Tata Group's Growth Strategies
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Case Code: BSTR414 Case Length: 26 Pages Period: 1991-2012 Pub Date: 2012 Teaching Note: Not Available |
Price: Rs.500 Organization: Tata Group Industry: Diversified Countries: India Themes: Growth Strategies |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
For the fiscal year ended 2010-2011, India's largest multinational conglomerate, the Tata Group, reported that its international operations constituted 58 percent of the group's revenues with US$ 48.3 billion. Analysts opined that while exports from India were the key to the growth of Tata Group's international business, the Tata Group companies' investments in assets overseas through greenfield projects, joint ventures, and acquisitions had also contributed to the group's growth. Of these, inorganic growth was a crucial component of Tata enterprises, according to analysts. Founded in 1868 by Jamsetji Tata, the Tata Group had pioneered several industries in India: power, steel, airlines, and hospitality.
For the FY ended 2011, the group operated in seven broad sectors ranging from automobiles, steel, energy, hotels, chemicals, and consumer goods to communication systems with Tata Steel, Tata Motors, Tata Consultancy Services, and Tata Power accounting for nearly 50 percent of the group's revenue.
In its initial years, the group's growth was largely organic due to the industrial development in India which was not conducive to alliances being formed with international companies. The Tata Group grew majorly through new product developments, technological upgradations, and innovation. The group pioneered the information technology industry in India with the launch of Tata Consultancy Services (TCS) in 1968. In 1998, the group's auto division Tata Motors developed India's first indigenously developed car, the Indica. In 2008, Tata Motors received global attention by unveiling the world's cheapest car, the Nano, by trying out several innovations, different design specifications, and engineering changes, to keep the costs low.
The group had redefined growth after Ratan Tata took over as Chairman of the Tata Group in 1991. He restructured the businesses of the Tata Group and expanded the group globally. The first major instance of inorganic growth was exemplified when the group's Tata Tea (now Tata Global Beverages) division acquired UK-based Tetley in 2000. This was followed by a series of acquisitions by the group. Some of the notable acquisitions were Tata Steel acquiring Corus3 in 2007 and Tata Motors' acquisition of Jaguar and Land Rover4 in 2008. Analysts pointed out that though the group had recorded increased revenues due to inorganic growth, it also had to deal with the challenges of integration and proper management of the portfolio of companies....
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