International Entrepreneurship: DhiruBhai Case Study

Introduction of International Entrepreneurship: DhiruBhai Case Study

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The ability to produce some innovative approaches with the desire of starting a new business is called entrepreneurship. The administrative role of a person can manage the business to make it profitable and the risk management power inside the person can make a startup venture lead to success. Replacing the new ideas with the traditional products can be defined as the key deliverable of the new ventures. Producing the objectives that can entitle management theories based on the industry can make a business person a successful entrepreneur. The Discovery and creative theory of entrepreneurs can make the notions for the startup venture that can make an entrepreneur successful.

Background of the entrepreneur

The Indian Entrepreneur who improved the business process with innovative thinking in India is Dhirubhai Ambani. The desire of transforming a dream into destiny was the ideal key aspect of Dhirubhai Ambani's nature. He was born in Gujrat in British rule India in 1932 and known as an intelligent and mature student since his childhood. He is known today as an Indian business tycoon due to his business ideas and his efficacy in managing a business. The inborn trading capability makes Dhirubhai a successful entrepreneur today and he is known for his start-up venture Reliance Industries. The factors that are needed to have inside the entrepreneur like self-intuitions, tolerance capacity, willpower, developed strategy based on the latest trends and market demand were present inside Dhirubhai Ambani. The ability to develop the present industry into an emerging market is considered the potential factor in becoming a successful entrepreneur (Ahn et al. 2019). All the above-mentioned factors were fulfilled in Dhirubhai.

History of business started

Ambani began his business in late 1950, by trading in spices. The textile business of Ambani was actually formed in the year 1966 and later it was named Reliance by him on May 8, 1973. The dynamic entrepreneur of India, Dhirubhai Ambani made his initial funding of Rs.15000 and later turned this little investment into the million-dollar profitable organisation named Reliance Group of Companies. The initial venture of the Reliance organisation was a polyester textile firm. The way Ambani made his business successful at the age of 26 with formal education made him a successful entrepreneur. In 1966 Dhirubhai formed his spinning factory in Naroda. Behind the success story of Dhirubhai Ambani, there is no connection that can lead to an investment in the organisation. Starting from a less amount of money the ideal notion of his success was to offer a higher quality product at a lower price with a smaller amount of profit. This gave him the ability of grew the business quickly. The strategies of business can be defined as the key aspect of the success strategy. The ability to building own network through business management made different business professionals invest in his business (Yaakub et al. 2020). The business process that followed him was made with the innovative theories and creative marketing for his textile brand ‘VIMAL’.

Figure 1: Different businesses of Reliance

(Source: Ril.com, 2022)

The entrepreneur theory presented in Dhirubhai Ambani

Producing a notion that can make the businesses a step ahead can be declared as the required quality inside Dhirubhai Ambani. All the achievements made by Ambani referred to the relevant theories of entrepreneurship. The primary theory that makes a business person an entrepreneur is the capability of starting innovation in a venture (Piramal, 2018). This theory is called dynamic theory, where the entrepreneurs appear due to individuals including specific psychological elements of self-motivation, and patience. One of the vital aspects of different entrepreneurship models is discovering the raw-material source that can make the business enhanced (Lee, 2018). Dhirubhai trusted in building networks and relationships and the way he managed the investors help to get motivated. The psychological power inside a business person can be referred to as the ultimate proficiency for the development of the business. The power of discovering new things was high inside Dhirubhai Ambani for the development of the business with innovative ideas.

The success story of the Reliance group formed by Dhirubhai Ambani

Dhirubhai Ambani believed efforts and instability in the business led him towards the record sales of 9 million in 1967 producing a profit of 1.3 million which was pushed back into the organisation to make the business sustainable. After a decade of manufacturing, Reliance become a millionaire organisation with a revenue of over 100 million that had included a turnover of around 680 million. The extensions process with developed different ventures started around 1975 with the branding of Vimal textile. The ambition of Dhirubhai made him a deep drive in opening more ventures to create the Reliance group of companies. The risk-taking adaptability inside him made him the leader of the Indian business professionals and an icon for so many reasons (Lohana, 2021). Dhirubhai can be taken as an example of how a common man can develop some ideas to become a successful entrepreneur.

Comparison between different ventures of Reliance Industries

Reliance is one of the leading industries in India which is known as a group of companies by the different developed scooters by Dhirubhai Ambani. He developed the fundamental development of the Reliance Industries with the aim, mission, and determination he was able to harvest his venture into a prosperous enterprise. From branding his own textile to the business expansion, Dhirubhai was able to make a remarkable journey. One of the ideal business moments had founded in 1978 when the Initial Public Offering (IPO) of Reliance was announced on the Bombay Stock market exchange and get listed in the share market. The momentum of Reliance’s business was measured around 1980-1985 when the shareholder of Reliance get expanded in the stock market (Mazumdar, 2018). The journey of forming the other veneers was started after 1985. After 1985, the organisation made the most vital decision by selecting the expansion of the polyester products. With the visualisation of the expanded revenue, Dhirubhai Ambani decided to expand its capital market by exploring the assets worldwide to issue Reliance Petroleum in 1993 (ril.com, 2022). Later in 1996, the business of the organisation becomes the first private enterprise. The entrance into the telecommunication sector was made in 1995 by forming a joint venture with NYNEX, a USA based telecom sector. In 2001, Reliance Petroleum Ltd became India’s biggest organisation and expanded its business in finance, healthcare, and retail markets (Lowe et al. 2019). The identification of the Reliance could not be formed as much capital its have in this day without the innovative and risk taking capabilities of Dhirubhai (Bhattacharya, 2019). Moreover, the polyester textile is the primary business that made Reliance established as an industry today with the visualisation power of Dhirubhai Ambani.

 The ever-growing Reliance

(Source: statista.com, 2022)

Drivers and motivations to capture trends in the market

Identification of opportunity

As an entrepreneur, Dhirubhai Ambani has started his organisation named Reliance Commercial Corporation along with his partner Chambaklal Damani. Prior to the business, the initial capital of the business was decided of worth Rs.15000 INR that is 300 US dollars (Faisal and Khan, 2019). The main objective of the business was to export and trade fabrics and spices. Dhirubhai Ambani, as an entrepreneur liked to appear in a challenging business environment, the partnership of the business has started encountering various damages. This habit of constant risk-taking led his partner to walk away from this partnership in 1965.

In this initial phase, he has recognised that more profit can be raised by selling nylon textiles. On the other hand, Dhirubhai Ambani started a business related to the trading of spices in the 1950s. In accordance with the theory of effectuation, he had started finding ways of expanding the business into different sections of commodities (Kitching and Rouse, 2020). Based on the strategy of offering new products with high quality, the man stoops into forming a high valued business that could be able to derive high profit from a small-scale investment. Thus, the attention of business was tuned to the production of synthetic textiles. This phenomenon led to the establishment of the first textile mill in the name of reliance in 1966. Based on policies regarding diversification and integration, Dhirubhai Ambani had invested in the businesses like power generation and plastic production in order to establish the organization in a mightier manner.

 Identified drivers and motivators

(Source: Khanka, 2019)

Determination of the required resources

In the initial periods of the business, the fabric that was manufactured by the Reliance Company was not able to create such massive success before the competitors. After being departed from the initial partnership, he decided to turn the objective of the business from an exporting Company to a manufacturer one with the ability of self-production (Rishi et al. 2018). In addition, one needs to recruit the best talents in order to make a high disposable income. The core intention of the business was to encourage Indians to buy expensive and better clothes that could be manufactured from polyester fibre. In order to achieve this specific objective, he decided to invest in spinning miles for producing yarns.

The actions and decisions that had been taken by him indicated that Dhirubhai Ambani could be considered a believer in the opportunist model (Khanka, 2019). This model can work more efficiently with the people who have corporate cultures that can mainly offer a free space for experimentation along with a diverse social network apart from the official hierarchy. The constant risk-taking habit of Dhirubhai Ambani helped him to achieve new business concepts that led him to fulfil the need of being an executive of multiple businesses. As he decided to be a manufacturer instead of an exporter, four knitting machines were installed in the factories and his brother was assigned the role of plant manager. In the initial period, the factory was started with the inauguration of only 20 employees only.

Implementation and managing of the required resources

Based on trust, Dhirubhai Ambani was successful in initializing the production of the company along with determining the product, place and people ready. He treated the hired professionals like family for offering a better work environment that contributed to developing their trust among them. On the other hand, continuing the business, he had taken huge amounts of loans that were up to 15 million rupees (Chakraborty and Halder, 2019). This amount of loan has been supported and offered from the banks as the entrepreneur could be able to establish the factory in the new yarns that are required for extending the business in a proper manner. As per the consequences, the initial years were not so easy for him to generate the expected return and profit amount from the business.

The first year was not so profitable and the gathered profit from the target market was ploughed back into the business for having continuous progress. In this way, the business was able to witness some positive transactions at the end of the second year based on which he was able to pay back some of his loans (Geetha, 2018). Witness positive growth in the revenue of the business, the first brand of polyester fabric production was launched by Dhirubhai Ambani named “VIMAL”. This establishment has seen great success as most of the efforts were provided to the advertising of the brand in order to enhance the demand for the product among the customer base.

Venture harvesting

Relying on the capabilities of the staff and on his own decisions regarding the manufacturing business, Dhirubhai Ambani was able to harvest the venture into a victorious business. He established a massive manufacturing plant in 1977 with developing the plan for further expansion of the manufacturing business of the fabric made of polyester (Rao et al. 2019). The Reliance Company launched the initial public offering in order to collect the fund for the business expansion. The IPO of the Reliance Company was enlisted in the Bombay Stock exchange in the year 1978. Dhirubhai Ambani brought the equity cult in the country in the same year with an appeal to the local stakeholders that demoted the security and assurance of the growth of every shareholder in accordance with the growth of the organisational business. From the year 1980 to 1985, the number of the shareholders was reached from one million to four million. As the record demonstrated, most of the shareholders belonged to the middle-class strata in India (Mahapatra and Kalra, 2021). Based on this increased amount of shareholders and the gained profit, another plant-manufacturing filament of polyester was established. At that time, it has been estimated that the product range was increased in a significant manner as both the plants were able to produce more than 50000 tonnes of filament. In the aftermath of achieving success, he started focussing on setting new horizons in the business by expanding the business based on new ideas. In accordance with that, he was able to offer mobile to 40% of the Indian population by venturing into the telecommunication sector.

Barriers or enablers faced by the business during growth

 Challenges faced by the entrepreneur

(Source: Mahapatra and Kalra, 2021)

Issues faced by the legislative parts

In order to taste the success, Dhirubhai Ambani faced numerous business rivalries in the initial stages of business development. Prior to the business start-up, he was being labelled with the accusation of carrying out business measures that are considered unethical. The accusation derived against him was that he had tried to influence the political parties with an intention to bring in reform (Mishra and Mahapatra, 2019). In accordance with the rumours, an allegation was derived against the success story of Dhirubhai Ambani that the political parties were being influenced in order to reform the business for better opportunities or exposure in different markets.

Manipulation of Stock prices

Another accusation was made on the name of Dhirubhai Ambani and his established organisation named Reliance. This allegation stated that organisational success was achieved by manipulating the stock prices. This allegation further stated that the manipulation of the stock price was done in order to manage the funding of the business at the beginning as the business shares were short in the respect of continuing a business (Katrak, 2018). As fewer shareholders were interested in buying a share of the newly born organisation, the initial funding for the business development or continuation became challenging for Dhirubhai Ambani.

Issues in maintaining entrepreneurial processes in a competitive market

As per the gathered information, it has been sseen that, prior to the business establishment, the organiser of the business has faced challenges regarding managing the target market and the existing competitors there. During the first period of the business initiation, the main competitor of the Dhirubhai Ambani’s Reliance was the Bombay Dyeing group. The founder of the Bombay Dyeing Group had been made a request of working in a cooperative manner with Reliance by buying yarns from him (Bhattacharya, 2019). However, the owner of the Bombay Dyeing at that moment and in future rejected this request, Reliance became the most trusted supplier of this particular organisation after the firm establishment and expansion of the organisation named Reliance under the leading mind of Dhirubhai Ambani.

After having the contract with the Bombay Dyeing, Reliance had started getting better investment amounts for the investors. This specific phenomenon had helped him to stand firm on the ground of business as a polyester production company. Based on these above-discussed challenges faced by Dhirubhai Ambani as an entrepreneur in the very start-up moment of his business, the way of resolving the identified issues has been stated in the below section. As a financial issue was raised at the beginning of the business along with several others, the knowledge about the choice and demands of the people of India has helped him to achieve success (Lohana, 2021). The increased amount of invested money to attract the shareholders was considered as an aid for the development, and formation of new plants that contributed to business expansion as well.

Ways Reliance overcome the barriers

Breaking the monopoly in the business made the situation favourable for Dhirubhai Ambani his business career. The success story of Dhirubhai led him to a different controversial topic in his era by different competitors. He never gave up on facing any type of barriers rather he acted self-motivated and made the controversies end with his success. Dhirubhai was constantly held blameworthy as it was declared that he carried out some unethical factors that have influenced power in front of the political issues in India. The business progress showcased by him made Dhirubhai put into tough circumstances. Although, the strategic management of Dhirubhai made him out of the barriers and put him a step ahead from the competition (Hart et al. 2019). Additionally, the factors that were challenging him proved wrong.

After Reliance get listed in the share market, Dhirubhai was blamed for the manipulation of stock and the insider selling strategy evolved against his organisation as some brokers made short-selling strategies to make the organisation down in the market (Signoretti, 2020). Dhirubhai handled the demand of the brokers and made the effective in breaking the allegation against him.

Wadias was the established organisation since Dhirubhai Ambani was developing his business. His helping hand in the development of manufacturers of yarns made Dhirubhai successful in achieving the supply chain in the competitive market.

Conclusion

Conclusively, Dhirubhai Ambani was known as the business tycoon of India and was popular in the international trade market for his success story. A business that was formed with only Rs. 1500 as the initial investment, he was able to form different ventures under his organisation Reliance. Dhirubhai Ambani was successful to build up textiles, synthetic yarn, and petrochemicals which made the Reliance Industry the largest private-sector corporation in India. The continuous growth of the Reliance group made a benchmark in the business industry by its revenue. From a little textile organisation, Dhirubhai made Reliance a billionaire business enterprise by applying entrepreneurship theories. Dhirubhai Ambani can be taken as an example of a dynamic entrepreneur and the risk-taking strategies developed by him made him aware to gain competitive advantages in the market. Different business expansions by Reliance are making a profit in the market till today. Petroleum is the biggest success of Dhirubhai Ambani and textile can be taken as the key element of success for him.

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Websites

Statista.com, 2022, About Reliance, Available at: https://www.statista.com/statistics/901458/india-net-worth-reliance/ [Accessed on 18th April 2022]

Ril.com, 2022, about reliance, available at: https://www.ril.com/TheRelianceStory.aspx [Accessed on 19th April 2022]