PROJECT ON LEADERSHIP STYLE OF DHIRUBHAI AMBANI

DHIRUBHAI AMBANI

EXECUTIVE SUMMARY

Our team identified Reliance as a representative company for studying the leadership style of its founder, Dhirubhai Hirachand Ambani, and how it impacted the management practices in his company in terms of successes as well as failures, if any. We described the profile of the Reliance Group with all its ramifications along with its subsidiaries and their broad functioning system. Thereafter we presented a brief life sketch of Dhirubhai Ambani, the kingpin, the pivot of the Reliance Group mentioning the highlights of his progress from a small yarn trader to the head of a premier national conglomerate. A discussion of his preferences, policies and methods was taken up along with the impact of each of them on the managerial practices in Reliance Group and related developments. We tried to fit Dhirubhai Ambani in different leadership models like I 10 model, Situational Model of Leadership and the leadership grid. In the process, we justified his labeling in each case based on facts and relevant available data. Comments were made on his leadership styles, the pros and cons in each case mentioning a few unavoidable lapses which need to be corrected for attaining 100% excellence. We have concluded, rightly so, that in spite of a few blemishes not-withstanding, it is solely due to Dhirubhai Ambani that the Reliance Group is now the largest Indian conglomerate in terms of market capitalization.
2

DHIRUBHAI AMBANI

INTRODUCTION
India is fortunate to have a number of trailblazers who established giant industries in India which prospered by their special managerial skills acquired through practice or through brain waves or through hereditary excellence of business background. These include Tatas, Birlas, Khaitans, Goenkas, Bajajs, Ambanis, Jindals, Mittals, Ruias, Mirchandanis and individuals like Vijay Mallya and Bhai Mohan Singh of Ranbaxy. Their descendants to day control more than Rs. 800 billion through 600 companies employing about one lakh people. We use their products day in and day out whether it is consumer durables, electronics, basic necessities and luxuries of life. One of the greatest businessmen India has produced is Dhirubhai Ambani, a synonym for Reliance and Vimal. For his vision, leadership qualities, trailblazing characteristics and go getting approaches, which have all put Reliance and his sons now at the top of the richest people in the world, out team have selected Dhirubhai Ambani as a quintessential representative of a specific leadership style which, among other things, will be explained in detail in this term paper. For a matriculate from a middle class family starting his trading life in Africa with M/s. Besse & Company, a small sub-division of Shell, rising to the pinnacles of business excellence hardly in three decades speaks volumes of the qualities of head and heart which guided Dhirubhai Ambani in his long but eventful journey through the corridors of yarn markets, trading, textiles, petrochemicals, polyester manufacturing and what not, thus embracing and encompassing all possible business areas which guaranteed a good profit and best value for money, not only for his family members, but for the millions of his shareholders. It was a unique spectacle that the
3

DHIRUBHAI AMBANI
annual general body meetings of Reliance were always held in open auditoria or maidans just because thousands had to be accommodated is still one of the most unique phenomena in the Indian business scenario.

DHIRUBHAI AMBANI OBJECTIVES OF THE STUDY

1. Study of Reliance Industries Ltd. including all the subdivisions. 2. Study of the leadership style of Dhirubhai Ambani and how it influenced the managerial practices of the company. 3. Categorization of Dhirubhai Ambani using various leadership models. 4. Study of the impact of this leadership style on the Reliance group. 5. Comments on the Reliance framework and identification of areas for rationalization or improvement, if any.

DHIRUBHAI AMBANI Research Methodology:

Secondary data
Secondary data is data collected by someone other than the user. Common sources of secondary data for social science include surveys and data collected through qualitative methodologies or qualitative research. Primary data, by contrast, are collected by the investigator conducting the research. Secondary data analysis saves time that would otherwise be spent collecting data and, particularly in the case of quantitative data, provides larger and higher-quality databases than would be unfeasible for any individual researcher to collect on their own. In addition to that, analysts of social and economic change consider secondary data essential, since it is impossible to conduct a new survey that can adequately capture past change and/or developments. (A) Sources of secondary data As is the case in primary research, secondary data can be obtained from two different research strands:

Quantitative: Census, housing, social security as well as electoral statistics and other related databases.

Qualitative: Semi-structured and structured interviews, focus groups transcripts, field notes, observation records and other personal, research-related documents.

A clear benefit of using secondary data is that much of the background work needed has been already been carried out, for example: literature reviews, case studies might have been carried out, published texts and statistic could have been already used elsewhere, media promotion and personal contacts have also been utilized. This wealth of background work means that secondary data generally have a pre-established degree of validity and reliability which need not be re-examined by the researcher who is reusing such data.
6

DHIRUBHAI AMBANI
Furthermore, secondary data can also be helpful in the research design of subsequent primary research and can provide a baseline with which the collected primary data results can be compared to. Therefore, it is always wise to begin any research activity with a review of the secondary.

DHIRUBHAI AMBANI COMPANY PROFILE

Reliance Group is India's largest private sector enterprise with revenues in excess of US$ 25 billion. The group has diversified business interests in areas such as petrochemicals, textiles and retail. Reliance Group's flagship company, Reliance Industries Limited (RIL), is a Fortune Global 500 company and is the largest private sector company in India.

The Reliance Group was founded by the legendary Dhirubhai H. Ambani. In 1975, the company expanded into textiles. Dhirubhai Ambani introduced equity cult in India when Reliance went public with IPO in 1977. Since the launch of its IPO RIL has expanded rapidly and integrated backwards into other industry sectors, most notably the production of petrochemicals and the refining of crude oil. Dhirubhai led the evolution as a global leader in the materials and energy value chain businesses. Today, Reliance Group's activities range from exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fiber intermediates, plastics and chemicals) to textiles and retail. Reliance enjoys global leadership in its businesses. It is the largest polyester yarn and fiber producer in the world and among the top five to ten producers in the world in major petrochemical products. Presently, Reliance Group has more than 25,000 employees on its rolls and exports products in excess of US$ 15 billion to more than 100 countries in the world.

DHIRUBHAI AMBANI
BUSINESS INTERESTS OF RELIANCE: Petroleum Exploration and Production: Petroleum Exploration and Production is a major growth area for Reliance and Reliance intends to become a global energy major. RIL is the largest Oil & Gas acreage holder among the Private sector companies in India with 34 domestic exploration blocks covering an area of about 331,000 sq. km. It is also India's first private sector company in the Exploration and Production (E&P) sector to have discovered large gas reserves. RIL also has interests in one exploration block each in Yemen and Oman.

Petroleum Refining and Marketing: Reliance operates the third largest refinery in the world at any single location, with a capacity of 30 million tons per year of crude throughput, at Jamnagar, Gujarat. Reliance is in the process of doubling the petroleum refinery at Jamnagar, which will make it the largest petroleum refinery in the world. The products rolled out from Reliance refinery include: LPG, Propylene, Naphtha, Reformate, Gasoline, TAME, Jet / Aviation Turbine Fuel / Superior Kerosene Oil, High Speed Diesel, Sulphur, and Petroleum Coke.

DHIRUBHAI AMBANI
FUNCTIONING AREAS:

Petrochemicals: Reliance deals in following petrochemical products:

Polymer Reliance's polymer business is integrated with its cracker facility at Hazira, as well as its refinery at Jamnagar, ensuring feedstock availability at all times. The company operates world-scale plants for Polyolefins and PVC with state-of-art technologies from global licensors like Novacor, Geon and Union Carbide.

Polyester Reliance is the largest producer of polyester fiber and yarn in the world, with a capacity of 2,000 KTA.

Polyester Intermediates Reliance is the world's 3rd largest producer of Paraxylene (PX), 6th largest producer of Purified Terephthalic Acid (PTA) and 5th largest producer of Mono Ethylene Glycol (MEG).

10

DHIRUBHAI AMBANI
Textiles Reliance textile products are sold under the brand names of Only Vimal, Harmony, Reance, RueRel and V2. Reliances Naroda textile complex, one of Indias largest and most modern textile complexes, produces about 25 million meters of fabric both for domestic and foreign markets.

Retail Reliance has recently entered the retail market and is aggressively working on introducing a pan-India network of retail outlets in multiple formats.

11

DHIRUBHAI AMBANI
SUBSIDIARIES OF RELIANCE GROUP: Reliance Petroleum - Reliance Petroleum Limited (RPL) is a subsidiary of Reliance

Industries Limited (RIL) and was created to exploit the emerging opportunities, creating value in the refining sector worldwide.

Reliance Life Sciences- Reliance Life Sciences is a diversified and integrated biotechnology initiative of the Reliance group companies, India's largest private sector companies.

Reliance Industrial Infrastructure Limited - Reliance Industrial Infrastructure Limited (RIIL), a Reliance Group company, is principally engaged in the formation and operation of industrial infrastructure, involving the leasing and supply with the software of the computer and data processing.

Reliance Institute of Life Sciences - Reliance Life Sciences Institute (RILS), established by Dhirubhai Ambani Foundation, is an institution of higher education in various fields of life sciences and related technologies.

Reliance Solar Limited - Initiative for Solar Energy and Reliance Group aims to bring solar energy systems and solutions primarily to remote and rural areas and bring about a transformation in the quality of life.

Reliance Logistics - Reliance Logistics (P) Ltd., a Reliance group company, is a single window solution provider for all your transportation, distribution, storage, logistics and supply chain needs.

12

DHIRUBHAI AMBANI

Reliance Clinical Research Services - Reliance Clinical Research Services (RCRS), a Reliance group company, is a contract research organization (CRO) and its wholly owned subsidiary of Reliance Life Sciences, which aims to provide world-class services for clinical research, pharmaceuticals, biotechnology companies and medical equipment.

Relicord - Relicord, a Reliance Life Sciences (RLS) initiative, offering services of cord blood banking is supported by Reliance Group, India's largest business house.

13

DHIRUBHAI AMBANI MAJOR ACHIEVEMENTS OF THE RELIANCE GROUP

The world's largest producer of Polyester Fiber and Yarn 4th largest producer of Paraxylene (PX) 5th largest producer of Purified Terephthalic Acid (PTA) 7th largest producer of Polypropylene (PP) Reliance's refinery at Jamnagar is the third largest refinery at a single location in the world.

Reliance pioneered the first ever Euro Convertible Bond issue by an Indian company. Reliance is the first private sector company in India to be rated by international credit rating agencies.

First corporate in Asia to issue 50 and 100 years bond in US debt market. First private sector Company in India to record a net profit of US dollar of over 1 billion.

14

DHIRUBHAI AMBANI LEADERSHIP STYLE OF DHIRUBHAI AMBANI

The following is a description of the leadership style of Dhirubhai Ambani, the founder of Reliance Industries. The managerial practices in Reliance were all affected completely by the leadership style of its founder. The great success story of Reliance can be completely attributed to the style of management brought in by Dhirubhai Ambani which was perfected by his sons and to some extent by experts in business management hired by the Reliance Group. But the fact remains that the comprehensive and integrated personality of Dhirubhai Ambani permeates and penetrates through all aspects of working of Reliance Industries and all its subsidiaries.

DHIRUBHAI AMBANI- YARN TRADER TO NATIONAL BUSINESS TYCOON It is interesting to note the gradual development of Ambani as a leader from his birth, growth and blooming into a full fledged company head. Born in a traders family in Gujarat on December 28th 1932 to Jumna and Hirachand Ambani, he was the third of five children and his father was a school master. Having barely completed his matriculation exam at 17 years of age, Dhirubhai reached Aden and joined M/s. Besse & Co. which was dealing with Shell products and was paid a first salary of 300 rupees per month. He studied all the nuances of the marketing of petroleum and as an ambitious young man; he shifted from service to business. He was helped by Jamnadas in dealing with commodities like rice and sugar and returned to India in 1958. He started Reliance Commercial Corporation with a capital of Rs 15000 as a trading firm. It is very educative to note that as for an Arab Sheiks request even a consignment of Indian soil was
15

DHIRUBHAI AMBANI
sent to Aden to grow roses in the desert showing that Ambani had the knack to identify an opportunity and strike the iron when it is hot. Branching out to yarn trading, he started the first spanking new mill at Naroda as he foresaw synthetics as the fabric of the future which shows the visionary nature of the man in general. Dhirubhai registered Reliance Textile Industries with a paid up capital of 150000 as a power loom unit. This is where the backward integration concept first took roots and later became the central theme for all strategic planning in Reliance. As a risk taker, Ambani raised Rs. 280000 to get into manufacturing in a project which was predicted to fail by great business stalwarts like Viren Shah. But, because of his advance anticipation of things to come, he made a profit of 1.3 million in the first year. By 1977, Dhirubhai went public and his profit reached Rs 43.3 million from the revenues of 700 million. To manage his exploding business, he took out talent from wherever available and jobs were offered more on showing initiative rather than on paper qualifications which became a classic Reliance management strategy. The best technological talent was poached from all his competitors to form the brains trust of Reliance. When Ambani bought machinery, he was always ahead of tomorrows and had commitment to quality by taking the finest technology the world could offer. The best example is that of acquiring DuPont technology for synthetic yarn from Delaware, US, the polyester process being first bought by him outside of United States. Dhirubhai entered domestic markets with an advertising blitz on par with Hindustan Lever when Reliance introduced ONLY VIMAL since he was very confident that the brand image was the

16

DHIRUBHAI AMBANI
most important in order to win the consumers confidence. Dhirubhai felt that marketing success was a function of three factors, namely, choosing the right product mix, identifying the market and establishing a viable distribution structure. When faced with resistance from traditional cloth marketers, Dhirubhai opened his own showrooms and appointed agents and offered franchises to his own shareholders. He also opened up non metro urban segments in smaller towns as a result of which by 1980, Reliance fabrics were available to twenty company owned retail outlets, 1000 franchised outlets and more than twenty thousand regular retails stores. This was comparable in speed and numbers only to Italian Benetton and American Mc Donalds. Dhirubhai established a good rapport with his dealers by making his business with them risk free because he used to say if you lose, come back to us, but if you make profits, they are all yours! Dhirubhais future gazing skill could be inferred from the fact that though India is a poor country, people will not mind paying a little more for synthetics provided they have a good quality and had a longer wear and tear. The Naroda mill transformed Dhirubhai from a simple yarn trader to a great mill owner on par with Mafatlals, Sarabhais etc. Dhirubhai spread out countries abroad through his Reliance synthetic textiles. His dynamism and confidence in the future made him reach a sales turnover of Rs 1 billion in just twelve years whereas Bombay Dyeing needed hundred years. Dhirubhai was accused of black marketing and corruption to improve his sales and get things done. After 1977, when Reliance went public, Dhirubhais holdings were 16% but he had thousands of share holders from the public to support him in all his endeavors. By converting debt into equity through successful debenture issues through 1979 to 1982, he was able to raise up to Rs 500 millions. A very important philosophy of Dhirubhai was always to ensure that Reliance share

17

DHIRUBHAI AMBANI
were in the ascendant to draw maximum benefit for the shareholders for whom he was prepared to bend the Govt. rules, use his political influence and any legal Hera pheri required for the purpose. Dhirubhai made sure that whenever Reliance had to impress the Govt. to modify the existing rules and regulations, they used to have all the information in India and abroad on the fingertips of the group which met and influenced the Govt. Reliance always managed to maintain its zero-tax status by changing its accounting practice by capitalizing interest for the long term debt for the purchase of fixed assets. Many people felt that Reliance was avoiding taxes by cheating the Govt. However, all the profits were ploughed into the company by Dhirubhai and his family so that business prospered. Dhirubhai had the knack of taking on people like VP Singh in which he had the inherent support from Ms. Indira Gandhi, Pranab Mukherjee and Rajeev Gandhi. One best example is when he contracted the purchase of a whole years supply of PTA of 60000 tons by having letters of credit from many banks wh en the Govt. was about to decide to shift imports of PTA from open license to permissible limited list. Dhirubhai was able to show his one-upmanship against Nusli Wadia and Goenka of Indian Express which were bent upon destroying Reliance. Though this led to his paralysis and later failing health, he was able to broker peace with his enemies through the success of Reliances G series along with the meeting of Dhirubhai with Rajeev Gandhi through the good offices of Amitabh Bachhan when VP Singh was shifted from Finance to Defence. However, there was never formal delegation of authority in Reliance as there was flexibility as well as ambiguity. Only the top managers could call the shots in addition to Dhirubhai and his

18

DHIRUBHAI AMBANI
sons. In spite of this, Dhirubhai was very considerate to his employees like when Mr. Sanghvi incurred a heavy loss in a deal with a view to increase the profit for Reliance. After 1995, Dhirubhai handed over the reins of his empire to his sons though he did not lose his craving for money and power since he was always available for expert advice. According to Anil Ambani, his fathers only fault was he thought too big and clearly ahead of his time.

DHIRUBHAI AMBANIS IMPACT ON RELIANCES MANAGERIAL PRACTICES AND THEIR POSITIVE IMPACT ON BUSINESS
The great success of the Reliance Group is in no small measure to epoch making changes in management practices and philosophies brought about by Dhirubhai Ambani based on his convictions that reflect his unique management style. The following illustrate and prove Dhirubhai Ambanis influence on Reliances management practices. Dhirubhai Ambani was a transformational leader. His innovative idea of converting the debentures of the company into equity shares resulted in far reaching changes in the management practices. Reliance was able to convert its liabilities into assets by this masterstroke and the share prices of the company went up and all the investors could make through this process. Though, the Government of the day was against this equity cult starter by Dhirubhai per say, but, over a period of time based on precedence in foreign companies, the statute book itself was modified to be in line with this innovative idea. Consequently, the volumes of business in Reliance increased very fast along with quick multiplication of its share capital.
19

DHIRUBHAI AMBANI
Dhirubhai was a visionary who foresaw that mere financing through banks and public limited companies will not suffice to increase the wealth base of Reliance. So, he was able to convince the people of rural Gujarat and elsewhere that shareholders of the company will have handsome returns on their investments. This approach resulted in having more than 3 million shareholders investing in Reliance, which is the highest number in the world for any company. As a result, Reliance Industries was the only public limited company whose annual general meetings had to be held in open air stadiums. So much so, with almost 20% of the shareholders in India belonging to Reliance, it became a dictating factor in Indian economy, courtesy the Indian stock markets. Dhirubhai Ambani believed that his people were his most important assets. The most talented professionals were drawn from all and sundry, were nurtured and continuously provided initiative to aim for still higher goals and targets. These highly motivated people comprised the core of what is known as the Reliance family. This practice improved the working of not only Reliance, but other prospering companies who followed this practice also prospered in the long run. He also empowered his managers by giving authority to them to work independently to work independently he had belief in the capabilities of his people. This has grown to become the core of the Reliance groups HR policy of staff recruitment and maintenance. Dhirubhai was a risk taker, but was only prepared to take calculated risk based on the expected future trends. He invested his entire earnings to purchase a huge stock of polyester yarn which was felt as a wrong decision by others because cotton was the king in India at the time. But he proved right and this made him a billionaire as polyester
20

DHIRUBHAI AMBANI
caught the fancy of the people for better value and longer wear and tear period of the clothing. This influenced Reliance to such an extent that it went on with the purchase of polyester technology from DuPont as the first non- American company to do so. This move gave the Reliance Group monumental financial resources that helped build a robust growth engine and also developed a core competence to grow business, expand and diversify into a potato-to-petrochemicals conglomerate at a break neck speed. When Dhirubhai felt that was a lot of opposition for the introduction of polyester cloth for retail outlets, he started his own chain of distribution centers and gave retail agencies to many of his shareholders on franchise basis. This made it possible for only Vimal to penetrate through A and B class cities and semi-urban neighborhoods which made the market blossom to absorb additional supplies and increase the demand for the same all over the country. In the long term perspective, this also helped develop the much needed knowledge of supply chain management strategies in the Reliance Group, which now boasts of one of the best supply chains in the country in the category of departmental stores, food chains, pharmacy drug stores etc. Dhirubhai Ambani was the one of the first Indian businessmen to realize that high quality actually costs less. Dhirubhai always insisted that Reliance use the best and finest stateof-the-art machinery, equipment and manufacturing facilities. Under his stewardship, the Reliance Industries operated the best manufacturing plants in the country, a comment by the World Bank team affirming the same being a testimony to its technological advancement. In the long run this emphasis on constant up gradation of facilities improved the capacity utilization, economies of scale and reduced the production costs per unit in various factories of the company. Also, this philosophy helped the company to
21

DHIRUBHAI AMBANI
vastly cut down its production/manufacturing costs, provide higher quality products and product pricing flexibility in many of their high volume- low margin businesses.

22

DHIRUBHAI AMBANI LEADERSHIP STYLE BASED ON VARIOUS MODELS

We are aware of different frameworks and models for leadership styles. Based on the facts and data available to us regarding Dhirubhai Ambani, we will now proceed to categorizing him accordingly and appropriately using relevant leadership models.

I 10 MODEL
Information Dhirubhai Ambani mastered the secret of gathering information. He had an uncanny knack of knowing exactly how the market is going to behave and stayed ahead of times. He used to gather information, whatever it may be and at whatever cost. He used to gather information about Governments whether they were local, state, central or international. Whenever he went for approval of license from government he used to have all the information about the market capacity, market share, competitors etc. he used to gather information about products, companies, consumers, markets, people, services, politics and practically anything and everything that mattered for that matter. He used to keep up to date information of

competitors. He used to gather information, analyzed and process the same. He was also able to identify opportunities out of those news and information. He was also quick to disburse that information to the relevant people.

Intelligence

Jamnadas, a friend of Dhirubhai helped him by giving some money to invest in share market when both of them left the job in Aden. Dhirubhai came to India after some years and established
23

DHIRUBHAI AMBANI
his own business. When Jamnadas came to India Dhirubhai gave him job in his company. Even though Jamnadas stopped working after sometime, Dhirubhai insisted that he be paid his salary till his demise. It shows his social intelligence. He was able to understand others emotions and feelings. He never forgot people who helped him.

Dhirubhai was very shrewd in his business transactions as well. He had a knack of getting the right information appropriate to the situation and used it to his advantage whenever necessary. He had the ability to solve any problem or deal with any kind of situation at the right time and in the right perspective.

Imagination

He always was ahead of the times and was able to predict or forecast future developments correctly. For example, he made the plant capacity of polyester production mill higher than the current market demand at that point of time because he knew that in near future, the demand for polyester would increase. Once he also reserved some stock of yarn in view of expected increase in the market price and this happened, resulting in huge profits.

Inspiration

He was a very inspirational leader. He inspired a good deal of young entrepreneurs in India. To his employees, he was their messiah whom they could fall back to in any hour of need. For example, when the action of one of his employees resulted in a huge loss, he was magnanimous in condoning the same, for he was very sure that the employee worked for the benefit of his company in the said situation.

24

DHIRUBHAI AMBANI
Insight

He had an uncanny insight to the future of his business. His choice of moving on to polyester, especially, at a time when cotton was the more popular fabric was based on his perception that the demand for polyester would pick up very soon and his prophecy was proved right. Converting debt into equity using debentures only highlights his deep insight about his business because by this move, he could clear the companys debts and achieve profits for all the shareholders.

Dhirubhai gave importance to the small investor and his contributions, and by doing so, he involved millions of middle class investors

Intensity

Dhirubhai was intensely attached to his company, its people and its business. All his moves were directed ultimately for the good of his company. His intensity was that infectious that it spread to all his employees. He was so intensely attached to his company that was prepared to forego his integrity for the sake of getting things done by hook or by crook for the sake of his company. Integrity Dhirubhai seems to stand low in terms of integrity. Dhirubhai manipulated the laws and customs rules to his companys advantage. He exploited the Indian government, their rules and tax system to the best of his ability which is very clear from the fact that Reliance is the only company which never paid taxes even after three decades of listing and went on giving bonuses and dividends to shareholders. It was government and the system which was at loss. Billions of

25

DHIRUBHAI AMBANI
rupees which should have gone to the coffers of government allegedly went into building Reliance Empire and also went for paying bribes to the government babus. Critics accused him of using "more than the usual" ways of obtaining licenses, getting quick approvals for public issues and capital goods imports, and of getting policies formulated in favor of Reliance Industries. However, Dhirubhai used to say that these were baseless allegations made against him by his jealous competitors. Influence Dhirubhai Ambani was known for his influence in political circles and had the ability to acquire most difficult licenses during the license raj. Ambanis influence on New Delhi was so strong that everything worked the way he wanted it to be, whether it was getting a license or taking action against his competitors.

Interdependence Dhirubhai depended on the Reliance family consisting of professionals and technocrats drawn by him from all possible quarters who were able to convert his expectations to fruitful results. By depending on them and looking after them simultaneously, he was able to achieve superlative results. This shows that Dhirubhai believed in team work though, of course, he was always the team leader.

26

DHIRUBHAI AMBANI
Impact

Dhirubhai had a great impact on stock exchanges and on government. He had such an impact that when Govt. and stock exchange experts opposed his idea of converting debentures to shares, he threatened them that if they take any legal action he will withdraw all shares from the stock exchange. Fearing this SEBI never took any action against him, and he forced the government to change the law.

27

DHIRUBHAI AMBANI
SITUATIONAL THEORY OF LEADERSHIP
Situational leadership stresses that leadership is composed of both a directive and a supportive dimension, each of which is to be applied appropriately in a given situation. According to this theory, leaders must change the degree to which they are directive or supportive to meet the changing needs of the subordinates. In other words, situational leadership demands that a leader should match his style to the competence and commitment of his subordinates. Effective leaders are those who can recognize the needs of the employees and adopt their own style to meet those needs. S3: high supportive/low directive behavior SUPPORTIVE STYLE S2: high directive/high supportive behavior COACHING STYLE (DHIRUBHAI AMBANI) S4:low supportive/low directive behavior DELEGATING STYLE S1:high directive/low supportive behavior DIRECTING BEHAVIOR

Note: Horizontal axis represents directive behavior. Vertical axis represents supportive behavior Based on the data available, we can categorize Dhirubhai under S2 leadership style which involves high directive and high supportive behavior as per the Blanchard-Blanchard situational leadership-II model. As Dhirubhai was showing spectacular results right from the beginning of his companys functioning in India and also because he picked and chose the technical and professional core group for his Reliance family, the followers were highly motivated, optimistic and goal directed. The followers therefore were at D2 to D3 development levels and required a

28

DHIRUBHAI AMBANI
guided coaching approach. Because of their commitment and competence, Dhirubhai followed the coaching approach in a high directive and high supportive style. As for this, he focused communication on both achieving goals and meeting the socio-emotional needs of his subordinates. He involved himself with the subordinates by giving encouragement and soliciting subordinate input. However, it is an extension of S1 leadership style that is high directive and low supportive behavior because as a leader, he was always making the final decision based on what and how the goal can be accomplished.

29

DHIRUBHAI AMBANI
BLAKE & MOUTONS LEADERSHIP GRID
The leadership grid proposed by Blake & Mouton, in its most reformed form of 1985, is designed to explain how leaders help organizations to reach their purposes through two factors, namely, concern for results on a 9 point scale and concern for people also on a 9 point scale. (1,1) represents impoverished management, (9,1) represents authority compliance, (5,5) represents middle-of-the-road management, (1,9) represents country club management and (9,9) represents team management. The (9, 9) style places a strong emphasis on both tasks and inter-personal relationships. It promotes a high degree of participation and team work in the organization and involves the employees fully committed to their work. Based on the data available, Dhirubhai Ambani can be categorized as a 9,9 leader, that is, in the team management block of leadership grid. Dhirubhai used to stimulate participation of the employees, always made his priorities clear and followed them to the successful completion. He behaved open mindedly and enjoyed working with his employees. However, he was not perhaps getting all the issues into the open which is perhaps a lapse. Because the employees were handpicked based on professional and technical competence and drawn from diverse sources, their involvement and commitment to work was of the highest order. In addition, Dhirubhai acted as a member of the so called Reliance family though sitting at the top of the table and thus could establish very good inter-personal relationships as he was strongly goal directed, he was able to always emphasize and motivate his employees towards task achievement as an important goal to be kept in mind at all times. He always had a very clear perception of his priorities in terms of immediate and final goals, a concept that percolated down to all his employees. Because of the
30

DHIRUBHAI AMBANI
common stake for his company, very good relationships of trust and respect ensued between him and his team members. The following points corroborate this view as additional confirmations:

TASK ORIENTED BEHAVIOR Dhirubhai was ready to risk his personal integrity, bend the rules, influence the politicians and the G overnment Officers concerned for the sole purpose of achieving his goals or targets.

As a risk taker, he expanded the capacity of his mills or went for polyester at such times when the atmosphere did not appear right for the same because he had a form conviction that the goals he had set for his company are justified and are bound to be met.

PEOPLE ORIENTED BEHAVIOR

He had a very jovial manner while handling his employees by treating them as part of his extended family, condoning their honest mistakes, if only, when they were for the benefit of the organization.

He was a very good pay-master and was very kind and considerate to all his employees who were hand-picked him for their administrative/technical expertise.

31

DHIRUBHAI AMBANI
He never advertized his munificence because felt obliged to help out not only the needy employees, but others remotely connected with the Reliance family.

32

DHIRUBHAI AMBANI

COMMENTS ON THE LEADERSHIP STYLE OF DHIRUBHAI AMBANI

Ambanis style of functioning produced all-round success for his organization in terms of the following: His coaching style of high directive and high supportive behavior as well as the team management style under the leadership grid are very apt and relevant for Reliance Group as they always produced the best possible results with all-round benefits to all the stakeholders including employees, customers, shareholders and the investors. His high directive and high supportive behavior is found to be very suitable for his dedicated and motivated employees who were all hand-picked by him for their ability and expertise. His style of functioning made all concerned to believe that Reliance was indeed a big extended family of Ambanis. But his go-getter status by hook or by crook and by bending the rules and regulations of the Govt. concerned and his single minded devotion to improve Reliance at the cost of other parallel establishments made him many enemies like Nusli Wadia or P Goenka and a few others with whom he had to continue an ever-going war of words and deeds. There is no evidence to show that career development schemes were in operation in Reliance at that point of time, which is a prime necessity to retain talent and to stay competitive in the changing environment. It also appears that a well set hierarchy in the bureaucracy seems to be absent and most of the decisions were taken by the senior most managers in addition to Dhirubhai showing that delegation of responsibility was under a low key. Though Reliance followed all the rules of corporate governance seemingly, they always took advantage of the
33

DHIRUBHAI AMBANI
loop-holes in the laws, systems and procedures. For good accountability, established companies must not only follow the rule of the law but also its spirit through ethical practices. In spite of the few of the above lapses in Reliance, we must add that due to Dhiru bhai Ambanis passion, intensity, passion, charisma, leadership capabilities and his favorable impact on all the stakeholders, Reliance has now become the number one company in terms of market capitalization in Indian stock exchanges.

34

DHIRUBHAI AMBANI CONCLUSION

Dhirubhai Ambani was not just an exceptional human but also an outstanding leader. A man far ahead of his times, he epitomized the dauntless entrepreneurial spirit. He dared to dream on a scale unimaginable before in Indian industry. His life and achievements prove that backed by confidence, courage and conviction, man can achieve the impossible. From a humble beginning, he went on to create an enviable business empire within a span of just 25 years. The Rs.60, 000 crore Reliance Group is a living testimony to his indomitable will, single-minded dedication and an unrelenting commitment to his goals. Under Shri Dhirubhai Ambani's visionary leadership, the Reliance Group emerged as the largest business conglomerate in India, and carved out a distinct place for itself in the global pantheon of corporate giants. The Group's track record of consistent growth is unparalleled in Indian industry and perhaps internationally too. Today, the Group's turnover represents nearly 3 percent of India's GDP. Shri Dhirubhai Ambani was not just firmly rooted in traditional Indian values, but was also the quintessentially modern man, the man of the new millennium. This was clearly reflected in his passion for megasized projects, the most advanced technology and the highest level of productivity. The corporate philosophy he followed was short, simple and succinct - "Think big. Think differently. Think fast. Think ahead. Aim for the best. He inspired the Reliance team to do better than the best - not only in India but in the world. Prestigious awards and titles were conferred on him by national and international organizations. He was acclaimed as the top businessman of the twentieth century and lauded for his dynamic, pioneering and innovative genius. His success story fired the imagination of the younger generation of Indian
35

DHIRUBHAI AMBANI
entrepreneurs, business leaders and progressive companies. He was an icon for them, a role model to be emulated. The number of revolutionary precedents set by Shri Dhirubhai Ambani is a legion. His unique vision redefined the potential of the Indian corporate sector as he challenged conventional wisdom in several areas. He was probably the first Indian businessman to recognize the strategic significance of investors and discover the vast untapped potential of the capital markets and channelize it for the growth and development of not only Reliance but also other publicly listed companies. It is worth noting the famous quotation of Dhirubhai Ambani in connection with conformity with rules and regulations. He said "You should not do anything illegal. First of all, the law should be changed!" It is not for nothing that to date, Reliance is the largest Indian conglomerate in terms of market capitalization.

36

DHIRUBHAI AMBANI BIBLIOGRAPHY

1. Business Maharajas Gita Piramal 2. The Polyester Prince A biography of Dhirubhai Ambani 3. Leadership Theory & Practice Peter G. Northhouse 4. Principles & Practices Of Management Daft & Daft 5. Reliance Industries Limited Website www.ril.com

37