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
Excerpts
TATA Group - Under Ratan Tata
When Ratan Tata took over as chairman, the Tata Group seemed on its way to disintegration, with powerful CEOs running some of the Group companies like their personal fiefdoms and challenging the core structure of the group. Over a period of four years, Ratan Tata managed to replace most of these CEOs and to bring in fresh talent to replace the senior executives in the Group companies. To bring in greater integration among the Group companies, Ratan Tata created the Group Executive Office, whose members were represented on the boards of the Tata companies. He also increased the stake of Tata Sons in the Group companies to at least 26 percent, to protect them from hostile takeovers...
Organic Growth Strategies
Ratan Tata strongly believed that to achieve growth at the Tata Group, it was necessary to create technologically superior and exciting products. According to him, the Tata Group would have to distinguish itself from other companies through innovation and low costs....
Inorganic Growth Strategies
Although Jamsetji Tata, the pioneer of the Tata Group, had tried to establish European operations, the Tata Group's overseas ventures had never been large enough to be worth a mention. Ratan Tata, however, was keen on the Group companies entering new markets as he felt that global operations would make them more competitive and efficient. He also believed that a company should be able to take advantage of global opportunities. "The objective of globalization is to move towards becoming globally competitive and to expand your market," he said....
The Results
The Tata Group operated in several sectors ranging from materials, engineering, energy, consumer products, chemicals, information technology and communications, to services. These sectors contributed significantly to the group's revenues domestically as well as internationally. Industry experts felt that the success of the Tata Group was majorly attributable to its global acquisitions since the group reported international revenues of US$ 48.3 billion for the FY ended 2011 ...
The Challenges
Though the conglomerate grew through acquisitions and JVs it had to face the challenge of divesting non-performing firms on a regular basis. The group also had to deal with the integration challenges since it followed the inorganic route to growth. It had to deal with the challenge of retention of personnel and co-ordination of sales and marketing functions in case of international acquisitions. The group also had to face the worrisome prospect of brand dilution when acquiring global companies...
The Road Ahead
Despite receiving criticisms for its disparate businesses, the Tata Group continued to grow with its inorganic growth strategies. In January 2012, the Tata Group entered into a JV with international coffee retail chain, Starbucks Corporation to form “Starbucks Coffee—A Tata Alliance”. The JV planned to launch 30-50 outlets in India in 2012...
Exhibits
Exhibit I: Timeline of Tata Group
Exhibit II: The Business Sectors of Tata Group
Exhibit III: Tata Group's Acquisitions
Exhibit IV: Tata Group's Worldwide Operations
Exhibit V A: Tata Group's Sector-wise Total Turnover and Sales Turnover for FY 2001-2002 to 2010-2011 (Rs. in millions)
Exhibit V B: Tata Group's Sector-wise Total Turnover and Sales Turnover for FY 2001-2002 to FY 2010-2011 (Rs. in millions)
Exhibit VI: Tata Group's Financial Highlights
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