Mukesh Ambani Strategic Management


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Mukesh Ambani Strategic Management

  1. 1. AN ASSIGNMENT ON PRACTICAL APPLICATION WITH RESPECT TO STRATEGIC PERSPECTIVE “STUDY ON MUKESH AMBANI”Submitted to: Prepared By:Prof. Kalpesh Ganotra Hitesh Sasani (25) Saptarshi Chakraborty (28) Rajkumar Singh (38)MBA-II, SEM-III Rajesh Yadav (42)(DR.J.K.PATEL INSTITUTE OF MANAGEMENT) Pinal Thummar (56)M.B.A PROGRAMME Nishant Soni (57)Affiliated to: Gujarat Technological University 1
  2. 2. Presentation Flow Introduction Early Life And Education Career Awards And Honours S.W.O.T. Analysis Of Mukesh Ambani Strategic Management Mukesh Ambani And Strategic Management Reliance Industries Limited Reliance-I.P.C.L Merger (Value Creation Through Integration) Other Partnerships, Mergers And Acquisitions By Reliance Financial Position Of Reliance Industries Limited Major Subsidiaries And Associates Conclusion Source Of Information 2
  3. 3. Introduction They say a good businessman can spot business in every opportunity, but a great businessman sees opportunity in every venture. Needless to say, a personification of this avowal can very well take form of Mukesh Ambani, head honcho of Reliance industries Limited (RIL) in every sense of good reason. Being a chemical engineer to a Stanford drop out, the journey of one of the true visionaries and business magnate is relived in this short report about Mukesh Ambani. Right from his early age to his education, career and the milestones he has achieved are a rare feat and is enough to make every Indian proud. Mukesh Dhirubhai Ambani was born on April 19, 1957 in the city of Aden in Yemen. Mukesh Ambani is the eldest son of Dhirubhai Ambani, the late patriarch of the Reliance Empire and Kokilaben Ambani. He has a brother, Anil Ambani, and two sisters - Dipti Salgaoncar & Neena Kothari. 3
  4. 4. Introduction He is an Indian business magnate, the chairman and managing director of Indian conglomerate Reliance Industries,the largest private sector enterprise in India listed in Fortune 500 magazine. As of 2011, he is the second richest man in Asia and the ninth richest man in the world with a personal wealth net worth of $22.6 B and earning worth $3,019,935 as of November 2011. (Source- 4
  5. 5. Early Life And Education From childhood, Mukesh Ambani was industrious and had a strong urge to become famous. He used to live with his family in the Usha Kiran skyscraper at Altamount Road in the 60’s until Dhirubhai Ambani then purchased a 14-floor apartment block called Sea Wind in Colaba, Mukesh Ambani was educated at Abaay Morischa School in Mumbai. And his indomitable wish to become famous and well known across the world made him one of the most successful entrepreneurs of the world. Being the first child, he received all the love and attention of his parents. His father was keen on providing an all-round development to his four children. 5
  6. 6. Early Life And Education He completed his graduation with a bachelor`s degree in chemical engineering from the University of Mumbai, Department of Chemical Technology (UDCT), now Institute of Chemical Technology, Mumbai. He stood sixth in the University exams. Mukesh later enrolled for an MBA from Stanford University but completed only one year of the two year program and dropped out in the year 1980. It was early 80s, and during that time the World Banks Young Professionals Programme (YPP) was quite famous. Mukesh was keen to pursue the prestigious YPP after completing his MBA. All this would take him a year and a half, after which he would return to India, to work on the polyester plant. But his father was to start work on the polyester plant right away. So, to help him build the PFY plant, Dhirubhai pulled his eldest son Mukesh out of Stanford where and Mukesh decided to return to India immediately. 6
  7. 7. Career Mukesh Ambani joined Reliance in 1981 and it was his brain behind Reliances backward integration from textiles into polyester fibres and further into petrochemicals, petroleum refining and going up-stream into oil and gas exploration and production. It was not easy task for him to prove his efficiency and business acumen in a nation where parallel economy (black market) prevails. Mukesh had to work hard for business enhancements. In this process, he directed the creation of 60 new, world-class manufacturing facilities involving diverse technologies that have raised Reliance’s manufacturing capacities from less than a million tonnes to twelve million tonnes per year. Mukesh made his fathers dream come true when he launched Reliance Infocom Limited in 2002. It grew as the largest and most complex information and communications technology initiative in the world. Reliance Infocom has been renamed as Reliance Communications Limited, and is now under Anil Dhirubhai Ambani Group. Mukeshs greatest accolade came in 2004 when he was ranked 13th in Asias Power 25 list of The Most Powerful People in Business, published by the Fortune magazine. The Asia Society, Washington D.C., USA, conferred on him the Asia Society Leadership Award in May 2004. 7
  8. 8. Career Anil used a combination of threat of disclosures and appeal to mother to finally get Reliance Communications Limited, Reliance Energy Limited and Relianc Infocomm. And his 30% share will help him infuse much needed funds in the three companies. He is a member of the Prime Ministers Council on Trade and Industry, Government of India and the Board of Governors of The National Council of Applied Economic Research (NCAER), New Delhi. Mukesh Ambani is married to Nita Ambani, who looks after the social and charitable arm of Reliance Industries. He also owns the Mumbai Indians I.P.L cricket team which he bought for the highest bid of $111.9 million. 8
  9. 9. AWARDS AND HONOURSYear of Award or Honour Name of Award or Honor Awarding Organization 2010 Global Vision Award at The Awards Dinner Asia Society 2010 Business Leader of the Year NDTV India 2010 Businessman of the Year Financial Chronicle 2010 Juran Quality Medal for 2009[32] Indian Merchants Chamber (IMC) School of Engineering and Applied Science Deans Medal 2010 University of Pennsylvania. United States-India Business Council Leadership Award 2007 United States-India Business Council. 2007 Chitralekha Person of the Year Award Government of Gujarat. 2004 World Communication Award Total Telecom. 9
  10. 10. Swot Analysis Strengths: Weakness: People Money Not Charismatic and Image Flamboyant. Brand Value Indian Never spends money lavishly Opportunities: Threats: Automobile Sector CompetitorsSouth East Asian Countries Share Market Large Market Oil DeficiencyAcquisitions, Mergers and Security Takeovers 10
  11. 11. Strategic Management “Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.” (According to Lamb, Robert, Boyden, Competitive strategic management, Englewood Cliffs, NJ: Prentice-Hal) 11
  12. 12. Mukesh Ambani And Strategic Management Always thinks ‘out of the box’. Apart from traditional and conventional beliefs, Mukesh Ambani always does things in an unconventional ways. Doing things in a different way. When generating funds from public by means of shares, its difficult to gain trust and convince them so It has gone into their psyche that to do things differently. Empower ordinary people to extra ordinary things. The other thing that is not visible externally is methods, processes, systems that moved Reliance away from a system that is totally owner-driven. Reliance were among the last to put up a polyester plant. Investment in excellence is investment in the future. Mukesh Ambani run Reliance Industries Limited has been accorded with the second position in the list of world’s 10 biggest ’sustainable value creators’. By generating the largest shareholder value in terms of market capitalization, Mukesh Ambani and Reliance Industries Limited, both, are held as the finest corporate entities of the world today. Self belief and opportunity analysis is essential for an entrepreneur. In the journey of an entrepreneur, the most important thing is self-belief and the ability to convert that belief into reality. He believed that we could raise money from the capital market and return it with profits. His second belief was that India is a great opportunity. 12
  13. 13. Reliance Industries Limited The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is Indias largest private sector enterprise, with businesses in the energy and materials value chain. Groups annual revenues are in excess of US$ 44 billion. The flagship company, Reliance Industries Limited,is a Fortune Global 500 company and is the largest private sector company in India. Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain. The Groups activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles, retail and special economic zones. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products. Major Group Companies are Reliance Industries Limited (including main subsidiary Reliance Retail limited) and Reliance Industrial Infrastructure Limited. 13
  14. 14. Reliance-I.P.C.L Merger (Value Creation Through Integration) Before the merger, Reliance was supplying raw materials to IPCL to make final products such as rubber. Now, Reliance will be able to offer end-to-end product solutions. The Reliance-I.P.C.L merger took place on April 18, 2007. After the merger, Reliance’s revenue will be increased from chemicals by 4 per cent to 48 per cent of the total. Later, analyst said that one share of Reliance will be equal value of four shares of IPCL. But, according to the book value formula the ratio would be 1:2. Reliance Industries would add more than Rs 11,000 crore in its balance-sheet and Rs 1,163 crore to its profit as well. The new development would make RIL as a pan-Indian and perhaps Asian dominant firm. It also would result in substantial tax savings for the merged companies because both companies are buying and selling products from each other. In 2002, Reliance had paid Rs 1,491 crore to the government to take 26 per cent stake in IPCL. Then, in August 2006, the Gujarat High Court had legitimate the merger of six polyester manufacturing companies such as Apollo Fibres, Central India Polyesters, India Polyfibres, Orissa Polyfibres, Recron Synthetics and Silvassa Industries with IPCL. From the above merger, we can conclude that the Reliance-IPCL merger; a tactical masterstroke by Mukesh Ambani resulted in profit of Rs 1,163 crore. Not only did he acquire IPCL, Mukesh Ambani also acquired six polyester manufacturing companies which got merged with ipcl a year earlier. Thus we can say that he obtained a major portion of petrochemical units in a bunch. So acquiring IPCL was a definite competitive advantage for Mukesh Ambani and a strategic move on his quest to become the richest Indian and ninth richest person in the world. 14
  15. 15. OTHER PARTNERSHIPS, MERGERS AND ACQUISITIONS BY RELIANCE In 2004, The European Commission approved the acquisition of the German specialty polyester manufacturer Trevira by Reliance. In 2008, during the year, Reliance signed an agreement to acquire certain polyester (capacity) assets of Hualon, Malaysia. In the Refining & Marketing business, Reliance took over majority control of Gulf Africa Petroleum Corporation (GAPCO) and started shipping products to the East African markets in 2008 Reliance also signed MoU with GAIL (India) Limited to explore opportunities of setting up petrochemical plants in feedstock rich countries outside India in 2008 During 2010, RIL and British Petroleum announced a strategic partnership in the oil and gas business. This partnership comprises BP taking 30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the KG-D6 block, and the formation of a joint venture (50:50) for sourcing and marketing gas in India. During 2010, the Company took a significant step by entering into partnerships in the United States of America with Atlas Energy, Pioneer Natural Resources and Carrizo Oil & Gas through three distinctive joint venture agreements. It has also entered into a separate joint venture with Pioneer Natural Resources aimed at addressing the mid-stream opportunity in gas evacuation and transportation. During 2010, RIL and Russias SIBUR announced a joint venture for the setting up of a facility for producing 100,000 tonnes of butyl rubber in India. During 2010, RIL acquired a 95% stake in Infotel Broadband Services Limited, which emerged as a successful bidder in all the 22 circles of the auction for Broadband Wireless Access (BWA) spectrum conducted by the Department of Telecommunication, Government of India. RIL has invested Rs. 4,201.64 crore by way of subscription to equity capital issued by Infotel Broadband. 15
  16. 16. Financial Position Of Reliance Industries Limited After the demise of Dhirubhai Ambani in 2002 the Reliance Industries Limited was carried forward by Mukesh Ambani He took reliance to the pinnacle of the private sector company in India. Facts And Figures speak for themselves. Revenue crossed Rs. 2,50,000 crore mark (Rs. 2,58,651 crore, US$ 58.0 billion) Net Profit crossed Rs. 20,000 crore mark (Rs. 20,286 crore, US$ 4.5billion) Total Assets crossed Rs. 2,80,000 crore mark (Rs. 2,84,719 crore, US$ 63.8 billion), unparalleled in the Indian Private sector. Exports crossed Rs. 1,40,000 crore mark (Rs. 1,46,667 crore, US$ 32.9 billion), 13.4% of Indias total exports. RIL declares Dividend of 80%. Payout of Rs 2,385 Crore, one of the highest in the Indian Private Sector. 16
  17. 17. Major Subsidiaries And Associates 17
  18. 18. Conclusions Through its uniqueness and providing that quality products, RIL has made its name felt. It is a company which has succeeded due to the hard work and sincerity of its employees. So it is truly the employees company. And all credit must go to Mukesh Ambani. A shrewd businessman who knows the value of money and invests in future prospects with a guaranteed return A person who also takes care of the Corporate Social Responsibility by means of Bal Kalyan programme, Dhirubhai Ambani hospital, Project Jagruti and initiative to combat HIV and T.B He very well understands the fact that unlike money, time lost can never be regained. According to him one needs to find opportunity in every adversity. As Mukesh Ambani rightly says: “One of his biggest obsessions is that senior people must give bright 25-year-olds the opportunity to contribute meaningfully.” - Mukesh Ambani, after recalling the opportunities he received as a young man. 18
  19. 19. Source Of Information Bloomberg Business Week: =RIL:IN 19
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