Tata

Lohit BindraShruti GuptaAnkit Gupta Heena AroraGurpreet GillGlobal Strategy

HISTORY The beginnings of the Tata Group can be traced back to 1868, when

Jamsetji Nusserwanji Tata established a trading company dealing in Opium in Bombay. This was followed by the installation of Empress Mills in Nagpur in 1877.Taj Mahal Hotel in Bombay was opened for business in 1903. Sir Dorab Tata, the eldest son of Jamsetji became the chairman of the group after his fathers death in 1904.Under him, the group ventured into steel production (1905) and hydroelectric power generation(1910).

After the death of Dorab Tata in 1934,Nowroji Saklatwala headed the group till 1938.He was succeeded by JRD Tata. The group expanded significantly under him with the establishment of Tata Chemicals (1939), Tata Motors and Tata Industries (both 1945), Voltas (1954), Tata Tea (1962), Tata Consultancy Services (1968) and Titan Industries (1984).Ratan Tata, the incumbent chairman of the group succeeded JRD Tata in 1991.

INTRODUCTION• The Tata Group is a multinational conglomerate company

headquartered in Mumbai, India.• In terms of market capitalization and revenues, Tata Group is

the largest private corporate group in India.• It has interests in steel, automobiles, information

technology, communication, power, tea and hospitality.• The Tata Group has operations in more than 85 countries

across six continents and its companies export products and services to 80 nations.

• The Tata Group comprises more than 117 companies and subsidiaries in seven business sectors, 27 of which are publicly listed. 65.8% of the ownership of Tata Group is held in charitable trusts.

Tata group has the following subsidiaries-

Tata SteelCorus SteelTata MotorsTata Consultancy ServicesTata TechnologiesTata TeaTitan IndustriesTata PowerTata CommunicationsTata Teleservices

Tata Auto Comp Systems LimitedTaj Hotels

STRATEGIES USED BY TATA

Expansion Strategy- Mergers, Acquisitions and Joint Ventures to expand in foreign markets.

Differentiation- Having a wide range or product and service portfolio.

COST LEADERSHIP-

GLOBAL FRAMEWORK• Identify Strategic business unit to audit• Evaluate industry potential for globalization• Evaluate current extent of globalization• Identify strategic need for change in the extent

of globalization• Evaluate organizational factors• Identify organizational ability to implement

globalization• Diagnose scope and direction of required

strategy and organizational changes

TATA STEEL• Tata Steel formerly known as TISCO and Tata Iron and Steel Company

Limited, is the world's seventh largest steel company, with an annual crude steel capacity of 31 million tonnes. It is the largest private sector steel company in India in terms of domestic production. Ranked 258th on Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of companies. Tata Steel is also India's second-largest and second-most profitable company in private sector with consolidated revenues of 132,110 crore (US$ 29.99 billion) and net profit of over 12,350 crore (US$ 2.8 billion) during the year ended March 31, 2008. Tata steel in the 8th most valuable brand according to an annual survey conducted by Brand Finance and The Economic Times in 2010. 

• Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions, the company has become a multinational with operations in various countries. The Jamshedpur plant contains the DCS supplied by Honeywell. The registered office of Tata Steel is in Mumbai. The company was also recognized as the world's best steel producer by World Steel Dynamics in 2005. The company is listed on BSE and NSE and employs about 82,700 people (as of 2007).

• The acquisition of NatSteel Singapore, which has production bases in seven countries, and Millennium Steel (now Tata Steel Thailand) were the first steps in Tata Steel’s global growth strategy.

• Both these acquisitions proved to be perfect fits in Tata Steel’s growth strategy.

• The acquisition of Corus in January 2007 took Tata Steel from a world position of 56 to 6. It also gave Tata Steel access to the Corus’s developed markets, strong product portfolio and its research and development facilities.

• Tata Steel’s global acquisitions are in tune with its strategy of adopting the de-integrated production model — to produce primary (semi-finished) steel near the source of raw material in countries such as India, and then turn these into final products closer to its markets.

GLOBAL STRATEGY FRAMEWORK1. Identify business unit: Tata Steel

2. Evaluate Industry potential for globalization: Market factors pushed for globalization. The market needs for steel was homogeneous and they had global customers. Because of homogeneity of needs, the brands and advertising were transferable.                                                                                                                                                                         

3. Economic factors were also favorable for globalization. Because of standardization of core products, the company was able to enjoy economies of scale in manufacturing. Since the company is ninety nine years old, they also enjoy the benefit of steep learning curve. Again, the raw material cost in U.K. is high. This can be offset by sourcing from India, where raw materials are comparatively cheaper.

4. Environmental factors increased the potential for global strategy. Since Corus had good sales network at various countries, the transportation costs of Tata steel will be reduced. Again, government policies like easing foreign currency restrictions both in UK and India were favorable for global strategy.

5. Global moves of competitor i.e. Mittal acquiring Arcelor also forced the Tata steel to go for global strategy

5. Evaluate current extent of globalization: The current extent of globalization is measured under 5 dimensions:

• Market participation: Tata steel has sales in various countries like USA, Srilanka, Nepal, Shanghai etc but it lacked global identity or image.

• Product standardization: The basic product was standardized throughout the world. At final stages the product was customized as per the req.

• Activity concentration: Tata steels technological and integration, finance, strategy etc were concentrated only in India whereas the manufacturing activities were dispersed in India, USA, UK, Thailand, Vietnam, Malaysia etc. Trading was done in Bangladesh, Srilanka, Nepal, South Africa, Hong Kong, etc.

• Marketing uniformity: The market positioning and marketing mix strategy were uniform throughout the world.

• Integration of competitive moves: Tata steel has taken an integrated approach to global competitors. They have tough competition with Mittal steels in almost all countries.

Identify strategic need for change in the extent of globalization: From the previous analysis, Tata steel concluded that its extent of globalization was significantly lower than the industry potential and lower than its competitor’s global strategy. The Mittal Arcelor is ranked number one in steel industry in the world whereas the Tata steel ranked fifty sixth (before acquiring Corus). Furthermore, the industry potential for Tata steel had a strong need to develop a more global strategy. The next issue was whether Tata steel would be able to implement such a strategy.

Evaluate organizational /internal factors :To internal ability of Tata steel to implement global strategy is tested under the following factors:

• Structure: The head quarter of Tata steel was located in India. The five main functions such as technological and integration, finance, strategy, corporate relation and communication and global minerals were centralized. While the production, selling and distribution was decentralized and the divisions heads were given autonomy to take decisions.

• Management processes: The management processes were favorable for global strategy. Since the strategy and corporate communication was centralized, there was well cross- border co-ordination.

• People: There were no foreign nationals working in India either at corporate or divisional levels. There were many foreign nationals overseas, but these were mostly in their home countries and there was little movement between international and domestic jobs. But the leader Ratan Tata, through his action and statements had a global approach.

• Culture: Tata steel had a strong Indian national identity than a global identity. But some SBU of Tata group like Tetley Tea, Taj group of Hotels had created global identity.

6.Identify organizational ability to implement globalization: Tata steel had the ability to implement globalization because of its rich experience of 99 years of running a business successfully in India. Hence it had the ability to acquire big steel company like Corus.

7. Diagnose scope and direction of required changes: The most important change, the Tata steel has to do is to encourage the transfer of people between nations. According to IISI data, the average hourly rate of pay in UK steel was 6 times that of Brazil and 10 times that of India. So by movement of people, the company can reduce the cost and strengthen its competitive advantage of low cost leadership.

TATA TEA• Tata Tea Limited, also known as Tata-Tetley, is the

world's second largest manufacturer and distributor of tea.• Owned by India's Tata Group, the Tata Tea Limited

markets tea under the major brands Tata Tea, Tetley, Good Earth Teas.

• While Tata Tea is the largest tea brand in India, Tetley is the largest tea company in the United Kingdom and Canada and the second largest in the United States by volume.

• It is one of India's first multinational companies. The operations of Tata Tea and its subsidiaries focus on branded product offerings in tea, but with a significant presence in plantation activity in India and Sri Lanka.

TATA- TETLEYSubsidiary of Tata Tea Limited.• A global player in tea : the world's Number 2 tea bag

company, with a presence in over 35 countries worldwide.

• Market leader in United Kingdom and Canada, a vibrant player in other major tea markets such as USA, Australia, Poland and France.

• Unmatched global tea buying and blending skills : among the most respected name in the industry for its expertise in buying and blending, with nearly 100 years of experience.

• Vast portfolio of high quality teas : black tea, green tea, herbal teas, iced ready-to-drink teas and speciality tea.  

• Tetley's manufacturing and distribution business is spread across 40 countries and sells over 60 branded tea bags.

•After Tetley was purchased by the Tata Group in 2000, most of its business in Asia has been integrated with Tata Tea.

•Tata Tea manufactures 70 million kilograms of tea in India, controls 54 tea estates, ten tea blending and packaging factories and employs around 59,000 people.

• The company owns 51 tea estates in India and Sri Lanka, especially in Assam, West Bengal in eastern India and Kerala in the south. The company is the largest manufacturer of Assam tea and Darjeeling tea.

FOREIGN ACQUISITION

• Tata Tea Ltd. purchased Britain’s Tetley Tea Company for US$450 million in early 2000.

• It was the largest sum ever paid by an Indian company for a foreign acquisition.

• Strategic move to transform itself from a sleepy farming operation with a core business of barely profitable tea plantations to a high-margin global distributor of specialty teas and other healthy beverages.

• At the time, Tetley was the world's second largest tea company after Unilever's Brook Bond-Lipton and had an annual turnover of £300 million.

• It was the market leader in Britain and Canada and a popular brand in the United States, Australia and the Middle East.

In 2007, Tata Tea launched the campaign Jaago Re! to awaken youth to social issues. The campaign was extended into 2008. In 2009, their campaign revolve around the issue of corruption with a new adline 'Ab Se Khilana Bandh, Pilana Shuru'. C

SR

Tata MotorsTata Motors is India’s largest automobile company, with

consolidated revenues of USD 20 billion in 2009-10. It is the leader in commercial vehicles and among the top three in passenger vehicles. Tata Motors has winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, the world's second largest bus manufacturer, and employs 24,000 workers. Since first rolled out in 1954, Tata Motors has produced and sold over 4 million vehicles in India. The truck market in India comprises the light trucks (LCV) and the medium and heavy trucks segments (M and HCV), of which the M and HCV segment constitutes nearly 78% of the total Indian truck market.

In 2010, Tata Motors surpassed Reliance to win the coveted title of 'India's most valuable brand' in a annual survey conducted by Brand Finance and The Economic Times.

Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Ahmedabad, Sanand and Pune in India, as well as in Argentina, South Africa and Thailand.

Tata Motors can be identified as an Extender, and is focusing on expanding into markets similar to those of the home base, using competencies developed at home.

Acquisitions• In 2004 Tata Motors acquired Daewoo's truck manufacturing unit, now known

as Tata Daewoo Commercial Vehicle, in South Korea. In May, 2009 Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo, Debuting in South Korea, South Africa, the SAARC countries and the Middle-East by the end of 2009.

• In 2005, Tata Motors acquired 21% of Aragonese Hispano Carrocera, (a Spanish bus and coach manufacturer) giving it controlling rights of the company.

• In 2007, Formed a joint venture with Marcopolo of Brazil and introduced low-floor buses in the Indian Market.

• In 2008, Tata Motors acquired British Jaguar Land Rover (JLR), which includes the Daimler and Lanchester brand names.

• In 2010, Tata Motors acquired 80% stake in Italy-based design and engineering company Trilix for a consideration of €1.85 million. The acquisition is in line with the company’s objective to enhance its styling/design capabilities to global standards.

Korean Operations• Tata Motors entered the advanced Korean Market by acquiring Daewoo,

with which it has tremendous synergies in terms of product strategy and R & D. Tata Motors has planned to use this merger and leverage the technology for developing a World Truck for India and international markets.

South African Operations• In the export market, Tata Motors moved from a fragmented approach to

specific markets, chosen in terms of consumer behavior, distribution networks, supply chain, etc. and identified South Africa as one of the best markets. The sales in this region are about 15,000 units. This is a significant improvement over what Tata Motors was cumulatively exporting 8000 units before adopting its new internationalization strategy.

Thailand Operations• Tata Motors formed a joint venture with Thonburi Automotive Plant to enter

Thailand. Thailand is the second most competitive market for pickups, and the new pickup trucks developed here will be sold in both domestic and export markets.

Latin American Operations• Tata Motors has taken its alliance with Fiat to produce a new one-tonne pick-up

truck, for Latin American markets from Fiat's facility in Argentina. This arrangement will also see Tata Motors forming a joint venture with a subsidiary of Iveco, the commercial vehicle division on Fiat, to set up a distribution network.

• Now that Tata Motors has established a sustainable model in some countries, its main challenge is to replicate this model in other countries as well.

Tata Motors also formed a joint venture with Fiat and gained access to Fiat’s diesel engine technology. Tata Motors sells Fiat cars in India through a 50/50 joint venture Fiat Automobiles India Limited, and is looking to extend its relationship with Fiat and Iveco to other segments.

Tata Communications

History

•It was founded as VSNL (Videsh Sanchar Nigam Limited) in 1986.

•On 13 February 2008 VSNL, formerly owned by the government, was taken over by the Tata Group and renamed Tata Communications Ltd.

VSNL Headquarters, Mumbai

Outline about Tata communication•TCL is the leading global provider of long distance communications.

•The Tata Global Network includes one of the most advanced and largest submarine cable networks, a Tier-1 IP network, with connectivity to more than 200 countries across 400 PoPs(Post office protocol), and nearly 1 million square feet of data center and collocation space worldwide

ACQUISITION• Tata communications acquired Teleglobe, a

company based in Canada, and Dishnet, an Indian company-

• In March 2004, VSNL acquired DishnetDSL from Sterling Infotech for Rs 270 crore, giving it a base of broadband subscribers.

• Tata Communications now has a cable network of more than 232,000 kilometers.

LATEST: Tata with Docomo

Tata Docomo LimitedType: joint venture

Industry: Mobile telecommunications

Founded: November 2008

Headquarters: New Delhi, India

Products•Mobile networks.•Telecom services

Parent

•TATA Teleservices (74%)•NTT DoCoMo (26%)

• The Tata Group's strategic joint venture with Japanese telecom giant NTT Docomo in November 2008.

• Tata Teleservices has received a pan-India license to operate GSM telecom services, under the brand "TATA DoCoMo" and currently operates in 18 of 22 telecom circles

• Tata Teleservices is the country's fourth largest operator in terms of wireless subscribers, after Bharti Airtel, Reliance Communications and Vodafone.

• On 5 November 2010, Tata DOCOMO became the first private sector telecom company to launch 3G services in India .

Global Presence• Tata Communications’ depth and breadth of

reach in emerging markets includes leadership in Indian enterprise data services, leadership in global international voice, and strategic investments in operators in South Africa (Neotel), Sri Lanka (Tata Communications Lanka Limited) and Nepal (United Telecom Limited).

Tata Chemicals

DESH KA NAMAK

Company background• TCL was established in 1939 by the Tata Group based in

Mumbai.• It produces inorganic chemicals, fertilizers and

phosphates at manufacturing units in Mithapur, Barbala and Haldia.

• Tata Chemicals touches lives in agriculture through several ways: its basket of crop nutrition products, its Tata Kisan Sansar network, and its fresh produce sourcing and distribution business, Khet-Se Agriproduce.

• It has also set up production facilities in the UK, Kenya, the Netherlands and US to meet the requirements of its global customers.

• Total workforce: 4306 (Mar. 2007).• TCL generated a total revenue of EUR 747

million for the year 2005-06• Its geographical distribution in year 2006 was: India : 89% Asia : 3% Europe: 7% Africa : 1%

Tata chemicals ltd in EU

• TCL focuses largely on inorganic growth in the EU.

• It plans to grow its existing EU subsidiaries through the organic route.

• Currently, it has subsidiaries in the UK and the Netherlands.

OPERATIONS IN UK• Tata Chemicals acquired a 100 per cent stake in

Brunner Mond Group Limited (BMGL) for EUR 144 million euro.

• This acquisition has made it the third-largest producer of soda ash and bicarbonate in the world.

• Post acquisition, TCL’s combined turnover is expected to increase by 40 per cent, and its total soda ash capacity will also grow to approximately three million tones globally.

• It has manufacturing plants in Cheshire (headquarters in Delfzijl) Northwich, the Netherlands and at Lake Magadi in Kenya.

US OPERATIONS

On March 27, 2008, Tata Chemicals Ltd acquired 100 per cent stake in US-based General Chemical Industrial Products Inc (GCIP) for $1 billion (around Rs 4,000 crore) to become the world’s second largest maker of soda ash. With all these acquisitions, combined capacity of production has increased to around 5.5 million tonnes of soda ash.

Success factors

• BMGL is a world leader in the manufacture of chemicals and has nearly 1500 customers.

• Strong relations with large global customers such as Unilever, P&G, Pilkington and Asahi.

• The combined synergies of BMGL’s strong brand and TCL’s low manufacturing costs provide the company with an edge over its competitors.

• TCL conducts R&D in utilisation of waste materials and product quality improvement, which has helped it to reduce its waste products and optimise its process parametres.

• Its total investment on R&D during the year amounted to EUR 0.414 million, accounting for almost 0.06 per cent of its total turnover.

FUTURE PLANS

• Identification of Inorganic and Organic Opportunities.

• Emphasis on R&D: to find solutions for cost reduction, energy conservation, waste utilisation and value addition.

PORTER’S GENERIC MODEL

COST LEADERSHIP

DIFFERENTIATION

COST FOCUS DIFFERENTIATION FOCUS

1. In case of Tata Steel the industry structure is that low cost is the source of competitive advantage. So it goes for cost leadership to become more successful. Second e.g.: TATA NANO.

2. In differentiation strategy the group succeeded by taking a broad approach and differentiating its whole range of products.

• The example is the small truck TATA ACE.• Within two years of its launch in 2005, more

than 100,000 Ace vehicles have been sold.

BOWMAN’S STRATEGY CLOCK

• Tata follows route 1,2,3 & 4.• No frill strategy; “a no frill strategy combine a low price

and low value added, low perceived product/services benefits and a focus on a price sensitive market segment.” The group is using the strategy in Oil industry.

• A Low price strategy seeks to achieve a lower price then competitors whilst trying to maintain similar perceived product or service benefit to those offered by competitors. The Group tried to achieve the low price strategy in markets such as automobile industry by providing lowest price cars and achieving a high share in the market.

• A hybrid strategy seeks simultaneously to achieve differentiation and a price lower then that of competitors.

• The hybrid strategy is used by the company in various industries, it involved a higher degree of organizational excellence and integration of all the departments.

• Here the strategy of the group is to maintain the cost of raw materials as lowest as possible and to achieve the lowest cost of final products.

• The group also invested a huge amount in research and development in order to achieve the highest degree of quality at the lowest price