A

PROJECT REPORT
ON
A STUDY ON SWOT AND VALUE CHAIN ANALYSIS OF
RELIANCE FRESH

MASTERS OF BUSINESS ADMINISTRATION

Guided by : Dr. Trilochan Nayak . Sub by: JEETIN KUMAR BEHERA

(Director Corporate Affairs) Roll No.:033

Astha School Of Management SEC :A

Bhubaneswar
 A
CKNOWLEDGEMENT

This report entitled “study of swot and value chain analysis of reliance fresh” is
the outcome of my summer training at BIRLA SUNLIFE INSURANCE

I sincerely express my gratitude and lot of thanks to Dr. Trilochan Nayak

Sir (Director Corporate Affairs) for helping me in completing my project
work and making it a great success.

Last but not least, I would thank all my friends, faculty members and all
respondents who rendered their precious time for contributing their skills and fill
the questionnaire, which made my project more appealing and attractive.

JEETIN KUMAR BEHERA

SEC - A

ROLL NO 045
 Contents

Chapter 1: Introduction
Chapter 2: Company Profile
Chapter 3: objective of study
Chapter 4: analysis and interpretation
Chapter 5: conclusion
 CHAPTER 1
INTRODUCTION

Industry: retail

Type: super market

Chairman and Managing director: Mukesh Ambani

first outlet: Hyderabad ( banjara hills)

founded: October 30th

Head quarter: Mumbai

SWOT ANALYSIS

SWOT analysis is a strategic planning technique used to help a person or

organization identify strengths, weaknesses, opportunities, and threats related
to business competition or project planning.[1] It is designed for use in the
preliminary stages of decision-making processes and can be used as a tool for
evaluation of the strategic position of a city or organization It is intended to
specify the objectives of the business venture or project and identify the internal
and external factors that are favorable and unfavorable to achieving those
objectives. Users of a SWOT analysis often ask and answer questions to generate
meaningful information for each category to make the tool useful and identify
their competitive advantage. SWOT has been described as the tried-and-true tool
of strategic analysis

Strengths and weakness are frequently internally-related, while opportunities and

threats commonly focus on the external environment. The name is an acronym
for the four parameters the technique examines:

 Strengths: characteristics of the business or project that give it an

advantage over others.
 Weaknesses: characteristics of the business that place the business or
project at a disadvantage relative to others.
 Opportunities: elements in the environment that the business or project
could exploit to its advantage.
 Threats: elements in the environment that could cause trouble for the
business or project.
The degree to which the internal environment of the firm matches with the
external environment is expressed by the concept of strategic fit. Identification of
SWOTs is important because they can inform later steps in planning to achieve
the objective
THE VALUE CHAIN ANALYSIS
The Value Chain The term ‘Value Chain’ was used by Michael Porter in his book
"Competitive Advantage: Creating and Sustaining superior Performance" (1985).
The value chain analysis describes the activities the organization performs and
links them to the organizations competitive position. Value chain analysis
describes the activities within and around an organization, and relates them to an
analysis of the competitive strength of the organization. Therefore, it evaluates
which value each particular activity adds to the organizations products or services.
This idea was built upon the insight that an organization is more than a random
compilation of machinery, equipment, people and money. Only if these things are
arranged into systems and systematic activates it will become possible to produce
something for which customers are willing to pay a price. Porter argues that the
ability to perform particular activities and to manage the linkages between these
activities is a source of competitive advantage. Porter distinguishes between
primary activities and support activities. Primary activities are directly concerned
with the creation or delivery of a product or service. They can be grouped into
five main areas: inbound logistics, operations, outbound logistics, marketing and
sales, and service. Each of these primary activities is linked to support activities
which help to improve their effectiveness or efficiency. There are four main areas
of support activities: procurement, technology development (including R&D),
human resource management, and infrastructure (systems for planning, finance,
quality, information management etc.).
The basic model of Porters Value Chain is as follows:

The term ‚Margin’ implies that organizations realize a profit margin that depends
on their ability to manage the linkages between all activities in the value chain. In
other words, the organization is able to deliver a product / service for which the
customer is willing to pay more than the sum of the costs of all activities in the
value chain.
 CHAPTER 2

COMPANY PROFILE OF RELIANCE FRESH

Reliance Retail started its journey in 2006 with the opening of its first Reliance
Fresh store. Today Reliance Retail operates 621 Reliance Fresh and Reliance Smart
stores and sells over 200 metric tonnes of Fruits and over 300 metric tonnes of
Vegetables every day.
Reliance Fresh is India’s leading neighbourhood retail chain, synonymous with
freshness & savings. With the three core promises of Fresh Hamesha, Available
Hamesha and Savings Hamesha, Reliance Fresh is a one-stop-shop for fresh
shopping, fresh savings and fresh happiness.
From fresh fruits & vegetables to dairy, cereals to spices, processed food &
beverages to home & personal care products, we have the entire gamut of your
grocery needs covered.
Across our stores, we retain a strong customer centric approach to meet all your
shopping needs - be it routine or seasonal, well known brands or popular local
products.
Continuing Reliance’s hallowed tradition of backward integration, Reliance Retail
directly partners with a large number of farmers and small vendors in a farm-to-
fork model. The linkages with the farm has brought about transformational
changes in the quality of life of the farmers as also enhancing the quality of
produce, reducing wastage by shortening the time to move fresh produce and
reducing intermediaries in the value chain thereby benefiting all.
Reliance Fresh is the convenience store format which forms a part of Reliance
Retail Ltd (RRL) of its parent company, Reliance Industries Ltd (RIL). RRL was set
up in the year 2006 to lead Reliance Group's foray into organised retail.
Presently, it has grown into an organisation that caters to millions of customers,
thousands of farmers and vendors. Based on its core growth strategy of backward
integration, RRL has made rapid progress towards building an entire value chain
starting from the farmers to the end consumers.
Reliance Fresh now operates 1,691 stores across the country. These stores sell
fresh fruits and vegetables, staples, groceries, fresh juice, bars and dairy products.
In addition, RRL has also ventured into the retail optics business and has opened
about 100 stores in India in a partnership with GrandVision and it also owns the
iStore, which is a one-stop-shop for all Apple products and services

Reliance Fresh Stores is the Mukesh Ambani led agri-retail venture of legendary
India business conglomerate - Reliance Industries Ltd. Reliance Fresh Stores retails
food products like fresh vegetables, fresh fruits, groceries, dairy products, breads,
fruit juice and staples.

The ` 25000 crore Reliance Fresh Stores is the newly formed agri-retail venture of
Reliance Industries Ltd. Mukesh Ambani led Reliance Fresh Stores started its
operation in the year 2006. Reliance Fresh Stores or `Reliance Fresh' outlets sell
high quality and competitively priced vegetables and fruits through these retail
counters. The size of these agri-retail outlets of Reliance varies from 1,500 sq ft to
3,000 sq ft.

The RIL Chairman and Managing Director, Mr Mukesh Ambani, envisages

extending the presence of Reliance Fresh Stores to 784 cities and 6,000 towns in
India. The company aims to open such agri-retail outlets for every 3,000 families
in India, i.e. one store within a radius of every 2 km. These retail outlets of
Reliance will be a mix of company-owned and franchisees said Mr. K. S.
Venugopal, Head, AP Operations and CE, Customer Solutions of Reliance Retail.
Important Indian cities would have larger versions of the retail store than the tier
II cities of India.
 Till January 2007, the number of Reliance Fresh Stores rose to forty. Reliance
Fresh Stores are located in the India cities of New Delhi, Mumbai, Chennai,
Hyderabad, Jaipur, Chandigarh and Ludhiana. At this rate of expansion of Reliance
Fresh Stores, the company is expected to realize its agri-retail dream by 2011. This
venture is expected to create direct employment to five lakh young Indians and
indirect job opportunities to around one million people. The main USP of Reliance
Fresh Stores is to provide international class shopping environment with latest
technology, a seamless supply chain management coupled with value added
services and ultimate customer satisfaction.

Food products sold by Reliance Fresh Stores

 
 Vegetables
 Groceries
 Fresh fruits
 Fresh juice bars
 Staples
 Dairy products
 Bread
 Non-vegetarian products
 CHAPTER 3
OBJECTIVES OF THE STUDY

The core purpose of SWOT matrix is to identify the strategies that an

organization can use to exploit external opportunities, counter threats, and
build on & protect Reliance Industries strengths, and eradicate
its weaknesses & the core purpose of value chain analysis is  to identify
areas and activities that will benefit from change in order to improve
profitability and efficiency.
ANALYSIS AND INTERPRETATION

VALUE CHAIN ANALYSIS IN RELIANCE FRESH

Value chain analysis consists of primary activities like inbound logistics, marketing
and sales, services and secondary activities like infrastructure, procurement,
technology development and human resource development. Figure 1 illustrates
the primary activities of value chain analysis and Figure 2 represents the
secondary activities of value chain analysis. Figure 3 illustrates the value chain
analysis of Reliance Fresh briefly.

Primary Activities of Value Chain Analysis (figure 1)

Inbound outbond marketing

oprations services
logistis logistics &sales

Secon
dary Activities of Value Chain Analysis(figure2)

infrastructure procurement

secondary activites

technology development human resource development

Supportive Activities in Value Chain Analysis of Reliance Fresh

Infrastructure
Reliance Industries has invested nearly Rs. 3000 crore to expand the Reliance
Fresh stores. The stores work on The Ranger Format which means selling of fresh
vegetables to the road sellers. Reliance plans to invest in excess of Rs. 25000
crore in the next 4 years in their retail division. The company already has in excess
of 650 reliance fresh outlets across the country. A typical Reliance Fresh store is
approximately 3000-4000 square feet and caters to a catchment area of 2-3 km.

Procurement
Procurement of vegetables, fruits, dairy products, bakery items directly from the
farmers and wholesalers based on the pre negotiated contacts. By procuring
directly they weed out the middleman commissions, costs of loading and
unloading, transportation costs and wastage due to exchange of hands.
Perishable products are procured from nearby areas of distribution centers. Non-
perishable products such as FMCG products which have longer shelf life are
procured centrally by their merchandising department.

Procurement Policies and Procedure, Inventory Management Procurement

policies:
1. Centralize purchase through various distribution centre directly from
manufacturer.

2. The category manager and the SCM manager plans the overall merchandise to
be offered at the store.

3. Orders are automatically generated by the SAP system when the level of the
merchandise reaches the reorder level.

4. The category manager can anytime check the inventory level.

5. The category manager receives the order automatically generated by the

system and then forwards it to the SCM manager.
Support Activities ( figure 3)
Infrastructure Funds collection
Funds collection
Stretching outlets countrywide
Space Management
Hefty Investments
Ranger format work
Human Resource Managing employees
Management Training employees
Appraisals and rewards
Knowledge transfers
Freedom of thoughts
Conducting meetings
Limited Working Hours
Fair remunerations
Technology Feedback from customers
Development Research work
Use of sophisticated software
Innovation
Use of IT, databases
Innovation
Procurement Acquiring the resources
Ingredients from local suppliers and wholesalers
Primary Activities
Inbound Logistics procurement of fruits and vegetables by DC
Merchandise monitoring and supervising
House keeping
3PL service provider
Store Operations Checking of refrigeration and temperature
Forecasting merchandise requirements
Managing chillers with temperature Regulation
Time to time inspection for hygiene Maintenance
Valuation of the closing stock
Marketing and Sales Target Market
Branding
Pricing
Distribution
Advertising (news papers, leaflets, pamphlets)
Special offers (weekend/festive season /random choice)
Promotional offers
Communicating the latest offers and events
Service and Support Customer feedback
Availability of fresh vegetables and fruits for purchase
Procurement procedure: Three important persons are involved in this
procedure.

1. Store manager

2. Category manager

3. Supply chain manager Similar products falls into a category and similar
categories are managed by a category manager. Once the stock in the store falls
below the reorder level the SAP system automatically generates order for
procurement of those goods. This order is received by category manager who
collects orders from different reliance fresh stores in the city and then places an
bigger order to the supply chain. The supply chain procures goods from their
respective sources through centralized purchasing or local purchases. The goods
are then send to the stores which ordered for it.

Sources of supply:
Vegetables: Local farmers and Wholesalers Fruits: Wholesalers Other FMCG
products: Direct through company contracts or through the Carry and Forward
Agents (C & F Agents).

Technology Development
Reliance Fresh is fully customized and equipped with highly secured software. The
four major software used in Reliance Fresh are SAP, RETALIX, R CONNECT PORTAL
and EUROPLEX SECURITIES. On PM Modi‟s calls regarding Make in India and
Digital India, Chairman Mukesh Ambani, Chairman, Reliance Industries, said these
had energized India and its enterprises. He said, Reliance Industries would invest
Rs. 1 lakh-crore in the next 12-18 months in Gujrat alone, in contributing to both
initiatives for technology development.

Human Resource Development

Human resource management of Reliance Fresh is categorically divided into

three: top level management, under this strategy makers and cluster managers
are included, mid level management, under this area managers and store
managers are included and low level management, under this only assistant store
manager is appointed. Different factors are implemented in human resource
management like strict appraisal policies, less working hours as compared to its
competitors, timely wages, timely notice prior to termination and recruitment
from friends and referrals.

Inbound Logistics
The inbound activity of Reliance Fresh primarily begins with the role of the
category heads belonging to the distribution centers (DCs) who are entrusted
with the task of choosing of different categories of vegetables and fruits. These
people are highly experts in selecting items that are meet the quality standards.
After procurement the next phase calls for the transportation of the merchandise
from the DCs to the Reliance Fresh Outlets by means of trucks and vans, hired on
a contractual basis. After reaching the outlet, the merchandise is assembled and
space allotment is done. vegetables and fruits are stored in open chillers with
proper temperature regulations. Sophisticated large-sized, specially designed and
germ resistant metallic crates are used for storing the vegetables and fruits. A
weekly inspection is done under the supervision of Hygiene Inspector. Special fly
resistant sprays and Pest Controlling substances are used to maintain health,
hygiene and freshness. A wide range of vegetables and fruits are available at a fair
price. It can further be witnessed that those vegetables and fruits which are
seasonal in nature are available with Reliance Fresh at any time unlike the local
marketers and vendors. Most importantly different types of uncommon fruits
varieties such as seedless grapes, varieties of apples and straw berries, oranges
etc. and vegetables such as baby corn, broccolli etc. are available with Reliance
Fresh. As the pricing part is concerned, the prices of onion and potato is minimum
one rupee lesser than the market price. Figure 9 shows the images of store
operations in different ways and it concludes that “ Reliance Fresh: Better Value
for Money”.
Store Operations
The merchandise is checked properly from time to time by the supervisor. The
house keeping people clean the outlet at least 7 times a day‟s span. Refrigeration
and temperature are checked regularly by the store manager. In the later half of
the day, indent of the next day merchandise is prepared by the store manager
with the help of the supervisor. At the end of the day the closing stock is checked
and further details of replenishment are forwarded to the head office by the
supervisor. The cash manager checks the balance and compares it with the sale.
The store winds up for customers around 10pm. The accounting procedures are
completed and the operators shut down the outlet at 11 pm. In Figure 6 the
Reliance Fresh store layout and design are depicted clearly.

Store Layout and Design

Store Layout: Grid Type Layout

Grid Type Layout: This type of layout is a retailer‟s primary choice when it comes
to Layout Planning or Designing. These layout makes you feel where and what are
you shopping. Ambience: Reliance fresh provides good ambience having proper
lighting, ventilation facilities. Also products are properly arranged according to
category. Customers are provided with trolleys and baskets to select products on
their own. For this purpose enough space is made available with the help of grid
layout. Air conditions are also used. Shelving Pattern: Use of Wall Racks, Corner
Racks, Retail Gondolas, Fruits and Vegetable Racks, Shopping Trolleys and
Baskets, Wire Products, Check Out Counter, Glass Shelves and Accessories,
Gondola End Racks, Wall Unit Racks, Wire Baskets.

Marketing and Sales Direct Marketing Use of mail, telephone, fax, e-mail or
internet to communicate directly with or solicit response or dialogue from specific
customers and prospects this platform is used to inform the „reliance one‟
members (a loyalty programme) through e-mails, telephones and SMS. Through
this the information regarding the latest offers, events are being communicated
to the customers.
Push Strategy Reliance fresh adopting push strategy like point of sale displays,
special displays, dealers premium, gifts, advertising materials, catalogs and
brochure, events and sampling for clearing their inventories in time. Figure 7
shows the images of different strategy implemented in Reliance Fresh.

Pull Strategy
Reliance fresh introducing pull strategy like coupons, samples, premium and gifts,
refunds/rebates and POP advertisement for attracting the customers.

Advertising Strategy

The advertising part of reliance fresh is done with the help of: print and broadcast
adds, packaging outer, catalogue, directories, billboards, symbols and logos, audio
materials.

Sales Promotion
A variety of short term incentives to encourage trial or purchase of a product or
service. The sales promotion at reliance fresh includes: premium and gifts,
sampling, rebates and offers like BOGO, BXGY etc.

Services and Support

The salesman are well trained in handling customers and well informed about the
available merchandise in context of pricing and offerings. They are experts in
multi tasking. They provide personalized service to customers and meet their
queries. They time to time operate as per the instructions of the top
management. They have a close monitoring on the available inventory and they
furnish the information as regards of procurement. In Box 1 SWOT Analysis of
Reliance Fresh has been explained clearly with some pros and cons.

SWOT analysis of reliance fresh

Strength Weakness
 Strong financials of holding company and brand. • There is poor inventory control is not
 Private label sale – Reliance select properly managed by the staff
 Contract farming • The staff needs to be more qualified and
 Network – 1600 channels in villages
more aware about the products available in
 Backward integration strategy
the store
 Experienced management team
• Staff takes more time in billing
 Strong IT and back end operations
 Vertical integration ‘
• Vegetables and fruits are not always fresh
 Backward integration • All types of vegetables and fruits are not
 Good financial position available to meet customer demand
 Brand equity • Lack of strong supply chain like other big
player • Poor inventory control
• Less innovative promotional scheme
• Lack of use of advance of information
technology
• Lack of facilities to customers like parking,
compact layout etc.
• Losses due to joint ventures
• Absence at prime locations
• Limited multi-format presence
 Opportunities Threats
 Reliance wants to build a high-profitability business and • Domestic competitors like Big Bazaar
food is perhaps, the best venture to start. that is because
• Brand cautious customers
the Indian supply chain comparatively insufficient
 There are several intermediaries, each of them adds his • Opposition from unorganized retailers
profit margin to the cost. besides there is huge wastage • Employee attrition rate
in transit. this offers potential for savings and profits • Change In FDI norms in retail sectors
 The supply chain already has been backed by few • Increase in the operating costs
hundred farmers the number is estimated to touch • Low price competition
million in next five years. the main aim of the reliance is
to eliminate the intermediaries in the sector and reduce
• Increasing competition
the cost
 Increase in net margin
 Untapped Rural Market Potential
 Sale of Reliance select products in Open Market
 Expansion in Metro and Tier cities
 Growing retail market
 Conclusion
Reliance Fresh manages its value chain effectively. The vegetables and fruits are
delivered to the customers with proper emphasis on freshness and hygiene. The
distribution centers keep a track of the inventory requirements at the outlets and
carefully select the vegetables and fruits from the local farmers and wholesalers.
The retail stores well manage the vegetables and fruits under properly regulated
temperature and chilling conditions. Proper emphasis on pest controlling and
germ contamination are done looking at the shelf- life of the items. The staff are
well trained and well informed about the available categories of vegetables and
fruits and the technology been used in Reliance Fresh. Customers get attracted at
the ambiance as well as the abundance of vegetables and fruits in Reliance Fresh.
Hygiene, quality, safety and competitive price have always concerned Reliance
Fresh supply chain management; in recent years, social responsibility and the
more holistic goal of sustainability have also earned official recognition. Reliance
Fresh has made rapid progress towards building a value chain starting from
farmers to the end customers with ten core values like care, citizenship, fairness,
honesty, purposeful, respect, responsibility, safety and truth.