Dar Almanthour Fragrance: An Entrepreneurial Analysis

Introduction

The company examined in this paper is Dar Almanthour for Fragrance, established in the year 2000. The key products retailed by the company include Bakhoor, perfumes, scents, perfume oil, and designed boxes for formal events. The business originated when the founder's colleague wished to sell his own handcrafted fragrance and offered the founder the chance to retail these fragrances to his family. Recognizing that selling fragrances was profitable, the founder purchased dozens of fragrances from his colleague and arranged for a third party to sell them in exchange for a percentage of the sales.

Seeing a clear opportunity, the founder then offered his colleague money in exchange for the mixture ingredients of the fragrance, with the intention of opening a dedicated fragrance shop. The colleague accepted, the two became partners, and they opened their first shop in Al Mubarikeya. The shop performed well and the founder quit his job to work inside the shop full time. The initial paid-up capital was 1,500 KWD, and the business broke even in its second month. In 2003, a new shop was purchased for 3,000 KWD, after which the founder began traveling to Singapore, Thailand, and China to source unique products.

Dar Almanthour for Fragrance has since grown to become one of the largest fragrance wholesalers in the nation. Today, the company operates 13 shops across the GCC. From an initial workforce of two — the founder and his business partner — the company now employs 50 people. The main objective of this paper is to examine and analyze the business of Dar Almanthour for Fragrance from an entrepreneurial perspective using key entrepreneurial themes.

Opportunity Discovery

Entrepreneurial activity takes into account a future circumstance that is both needed and achievable, irrespective of the resources presently under the control of the entrepreneur. Opportunities are objective actualities in the sense that they exist independently of the entrepreneur and can therefore be discovered by more than one individual. Although opportunity recognition is subjective to the individual, the opportunities themselves are deemed to be objective phenomena that are not necessarily recognized by all parties at all times (Maastricht School of Management, 2018: Theme 2). Opportunities await discovery, and various factors elucidate who discovers them, including alertness, opportunity cost, the nature of the opportunity, prior knowledge, information asymmetry, and personality traits. A fundamental aspect is alertness, defined as an inclination to identify and be sensitive to information regarding objects, events, and behavioral patterns within the environment.

This perspective is supported by several authors. According to Alvarez and Barney (2007), discovery theory assumes that entrepreneurs who discover opportunities differ substantially from others in their capacity either to perceive opportunities or, once perceived, to exploit them. The authors highlight the concept of alertness, which enables entrepreneurs operating within a market to become aware of opportunities generated by external shocks while others disregard them. Similarly, Ardichvili, Cardozo, and Ray (2003) employ Dublin's theory-building framework to propose a process of opportunity identification. The authors argue that entrepreneurial alertness is fundamental to opportunity identification and encompasses three factors: recognition, development, and evaluation.

Furthermore, Baron (2006) argues that opportunity recognition is a form of pattern recognition. Entrepreneurs identify opportunities for new business ventures by using cognitive frameworks acquired through experience to perceive connections between apparently unrelated events or trends in the external environment. In essence, entrepreneurs capitalize on these cognitive frameworks to connect the dots between changes in demography, technology, markets, and other factors, and it is through these perceived patterns that new products or services are proposed.

Entrepreneurial opportunity discovery is clearly evident in the case of Dar Almanthour for Fragrance. The business began when the founder's colleague offered to retail fragrances to the founder's family, and the founder recognized an opportunity to generate profits from these sales. He therefore purchased dozens of fragrances from his colleague and arranged for another person to sell them, taking a percentage of the proceeds.

Opportunity Development

The opportunity development process is recurring and iterative. This means an entrepreneur is likely to undertake evaluations multiple times at different stages of development. Evaluation can also give rise to the recognition of additional opportunities or lead to changes and adjustments to the original concept (Ardichvili, Cardozo, and Ray, 2003). Opportunity development begins with the entrepreneur's perception of a prospective opportunity in the form of an idea or conception. At this initial stage, the opportunity is imagined and the entrepreneur may remain uncertain about its feasibility. Many opportunities are the result of social construction — they need not be pre-existing entities waiting to be discovered; rather, entrepreneurs can play a practical and fundamental role in shaping the prospects they ultimately capitalize on (Maastricht School of Management, 2018: Theme 2).

Based on research by Alvarez and Barney (2007), opportunity development requires decision-making under risk. This context is defined as one in which decision makers are able to gather sufficient information about a decision to anticipate possible outcomes and their associated probabilities. The authors use the example of Mount Everest: it took years to confirm the mountain existed and further years to determine its height, yet no one ever doubted that such information could ultimately be obtained. Gruber, Kim, and Brinckmann (2015) point out that agents develop their opportunities by combining what they have at hand, conducting trials with a given set of means, and actively engaging with consumers and other stakeholders. Fundamentally, opportunities can be developed through social interaction. In the early stages of creating a firm, an entrepreneur lacks sufficient information about the future development of the business and therefore seeks to manage existing resources through social engagement.

Once the opportunity concept has formed in the entrepreneur's mind, it is tested for feasibility and viability through interaction with peers. The entrepreneur values the opinions of others regarding the existence and potential of an opportunity. In the case of Dar Almanthour for Fragrance, the founder's colleague wanted to sell his own handcrafted fragrance and offered the founder the opportunity to retail it to his family. After doing so, the founder recognized that selling fragrances could generate meaningful revenue. He then sought external confirmation that the idea was feasible and, through what can be described as an objectification process, transformed the subjective idea into a tangible opportunity with the quality of an external reality. He purchased dozens of fragrances from his colleague and arranged for another party to sell them while he earned a percentage of the sales.

The next phase of opportunity development involved soliciting stakeholder support to transform the objectified opportunity into a working venture — an alliance of partners and resources to carry out the means-end path envisioned at the objectification stage. The founder and his colleague joined hands as partners and opened their first shop in Al Mubarikeya with paid-up capital of 1,500 KWD, subsequently purchasing a new shop for 3,000 KWD after the business broke even in its second month.

Conclusion

Dar Almanthour for Fragrance has experienced significant success in a short span of time, most visibly in the fact that the company is presently the largest wholesaler of fragrances and perfumes in the nation and has opened 13 retail shops across the GCC. Much of this success can be attributed to the vision and decisions of the founder. When viewed through the eight themes of entrepreneurship, the company's development broadly follows a coherent and well-executed entrepreneurial path.

That said, several areas could have been approached differently. As Shane (2001) notes, technology represents a significant opportunity for established businesses to achieve better performance, reduced costs, and improved product quality and appeal. One recommendation is for the company to establish a website and invest in social media platforms such as Facebook and Instagram. These channels are valuable not only for e-commerce but also for marketing and product promotion, enabling the business to expand its customer base and generate greater revenue.

A second area for improvement is formal business planning. Greene and Hopp (2017) demonstrate that business planning is positively associated with new venture viability. Given that the founder did not develop a formal business plan when launching the firm, creating one now could prove highly beneficial — particularly for guiding expansion into additional GCC markets and broadening the range of products offered to consumers.

References

Alvarez, S. A., & Barney, J. B. (2007). Discovery and creation: Alternative theories of entrepreneurial action. Strategic Entrepreneurship Journal, 1(1–2), 11–26.

Amit, R., & Zott, C. (2015). Crafting business architecture: The antecedents of business model design. Strategic Entrepreneurship Journal, 9(4), 331–350.

Andries, P., Debackere, K., & Van Looy, B. (2013). Simultaneous experimentation as a learning strategy: Business model development under uncertainty. Strategic Entrepreneurship Journal, 7(4), 288–310.

Ardichvili, A., Cardozo, R., & Ray, S. (2003). A theory of entrepreneurial opportunity identification and development. Journal of Business Venturing, 18(1), 105–123.

Baron, R. A. (2006). Opportunity recognition as pattern recognition: How entrepreneurs "connect the dots" to identify new business opportunities. Academy of Management Perspectives, 20(1), 104–119.

Barringer, B. R., Jones, F. F., & Neubaum, D. O. (2005). A quantitative content analysis of the characteristics of rapid-growth firms and their founders. Journal of Business Venturing, 20(5), 663–687.

Fombrun, C. J., & Wally, S. (1989). Structuring small firms for rapid growth. Journal of Business Venturing, 4(2), 107–122.

Gaglio, C. M. (2004). The role of mental simulations and counterfactual thinking in the opportunity identification process. Entrepreneurship Theory and Practice, 28(6), 533–552.

Gerasymenko, V., De Clercq, D., & Sapienza, H. J. (2015). Changing the business model: Effects of venture capital firms and outside CEOs on portfolio company performance. Strategic Entrepreneurship Journal, 9(1), 79–98.

Greene, F. J., & Hopp, C. (2017). Are formal planners more likely to achieve new venture viability? A counterfactual model and analysis. Strategic Entrepreneurship Journal, 11, 36–60.

Gruber, M., Kim, S. M., & Brinckmann, J. (2015). What is an attractive business opportunity? An empirical study of opportunity evaluation decisions by technologists, managers, and entrepreneurs. Strategic Entrepreneurship Journal, 9, 205–225.

Hayton, J. C., & Cholakova, M. (2012). The role of affect in the creation and intentional pursuit of entrepreneurial ideas. Entrepreneurship Theory and Practice, 36(1), 41–67.

Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448–469.

Shane, S. (2001). Technological opportunities and new firm creation. Management Science, 47(2), 205–220.

Winborg, J., & Landström, H. (2000). Financial bootstrapping in small businesses: Examining small business managers' resource acquisition behaviors. Journal of Business Venturing, 16(3), 235–254.

Zimmerman, M. A., & Zeitz, G. J. (2002). Beyond survival: Achieving new venture growth by building legitimacy. Academy of Management Review, 27(3), 414–431.

Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research. Journal of Management, 37(4), 1019–1042.