Case Analysis

Jio and Facebook: Adding Value through an Alliance

Mengqi Li (ID: 0443266)

Department of Business Administration, Laurentian University MGMT_5121EL_61_2024W

Strategic Management

Dr. Stephen Havlovic

March 10, 2024

 Executive Summary

The strategic alliance between Facebook and Jio, initiated in April 2020, aimed to

revolutionize India's digital landscape by leveraging each company's strengths. Jio, a

dominant player in India's telecommunications sector, boasts an extensive subscriber base

and a diverse range of digital lifestyle services. Facebook, with its unparalleled reach through

platforms like WhatsApp and Facebook, saw an opportunity to tap into India's burgeoning e-

commerce market.

This report undertakes a thorough analysis of the strategic alliance between Facebook

and Jio. Through an exhaustive examination of the strategy's formulation and execution,

alongside the implications derived from industry analysis, a comprehensive understanding

has been generated. By assessing the strengths, weaknesses, opportunities, and threats

inherent in the alliance, the report lays the groundwork for the development of strategic

alternatives. In conclusion, the report seeks to address a pivotal question: How could Jio

ensure a cooperative and complementary partnership (despite their differences with

Facebook) in order to succeed and set a precedent for future international alliances?
I. Strategic Profile and Case Analysis Purpose

1. Company Overview

Jio is a game-changer in the Indian telecommunication industry. Compared with other

competitors such as Airtel, Vodafone and Idea, Jio's packages offer better value for money.

Jio retained its preeminent position in the Indian telecom space with 439.3 million

subscribers as on March 2023, with a net addition of 29.2 million subscribers during the year

(RIL, 2023). Jio has launched several apps, covering music, video, gaming, chatting, news,

healthcare, and other lifestyle areas, most of which are only available for Jio users to use on

the Jio network. Jio aims to be India’s largest digital lifestyle company.

2. the Facebook-Reliance deal Background

In April 2020, Facebook announced a $5.7 billion investment in Reliance Industries'

subsidiary, Jio Platforms. Mark Zuckerberg and Reliance Industries CEO Mukesh Ambani

emphasized their intention to use technology to transform 30 million small businesses across

India and enable consumers to place orders directly through WhatsApp. In August 2022,

JioMart signed an agreement with Meta to launch the first-ever end-to-end shopping

experience on WhatsApp. Under this deal, Jio will use WhatsApp's chat solutions to power its

grocery shopping service in India (Business Standard, 2022). This deal gave the social media

giant a 99.9 percent stake in the company along with access to Jio’s extensive mobile network

and subscriber database in the country. In turn, the deal gives Reliance access to the 400-

million-strong database of WhatsApp and integrate its hyper local e-commerce business,

JioMart, with the messaging application (Basuroy, 2024).

3. The reaction of the Indian Government and Industry

From the perspective of the Indian government, the Facebook-Reliance deal was subject to a

great degree of regulatory approval and vigilance from the Competition Commission of India

and the Telecom Regulatory Authority of India respectively (Chandwani, 2020).

Collaboration between companies the size of Facebook and Reliance can lead to concerns of

monopolization in the market.

On the other hand, the industry experts seemed quite pleased with the timing of the deal. It

was believed that the deal would give out many positive signals, particularly about the

economic importance of India and its growing importance as a growth centre for the world,

both to the national and international economy (Goyal, 2023).

II. Situation Analysis

1. General Environmental Analysis

1.1 Global Conditions:

The year 2020 was a challenging one for the entire world. Significant changes took place

globally, particularly in the economy. Recessionary pressures mounted in various countries,

while industries such as oil and transportation suffered losses. On the other hand, e-commerce

flourished. Many companies opted to relocate or diversify their production facilities from

China to other countries, with India being one of the leading destinations due to its enormous

growth potential and low cost of production, thanks to cheap labour. This presented India

with a unique opportunity to become the next world factory.

1.2 India Economic Trends:

Deloitte research (2023) found that India turned its story around in one decade—one that saw

populism breakthrough in the West in 2016, demonetization in 2017, the shadow banking

crisis of 2018, a once-in-a-lifetime pandemic in 2020, the highest inflation in 40 years in the

West, and two wars since early 2022. The three capabilities that have driven India’s ability to

create unique goods and services include Infusing technology, Branching into niche and

complex manufacturing and Underscoring competitiveness through exports. Projections

indicate that India is poised to surpass Japan and Germany, positioning itself as the world’s

third-largest economy by 2027, according to a note published by analysts at the investment

banking firm Jefferies (Laker, 2024)

1.3 Sociocultural Trends

The pandemic accelerated e-commerce growth due to several factors: heightened social

media usage led to increased ad impressions and boosted sales, lockdowns reduced foot

traffic in physical stores, and the shift to online payment methods reduced the spread of

COVID-19 through physical currency.

2. Industry Analysis - E-Commerce Market

In recent years, e-commerce has become a vital part of global retail. With the rise of the

internet, buying and selling goods has changed significantly, benefiting consumers worldwide

through online transactions. Notably, consumer-to-consumer (C2C) platforms like eBay, Etsy,

and Taobao have become popular. The latest trends in global e-commerce are shifting towards

mobile usage. Nowadays, besides desktop and mobile websites, many e-commerce

businesses sell products through mobile shopping apps and social media platforms.

Asia leads the ranking of the biggest e-commerce markets worldwide. The total revenue of
online retail in Asian countries added up to nearly 1.7 trillion U.S. dollars in 2023. Asia’s

leading position can mostly be ascribed to China, which achieved a revenue of over 935

billion U.S. dollars in 2023. The e-commerce market is highly developed on the Asian

continent and will continue to grow. India has the highest Compound Annual Growth Rate

(CAGR) for its e-commerce market. Between 2023 and 2027, the market value is forecast to

grow by over 14 percent annually. (Statista, 2024)

3. Competitor Analysis

3.1 Amazon

Amazon operates worldwide and provides a wide range of products in different countries,

including India. Amazon has been aggressively expanding its footprint in India, offering

massive sales and discounts pegged to Indian festivals. Amazon Great Indian Festival was the

clear winner in terms of sales performance in the 2023 Diwali sale, outperforming Flipkart

Big Billion Days in terms of both Gross Merchandise Value (GMV) and order volume.

Amazon's success can be attributed to several key areas: stronger brand recognition, wider

product selection, more competitive pricing, better logistics and delivery and more aggressive

marketing campaign (Ahuja, 2023).

3.2 Flipkart

Flipkart was established in 2007 by Sachin Bansal and Binny Bansal as an online bookstore.

Presently, it has grown to become India's largest online retailer, offering a wide range of

products including food processors, yoga mats, and many more. The company's digital

ecosystem encompasses Ekart, its in-house logistics arm, and PhonePe, a payment app

acquired by Flipkart in 2016. In 2018, Walmart acquired a controlling stake in Flipkart for a
whopping $16 billion. Flipkart is a domestic e-commerce B2C company that operates only in

India.

3.3 Competitor’s Advantages

• Dominant market share;

• Offer substantial discounts on popular products;

• Exclusive partnerships with several brands

• Comprehensive logistic and delivery system

• Good user experience includes checkout and payment procedures, customer support

services etc.

4. the Facebook-Reliance deal current situation

Within two years of its launch, JioMart has outdone its peers in the grocery category.

Bernstein acknowledged JioMart’s success: While Amazon struggled to maintain its

dominance, Reliance has scaled up its e-commerce operations to become the leader in the

online grocery category. The new business model built on WhatsApp has a very low customer

acquisition cost (CAC) or marketing expense. The integration with WhatsApp has grown at a

fast clip but is yet to drive large order volumes that JioMart expected. Additionally, there

have been numerous complaints about JioMart’s app, payment failures, and incomplete

deliveries, which hints at the bigger problem of streamlining inventory across its online and

offline properties (Christopher, 2022).

III. SWOT Analysis

Strengths and Opportunities Weakness and Threats

Jio • Supported by RIL; • A great level of debt of RIL;

• Very strong customer base in • New entrant to the e-commerce
 & India; market;
• Biggest telecommunication • Small market share
JioMart company in India; • The balance between cooperation
• technological capability and and competition with FB, such as
expansive digital infrastructure; WhatsApp pay VS JioMoney,
• the 5G platform WhatsApp VS JioChat;
• India upward economic trend; • Challenges to the supply chain,
• Prime Minister Modi's 'Digital inventory management, and
India' mission inability to match the deals
• Huge potential digital market; offered by organized retailers
• Understanding of the diverse such as Amazon and Flipkart;
and complex Indian market
Facebook • Intelligence to track users' • Zero transaction-based revenue,
preferences and activities only advertising revenue;
• India is home to the largest FB • Uncertain position in the Indian
and WhatsApp communities; market due to competition;
• Facebook’s business features, • Growing concerns about data
such as Pages and Marketplace, privacy and security have led to
have empowered local regulatory scrutiny. The Indian
businesses to reach a larger government has introduced
audience, create brand regulations like the Personal Data
awareness, and generate sales. Protection Bill to ensure user data
(Sajith, 2023) is handled responsibly.
• Huge potential e-commerce • Facebook has encountered
market. regulatory challenges, including
data localization requirements
and content removal requests.
Navigating these regulations
while maintaining user trust is a
delicate balance. (Sajith, 2023)

IV. Strategy Recommendation

• Developing a Super-App: A super-app would consolidate various services, including

communication, social media, online shopping, and payment, into a single platform. By
 offering a seamless and comprehensive user experience, Jio can differentiate itself from

competitors and capture a larger share of the digital market.

However, establishing a business model similar to WeChat's super app is not

straightforward. Firstly, government regulations and industry norms may restrict

Facebook and Jio's ability to develop a super app business model in India. Secondly,

cultural differences and consumer habits will also impact the feasibility of this model in

India. Additionally, technological and security challenges need to be addressed seriously.

Therefore, while the super app model has been successful in other markets,

implementing it in India may pose some difficulties and challenges.

• Enhance User Experience: JioMart can leverage Facebook's technology and user

interface design experience to optimize its platform's user experience, including website

and mobile app interface design, search functionality, shopping process, etc., to increase

user satisfaction and loyalty.

• Strengthen E-commerce Platform: Address the challenges faced by JioMart, such as

streamlining inventory management and improving delivery efficiency. Invest in

technology and logistics to enhance the shopping experience and increase customer

satisfaction. Leverage Facebook's expertise in user engagement and data analytics to

optimize the JioMart platform and drive sales. Use targeted advertising on Facebook's

platforms to promote JioMart and attract new customers.

• Focus on Regulatory Compliance: Ensure compliance with Indian regulations, especially

regarding data privacy and security. Implement robust data protection measures to

safeguard user information and maintain trust. Proactively engage with regulatory
 authorities to address concerns and demonstrate commitment to responsible data

handling practices. Collaborate with industry stakeholders to establish industry standards

and best practices.

• Involvement in the formulation of industry regulations: They can actively participate in

shaping industry regulations related to information security, especially in the realms of

digitalization and network technology. With their vast user bases and digital

infrastructure, they possess significant influence in the field of information security. This

would enable them to play a more proactive role in protecting user privacy and data

security, while also contributing to the establishment of a more trustworthy digital

ecosystem.

However, it is important to note that the development of any industry regulations

requires extensive collaboration and negotiation to ensure the interests of all stakeholders

are adequately addressed. Additionally, they should collaborate with government

agencies, other industry leaders, and professional organizations to jointly develop and

implement information security standards and best practices beneficial to the entire

industry.

• Optimize Supply Chain: Collaborate with suppliers and logistics partners to optimize the

supply chain and improve inventory management. Implement technology-driven

solutions such as real-time tracking and demand forecasting to minimize stockouts and

reduce wastage. Leverage Facebook's social media platforms to gather customer

feedback and insights on product preferences. Use data analytics to identify trends and

adjust inventory accordingly to meet customer demand.

 References

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offer grocery shopping on WhatsApp. Business Standard. https://www.business-
standard.com/article/companies/meta-partners-with-reliance-jiomart-to-offer-grocery-
shopping-on-whatsapp-122082900719_1.html

Reliance Industries Limited. (2023) Annual Report for the year 2022-2023
https://www.ril.com/investors/financial-reporting

Majumdar, Rumki. (2023). India economic outlook, January 2024. Deloitte Global
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https://www2.deloitte.com/us/en/insights/economy/asia-pacific/india-economic-
outlook.html/#endnote-4

Laker, B. (2024). India Will Grow To Become The World’s Third-Largest Economy By 2027.
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Sajith. (2023, August 8). The Phenomenal Growth of Facebook in India: A Comprehensive
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Statista. (2024). E-commerce worldwide - statistics & facts.

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Basuroy, T. (2024, Jan 2). Mobile app usage in India - statistics & facts. Statista.
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Ahuja, P. (2023, November 11). Amazon vs Flipkart: Who did it better?. Linkedin.
https://www.linkedin.com/pulse/amazon-vs-flipkart-who-did-better-pranav-ahuja-ye30f

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