Mckinsey's 7S Frame Work

Strategy

Marketing Mix of Indian Oil Corporation analyses the brand/company which covers 4Ps
(Product, Price, Place, Promotion) and explains the its marketing strategy.

Product:
IOCL is present across the hydrocarbon value chain and nearly accounts for half of India’s
petroleum products market. Indian Oil Corporation’s product portfolio in its marketing mix
includes: Indane gas, Auto gas, Natural gas, petrol, diesel, jet fuel, lubricants & greases,
kerosene, industrial fuels, Bitumen, petrochemicals, crude oil and some other special
products. IOCL is a leading player in petroleum and LPG with the brands like - Indane LPG,
SERVO Lubricants, Autogas LPG, XtraPremium Petrol, XtraMile Diesel and PROPEL
petrochemicals. All these brands enjoy a good customer awareness and considered as super
brands.

Price:
As Indian Oil Corporation is a government owned company. Some of the pricing decisions
are taken by the central government after taking into consideration of all the taxes and
subsidies made available in its initiatives and other prices are decided by the company itself.
The prices set by Indian Oil Corporation are different at different places in India. A
geographical pricing mechanism is followed in its marketing mix. The prices are segmented
into geographic locations like – metro cities, state capitals, National Capital Region (NCR).
Petrol price is varying between Rs.71.79 to 73.33 per liter. Diesel price is between Rs.62 to
65.5 per liter. Auto gas at nearly Rs.35 – 40. ATF is at Rs.41992 per KL for domestic airlines
and $557 -602 per KL for international airlines. Indane Gas is priced at nearly Rs.597- 600
for the subsidized.

Place:
Indian Oil Corporation has got a wide geographic presence. As far as the availability is
concerned IOCL is omnipresent with its reach much higher than any other nearest competitor.
Indian Oil Corporation controls 11 refineries of India 23 refineries with a
combined refining capacity of 80.7 million tons per year. across the country, over 11,220 Km
of pipeline connecting to high demand places, 132 Km of gas pipeline and nearly 37000 plus
customer touch points. Of these 3700 touch points – 26,752 are the retail outlets, IOCL have
an outlet in the world’s highest point. Nearly 6000 LPG distribution stations, 6,218 bulk
consumer pumps and nearly 100 aviation fuel stations. IOCL is present internationally also
with subsidiaries in Sri Lanka, Mauritius and UAE.

Promotion:
Indian Oil Corporation is a Maharatna company and is actively involved in advertising. Being
a public sector company and not in a heavy competitive environment the promotions done by
IOCL are not aggressive or heavily mass media targeted. But it does promotional activities.
These include collaborating with other companies and promoting IOCL in their campaigns,
like once IOCL associated with Honda Motors and did some sales promotion campaigns in
selected outlets. This is done to promote servo 4T oil. In this promotion winners have
received vehicles from Honda. Indian Oil Corporation also has loyalty programs like fleet
cards and customers can earn points and during festive seasons some gifts would be given to
consumers through a lucky draw. Indian Oil Corporation does print advertisements and uses
hoardings at its retail outlets.

System :

Here sap is used as there keen accounting system

The entire organization is driven by dynamic team of Board of Directors and being public
sector unit.
Indian oil emphasized on developing leadership qualities and focuses on continuous sharing
of information.

Skills:
Building human competence and motivated workforce through training has been identified as
one of the areas of greatest strength in IndianOil. The vast experience and the reservoir of
talented faculty available with IndianOil are also used to train employees in several areas viz.
Refining, Marketing, Transportation, Research & Development and overall Management. All
the faculties are experts in their respective fields with great deal of academic excellence and
long years of hands-on experience in the field. IndianOil owns a chain of 19 training centers
spread across the country with IndianOil Institute of Petroleum Management (IIPM) located
near New Delhi as the nodal centre, which continuously upgrades the knowledge and skill of
all its employees. The training centers are located at its refineries, Divisional Head Offices &
regional offices of Marketing and Pipelines Divisions.
IndianOil's over five decades of rich experience, coupled with availability of skilled
manpower in providing training in various facets of downstream petroleum sector, is
available to clients in developing their workforce. IndianOil offers to share its experience
through specialized educational programs to benefit the Oil & Gas Industry.

Staff:

Indian Oil Corporation has a strong workforce of 33,000 employees working in its various
business process. Most of the recruitments are done through advertisements in newspapers
and company’s website. Building and developing human resources competence and
motivated employees is a biggest strength IOCL can be proud of. It invests in training and
development of its employees to develop their capabilities and facilitate career progression.
Its promotion policy and dealings with employees are fair and transparent. Indian Oil
Corporation’s employees also hold equity in the company of nearly65 shares which is very
high compared to any other organization.

STRUCTURE

Indian Oil is India’s flagship Maharatna national oil company with business interests
straddling the entire hydrocarbon value chain – from refining, pipeline transportation and
marketing of petroleum products to Research & Development, Exploration & Production,
marketing of natural gas and petrochemicals.
By venturing into the Renewable and the Nuclear Energy, the company has grown and
evolved itself from a pure petroleum refining and marketing company to a full-fledged
energy company. 
Indian Oil and its subsidiaries own and operate 11 of India’s 23 refineries and its cross-
country pipelines network, for transportation of crude oil & finished products, spans over
11,220 km is the largest in the country, meeting the vital energy needs of consumers in an
efficient and environment-friendly manner.

At Indian Oil, operations are strategically structured along the verticals -

 Refineries

 Pipelines

 Marketing

 Research & Development Centre

 Business Development

Each of these divisions have a different organization structure specific to their own functions.
For example, the R&D centre is not as diversified as other divisions and therefore has fewer
number of departments and offices across the country.

IndianOil follows a common hierarchy in all its departments across all the divisions.

CHAIRMAN

BOARD OF DIRECTORS

EXECUTIVE DIRECTOR

GENERAL MANAGER

DEPUTY GENERAL MANAGER

SENIOR MANAGER

MANAGER
 DEPUTY MANAGER

ASSISTANT MANAGER

SENIOR ENGINEER/OFFICERS

ASSISTANT ENGINEER/OFFICER

The different posts at IndianOil are divided into grades which starts from
engineer/officer which is Grade A till executive director which is Grade I.
A new post of assistant engineer/officer has been added recently which is called Grade A0.
The Board of Directors including the Chairman is a government nominated body and has a
different structure.

SHARED VALUES

Indian Oil nurtures the core values of

 Care
 Innovation
 Passion
 Trust

Care Stands Understandin Co- Empower

for Concern Empathy g Operatin -ment
Innovatio-n Ability to
Stands for Creativity Learn Flexibility Change
Passion Dedicatio
Stands for Commitment n Pride Inspiration Ownership
Trust Stands Delivered
for Promises Reliability Dependability Intergrity Truthfulness

Indian Oil Corporation (IOC), the nation's biggest oil firm, has adopted 2018 as the 'Year of
Trust' as it earned belief in the delivery potential in programmes like PMUY, and decision
of early implementation of BS-VI fuel norms.
Every second Indian is served by the company as it commands half of the auto fuel and
cooking fuel market share.
The decision follows the tradition started by the company in 2016 of adopting calendar year
based on IOC's corporate values of ' Care', 'Innovation', 'Passion' and 'Trust'.
Year 2016 was the 'Year of Core Values',
while 2017 was observed as the 'Year of Innovation and Technology'.

STYLE

Here autocrative form of leadership is followed

It is a leadership style characterized by individual control over all decisions and little input
from group members.

Procedures followed in the Decision-Making Process, Including Channels of Supervision and

Accountability.

The Chairman, Functional Directors and other Executives are accountable to Board of
Directors for proper discharge of their duties and responsibilities.
Porter’s Five Forces Analysis
A model was put forward by Michael. E. Porter in an article in the Harvard Business Review
in 1979. This model, known as Porter's Five Forces Model is a strategic management tool that
helps determine the competitive landscape of an industry. Each of the five forces mentioned
in the model and their strengths help strategic planners understand the inherent profit
potential within an industry. The strengths of these forces vary across the industry to industry,
which means that every industry is different regarding the profitability and attractiveness.
The structure of an industry, even though it is stable, can change over time. These Porter’s
five forces are as follows:

 Threat of New Entrants

 Bargaining Power of Suppliers
 Bargaining Power of Buyers
 Threat of Substitute Products or Services
 Rivalry Among Existing Firms

The Porter’s Five Forces model can be used to analyse the industry in which Indian Oil
operates, in terms of attractiveness through inherent profit potential. The information
analysed using the model can be used by strategic planners for Indian Oil to make strategic
decisions.

Indian Oil Porter’s Five Forces Analysis

This section analyses Indian Oil using each of the five forces of Porter’s model.
Threat of New Entrants

 The economies of scale is fairly difficult to achieve in the industry in which Indian
Oil operates. This makes it easier for those producing large capacitates to have a cost
advantage. It also makes production costlier for new entrants. This makes the threats of
new entrants a weaker force.
 The product differentiation is strong within the industry, where firms in the industry
sell differentiated products rather a standardised product. Customers also look for
differentiated products. There is a strong emphasis on advertising and customer services as
well. All of these factors make the threat of new entrants a weak force within this industry.
 The capital requirements within the industry are high, therefore, making it difficult for
new entrants to set up businesses as high expenditures need to be incurred. Capital
expenditure is also high because of high Research and Development costs. All of these
factors make the threat of new entrants a weaker force within this industry.
 The access to distribution networks is easy for new entrants, which can easily set up
their distribution channels and come into the business. With only a few retail outlets
selling the product type, it is easy for any new entrant to get its product on the shelves. All
of these factors make the threat of new entrants a strong force within this industry.
 The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it difficult for
 new entrants to join the industry, therefore, making the threat of new entrants a weak
force.

How Indian Oil can tackle the Threat of New Entrants?

 Indian Oil can take advantage of the economies of scale it has within the industry,
fighting off new entrants through its cost advantage.
 Indian Oil can focus on innovation to differentiate its products from that of new
entrants. It can spend on marketing to build strong brand identification. This will help it
retain its customers rather than losing them to new entrants.

Bargaining Power of Suppliers

 The number of suppliers in the industry in which Indian Oil operates is a lot compared
to the buyers. This means that the suppliers have less control over prices and this makes
the bargaining power of suppliers a weak force.
 The product that these suppliers provide are fairly standardised, less differentiated and
have low switching costs. This makes it easier for buyers like Indian Oil to switch
suppliers. This makes the bargaining power of suppliers a weaker force.
 The suppliers do not contend with other products within this industry. This means that
there are no other substitutes for the product other than the ones that the suppliers provide.
This makes the bargaining power of suppliers a stronger force within the industry.
 The suppliers do not provide a credible threat for forward integration into the industry
in which Indian Oil operates. This makes the bargaining power of suppliers a weaker force
within the industry.
 The industry in which Indian Oil operates is an important customer for its suppliers.
This means that the industry’s profits are closely tied to that of the suppliers. These
suppliers, therefore, have to provide reasonable pricing. This makes the bargaining power
of suppliers a weaker force within the industry.

How Indian Oil can tackle the Bargaining Power of Suppliers?

 Indian Oil can purchase raw materials from its suppliers at a low cost. If the costs or
products are not suitable for Indian Oil, it can then switch its suppliers because switching
costs are low.
 It can have multiple suppliers within its supply chain. For example, Indian Oil can
have different suppliers for its different geographic locations. This way it can ensure
efficiency within its supply chain.
 As the industry is an important customer for its suppliers, Indian Oil can benefit from
developing close relationships with its suppliers where both of them benefit.

Bargaining Power of Buyers

 The number of suppliers in the industry in which Indian Oil operates is a lot more
than the number of firms producing the products. This means that the buyers have a few
firms to choose from, and therefore, do not have much control over prices. This makes the
bargaining power of buyers a weaker force within the industry.
 The product differentiation within the industry is high, which means that the buyers
are not able to find alternative firms producing a particular product. This difficulty in
switching makes the bargaining power of buyers a weaker force within the industry.
 The income of the buyers within the industry is low. This means that there is pressure
to purchase at low prices, making the buyers more price sensitive. This makes the buying
power of buyers a weaker force within the industry.
 The quality of the products is important to the buyers, and these buyers make frequent
purchases. This means that the buyers in the industry are less price sensitive. This makes
the bargaining power of buyers a weaker force within the industry.
 There is no significant threat to the buyers to integrate backwards. This makes the
bargaining threat of buyers a weaker force within the industry.

How Indian Oil can tackle the Bargaining Power of Buyers?

 Indian Oil can focus on innovation and differentiation to attract more buyers. Product
differentiation and quality of products are important to buyers within the industry, and
Indian Oil can attract a large number of customers by focusing on these.
 Indian Oil needs to build a large customer base, as the bargaining power of buyers is
weak. It can do this through marketing efforts aimed at building brand loyalty.
 Indian Oil can take advantage of its economies of scale to develop a cost advantage
and sell at low prices to the low-income buyers of the industry. This way it will be able to
attract a large number of buyers.

Threat of Substitute Products or Services

 There are very few substitutes available for the products that are produced in the
industry in which Indian Oil operates. The very few substitutes that are available are also
produced by low profit earning industries. This means that there is no ceiling on the
maximum profit that firms can earn in the industry in which Indian Oil operates. All of
these factors make the threat of substitute products a weaker force within the industry.
 The very few substitutes available are of high quality but are way more expensive.
Comparatively, firms producing within the industry in which Indian Oil operates sell at a
lower price than substitutes, with adequate quality. This means that buyers are less likely
to switch to substitute products. This means that the threat of substitute products is weak
within the industry.

How Indian Oil can tackle the Threat of Substitute Products?

 Indian Oil can focus on providing greater quality in its products. As a result, buyers
would choose its products, which provide greater quality at a lower price as compared to
substitute products that provide greater quality but at a higher price.
 Indian Oil can focus on differentiating its products. This will ensure that buyers see its
products as unique and do not shift easily to substitute products that do not provide these
unique benefits. It can provide such unique benefits to its customers by better
understanding their needs through market research, and providing what the customer
wants.
Rivalry Among Existing Firms

 The number of competitors in the industry in which Indian Oil operates are very few.
Most of these are also large in size. This means that firms in the industry will not make
moves without being unnoticed. This makes the rivalry among existing firms a weaker
force within the industry.
 The very few competitors have a large market share. This means that these will
engage in competitive actions to gain position and become market leaders. This makes the
rivalry among existing firms a stronger force within the industry.
 The industry in which Indian Oil is growing every year and is expected to continue to
do this for a few years ahead. A positive Industry growth means that competitors are less
likely to engage in completive actions because they do not need to capture market share
from each other. This makes the rivalry among existing firms a weaker force within the
industry.
 The fixed costs are high within the industry in which Indian Oil operates. This makes
the companies within the industry to push to full capacity. This also means these
companies to reduce their prices when demand slackens. This makes the rivalry among
existing firms a stronger force within the industry.
 The products produced within the industry in which Indian Oil operates are highly
differentiated. As a result, it is difficult for competing firms to win the customers of each
other because of each of their products in unique. This makes the rivalry among existing
firms a weaker force within the industry.
 The production of products within the industry requires an increase in capacity by
large increments. This makes the industry prone to disruptions in the supply-demand
balance, often leading to overproduction. Overproduction means that companies have to
cut down prices to ensure that its products sell. This makes the rivalry among existing
firms a stronger force within the industry.
 The exit barriers within the industry are particularly high due to high investment
required in capital and assets to operate. The exit barriers are also high due to government
regulations and restrictions. This makes firms within the industry reluctant to leave the
business, and these continue to produce even at low profits. This makes the rivalry among
existing firms a stronger force within the industry.
 The strategies of the firms within the industry are diverse, which means they are
unique to each other in terms of strategy. This results in them running head-on into each
other regarding strategy. This makes the rivalry among existing firms a strong force within
the industry.

How Indian Oil can tackle the Rivalry Among Existing Firms?

 Indian Oil needs to focus on differentiating its products so that the actions of
competitors will have less effect on its customers that seek its unique products.
 As the industry is growing, Indian Oil can focus on new customers rather than
winning the ones from existing companies.
 Indian Oil can conduct market research to understand the supply-demand situation
within the industry and prevent overproduction.
Implications of Porter Five Forces on Indian Oil
By using the information in Indian Oil five forces analysis, strategic planners will be able to
understand how different factors under each of the five forces affect the profitability of the
industry. A stronger force means lower profitability, and a weaker force means greater
profitability. Based on this a judgement of the industry's profitability can be made and used in
strategic planning.