1976, the oil industry had operated under the government-controlled
administered price mechanism (APM) for petroleum products. The APM
ensured a fixed level of profitability for the government-owned oil companies

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and ensured that products such as kerosene, used by economically weaker
sections of the population, and diesel, widely used in public transport and in
the agricultural sector, were protected from the volatility of the international
market. A strategic planning group set up by the government in 1995
recommended the complete deregulation of India‟s oil industry by April 2002.
Deregulation resulted in the oil industry moving from the APM to a market
determined pricing mechanism
Technology

Electronic data processing (EDP) was
introduced in IOCL in 1966 with punched cards and unit record machines.
These were replaced in 1986 by personal computers (PCs). Computers had
been traditionally opposed by IOCL unions, who perceived them as
replacements for workers. It was only in 1990, after PCs had become a
common feature in the organization, which the unions began to accept the
mainframe computer system in the organization. However, by that time, the
technology had progressed, and IOCL decided in 1992 to replace the
mainframes with a distributed data processing environment.
Information Technology at IOCL:

Financial Resources

Their annual distribution cost and expenditure on project services and
material account for Rs34 billion and Rs40 billion respectively; even a one per
cent reduction through optimization and information analysis would entail a
substantial savings to IOCL. Initially we targeted Rs2.3 billion as annualized
savings but we have revised the target as our expectations have increased
with successes in implementation. Until now our focus has been on
standardization; with the rollout of the system to the entire corporation by
2004-2005, we will be a position to do a benchmarking of the savings.
Absenteeism/Turnover

Status: Information not available.
Organizational Growth

In October 1999, IOCL selected the internationally-reputed ERP package,
SAP R/3. The system would be accessed company-wide over a hybrid wide
area network. A.M. Rao, DGM (IS) noted the difficulty in selling this
centralized approach: “Trying to sell the concept of a centralized system that
would connect the entire country was difficult when we were not sure that a

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telephone call to the other end of the city would occur trouble free.” The
optimal and efficient performance of the new centralized approach at IOCL
called for a telecommunications network unparalleled in the history of
corporate India. In 1996, not only was the telecommunications sector
controlled by the government, the reliability of connections and bandwidth
adequacy was in doubt.
The Manthan team, however, felt that a multitiered communications strategy
would provide nearly 100 per cent uptime with adequate bandwidth. IOCL saw
this as an opportunity to implement a single integrated communication
network for the entire organization, dissolving divisional boundaries by
providing voice, video and data connectivity throughout the country.
Management Philosophy

Puri observed, In the immediate future, if everything goes well, we hope to
move toward a paperless office environment and an optimized supply chain.
The data generated at the central site from all locations of IOCL will be the
backbone for customized portals that will provide ready day-to-day information
on key performance indicators to senior management while facilitating the
launching of data warehousing and customer relationship management. We
believe that our Manthan experience can be leveraged by floating a new
company to offer consultancy services to our subsidiaries and joint venture
partners on training and implementation related to SAP R/3, networking and
hardware selection, while also becoming a beta testing site for major software
vendors.

Forecasting Demand: Techniques
Trend Analysis

Status: Information not available.
Managerial Estimates

While Puri and his team had faced several challenges in designing and
implementing Project Manthan, slow response time threatened to escalate the
challenge to a new level. As the Indian petroleum market continued to
undergo deregulation and an excess refining capacity appeared for the first
time, customers had the flexibility to source their needs from companies that

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offered the best service at the least cost and time. One of the key business
requirements from Project Manthan had been its beneficial impact on the
customer relationship. Lengthy transaction processing delays (e.g. the
generation of a sales invoice) could, however, trigger customer migration to
other oil companies. The Manthan team, however, felt that a multitiered
communications strategy would provide nearly 100 per cent uptime with
adequate bandwidth. IOCL saw this as an opportunity to implement a single
integrated communication network for the entire organization, dissolving
divisional boundaries by providing voice, video and data connectivity
throughout the country.
Delphi Technique

Status: Information not available.
Forecasting Supply: Considerations

Demographic Changes

Status: Information not available.
Education of the Workforce

Status: Information not available.
Labor Mobility

Status: Information not available.
Government Policy

The PSUs certainly helped establish a core industrial base in India. However,
they had come to be known for their low productivity, unsatisfactory quality of
goods, excessive manpower utilization, inadequate human resource
development and low rate of return on capital. For instance, between 1980
and 2002, the average rate of return on capital employed by PSUs was only
3.4 per cent as against the average cost of borrowing of 8.7 per cent. In 1992,
the Indian government — as part of a decisive move to stimulate the economy
— began to disinvest in many PSUs and deregulate various sectors of the
economy, allowing private and foreign participation and ownership in nearly

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every sector. The Manthan team, however, felt that a multitiered
communications strategy would provide nearly 100 per cent uptime with
adequate bandwidth.
Unemployment Rate

Status: Information not available.
Forecasting Supply: Techniques
Staffing table

Status: Information not available.
Markov Analysis

Status: Information not available.
Skills Inventories

Status: Information not available.
Replacement Charts

Status: Information not available.
Succession Planning

Status: Information not available.
Balancing Demand and Supply:
The main problem of the company was not the HR issues. There was neither
surplus nor shortage of the workforce. Delays in completing front-end
transactions were not well received by customers and threatened to
compromise user co-operation in moving the corporation to a more
contemporary information processing platform. Moreover, Puri wondered if
any such pause might further erode user confidence in the project as a whole.
Yet, continuing on without sorting out the problem seemed to pose its own
dangers; the competitive environment did not seem to allow for the possibility
of pausing the implementation to try to solve the problem.

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Financial Analysis
The Indian oil refinery sector is
passing through a period of weak
refining margins. The gross
refining margins (GRMs) of most
domestic refining companies
have been on a declining trend
over 1999-2003 on account of
factors such as global supply
overhang and de-growth in
demand for petroleum products,
especially light and middle
distillates in major consuming
countries. Furthermore, the
historically low level of price differential between „light-sweet‟ and „heavy-sour‟
crude oils made a significant negative impact on the GRMs of complex
refineries.

The GRMs of domestic refineries may remain weak over the medium term in
line with low international refining margins, resulting from expected increase in
global surplus capacity; moderate „light-heavy‟ differentials and lower importduty differentials between petroleum products and crude oil. Higher-thananticipated recovery in demand for petroleum products in major markets,
delays in planned projects and closure of unviable refinery capacities may
translate to some upside to GRM levels in the medium term.

37 | P a g e

Short Term Solvency Ratio



Current Ratio
Cash Ratio

There is no sufficient information provided in the case.

Long Term Solvency Ratio




Total Debt Ratio
Debt to Equity Ratio
Equity Multiplier Ratio

There is no sufficient information provided in the case.

Market Value Ratio


Price Earnings Ratio

There is no sufficient information provided in the case.

Asset Utilization Ratio


Total Asset Turnover Ratio

There is no sufficient information provided in the case.

Profitability Ratio




Profit Margin Ratio
Return on Asset Ratio
Return on Equity Ratio

There is no sufficient information provided in the case.

Market Value Ratio


Price Earnings Ratio:

There is no sufficient information provided in the case.

38 | P a g e

International Business Analysis
Porter’s Diamond Model

The porter Diamond:
The Porter Diamond is a theory showing four conditions as important for
competitive superiority: demand conditions; factor conditions; related and
supported industries; firm strategy, structure and rivalry.

1) Demand condition for porter’s diamond
Illustrate the theory that when demand for goods in the local market is larger
than in the export markets then local firms devote their resources to that
product than foreign firms leading to competitive advantage when they export
the product. The stronger and more dynamic the local market is the more
aware local firms are to international trends and the more national advantage
can be achieved. The demand conditions also affect the intensity of internal
rivalry between companies. Growing demand tends to reduce rivalry as

39 | P a g e

companies can sell more without taking market share away from other
companies, resulting in high profits.
Demand condition was high in both the countries India and France. In India
there was a confirm sales of 10000 tones yearly.

2) Factor conditions in India:
Factors conditions relate to how a country creates its own important factors
such as resources and technological base. These factors can be grouped into
human resources (qualification level, cost of labor, commitment etc.), material
resources (natural resources, vegetation, space etc.), knowledge resources,
capital resources, and infrastructure. They also include factors like quality of
research on universities, deregulation of labor markets, or liquidity of national
stock markets.
These national factors often provide initial advantages, which are
subsequently built upon. Each country has its own particular set of factor
conditions; hence, in each country will develop those industries for which the
particular set of factor conditions is optimal. This explains the existence of socalled low-cost-countries (low costs of labor), agricultural countries (large
countries with fertile soil), or the start-up culture in the United States (well
developed venture capital market).
Porter points out that these factors are not necessarily nature-made or
inherited. They may develop and change. Political initiatives, technological
progress or socio-cultural changes, for instance, may shape national factor
conditions.
Factor condition was not very favorable, Indian Oil Corporation will have to
bring raw material from India if they want to set up a production plant outside
India. In France, the cost of labor was huge. But in India, labor was really
cheap.

3) Related and Supporting Industries:
set of strong related and supporting industries is important to the
competitiveness of firms. This includes suppliers and related industries. This
usually occurs at a regional level as opposed to a national level.
One internationally successful industry may lead to advantages in other
related or supporting industries. Competitive supplying industries will reinforce
innovation and internationalization in industries at later stages in the value
system. Besides suppliers, related industries are of importance. These are

40 | P a g e

industries that can use and coordinate particular activities in the value chain
together, or that are concerned with complementary products.
To operate in both the country, India and France Indian Oil Corporation has to
bring the required supply on its own. In short; there were not too many related
and supporting industry, though India had CMC(real estate developing
industry) but France had none.

4) Firm Structure, Industry Structure and Rivalry
Firm structure of Indian Oil Corporation can help them a lot as their original
management system is closely in synchronization with both French and India
philosophy of management. Thus, Indian Oil Corporation can add this factor in
their favor when they will be launching their full scale operations in the other
countries. In India pipe industry, there are very few players which are driving
the market .however, there is an increasing competition among them, which is
increasing year after year.
Firm strategy and structure was regulated by the government in both India
and France. There were not too many rivalries in India.

Product life cycle:
Now if we consider the condition of Water Purificatio market we can see that
the industry is growing. From the analysis that we have done we found that
market is growing day by day. We found that market share loss and gain
occurs on consumption patterns. As a result Indian Oil Corporation Limited
along with other companies facing huge problem and competition in the
market.
There were enough players in the market to compete. As a result the
competition was huge and it was leading Indian Oil Corporation Limited
towards decreasing market share. As the competition was high the industry
was totally saturated. So without any doubt we can state that coffee industry
is in the growth stage. Indian Oil Corporation Limited and along with other
competitors are among the major players in the water purification industry
which is in the growth stage according to the industry life cycle.

Introduction
In the introduction stage of the life cycle, an industry is in its infancy. At this
stage market size and growth is slight. Perhaps a new, unique product

41 | P a g e

offering has been developed and patented, thus beginning a new industry.
Some analysts even add an embryonic stage before introduction. At the
introduction stage, the firm may be alone in the industry. It is possible that
substantial research and development costs have been incurred in getting the
product to this stage. In addition, marketing costs may be high in order to test
the market, undergo launch promotion and set up distribution channels. It is
highly unlikely that companies will make profits on products at the Introduction
Stage.

INDIAN OIL
CORPORATION
LIMITED

Products at this stage have to be carefully monitored to ensure that they start
to grow. Otherwise, the best option may be to withdraw or end the product.

Growth
Like the introduction stage, the growth stage also requires a significant
amount of capital for the firm. The goal of marketing efforts at this stage is to
differentiate a firm's offerings from other competitors within the industry. If the
new product is successful (many are not), sales will start to grow and new
competitors will enter the market, slowly eroding the market share of the
innovative firm.
The product starts to be exported to other markets and substantial efforts are
made to improve its distribution since competition mainly takes place more on

42 | P a g e

the innovative capabilities of the product than on its price. This phase tends to
be associated by high levels of profits.

Maturity
As the industry approaches maturity, the industry life cycle curve becomes
noticeably flatter, indicating slowing growth. Some experts have labeled an
additional stage, called expansion, between growth and maturity. In fact, the
rate of sales expansion is typically equal to the growth rate of the economy.
The Maturity Stage is, perhaps, the most common stage for all markets. It is in
this stage that competition is most intense as companies fight to maintain their
market share. Here, both marketing and finance become key activities.
Marketing spend has to be monitored carefully, since any significant moves
are likely to be copied by competitors.
The Maturity Stage is the time when most profit is earned by the market as a
whole. Any expenditure on research and development is likely to be restricted
to product modification and improvement and perhaps to improve production
efficiency and quality.

Decline
In the Decline Stage, the market is shrinking, reducing the overall amount of
profit that can be shared amongst the remaining competitors. At this stage,
great care has to be taken to manage the product carefully. It may be possible
to take out some production cost, to transfer production to a cheaper facility,
sell the product into other, cheaper markets. Care should be taken to control
the amount of stocks of the product.
Ultimately, depending on whether the product remains profitable, a company
may decide to end the product. In this phase, sales decrease at an
accelerating rate, causing the plotted curve to trend downward.

Industry life cycle:
Indian Oil Corporation Limited oil industry in the developing countries is
in its growth stage
A constant trend in the industry growth is being noticed. The possible sectors
for expansion opportunity for Water Purification industry have been identified.
Different stakeholders of the business environment have made their positions

43 | P a g e

clear to others. Government has come up with favorable and organized
policies and guidelines for the companies operating in the business. The
availability of employees with required skills are present in the local market.
Also there is enough opportunity to train up more people in present as there
are lots of well-known institutions available. So an intensive pressure of
competition among the competitors is being seen followed by high level of
rivalry. Competition will be very high among them as they instantly copied the
product. Now they have to come up with expansion of their business through
creating more awareness with outlets in order to bid the problem of getting
stabilized of profits.

Indian Oil
Corporation
Limited industry

Fragmentation Stage
Fragmentation is the first stage of the new industry. This is the stage when the
new industry develops the business. At this stage, the new industry normally
arises when an entrepreneur overcomes the twin problems of innovation and
invention, and works out how to bring the new products or services into the
market.
Shake-out
Shake-out is the second stage of the industry lifecycle. It is the stage at which
a new industry emerges. During the shake-out stage, competitors start to
realize business opportunities in the emerging industry. The value of the
industry also quickly rises.

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Maturity
Maturity is the third stage in the industry lifecycle. Maturity is a stage at which
the efficiencies of the dominant business model give these organizations
competitive advantage over competition. The competition in the industry is
rather aggressive because there are many competitors and product
substitutes. Price, competition, and cooperation take on a complex form. Some
companies may shift some of the production overseas in order to gain
competitive advantage.

Decline
In the stage of decline, some companies may leave the industry if there is no
demand for the products or services they provide, or they may develop new
products or services that meet the demand in the market. In such cases, this
will create a new industry.
Here are some of the reasons why we said that this industry is in the Shake
out stage.

The industry was generating huge revenue and was attracting investment
from private and government sectors. A huge number of companies
already had invested in this industry.
Required levels of skilled people were locally vastly available.
Infrastructure was already established although not of the global standard.
All areas of this industry had targeted market present locally and those
markets were showing huge demand.
The industry was generating huge revenue and was attracting investment
from private and government sectors.
Quality suppliers are also present locally and globally.
Targeted customers are showing positive attitudes towards the new
innovations introduced by the companies in the industry.

45 | P a g e

Alternative
Alternative 1
“Do nothing”
This alternative will provide them
with less work or probably no
work to do. This strategy will
require the company to simply
follow its previous footsteps.
Following this strategy would
mean that the decision to take an
active interest in Delays in
completing front-end
transactions were not well
received by customers and
threatened to compromise user
co-operation in moving the
corporation to a more
contemporary information processing platform. Moreover, Puri wondered if
any such pause might further erode user confidence in the project as a whole.
Yet, continuing on without sorting out the problem seemed to pose its own
dangers; the competitive environment did not seem to allow for the possibility
by pausing the implementation to try to solve the problem.
Doing nothing would mean that they will lose this ever growing market through
which they could have increased their annual sales and would have been able
to regain their market shares.

Marketing insight:
They don‟t require any conventional marketing plan to promote their product.
As they are doing nothing they probably don‟t have any work to do or improve
their product status in the market. They don‟t have to do any promotional
activities to promote their product in the market or make their product known
to the consumers.

46 | P a g e

Financial insight:
As they are doing nothing for their product, they don‟t require any investment
to promote or make any necessary changes in their production. They don‟t
need any investment to come up with any new product innovation to market
their product or increase their sales.

HRM insight:
From the case we got no idea whether they have any proper management or
HR department, due to less information provided. So we are guessing that
they don‟t have any HR department neither they have any proper
management style. There is very high possibility that they might face future
difficulties managing their product or their employees due to their lack of
proper management.

Pros:


They have no risk as they are not entering into new market.



There is no need for investment on marketing research or product
innovation.



No additional management and distributors required



Occupy more time to study the competitors‟ trend and come up with
new R&D
Easier to sustain current revenues earned solely from the „Cash-cow‟
products
Increased focus on existing brands saves time for extending product
line




Cons:


They will continue to have diminishing market share.



They are underutilizing their market expansion capacity.



They will lose the market which is developing and encouraging foreign
investments.

Though the do nothing would buy ample time for Indian Oil Corporation to
come up with new ideas and R&D, but the opportunity cost is very high for
such strategy. In this alternative, the competitors would enjoy the market‟s
impressive growth and simply take the “cream” out of the industry and leaving

47 | P a g e

residuals. Therefore, unless they faces severe break down both financially
and strategically the “Do Nothing” strategy is not recommended.

Alternative 2:
“In response to time issues, Indian Oil Corporation
should remove the reporting load from the database
server and shift it to a business warehouse server.”
Puri recognized that the slow response time had huge business and
organizational implications. Delays in completing front-end transactions were
not well received by customers and threatened to compromise user cooperation in moving the corporation to a more contemporary information
processing platform. Moreover, Puri wondered if any such pause might further
erode user confidence in the project as a whole.
Yet, continuing on without sorting out the problem seemed to pose its own
dangers; the competitive environment did not seem to allow for the possibility
of pausing the implementation to try to solve the problem. It was April 8, 2003,
and top management, concerned about the implications of the slow response
times, expected a recommendation within 10 days about whether to proceed
with implementation in the remaining sites.
The response time issues had cropped up following the end of a month. The
month-end period in IOCL involved consolidation of all past transactions for
monthly reporting purposes to aid management decision-making. When the
response time issue first came up, the Basis team responded by deferring
processing of reporting applications to free up resources for business
transactions. This action had improved response time to an extent. Puri
learned from his team, however, that other factors could have contributed to
the poor response times: hardware configuration and installation, database
design and installation, the way SAP had been implemented, the nature of the
processes as well as their loads (i.e. transactions and reporting load), and
communication bandwidth limitations. However, the extent of the contribution
of each factor was uncertain. Additionally, Puri was aware that the recent
version upgrade to 4.6C might have put a higher resource demand on existing
production systems.
Alternative was to remove the reporting load from the database server and
shift it to a business warehouse server. Although this would free substantial
resources for transaction processes, the reporting server would require a
substantial investment of time and money.

48 | P a g e

Marketing insight:
They need to require any conventional marketing plan to promote their
product. As they are doing this they probably don‟t have any work to do or
improve their product status in the market. They have to do any promotional
activities to promote their product in the market or make their product known
to the consumers.

Financial insight:
As they are doing this for their product, they need to require investment to
promote or make any necessary changes in their production. They need all
investment to come up with any new product innovation to market their
product or increase their sales.

HRM insight:
From the case we got no idea whether they have any proper management or
HR department, due to less information provided. So we are guessing that
they don‟t have any HR department neither they have any proper
management style. There is very high possibility that they might face future
difficulties managing their product or their employees due to their lack of
proper management.

Pros:


They will continue to have diminishing market share.



They are underutilizing their market expansion capacity.



They will not lose the market which is developing and encouraging
foreign investments.

Cons:


They have risk as they are not entering into new market.



There is no need for investment on marketing research or product
innovation.



They need to put an effort in order to assume control of the target firm.

49 | P a g e

Alternative 3:
“The company should examine the availability of inhouse skills as well as the current systems set-up
and recommend the structure and the skills required
for operating, maintaining, and upgrading the
proposed corporate system.”
One of the biggest challenges to adopting the new IT system was the level of
computer proficiency in the organization. Of the nearly 9,500 employees in
executive and supervisory roles, a large proportion had little experience with
computers, let alone with advanced systems such as an ERP. It became clear
to management that corporate-wide visibility for IT and the training of all its
employees on IT systems was going to be a key factor in project success and
the use of IT for business growth.
This essentially addresses the Management oversight of the organization‟s
control processes for providing assurance on the system. Audit reviewed the
adequacy of the monitoring processes and how much these had been
successful in continuous improvement of the system.
There was a need to submit status reports to Senior Management regarding
achievement of planned objectives, deliverables obtained, meeting of
performance targets etc. and any such information as may be required by the
Senior Management for monitoring and review regarding the progress made
towards achievement of the identified goals. Such reports could greatly
facilitate Management in initiating timely action and controlling the effective
progress of the Project. However, Audit found that Business Warehousing and
portal for Management Reporting as recommended by the Consultants had
not been installed.
In the absence of the same, Management reporting through SAP was virtually
absent. Though basic measurements to be monitored had been identified and
assessment methods and techniques had been defined, the processes had
not been adopted across the entire organization and decisions were made
based on the expertise of a few individuals.

Marketing insight:
They need to require any conventional marketing plan to promote their
product. As they are doing this they probably don‟t have any work to do or
improve their product status in the market. They have to do any promotional
activities to promote their product in the market or make their product known
to the consumers.

50 | P a g e

Financial insight:
As they are doing this for their product, they need to require investment to
promote or make any necessary changes in their production. They need all
investment to come up with any new product innovation to market their
product or increase their sales.

HRM insight:
From the case we got no idea whether they have any proper management or
HR department, due to less information provided. So we are guessing that
they don‟t have any HR department neither they have any proper
management style. There is very high possibility that they might face future
difficulties managing their product or their employees due to their lack of
proper management.

Pros:


They will continue to have diminishing market share.



They are underutilizing their market expansion capacity.



They will not lose the market which is developing and encouraging
foreign investments.



Occupy more time to study the competitors‟ trend and come up with
new R&D
Easier to sustain current revenues earned solely from the „Cash-cow‟
products
Increased focus on existing brands saves time for extending product
line




Cons:


They have risk as they are not entering into new market.



There is no need for investment on marketing research or product
innovation.



They need to put an effort in order to assume control of the target firm.

51 | P a g e

Alternative 4:
“Design the system with open architecture so that
the continuing advancements in technology for
hardware, software, and communications can be
seamlessly assimilated without disrupting the totality
of the process.”
Puri realized there were time and resource costs associated with sorting out
the response time problem. Given the three-tiered ERP architecture, it would
be challenging to identify which factors — e.g., the SAP application, the
database server, the way in which the database has been implemented, the
communications bandwidth constraints — were bottlenecks. Puri knew,
though, that with more sites going live and increasing end-user expectations,
the efficient performance of the technological system was crucial.
At the time, key functions in various IOCL divisions were sustained by
different legacy software systems developed over the past several years, (e.g.
the marketing division had the terminal documentation module (TDM) to
capture data at point-of-sale units such as bulk storage terminals, the plant
documentation module (PDM) for operations at liquefied petroleum gas (LPG)
bottling plants, and the IndAir system for aviation fuel stations). Similarly, the
financial management system (FMS), the materials management system
(MMS), and the online maintenance and inspection system (OMNIS) were in
operation in the refineries and pipelines divisions.
There were other legacy systems for stock and sales accounting in the
marketing division and for payroll in all divisions. EDP at IOCL worked on
minicomputer and PC-based platforms, and significant investments had been
made in these basic building blocks. There were also local and wide area
networks, but these operated on a limited scale with little standardization.

Marketing insight:
They need to require any conventional marketing plan to promote their
product. As they are doing this they probably don‟t have any work to do or
improve their product status in the market. They have to do any promotional
activities to promote their product in the market or make their product known
to the consumers.

Financial insight:
As they are doing this for their product, they need to require investment to
promote or make any necessary changes in their production. They need all

52 | P a g e

investment to come up with any new product innovation to market their
product or increase their sales.

HRM insight:
From the case we got no idea whether they have any proper management or
HR department, due to less information provided. So we are guessing that
they don‟t have any HR department neither they have any proper
management style. There is very high possibility that they might face future
difficulties managing their product or their employees due to their lack of
proper management.

Pros:


They will continue to have diminishing market share.



They are underutilizing their market expansion capacity.



They will not lose the market which is developing and encouraging
foreign investments.



Occupy more time to study the competitors‟ trend and come up with
new R&D
Easier to sustain current revenues earned solely from the „Cash-cow‟
products
Increased focus on existing brands saves time for extending product
line




Cons:


They have risk as they are not entering into new market.



There is no need for investment on marketing research or product
innovation.



They need to put an effort in order to assume control of the target firm.

53 | P a g e

Alternative 5:
“The company should deliberate centralized control
with decentralized customer response.”
Puri also understood that he did not have direct control over several causal
factors, such as the adequate allocation of bandwidth by the government-run
telecommunications provider. Such constraints resulted in several questions
for Puri with respect to the future course of Project Manthan. The primary
decision he needed to make was whether or not to proceed as planned with
implementation at the remaining sites.
If he were to recommend continued implementation, he would have to keep
in mind that response times could worsen due to the additional load of the
new sites. If he were to recommend stalling the implementation, he would
have to account for the implications of such a decision as well as come up
with a suitable action plan to bring the project back on track.
Puri also had to come up with a strategy to address the growing discontent of
end users and management related to the poor response times. In doing so,
he knew that the suitability of a centralized IT architecture at Indian Oil would
be revisited. Puri also had to decide which of the existing group of vendors
should be brought in to help with the problem without compromising the
momentum of the project.

Marketing insight:
They need to require any conventional marketing plan to promote their
product. As they are doing acquisition they probably don‟t have any work to
do or improve their product status in the market. They have to do any
promotional activities to promote their product in the market or make their
product known to the consumers.

Financial insight:
As they are doing for their product, they need to require investment to
promote or make any necessary changes in their cafes or production. They
need all investment to come up with any new product innovation to market
their product or increase their sales.

54 | P a g e

HRM insight:
From the case we got no idea whether they have any proper management or
HR department, due to less information provided. So we are guessing that
they don‟t have any HR department neither they have any proper
management style. There is very high possibility that they might face future
difficulties managing their product or their employees due to their lack of
proper management.

Pros:


They will continue to have diminishing market share. They should not
lose the amount of huge investment which they already have done in
the market if they stay focused on operation of the sector. This would
translate into profits for the company.



They are underutilizing their market expansion capacity.



They will not lose the market which is developing and encouraging
foreign investments.

Cons:



They have risk as they are not entering into new market.



There is no need for investment on marketing research or product
innovation.



They need to put an effort in order to assume control of the target firm.

55 | P a g e

Recommendation
Our strategy recommendations for the managers of IOCL are to design the
system with open architecture so that the continuing advancements in
technology for hardware, software, and communications can be seamlessly
assimilated without disrupting the totality of the process.
Conditionally, they must accept the costs and technological challenges of
distributing to every conceivable market. Selling costs may be higher in
remote regions, but the advanced technology must be available, and it must
be reasonably priced. Additionally, IOCL can look to the competition for clues
as to what products they should phase out, so that they can utilize plant
capacities for strong sellers and new innovative offerings.
So for this IOCL company should present their product according to the local
demand. For that they can come up with several techniques of ERP
technique, because it is popular and cost effective, and distribution will be
more flexible in comparison to cost.
At the time, key functions in various IOCL divisions were sustained by
different legacy software systems developed over the past several years, (e.g.
the marketing division had the terminal documentation module (TDM) to
capture data at point-of-sale units such as bulk storage terminals, the plant
documentation module (PDM) for operations at liquefied petroleum gas (LPG)
bottling plants, and the IndAir system for aviation fuel stations). Similarly, the
financial management system (FMS), the materials management system
(MMS), and the online maintenance and inspection system (OMNIS) were in
operation in the refineries and pipelines divisions.
There were other legacy systems for stock and sales accounting in the
marketing division and for payroll in all divisions. EDP at IOCL worked on
minicomputer and PC-based platforms, and significant investments had been
made in these basic building blocks. There were also local and wide area
networks, but these operated on a limited scale with little standardization


They need to require any conventional marketing plan to promote their
product. As they are doing this they probably don‟t have any work to do
or improve their product status in the market. They have to do any

56 | P a g e

promotional activities to promote their product in the market or make
their product known to the consumers.


As they are doing this for their product, they need to require investment
to promote or make any necessary changes in their production. They
need all investment to come up with any new product innovation to
market their product or increase their sales.

 From the case we got no idea whether
they have any proper management or
HR department, due to less
information provided. So we are
guessing that they don‟t have any HR
department neither they have any
proper management style. There is
very high possibility that they might
face future difficulties managing their
product or their employees due to their
lack of proper management.

Reasons for choosing this alternative:


They will continue to have more market share.



They are underutilizing their market expansion capacity.



They will not lose the market which is developing and encouraging
foreign investments.



Occupy more time to study the competitors‟ trend and come up with
new R&D
Easier to sustain current revenues earned solely from the „Cash-cow‟
products
Increased focus on existing brands saves time for extending product
line




57 | P a g e

Reasons for not choosing other alternatives:

“Do nothing”


They will continue to have diminishing market share.



They are underutilizing their market expansion capacity.



They will lose the market which is developing and encouraging foreign
investments.

“The company should examine the availability of inhouse skills as well as the current systems set-up
and recommend the structure and the skills required
for operating, maintaining, and upgrading the
proposed corporate system.”


They have risk as they are not entering into new market.



There is no need for investment on marketing research or product
innovation.



They need to put an effort in order to assume control of the target firm.

“The company should deliberate centralized control
with decentralized customer response.”


They have risk as they are not entering into new market.



There is no need for investment on marketing research or product
innovation.



They need to put an effort in order to assume control of the target firm.

58 | P a g e

Implementation
This case presents the challenges the IOCL faces in India. Not only is IOCL
up against only one or two competitor, but it must also compete with many of
local brands, many of which have a better position in the market. The case
provides background information on the history of IOCL in India, trends in the
Indian oil purification market, and competition by US filter and the many local
oil purification firms. In addition, IOCL's strategies for competing are outlined.
The main question raised by the case is what marketing strategies IOCL can
implement to better compete in India.
Indian Oil Corporation Limited might face difficulty as they need to buy some
of their raw materials from the local suppliers and High concentration means
Indian Oil Corporation Limited has option to choose from abroad suppliers.
Indian Oil Corporation Limited has a great opportunity which might destroy if
not supported well by the suppliers by providing quality raw materials at right
amount and at right time. In the case of Indian Oil Corporation Limited the
Competitive Rivalry within industry was founded as High because of the
following factors which jointly made up this part of the porter‟s five forces
model:

General Implementation:
Implementation is the process of turning plans into actions, and involves all
the activities that put the marketing plan to initiate market expansion to work.
Successful implementation depends on how well the business blends its
people, organizational structure and company culture into a cohesive program
that supports the marketing plan.
For its further success, IOCL must impose several key changes. Supply
needs to be on time and meet the demand from plants. It must also be
efficient so as not to build technological problems. It is very dangerous for a
technological company like IOCL to be lagging behind in tech side. So it must
focus on a efficient production process all over its operations in India including
its home country Chile. As most of the tools including machinery are to be
procured from the parent company in order to maintain the world class quality
and speed of production and production facilities it would be essential to
ensure the speed of the movement of these things across borders.

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The marketing needs to be motivated and knowledgeable about the product
and services. The forms of promotion such as advertising must be attracting
and enticing to the target market to get the greatest amount of exposure
possible for the product. But due to the nature of the product more sales
promotion aimed at the wholesalers or dealers would be the more efficient
marketing policy. This will ensure the success of the product in the market.
Distribution of the oil must be efficient. This problem has already been taken
care of with convenient transmission strategies to consumers‟ areas. IOCL
has enough experience in the power generation sector. Lack of proper
experience in any sector of the business can proof to be dangerous for
profitability. No matter how much market research or environmental scanning
is done it would never be equivalent to years of experience in any sector.
IOCL has this advantage in the electricity sector but not in any other utility
area.
IOCL should start with a concrete plan for this new investing method. Though
they were present in the Indian market from beforehand still they need to
make their stand firm in the new market which they are targeting. We are
suggesting they go with joint venture franchises in the country. In such
franchise businesses, the business which they are in reputation and image
makes or breaks deals. So they should work on proper method of entering the
market.
IOCL should then set up strategies and starting investment in “market
development research” and “product development research” to come up with
newer methods may be even more efficiency to their supply line. This way
they will be responding to the market demand while not altering their main
business.
They should be very careful and focused on the preference of the Indians in
the regard of market development. Otherwise, all the investments will just go
down the drains. They should start with the big cities and then move across
the nation. India is versatile. Legislation of one part is vastly different than
another part. Their first step can be to start operation as power supplier to big
manufacturing firms.
The role of the judiciary in enforcing action in the power sector is pivotal to the
success of any nation‟s economy or the power company. It is important to
have the judiciary understand the power policy of the Federal Government,
the legal regulatory framework and the role of the regulator of the sector.
While emphasizing the role of electricity in the economic development of any
nation it is to be noted that no meaningful development by any nation can be

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achieved without reliable power sector, adding that it is a known fact that any
serious minded nation must put its power sector on a sound pedestal.
Their next step should be to test the new services for the markets and see
how they take it.

Project Scope






ERP
Add-on Software Packages
Hardware procurement
Communication network
Transition management

Why ERP?











Software solution for complete integration of systems
across departments as well as the enterprise
Better customer service
Introduction of latest technology
Expert databases for more informed management
decision making
Unified accounting for refining, pipeline and marketing
Focus on improving customer related processes
Corporate-wide knowledge sharing
Need for robust communication connectivity across IOCL

SAP Overview











SAP stands for Systems, Applications and Products
for Data Processing
An online real time system
SAP is an industry-leading software application
company (Headquarters in Waldorf, Germany)
providing Enterprise Resources Planning (ERP)
Systems solutions
3rd largest software vendor in the world with 34
years of business experience
30,000+ business installations in 100+ countries

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SAP Benefits










SAP offers Best Practices for oil and gas industry
Standardized business processes and approach
across companies
Long term strategy for business systems
Global systems environment: multi-currency,
multi- language and country specific support for
government reporting and taxation
integration of application, processes and data
Dramatic increase in business information

Terrestrial Network






Connectivity being provided to 70 marketing Locations
Eight refineries being connected in a star network to Refinery HO
Provides Data/Voice connectivity on the same channel using latest
technology
Refinery LANs being extended to Marketing and
Pipelines offices within the same campus

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Functional Implementation
Marketing:
For any new market growth plan is useless if it is not made known to the
consumers properly. Talking to the consumers in the way they will understand
best is the job of the marketing department. No matter how fine the new
products are without the proper marketing it won‟t be able to bring revenue for
the company.
Firstly, when attempting to implement a new Marketing plan a business must
address its target market and conduct the relevant information to insure the
new marketing plan both differs from the old and is better for the business.
When conducting market research a business must first define the problem
and then gather the appropriate information to solve the problem. There are 3
types of information a business can gather to solve its problems.


Exploratory Research which clarifies the problem and searches for
ways to address it.



Descriptive Research is used to measure and describe things like the
market potential for a product and characteristics of the target market.



Casual Research is used to test a hypothesis about a cause and effect
relationship.

IOCL through its market research has addressed all three types of research to
define the problem raised by shareholders and gathered information to serve
their needs.

Factors Influencing Consumer Choice

When making decisions on products a business must look at factors that
influence consumer choice such as psychological factors, Socio-cultural
factors, Economic factors and Government Factors.

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Psychological Factors: such as motivation, perception, lifestyle, personality
and self concept, learning, and attitudes influence the consumer‟s behavior
towards a product and IOCL has addressed this issue by already introducing
squid and capelin to satisfy different lifestyles. They will be contributing more
in this sector with increased investment and interest in the squid, crab, capelin
market.
Socio-cultural factors: such as culture, subculture, socio-economic status,
family and reference groups influence the consumer‟s behavior towards a
product.

Economic factors: such as Disposable income and discretionary income.
IOCL has addressed this side of the influence by maintaining an average
price on the price of its products.
Government Factors: such as new regulations, inflation, interest rates all
influence consumer spending and choice. For the sake of the business of
IOCL it is of vital importance that it appeases the government at any cost to
avoid legal actions.
In order to compete with these local companies to save their profit margin
and keep a competitive advantage over competitors IOCL must have
political affiliation itself for lobbying at crucial times. The intelligent thing
to do will be giving shares of IOCL to a prominent member of opposition party
as well for future benefit.
Having political connections in a country is a blessing in itself. It can make the
entire legal problem vanish in a second. And it also makes ones problems
more heard and taken seriously by the authority. The intelligent thing to do
will be giving shares of ACI to a prominent member of opposition party as
well. That way it‟s security for the future benefit. When making decisions on
products a business must look at factors that influence consumer choice such

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as psychological factors, Socio-cultural factors, Economic factors and
Government Factors.
Second, building proper brand awareness & loyalty. A key element of IOCL‟s
success can be to its marketing strategies. Since it started its operations until
today that is a powerful, globally known corporation, the company‟s brand
development strategies constantly raise consumer interest and remain highly
competitive. Having achieved impressive brand loyalty through continuous
reinvention of its brand and focus on brand enhancement, IOCL is, without
any doubt, the leading fishes supply company in the world.

Thirdly, with monitoring. Monitoring and controlling allows the business to
check for variance in the budget and actual. This is important because it
allows IOCL to take the necessary actions to meet the marketing objectives.
There are three tools IOCL should use to monitor the marketing plan.
They are the following:
The sales analysis breaks down total business sales by market segments to
identify strengths and weaknesses in the different areas of sales. Sellers of
IOCL products vary from major retail supermarkets to small corner stores.
This gives the its products maximum exposure to customers at their
convenience.
Market share analysis compares IOCL‟s business sales performance with that
of its competitors. IOCL looks to increase its market share by over 60%. With
the changes IOCL is currently undergoing, they aim to regain an iron fist
control of the market. Target market various age groups and lifestyles from
high school students to job holders, and male or female.
Marketing Profitability Analysis looks at the cost side of marketing and the
profitability of products, sales territories, market segments and sales people.
There are three ratios to monitor marketing profitability; they are market
research to sales, advertising to sales and sales representatives to sales. The
results of these three tools can help IOCL determine any emerging trends,
such as the need for a different product. Comparing these results with actual
results gives the business an idea on when to change.

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Economies of scale in microeconomics, refers to the cost advantages that
an enterprise obtains due to expansion. There are factors that cause a
producer‟s average cost per unit to fall as the scale of output is increased.
"Economies of scale" is a long run concept and refers to reductions in unit
cost as the size of a facility and the usage levels of other inputs increase.
IOCL will create new business opportunities
for its other subsidiaries as well because they
also have a supplier company of machinery.
So it will also work as a backward integration
for the expansion. And the expansion itself will
help IOCL earn more profit and market share
intimidating and keeping the competition out.
Productive efficiency occurs when
the economy is utilizing all of its resources
efficiently, producing most output from least
input. The concept is illustrated on
a production possibility frontier (PPF) where
all points on the curve are points of maximum
productive efficiency (i.e., no more output can
be achieved from the given inputs).
Equilibrium may be productively efficient
without being allocatively efficient i.e. it may
result in a distribution of goods where social welfare is not maximized.
It is pretty obvious that the marketing team employed at the IOCL Head
offices would work to implement this idea. They would need much patience
and much vigorous and careful planning to undertake the whole plan as the
success of the entire strategy largely depends on the marketing tactics.
The recommendation is likely to be implemented in the facilities of the IOCL
Company. IOCL is a multinational company and there should be no
geographical limits to the flow of ideas for its business growth. So strategies
would be taken from its different experiences in different regions but it would
be integrated and implemented in Chile.
This recommendation should be implemented as soon as possible at
strategically suitable time when both investments and opportunities of
expansion are available. But it should be soon as competition is rising.

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Finance:
Without a proper guideline of how to run this plan financially it would not be
possible to even initiate the market research and market development
process.
Financial forecasts are predictions of future events relating strictly to expected
costs and revenue costs for future years. There are five major marketing
expenditures, which include:
 research costs,
 product development costs,
 product costs,
 promotion costs and
 Distribution costs.
All this costs will have to be
estimated by financial analysts
to in order to predict the future
profitability of the strategy.

Sales force composite is the another most logical method in forecasting
market sales hence revenue. This involves estimates from individual
salespeople to sell to work out a total for the whole business. Once these
costs and revenues are forecasted, management can then decide which
combination of marketing mix strategies will deliver the most sales revenue at
the lowest cost.
This is important as the allocation of money for the implementation of the plan
depends on the feasibility test focusing on the forecast.
Making billion-dollar investments in new conventional power plants entails a
risk that costs may not be fully recovered. In particular, there is a potential for
costs to significantly exceed the projections used to justify investment in the
plant in the first place. Three types of cost escalation “surprises” are
especially important:

Sales force composite is the another most logical method in forecasting
market sales hence revenue. This involves estimates from individual
salespeople to sell to work out a total for the whole business. Once these

67 | P a g e

costs and revenues are forecasted, management can then decide which
combination of marketing mix strategies will deliver the most sales revenue at
the lowest cost.

Fuel cost surprises:
Future fuel costs are highly uncertain. The track record of fuel price forecasts
is poor, and decisions made on the basis of fuel price forecasts are risky.
Costs of complying with impending regulation of greenhouse gas emissions
are uncertain, but could add greatly to the cost of generating electricity with
conventional coal-fired power plants. These costs may exceed the fuel costs
for a power plant
Another important fact can be from where the funds of the new market
diversification will come. We plan for the company to pay it by itself and
through capital investments. IOCL has already gained a lot of capital from the
share market they can gain even more.
Generally finance related issues are dealt by the Finance Department. So,
this time as well when it came to forecasting feasibility it would be up to the
financial department to do the job properly and keeping IOCL competitive
should be monitored by the Finance department.
The recommendation is likely to be implemented in the facilities of the IOCL
Company. The planning for the overall company can take place in Chile
grounds and the plans for regional markets and other subsidies can be
decided on host country grounds.
This recommendation should be implemented as soon as possible at
strategically suitable time when both investments and opportunities of
expansion are available. But it should be soon as competition is rising.

Human Resource:
As we have expanded over the decades, our company has benefited from the
various cultural insights and perspectives of the societies in which we do
business. Much of our future success will depend on our ability to develop a
worldwide team that is rich in its diversity of thinking, perspectives,
backgrounds and culture.

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As we have expanded over the decades, our company has benefited from the
various cultural insights and perspectives of the societies in which we do
business. Much of our future success will depend on our ability to develop a
worldwide team that is rich in its diversity of thinking, perspectives,
backgrounds and culture.
We are determined to have a diverse culture, from top to bottom that benefit
from the perspectives of each individual.
Employee Forums: We believe that a sense of community enhances our ability to attract, retain,
and develop diverse talent and ideas as a source of competitive business
advantage.
In the U.S., through employee forums, employees can connect with
colleagues who share similar interests and backgrounds. In those forums and
elsewhere, employees support each other's personal and professional growth
and enhance their individual and collective ability to contribute to the company
Mentoring Programs:
The FPI Company is creating a system of mentoring programs that include,
one-on-one mentoring, group mentoring and mentoring self-study tools. Oneon-one mentoring programs designed to foster professional growth and
development. These programs promote trusting
relationships for networking, coaching, career
counseling and life lessons.
The benefits of mentoring also strengthen
our company. Mentoring increases the flow
of information across organizational lines
and encourages diverse thinking and crossfunctional learning. They should have a
strong commitment to hiring interns through The Company Internship
Programs. The company offers a number of internship programs for
undergraduate and graduate students. The company also has internship
programs focused on graduate students in the areas of marketing and
fountain operations.
Training & Development

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Simultaneous improvement of technology of production process and skills of
manpower both is needed. The old school employees that are resistant to
change should attend workshops and month long on-going training programs
to change their outlook on management approaches and work environment.
With the advent of globalization every business scenario in the world is
changing. If people are resistant to change it will only harm their competitive
edge as others will adjust responding to the modified situation. As a result of
which they would be better suited for the demand of the market. To stay
competitive in the market IOCL must comply itself to the changes and keep on
up-to-date about both production process and efficiency increasing
management approaches.
The reason why the employees resist change is the perspective that the
changes and new things will make them obsolete and encourage the
employers to hire younger people to run the company. To nip this suspicion in
the bud we suggest training & development of all the employees both
managerial and non-managerial. This way the employees would feel involved
in the changing environment rather than feel left out. It is believed that then
they would not be as resistant as helpful for the changes believing those will
enhance their efficiency rather than making them obsolete.
Firstly, the employees of IOCL are to be participating in team building
activities along with the management. There should be some amount of
bonding there so that the employees trust their bosses properly during the
period of organizational change. Proper relation of trust is needed to undergo
such a massive revolution. They should be made to believe that the new
things would not mean their lay off. Those are tools to make them more
efficient.
Secondly, training & development should start even before the technologies
are there to run the factories. The employees should be made familiar with the
idea of those so that they do not feel out dated and threatened or intimidated
when those are finally there. Some amount of acceptance and familiarity
should be there beforehand.
Thirdly, massive investment is needed to bring up-to-date technology of oil
extraction along with technical experts and trainers who would be there 24x7
to assist the machines and train the employees first hand to operate those.
A number of Human resource experts along with technical experts on oil
extraction are to implement this recommendation. The HR experts are to
handle the relationship issues during these crucial times of change. The

70 | P a g e

technical experts are to conduct the training and development of employees
with the help of HR department.
The recommendation is likely to be implemented in the facilities of the IOCL
Company. The training for the employees can take place in the factory
grounds and the training for the managers can take place in the office
compounds.
This recommendation should be implemented as soon as possible at
strategically suitable time when both investments and opportunities of
expansion are available. But it should be soon as competition. Simultaneous
improvement of technology of production process and skills of manpower both
is needed. The old school employees that are resistant to change should
attend workshops and month long on-going training programs to change their
outlook on management approaches and work environment.
With the advent of globalization every business scenario in the world is
changing. If people are resistant to change it will only harm their competitive
edge as others will adjust responding to the modified situation. As a result of
which they would be better suited for the demand of the market. To stay
competitive in the market IOCL must comply itself to the changes and keep on
up-to-date about both production process and efficiency increasing
management approaches.
The reason why the employees resist change is the perspective that the
changes and new things will make them obsolete and encourage the
employers to hire younger people to run the company. To nip this suspicion in
the bud we suggest training & development of all the employees both
managerial and non-managerial. This way the employees would feel involved
in the changing environment rather than feel left out. It is believed that then
they would not be as resistant as helpful for the changes believing those will
enhance their efficiency rather than making them obsolete.
Firstly, the employees of IOCL are to be participating in team building
activities along with the management. There should be some amount of
bonding there so that the employees trust their bosses properly during the
period of organizational change. Proper relation of trust is needed to undergo
such a massive revolution. They should be made to believe that the new
things would not mean their lay off. Those are tools to make them more
efficient.
Secondly, training & development should start even before the technologies
are there to run the factories. The employees should be made familiar with the
idea of those so that they do not feel out dated and threatened or intimidated

71 | P a g e

when those are finally there. Some amount of acceptance and familiarity
should be there beforehand.
Thirdly, massive investment is needed to bring up-to-date technology of oil
extraction along with technical experts and trainers who would be there 24x7
to assist the machines and train the employees first hand to operate those.
A number of Human resource experts along with technical experts on oil
extraction are to implement this recommendation. The HR experts are to
handle the relationship issues during these crucial times of change. The
technical experts are to conduct the training and development of employees
with the help of HR department.
The recommendation is likely to be implemented in the facilities of the IOCL
Company. The training for the employees can take place in the factory
grounds and the training for the managers can take place in the office
compounds.
This recommendation should be implemented as soon as possible at
strategically suitable time when both investments and opportunities of
expansion are available. But it should be soon as competition.

Total Integration
Integrated business planning (IBP) refers to the technologies, applications
and processes of connecting the planning function across the enterprise to
improve organizational alignment and financial performance. IBP accurately
represents a holistic model of the company in order to link strategic
planning and operational planning with financial planning.
By deploying a single model across the enterprise and leveraging the
organization‟s information assets, corporate executives, business unit heads
and planning managers use IBP to evaluate plans and activities based on the
true economic impact of each consideration.
Such a massive Plan cannot be implemented without the assistance of every
department supporting the entire organization. Financial department has done
the forecasting, marketing department has conducted research on product
development to ultimately launce new tastes of IOCL in the new country Chile,
in the market when HR has been working relentlessly to keep up the level of
the work of the organization at a certain world class standard

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Integrated business planning (IBP) refers to the technologies, applications
and processes of connecting the planning function across the enterprise to
improve organizational alignment and financial performance. IBP accurately
represents a holistic model of the company in order to link strategic
planning and operational planning with financial planning.
By deploying a single model across the enterprise and leveraging the
organization‟s information assets, corporate executives, business unit heads
and planning managers use IBP to evaluate plans and activities based on the
true economic impact of each consideration.
Such a massive Plan cannot be implemented without the assistance of every
department supporting the entire organization. Financial department has done
the forecasting, marketing department has conducted research on product
development to ultimately launce new tastes of IOCL in the new country Chile,
in the market when HR has been working relentlessly to keep up the level of
the work of the organization at a certain world class standard
Benefits

IBP transforms planning into a decisive competitive advantage by:
Providing an integrated planning platform across marketing, operations and
finance
Generating a holistic understanding of performance drivers
Quantifying the financial impact and interdependencies across planning
alternatives
Optimizing strategic planning and resource allocation
Balancing sales and operations planning for profitability
Quantifying financial risk
Increasing business flexibility

IOCL is one of the most recognizable successful companies around the globe.
Having established a leading brand that fascinates consumers all over the
world, it is widely regarded as one of the most booming power generation
organizations having achieved huge success. The most important function of

73 | P a g e

their business is production. How they integrate that to the strategy to
increase efficiency is also important.
Integrated Marketing Communications (IMC) is defined as customer
centric, data driven method of communicating with the customers. IMC is the
coordination and integration of all marketing communication tools, avenues,
functions and sources within a company into a seamless program that
maximizes the impact on consumers and other end users at a minimal
cost. This management concept is designed to make all aspects of marketing
communication such as advertising, sales promotion, public relations, and
direct marketing work together as a unified force, rather than permitting each
to work in isolation.
Integrated marketing communications (IMC) is a process for managing
customer relationships that drive brand value primarily through
communication efforts. Such efforts often include cross-functional processes
that create and nourish profitable relationships with customers and other
stakeholders by strategically controlling or influencing all messages sent to
these groups and encouraging data-driven, purposeful dialog with them.
IMC includes the coordination and integration of all marketing communication
tools, avenues, and sources within a company into a seamless program in
order to maximize the impact on end users at a minimal cost. This integration
affects all firm's business-to-business, marketing channel, customer-focused,
and internally directed communications. Integrated Marketing
Communications is a simple concept. It ensures that all forms of
communications and messages are carefully linked together.
The Internet has changed the way business is done in the current world. The
variables of segmentation, targeting and positioning are addressed differently.
Integrated marketing is based on a master marketing plan. This plan should
coordinate efforts in all components of the marketing mix.
A marketing plan consists of the following six steps:
1. Situation analysis
2. Marketing objectives
3. Marketing budget
4. Marketing strategies
5. Marketing tactics

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6. Evaluation of performance
Integrated marketing communications aims to ensure consistency of message
and the complementary use of media. The concept includes online and offline
marketing channels.
Online marketing channels include any e-marketing campaigns or programs,
from search engine optimization (SEO), pay-per-click, affiliate, email, banner
to latest web related channels
for webinar, blog, microblogging, RSS, podcast,
Internet Radio, and Internet
TV. Offline marketing
channels are traditional print
(newspaper, magazine), mail
order, public relations,
industry relations, billboard,
traditional radio, and
television.
A company develops its
integrated marketing
communication program using
all the elements of the
marketing mix (product, price,
place, and promotion). Integrated marketing communications plans are vital to
achieving success. The reasons for their importance begin with the explosion
of information technologies. Channel power has shifted from manufacturers to
retailers to consumers.
Together, with successful implementation of this strategic plan in to action, we
believe that IOCL can gain its market share in a profitable manner in Chile.
In conclusion, IOCL is a successful company, mostly because it has managed
to position its brand in a way that takes advantage of all the elements of
marketing mix, i.e. product, place price and promotion/distribution. In doing
so, it achieves to develop a personality and distinguish itself from competition,
while offering consumers a clear view of its values of quality and efficient
production. This leads to increased loyalty and satisfaction.

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