IOCL's Global Integration and Competitive Advantage

The report discusses the application of the Integration-Responsiveness framework by IOCL (Indian Oil Corporation Limited) in its multinational strategy for the production line. The organization uses a global integration framework to examine and explain strategic and organizational dilemmas, focusing on strategic coordination with global customers, competitors, and investment intensity to attain economies of scale. IOCL's operations are carried out in different manners with various product lines, and the company has expanded its product line at a faster pace to gain competitive advantage.

IOCL (Indian oil corporation limited)
1

Introduction
Global integration is used by the organization to attain economic efficiency on a global
scale. In other words, it refers to coordination between different value-chain activities across
countries to achieve production efficiency, synergy, and cross-fertilization. IOCL (Indian oil
corporation limited) is the largest commercial enterprise of India. The report herewith is going to
discuss about the extent to which firm exploit economies of scale and scope with this product
line while using integration-responsiveness framework. Further, it examines locations of the
IOCL activities with respect to this product line and reason of choosing such location.
The extent to which a firm exploit economies of scale and scope with this product line
under integration-responsiveness framework
The use of Global Integration framework facilitates production firms to examine and
explain strategic and organizational dilemmas. The model helps in deciding why firm is going to
select product line and the location to attain economics of scale. In Global integration the firm
focuses on strategic coordination to global customers Global competitors, investment Intensity to
attain economics of scale. The organization is facing huge pressure for cost reduction sourcing of
raw materials. Local responsiveness is all about using unique resources and capabilities which
are available to firm in the local market (Integration-Responsiveness Framework &
Transnational Strategy in Global Expansion. 2016). The business is going to asses the diversity
of local customer needs and focus of making differences in distribution channels. IOCL (Indian
oil corporation limited) is using multinational strategy for the production line in which most of
the production facilities are in geographic locations. It can be said that the pressure for local
responsiveness is high and the pressure from local responsiveness is also low. The organization
is focused to meet specific needs of buyers within individual countries (Annual report: IOCL).
The firm in focused to place its strategies well in the competitive environment, and the
distribution structure (Rothaermel, 2015). Being an operates India’s Largest network of crude &
product pipelines, it is focused to clients with increasing length.
Locations of the IOCL activities with respect to this product line and how it contributes to
competitive advantage
2

Indian Oil Corporation limited carries out its operations in different manner with many
product line. The entire group owns and operates 11 of India’s 23 refineries with refined capacity
of 80.7 MMTPA (million metric tonnes per annum). Further, the main motive behind setting up
refineries worldwide is due to presence of resources which are required in production of different
oil products. Main products of IOCL are petrol, diesel, auto LPG, aviation turbine fuel,
lubricants, petrochemicals, LPG, kerosene, bitumen, naphtha etc. Therefore, all these products
are developed through the different refineries. Company has developed its refineries in major
areas which are Digboi, Guwahati, Barauni, Gujarat, Haldia etc. In order to gain competitive
advantage IOCL has expanded its product line at faster pace where petrochemical and other type
of products are developed keeping in view requirement of customers and other type of businesses
operating in the market (Rose, 2014). Company is efficient enough in utilizing all its resources in
effective manner and this has enhanced business performance in the market. Apart from this,
research and development activities of IOCL are also effective where new products are
introduced by business on continuous basis such as speed petrol of enterprise etc. Moreover, the
production activities are carried out with advanced technology and this in turn saves cost by
enhancing the quality of the products being offered to the target market. Locations selected by
the business provide full advantage to the business in the form of resource accessible and same
are efficiently utilized by business for gaining competitive advantage (Indian Oil Improves
Supply Chain with Honeywell’s Supply Chain Management Solution. 2016).
Industry evolving and how well placed is the firm to deal with
The entire oil industry of India is growing at faster pace in the market where the overall
domestic oil output is anticipated to grow to 1 MBPD by FY 16. Country like India strongly
relies on imported LPG. State owned oil along with Natural Gas Corporation dominates the
entire upstream segment. Further, investment in entire oil industry is increasing at faster pace as
consumption of petrochemical products is increasing at faster pace (Meyer and Estrin, 2014).
Overall the initiatives taken by government are highly appreciable where subsidy along with
financial help is provided to the businesses operating in the oil market and this has supported
businesses to enhance overall position in the market. With the motive to strengthen country
energy security oil diplomacy initiatives have been taken and this in turn has acted as
3

development tool for the entire industry. Apart from this, companies are focusing on enhancing
their production volume to serve more customers.
Conclusion
The report discussed about the application of Integration-responsiveness framework
IOCL (Indian oil corporation limited) in which multinational strategy for the production line is
adopted in which most of the production facilities are in geographic locations.
4

Online
Annual report: IOCL, 2016.[PDF]. Available Through:
<https://www.iocl.com/aboutus/AnnualReports/IOC%20Annual%20Report%202013-
14.pdf>. [Accessed on 25th April 2015].
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Indian Oil Improves Supply Chain with Honeywell’s Supply Chain Management Solution.2016.
[PDF]. Available Through: <https://www.iocl.com/aboutus/AnnualReports/IOC
%20Annual%20Report%202013-14.pdf>. [Accessed on 25th April 2015].
Integration-Responsiveness Framework & Transnational Strategy in Global Expansion.
2016.Online]. Available Through:
<https://vigilbose.wordpress.com/2013/01/27/integration-responsiveness-framework-
transnational-strategy-in-global-expansion-part-2/>. [Accessed on 25th April 2015].
Meyer, K.E. and Estrin, S., 2014. Local context and global strategy: extending the integration
responsiveness framework to subsidiary strategy.Global Strategy Journal, 4(1), pp.1-19.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill.
5