RATAN TATA

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Few gave him much of a chance of success when JRD Tata appointed Ratan Tata as his
successor. In his effort to enable Tatas to function as a group despite governments
unwillingness to allow it, JRD had installed very able mangers to head each of the maor
companies in the group! Russi "odi in TI#$%, Darbari #eth in Tata $hemicals and Tata
Tea, &it 'er(ar in charge of the )otels, # "ulgao(ar in charge of T*+$%. In order to
demonstrate that he did not control them, they more or less independently ran their
companies. The ,oards were wea( and some of these )eads over the years became
personally identified almost as owners of the companies. "angers and staff were
e-clusive to each company, not to the .roup. Finances were also e-clusive to each
company. &s satraps they became accustomed to act independently. They were all much
older than Ratan Tata . )e had wor(ed in TI#$% and headed a small electronics
company, /*+$%, without ma(ing much of a mar( on it.
0hen he too( charge of the .roup in 1221, his unarticulated strategy, obvious in
retrospect as you loo(ed at his actions, consisted of!
1. $arefully and as far as possible without fanfare, get the old satraps out, especially
those who had no intention of following a group discipline3
4. Introduce new blood at the top and then at other levels3
5. $entrali6e information about human resources, so that the best people had
opportunities for career growth3
7. "anage group finances for the benefit for the group as a whole
8. Increase the shareholding of Tata #ons, the holding company that held small
percentages of the e9uity in almost every group company, so as to improve the
control by the group
:. &t the same time, he was clearly not interested in interfering with autonomous
enterprise and decision;ma(ing in each company, but introduce a group culture3
<. *nsure that the group followed a common frame of ethics and values3
=. >osition the company for growth in new opportunities, improve mar(et position
and where a business appeared a poor fit with the groupss competence, move out
of it. ,y 4??:, the Tata group of companies is much transformed.
"any businesses are no longer in the .roup3 for e-ample, T%"$% and
+a(me sold to )industan +ever3
/ew ones ac9uired in India or overseas include @#/+, Tyco, many hotel
properties in India and overseas, the $hemicals business of )industan
+ever3
There is a much clearer design in the range of the groups operations3
#hareholding has gone to 4:A or more in most Tata companies3
)uman and financial resources are centrally monitored,
Tata #ons ,oard "embers play an active role as $hairmen of Tata
companies even though the Tata #ons shareholding is yet not particularly
dominant.

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#ources! ,usiness #tandard3 Rediffusion.com3 Mckinseyquarterly.com: October 31, 2005; Indian Brand quity
!oundation 200"#0$, Inter%ie&
&fter achieving most of these obectives, Ratan Tata is now ma(ing his .roup a global
player. )is message is that Tata companies must thin( big3 lead, never follow. &fter the
ac9uisition of Tetley, Tata Tea became the largest pac(aged tea company in India. It has
since ac9uired world leaders in coffee and other beverages. "any other ac9uisitions have
ta(en place and are on the anvil, including the large one of $orus #teel in *urope by Tata
#teel. Tata is perhaps the largest global player among Indian companies.
In his first five years Ratan gently, with support from JRD Tata, eased of the aged
or aging old satraps and brought in fresh blood. This process could have been
completed 9uic(ly and ruthlessly but that is not his style, nor did the small T&T&
shareholdings permit such moves. Tatas game plan, according to his managers, was
simpleBrationali6e the groups business portfolio3 deliver a return on investment that
e-ceeded the cost of capital; have a symbolically and emotionally unified brand3 and
grab new opportunities.