Updated: Oct 2
SWOT - Strength And Weaknesses Of Relinace Jio
Reliance Jio might look infallible at this time. But every company must look for its strengths and weaknesses to keep on maintaining the strong foothold. Reliance Jio is no exception. It entered the Indian Telecom market with a bang. But its competitors are leaving no stones unturned to outsmart Jio. Hence there is a need for SWOT analysis of Reliance. With this SWOT analysis, we can identify the Strengths and weaknesses of Reliance Jio. Furthermore we can also know how exactly it can keep on staying ahead of others.
SWOT Analysis of Reliance Jio
Let us prepare a SWOT analysis of Reliance JIo and see where it is winning, where it lags and how it can use opportunities to its favour.
Strengths of Reliance Jio
Low Maintainence 4G Infrastructure
The first and foremost strength of Reliance Jio is its strong IP based 4G network. The telecom network has been using an all-IP networking system since its inception. It does not have legacy systems in place. As a result the network works more efficiently than that of the incumbent telecom operators. Further, reliance Jio spends lesser than the old opeartors in the maintainence of its network infrastructure.
The incumbent telecom service providers use circuit switching techniques. There are two
problems associated with circuit switching. First, in the circuit switching environment, the use of resources is not optimal. Along with that, if something happens to the physical hardware, it is not possible to re-route the data originating from the customer’s en ( because the network is not virtualized). As a result the circuit switch based networks are prone to downtime. Secondly, the old telecom service providers, now, have to start using IP-based networks for facilitating 4G and faster data transmission. So they have to maintain two different networking protocols and hardware. This is counterproductive.
Financial Strength Of Mukesh Ambani
Another strength of Reliance is the deep pockets of Mukesh Ambani, the owner of Reliance Jio. Before entering the tech industry, Mukesh Ambani’s RIL was in the oil and gas industry. He had made enough money to spend on Reliance Jio before it became self sufficient.
Unique Business Strategy
The third strength that should be mentioned in this SWOT analysis of Reliance Jio is that Reliance JIo brought in a new paradigm in the telecom sector. Before JIO, nobody thought people could use telecom networks to do data-intensive tasks like movie streaming. Reliance JIo identified the hunger that the Indian customers had for Internet data. Mukesh Ambani democratized the Internet usage in India. Along with that, it also made voice calls forever free. This unique marketing strategy is obviously one of the strengths of Reliance Jio.
Ecosystem of Apps & Services
Reliance Jio has a whole ecosystem around it. When somebody buys a Jio SIM, he is not just getting a SIM card, he also gets Jio TV, Jio Cinema, Jio News, Jio Antivirus - all for free. Other companies too have their own eco-systems, but they are not as robust as that of Jio. This is obviously a strength of Jio and it must be included in the SWOT analysis of Reliance Jio.
The Enviable Wisdom Of Mukesh Ambani
Last but not the least, it is the go getter attitude of Mukesh Ambani that is perhaps the biggest strength of Reliance Jio. Mukesh Ambani had ambitious plans for the old Reliance CDMA and GSM telecom network. But unfortunately, it was his brother Anil Ambani who bagged the telecom arm of Reliance Industries. So Mukesh Ambani waited like a hungry tiger for the legal obstacle to end ( he was barred from competing against his brother for a certain period of time). After the period ended, Mukesh Ambani launched his dream project and made a history in the telecom world of India.
Weaknesses Of Reliance Jio
No Support For Legacy Phones
Next in the SWOT analysis of Reliance Jio is identifying its weaknesses. The first weakness that I can see is actually one of its strengths. As said earlier, Reliance is a 4G only network. But in India there are a huge number of people who still use 2G feature phones. So Reliance Jio cannot make them its customers.
No Unlimited Calls To Off-net Networks
Another weakness of Reliance Jio is the fact that it does not provide unlimited calls. Only the on-net Jio To Jio calls are free. Jio to others calls are capped. After 1000 minutes or 3000 minutes the customers would have to recharge with talktime plans in order to continue calling people who use other networks.
Even after almost 5 years of launching, the network of Reliance Jio is still not robust. There are many places in India where Reliance Jio cannot provide 4G speeds. As a result, the customers get angry.
Doesn't Believe In Healthy Competition
Reliance Jio is not part of Cellular Operators Association of India or COAI. It is always at loggerheads with Airtel and VI. Yet Reliance Jio gets away with many controversial practices because it has the support of the government. But what will happen when the government changes? The attitude towards Jio by the government - existing or new - can change anytime. When that happens, Jio can find itself in a tough spot.
Opportunities For Reliance Jio
Let us now focus on the opportunities that Reliance Jio has. In this SWOT analysis, we will identify the avenues that will make Reliance Jio more successful.
No Dearth of Investmensts In Its Way
First of all, many companies are taking interest in Reliance Jio. Facebook has bought 9.99% stake in Reliance Jio. Vista Equity, Silver Lake Partners, General Atlantic etc have also bought stakes in Reliance Jio. Jio has a big opportunity to become debt free within 2021. It will then not be a liability anymore. It can become a money making machine for Mukesh Ambani.
Data Is The New Oil
Mukesh Ambani had said that data is the new oil. I am extremely sure that when Mukesh Ambani talked about data, he did not think about internet data only - he also had user-data in mind. It is true that big-data can is going to be a great tool for businesses in the coming years. And Reliance is a telecom company - it has the gold mine of user data. Now combined with it, Jio has Facebook by its side now. It is a great opportunity for Jio.
First Mover's Advantage For 5G Roll Out
Reliance Jio runs on advanced 4G network. It can easily upgrade its network infrastructure to accommodate 5G. On the other hand the incumbent telecom operators are struggling to spread its 4G presence even to this date. So Reliance has a great opportunity to grab the first mover’s advantage when the government allows rolling out 5G airwaves for the customers.
Customers Are Willing To Pay For Additional Services
Another opportunity that should be mentioned in this SWOT analysis of reliance Jio is the changing behaviour of the customers. Jio recently made watching IPL and premium Hotstar content chargeable. Earlier watching sports on Hotstar was free. Indian consumers are quite price sensitive. But Jio cleverly bundled Hotstar premium with its new recharge plan of Rs 401. Rs 401 plan has a validity of just one month but the Hotstar bundle is valid for 1 year. This plan has been received by people without much complaints. People are now ready to pay to enjoy the things that Reliance Jio offers in its ecosystem. This is a great opportunity for Reliance Jio to make the additional things ( Jio TV, Jio Cinema etc) that is present in the ecosystem to become chargeable. This will help Jio earn additional revenue from these subscriptions.
Threats To Reliance Jio
Next in this SWOT analysis of Reliance Jio, let’s talk about the threats to Reliance Jio’s success.
The Competitors Aren't Sleeping
The first threat is obviously the pack of the competitors that Jio is up against. When Jio first entered the market, Airtel or Vodafone had to suffer a lot of financial stress because of the price war. Thet accrued huge loss to match their recharge plans with those of Jio. Jio had the advantage of using modern technologies. But these incumbents were using outdated technologies. And they had to spend more money than Jio to keep their network infrastructure up and running. Reducing the recharge plans hurt them badly.
But now they have significantly upgraded their network. These competitors of Jio have now less trouble in offering low price recharge plans. Furthermore what Jio cannot offer, these incumbents offer that - and that is truly unlimited calls to any network. The fact that the incumbent telecom service providers have recovered greatly from the price war and can put up a great fight against Reliance Jio is quite worrisome for Reliance Jio.
Two Biggest Rivals of Jio Have Joined Hands
Added to this threat, Vodafone and Idea have now joined hands to form VI telecom network. Vodafone is famous for its superior network in the urban areas and Idea is famous for connecting the rural areas seamlessly. The rebranded company is now posing a great threat to Jio. Although, in terms of the number of customers, VI is behind Jio, VI has started offering some great recharge plans to counter Jio’s progress. For example, VI is now providing 4GB per day data with its 299 recharge plan.
Politics Surrounding The Price Hike By Reliance Jio
Reliance Jio is also facing a unique threat which is political in nature. Whenever there is any suggestion of privatisation, the opposition parties cite the Jio example. They mention that once people fell in the “trap” of Jio, the company increased the price. So every price hike by reliance Jio will be scrutinised with politics in mind. And every price hike will hamper the image of Reliance in the minds of the people. This threat of bad press can hinder Jio’s plan of gradual price hike.
The top executives of Reliance Jio are as shrewd as Chanakya. They have their way of turning a weakness of Jio into its strength. The great thing about Jio is that it is always evolving. This alone can make all the difference.
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