Rashtreeya Sikshana Samithi Trust

R V INSTITUTE OF
MANAGEMENT
4th T Block Jayanagar, Bangalore 560
041

IV SEMISTER
4.1 INTERNATIONAL BUSINESS DYNAMICS

Project On

Global Operation Management of TATA Group

NAME :
CLASS AND SECTION:
REGISTOR NUMBER:
NAME OF THE FACULTY:
MARKS OBTAINED:

DECLARATION BY THE STUDENT

I, declare that this project is the outcome of my own efforts and that it has not been
submitted to any other University or Institute for the award of any other Degree or
Diploma or Certificate.

Place: Bangalore

Bhavana Hegde

Date: 13/04/2016

141GCMD021

Global operations of TATA Group

INTRODUCTION:The Tata group: A Legacy of Trust Tata is Indias largest and most diversified business
conglomerate with more than 100 operating companies spread across 85 countries in six
different continents, employing 350,000 people and generating revenue of US$ 70.8 billion
as of FY 2009. The group's global business operations are spread over seven business sectors:
communications and information technology, engineering, materials, services, energy,
consumer products and chemicals.
Tata companies share five core values integrity, understanding, excellence, unity and
responsibility. Each Tata company agrees to the Tata Code of Conduct by signing the TATA
Brand Equity and Business Promotion Agreement with Tata Sons Ltd. This ensures adherence
to the Tata ethos and value system. Adherence to ethics and excellence and the commitment
towards serving communities have been at the core of Tatas unblemished growth and
sustenance for over 140 years. This heritage evokes trust and goodwill among consumers,
employees, shareholders and the larger community. Today, the Tata name is a unique asset
representing Leadership with Trust. This legacy has earned the admiration of the groups
stakeholders in a manner few business houses can even hope to match.
Tata Group is one of India's largest and most respected business groups. Tata Group's name is
synonymous with India's industrialisation. The Group gave India her first steel plant, hydroelectric plant, inorganic chemistry plant and created a reservoir of scientific and technological
manpower for the country. Its Trusts have instituted the Tata Institute of Social Sciences in
1936; India's first cancer hospital, the Tata Memorial in 1941, and in 1945, the Tata Institute
of Fundamental Research, which became the cradle of India's Atomic energy program. Today,
Tata Group comprises 96 operating companies in seven business sectors: information systems
and communications; engineering; materials; services; energy; consumer products; and
chemicals. The Group has operations in more than 54 countries across six continents, and its
companies

export

products

and

services

to

120

nations.

Jamsetji Nusserwanji Tata laid the foundations of Tata Group when he started a private
trading firm in 1868. In 1874, he set up the Central India Spinning Weaving and
Manufacturing Company Limited and thus marked the Group's entry into textiles. In 1887,
2

Jamsetji Tata formed a partnership firm, Tata & Sons, with his elder son Sir Dorabji Tata and
his cousin Ratanji Dadabhoy Tata. His younger son Sir Ratan Tata joined the firm in 1896. In
1902, the Indian Hotels Company was incorporated to set up the Taj Mahal Palace and Tower,
India's first luxury hotel, which opened in 1903. The Tata Iron and Steel Company (now
known as Tata Steel) was established to set up India's first iron and steel plant in Jamshedpur.
The rest of the Tata companies spread over seven sectors in which Tata Group operates are:
1.Engineering
(a) Automotive:

Tata

AutoComp

Systems

Subsidiaries / associates / joint ventures: Automotive Composite Systems International,

Automotive Stampings and Assemblies, Knorr Bremse Systems for Commercial Vehicles,
TACO Engineering, TACO Faurecia Design Centre, TACO Hendrickson Suspension
Systems, TACO Interiors and Plastics Division, TacoKunststofftechnik, TACO MobiApps
Telematics, TACO Supply Chain Management, TACO Tooling, TACO Visteon Engineering
Center, Tata Ficosa Automotive Systems, Tata Johnson Controls Automotive, Tata Toyo
Radiator, Tata Yazaki AutoComp, TC Springs, Technical Stampings Automotive

Tata

Motors

Subsidiaries / associates / joint ventures: Concorde Motors, HV Axels, HV Transmissions,

Nita Company, TAL Manufacturing Solutions, Tata Cummins, Tata Daewoo Commercial
Vehicles Company, Tata Engineering Services, Tata Precision Industries, Tata Technologies,
Telco Construction Equipment Company
(b) Engineering Services

Tata Projects

TCE Consulting Engineers

Voltas
(c) Engineering Products

TAL Manufacturing Solutions

Telco Construction Equipment Company

TRF
2.Materials
(a) Composites
3

Tata Advanced Materials

(b) Metals

Tata

Steel

Subsidiaries / associates / joint ventures: Hooghly Met Coke and Power Company,
Jamshedpur Injection Powder (Jamipol), Lanka Special Steel, mjunction services, NatSteel,
Sila Eastern Company, Tata Metaliks, Tata Pigments, Tata Ryerson, Tata Sponge Iron, Tata
Refractories, Tayo Rolls, The Indian Steel and Wire Products, The Tinplate Company of
India, TM International Logistics, Wires Division.
3.Energy
(a) Power

Tata BP Solar India

Tata

Power

Subsidiaries / associates / joint ventures: Tata Ceramics, Tata Power Trading, North Delhi
Power Limited
(b) Oil & Gas

Tata Petrodyne
4. Chemicals

Rallis India

Tata Chemicals

Tata Pigments
5.Services:
(a) Hotels and Realty

Indian Hotels (Taj

group)

Subsidiaries / associates / joint ventures: Taj Air , Roots Corporation (Ginger Hotels)

THDC
(b) Financial Services

Tata AIG General Insurance

Tata AIG Life Insurance

Tata Asset Management

Tata Financial Services

4

Tata Investment Corporation

(c) Other Services

Tata Quality Management Services

Tata Services

Tata Strategic Management Group

6. Consumer Products

Infiniti Retail

Tata

Tea

Subsidiaries / associates / joint ventures: Tetley Group, Tata Coffee, Tata Tetley, Tata Tea Inc

Tata Ceramics

Tata McGraw Hill Publishing Company

Titan Industries

Trent
7.

Information

Systems

and

Communications

(a) Information Systems

Nelito Systems

Tata

Consultancy

Services

Subsidiaries / associates / joint ventures: APONLINE, Airline Financial Support Services,

Aviation Software Development Consultancy, CMC, CMC Americas Inc, Conscripti, HOTV,
Tata America International Corporation, WTI Advanced Technology

Tata Elxsi

SerWizSol

Tata Interactive Systems

Tata Technologies
(b) Communications

Tata Sky

Tata Teleservices

Subsidiaries / associates / joint ventures: Tata Teleservices (Maharashtra), Tata

Internet Services

VSNL
5

Tatanet
(c) Industrial Automation

Nelco
Subsidiaries / associates / joint ventures: Tatanet
Tata

Group is

an

Indian

multinational conglomerate holding

company headquartered

in Mumbai, Maharashtra, India. It was founded in 1868 by Jamsetji Tata and gained
international recognition after purchasing several global companies. It is one of India's largest
conglomerates. In 2014-15, the revenue of Tata companies, taken together, was $108.78
billion. These companies collectively employ over 600,000 people. Each Tata company or
enterprise operates independently under the guidance and supervision of its own board of
directors and shareholders. There are 30 publicly-listed Tata enterprises with a combined
market capitalisation of about $134 billion (as on March 31, 2015). Tata companies with
significant scale include Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, Tata
Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian
Hotels Company.
The Tata Group is India largest business group accounting for 5.2% of India GDP and
operates in over 80 countries with group revenue amounting to a whopping USD 62.5 billion
in 2008.The group operates in seven broad sectors ranging from steel, automobiles, energy,
chemicals, hotels and consumer goods to communication systems with Tata Steel, Tata
Motors, Tata Consulting Services and Tata Power accounting for nearly 50% of the group
revenue. The group profit has grown at a CAGR of 19.4% over the last decade and a half and
the group revenue has grown at a CAGR of 16% over the same time period. Over the last
decade, the Tata Group has had a clear focus on internationalization with contribution of
international operations to the revenues having gone upto 61%. Today, the Tata Group
comprises of 96 companies, operates in 6 continents and employs approximately 350,000
people. Inorganic route has played a major role in this fast growth story.
The Tata Group comprises over 100 operating companies in seven business sectors:
communications and information technology, engineering, materials, services, energy,
consumer products and chemicals:- The group has operations in more than 80 countries
across six continents, and its companies export products and services to 85 countries,
6

employing over 450,000 people worldwide. The major Tata companies are Tata Steel, Tata
Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global
Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels.

The total revenue of Tata Group companies, taken together, was $100.09 billion (around
Rs475,721 crore) in 2011-12, with 58% of this coming from business outside India. In
tandem with the increasing international footprint of Tata Group companies, the Tata brand is
also gaining international recognition. Brand Finance, a UK-based consultancy firm, valued
the Tata brand at $18.16 billion and ranked it 39th among the top 500 most valuable global
brands in their BrandFinance Global 500 2013 report.
Tata has always believed in returning wealth to the society it serves. Two-thirds of the equity
of Tata Sons, the Tata promoter holding company, is held by philanthropic trusts that have
created national institutions for science and technology, medical research, social studies and
the performing arts. The trusts also provide aid and assistance to non-government
organisations working in the areas of education, healthcare and livelihoods.

The TATA group involves the following business subsidiaries:Products

Airlines
Automotive
Consumer goods
Chemicals
Defence & aerospace
Electrical distribution
Engineering services
Financial services
Healthcare
Information technology

Locomotives
Steel
Telecommunication
Real estate

Purpose of TATA Group:At the Tata group they are committed to improving the quality of life of the communities they
serve. They do this by striving for leadership and global competitiveness in the business
sectors in which they operate.
Their practice of returning to society what they earn evokes trust among consumers,
employees, shareholders and the community. They are committed to protecting this heritage
of leadership with trust through the manner in which they conduct the business.
Core Values:Tata has always been values-driven. These values continue to direct the growth and business
of Tata companies. The five core Tata values underpinning the way we do business are:

Integrity: We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.

Understanding: We must be caring, show respect, compassion and humanity for our
colleagues and customers around the world, and always work for the benefit of the
communities we serve.

Excellence: We must constantly strive to achieve the highest possible standards in our
day-to-day work and in the quality of the goods and services we provide.

Unity: We must work cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships based on
tolerance, understanding and mutual cooperation.
8

Responsibility: We must continue to be responsible, sensitive to the countries,

communities and environments in which we work, always ensuring that what comes from
the people goes back to the people many times over.

Vision 2025:By 2025, 25% of the worlds population will experience the Tata commitment to improving
the quality of life of customers and communities. As a result, Tata will be amongst the 25
most admired corporate and employer brands globally, with a market capitalisation
comparable
to
the
25
most
valuable
companies
in
the
world.
Mission:To improve the quality of life of the communities we serve globally through long-term
stakeholder value creation based on Leadership with Trust.

Major Acquisitions:

February 2000 Tetley Tea Company, $407 million.

March 2004 Daewoo Commercial Vehicle Company, $102 million

August 2004 NatSteel's Steel business, $292 million

November 2004 Tyco Global Network, $130 million

July 2005 Teleglobe International Holdings, $239 million

October 2005 Good Earth Corporation

December 2005 Millennium Steel, Thailand, $165 million

December 2005 Brunner Mond Chemicals, $10 million

June 2006 Eight O'Clock Coffee, $220 million

November 2006 Ritz Carlton Boston, $170 million

January 2007 Corus Group, $12 billion[5]

March 2007 PT Kaltim Prima Coal (KPC) (Bumi Resources), $1.1 billion

April 2007 Campton Place Hotel, San Francisco, $60 million

January 2008 Imacid Chemical Company,Morocco[6]

February 2008 General Chemical Industrial Products, $1 billion

March 2008 Jaguar Cars and Land Rover, $2.3 billion

March 2008 Serviplem SA, Spain

April 2008 Comoplesa Lebrero SA, Spain

May 2008 Piaggio Aero Industries S.p.A., Italy

June 2008 China Enterprise Communications,China

June 2008 Neotel, South Africa

October 2008 Miljo Grenland / Innovasjon, Norway

The Tata groups global footprint spans more than 100 countries in six
continents:The Tata group has been international in its approach to business from its inception. The
Founder, Jamsetji Nusserwanji Tata, began his business career in international trade in China
and England. The businesses he later established in India measured up to international
standards and used world-class technology. Tata Exports (now Tata International) was set up
in 1962 and currently Tata companies export their products and services to over 150
countries.
In 2014-15 the Tata group had international revenues of $73.4 billion, 67.5 percent of its total
revenues, with the UK and the US being the two main overseas revenue contributors.
Each operating company in the Tata group develops its own international strategy as an
integral part of its overall strategy, depending on the nature of the industry, opportunities
available and competitive dynamics of the global stage.
For some companies, focus on the domestic Indian market remains the priority. For others, it
is developing a presence in international markets in terms of trading and distribution of their
products. Then there are Tata companies, increasing in number, setting up greenfield projects,
making acquisitions and creating joint ventures in overseas geographies and becoming an
integral part of the development and economy of those geographies.

10

Beginning with Tata Teas acquisition of Tetley in 2000, Tata companies made several
significant overseas acquisitions including Corus by Tata Steel, Jaguar and Land Rover by
Tata Motors and Brunner Mond by Tata Chemicals all in the UK; Daewoo Commercial
Vehicles by Tata Motors in South Korea; NatSteel in Singapore and Millennium Steel in
Thailand by Tata Steel; and General Chemical Industrial Products by Tata Chemicals, Eight
O Clock Coffee by Tata Tea and Tyco Global Network by Tata Communications in the US.
In 2004, Ratan Tata, then Chairman of Tata Sons, summed up the Tata groups efforts to
internationalise its operations thus: I hope that a hundred years from now we will spread our
wings far beyond India, that we become a global group, operating in many countries, an
Indian business conglomerate that is at home in the world, carrying the same sense of trust
that we do today.

The business of excellence:A key vector that has helped Tata companies grow and establish themselves on the global
stage is the strong business excellence movement in the group. Excellence is a continual quest
at the Tata group and Tata companies are supported in their efforts to achieve world-class
standards in all aspects of operations through group-level processes and systems that encourage
and enable business excellence.

Model
Tata companies use the Tata Business Excellence Model (TBEM), which covers business
aspects that range from strategy and leadership, to safety and climate change. Adapted
from the renowned Malcolm Baldrige model, TBEM encourages continuous

improvements through a formal system of benchmarking and assessment.

Support
The TBEM initiative falls under the aegis of Tata Business Excellence Group (TBExG),
an in-house organisation mandated to help different Tata companies achieve their

business excellence and improvement goals.

Forum
The Tata Business Excellence Convention is a forum that brings together the champions
of excellence in Tata from all over the world. Global experts speak on challenges and

opportunities.
Recognition
The JRD QV Award function held during the Annual Group Leadership Conference
(AGLC) recognises Tata companies that have achieved significant improvement and
excelled in the quality journey.

11

Code
The Tata Code of Conduct (TCoC) is a mandatory pan-Tata policy that defines how Tata
employees can conduct themselves.

Stories:Business excellence: 20 years and counting:Twenty years ago, the Tata group set forth on a search for excellence, which has enhanced the
reputation and value of the Tata brand, spurred the growth of individual Tata companies and laid
the foundation for the group's global growth
'Our companies are our primary customers'
A former executive director of Tata Consultancy Services and Tata Power, S Padmanabhan has
just stepped into his role as executive chairman of Tata Quality Management Services (TQMS).
In this interview, Mr Padmanabhan talks about how both TBEM and TQMS are constantly
evolving to stay in sync with the group's vision for business excellence
Sparkle all the way
With intense focus on innovation and other business excellence best practices, the jewellery
division of Titan Industries has reached the pinnacle of excellence within the Tata group by
winning the coveted JRD QV award 2012
Transforming to meet the future
The 2012 Tata Business Excellence Convention focused on identifying the challenges that the
future will pose and finding sustainable solutions for them
Mentoring is a learning process
S Padmanabhan, executive director, operations, Tata Power, has been associated with the
business excellence movement at Tata as a TBEM (Tata Business Excellence Model) mentor
since 2003. In this interview, he explains how mentoring is a process of learning both for the
company as well as the mentor
Bringing it all together
The common vision and philosophy that the Tata Business Excellence Model provides, has been
an effective enabler in easing the integration of newly acquired entities into the group fold.

Investing in innovation:The Tata group has adopted a three-pronged strategy to encourage and enhance innovation
across business sectors and companies. The three key drivers are better communication and

12

recognition of innovative ideas and efforts, facilities and initiatives that enable learning from
other companies, and support for collaborative research and partnerships with academia.

Tata
Group
Innovation
Forum:Managed by Tata Quality Management Services (TQMS), Tata Group Innovation Forum
(TGIF) is a vibrant network connecting Tata companies all over the world, stimulating
innovative thinking and fostering collaboration and research. The forum organises a number
of events and workshops and facilitates interaction between Tata managers, innovation
experts and academicians.
TGIF regularly invites academics and other experts in the field to conduct workshops and
seminars which introduce new innovation concepts and tools and stimulate innovative
thinking among Tata managers. The experts include Clayton Christensen; Prof Henry
Chesbrough of the University of California, Berkeley; Dr James Canton; Prof Julian
Birkinshaw of the London Business School; Langdon Morris; and David Wittenberg.
The group has set up several platforms for collaboration on technology and innovation both
within the Tata ecosystem and with external organisations such as DuPont. The Tata group
invests in building outstanding research facilities and forging partnerships with academic and
research organisations in order to encourage creative thinking and find innovative solutions
that improve quality of life.
Bringing together technologists and researchers from different Tata companies, TGIF
undertook a technology mapping exercise, so that companies could gain by sharing their
research and technology roadmaps, infrastructure, skills and competencies. Key innovation
projects were identified where many companies could contribute. Subsequently, clusters have
been formed, which are successfully working on several collaborative projects.
Financial highlights:INR
2014-15
(Rs crore)

2013-14
(Rs crore)

% change

Total revenue

665,185

624,757

6.5

Sales

653,381

617,212

5.9

Total assets

721,180

703,734

2.5

International revenues

448,918

419,860

6.9

Year

13

Net forex earnings

40,690

32,129

26.6

Financial year is April-March

Exchange rate: USD=Rs61.15 for 2014-15 and USD=Rs60.50 for 2013-14
Revenue figures for group companies are consolidated and net of excise duty (wherever
applicable)

Group's capital market performance

Shares of the Tata group companies have been among the star performers on the Indian stock
market over the last three years. Trends in the group's total market capitalisation along with
aggregate market capitalisation of Bombay Stock Exchange are provided below.

Tata group

BSE

2013
(Rs crore)

2014
(Rs crore)

2015 As on March 31,

(Rs crore)
2016

(End March)

(End March)

(End March)

(Rs crore)

518,716

684,859

832,374

771,200

($95.56bn)

($114.35bn)

($134.0bn)

($116.41bn)

6,416,268
($1,182bn)

7,521,057
($1,256bn)

1,01,49,290
($1,621bn)

9,632,750
($1,454bn)

With the listing of TCS on August 25, 2004, the total market capitalisation of the group's
29 listed companies crossed the Rs100,000 crore mark and the group acquired the
distinction of having the highest market capitalisation among all business houses in the
country, both in the public and private sectors.
Tata group accounts for 8.0 percent of the total market capitalisation of BSE.
Tata companies enjoy the trust of over 3.9 million investors.
Figures within the bracket are in US $ billion.

Market capitalisation of Tata companies as on March 31, 2016

Most valuable business Group

8.0% of Bombay Stock Exchange's total market capitalisation

14

3.9 mn shareholders

Name of the company

Rs Cr

$ billion

TCS

495,770

74.83

Tata Motors

111,533

16.84

Tata Steel

31,030

4.68

Titan Company

30,078

4.54

Tata Power

17,485

2.64

Tata Motors (DVR)

14,677

2.22

Tata Communications

10,857

1.64

Tata Chemicals

9,509

1.44

Tata Global Beverages

7,637

1.15

Voltas

9,164

1.38

Indian Hotels

9,823

1.48

Trent

5,271

0.80

Rallis

3,304

0.50

Tata Investment Corporation

2,585

0.39

Tata Elxsi

5,856

0.88

Tata Coffee

1,677

0.25

Tata Teleservices (Maharashtra)

1,296

0.20

Note: Exchange rate $ = Rs 66.25

The Index is now operational in most major Tata companies. Within each firm, a Corporate
Head Social Responsibility (always a senior executive) manages a cross-functional CSR team
of facilitators with specific responsibilities for community development, environmental
15

management and volunteering. Mr. Nadkarni heads the operations of these teams and their
leaders, i.e. the TCCI team, and functions as the Secretary of the Council a group of 43
chief executive officers of Tata companies. TCCI operates across Tata companies as a
network of more than 200 trained facilitations and over 11,500 volunteers.
The Index itself was a remarkable innovation. First, it broke down sustainability responses
into three nested levels: systems (275/1000), people (175/1000) and program (550/1000),
making it easy to measure, and easy to identify areas for improvement.
Figure 1: The TATA Index

Source: TCCI, February 2008.

Second, the indexation exercise places great emphasis on process not just outcomes. For example,
here is how a company might apply the index to its own operations:
Figure 2: Example of Tata Company Self-Assessment using the Tata Index

ASSURANCE ITEM
SYSTEMS LEVEL RESPONSE
1Leadership is by example
2Deployment through networking and commitment
3Strategy to build lasting businesses
4Accountability towards value creation
Total for Systems Reponse:

SCORES
PROCESS OUTCOMES

TOTAL

23
14
12
13
62

39
26
20
25
110

16
12
8
12
48

16

PEOPLE LEVEL RESPONSE

1Put the best people!
2Train and empower them!
3Make them Leaders!
4Most employees are like that!
Total for People Reponse:

10
9
10
8
37

8
7
4
4
23

18
16
14
12
60

PROGRAM LEVEL RESPONSE

1Managing Risks
2Opportunities to serve people
3Build Community and Livelihoods
4Encourage entrepreneurs and self-employment
Total for Program Reponse:

28
44
25
34
131

25
30
21
23
99

53
74
46
57
230

Source: TCCI, February 2008.

For each assessment, the Corporate Sustainability Facilitator representing a Tata company and the
Community Head for the project would also identify specific opportunities for improvement. These
might read: The Company mentions of a regular convention of review. However, it is not clear as to
how the review findings are incorporated into Companys strategy. or The Company trains its
Facilitators / project leaders for leadership. However, it is not clear how the training imparted is
actually benefiting them. or The Company declares underprivileged women as its key community.
However, there is no evidence on the process of identification of this community. or The Company
states that the key community has benefited in terms of self-reliance. However, it is not clear as to
how the key community has actually built self-reliance.

Inorganic Route to Achieve an International Presence

Over the last ten years, the groups strategy has revolved around building a very strong
presence in international markets. To quote Alan Rosling, Executive Director, Tata Sons
Internationalization is not a strategy; it is an imperative, a challenge or an objective. The
group has made a conscious attempt to follow the inorganic growth route. Starting with the
Tetley Acquisition in 2001 for USD 432 million, the group has made acquisitions in most of
the sectors it operates in. The highlight of its international acquisition strategy was the USD
11.2 billion acquisition of Anglo-Dutch firm, Corus (the fourth largest in the global steel
industry). Other significant acquisitions include the Tata Motorsa acquisition of Daewoo
17

Chemical Vehicle Company, Tata Power buying a 30% stake in PT Kaltim Prima Coal Prima
and Indian Hotels acquisition of Ritz-Carlton Hotels.
According to Srinivasan and Mishra (2007), an M&A might be undertaken for horizontal
acquisition to retain/gain market leadership or to get a foothold onto international markets
(market entry) or to leverage on synergies. Tata Chemicals acquisition of Brunner Mond (the
second largest producer of soda ash in Europe) is a classic example of a horizontal
acquisition. A market entry strategy can be used to tap the more advanced markets that help
the company move up the value chain thereby deriving higher margins. This was the major
reason why Tata Steel decided to acquire Corus as it helped Tata Steel enter the value added
steel market in Europe. In a merger / acquisition, the Tata Group brings along with it
accumulated production experience, cost effectiveness of production processes and ability to
differentiate products.
Going forward, the Tata Group is expected to pursue vigorously the M&A route to growth.
Some of the markets which the group is looking at for inorganic growth include South East
Asia, South Africa, United States and Europe. The group however should be careful about
integrating all these companies under one roof. Focusing on methods to facilitate easy
integration of companies while preserving the Tata culture will be of paramount importance
in future acquisitions.
With accelerated inorganic growth comes the need to optimize the portfolio of companies
held. Are there companies in their portfolio that have consistently underperformed as
compared to the industry? This is explored using the BCG Growth Share Matrix.

Portfolio Analysis of the Tata Group:The BCG Growth Share matrix uses the dimensions of relative market share and the market
growth rate to establish a 2*2 matrix containing 4 main quadrants Stars (high market
growth, high market share), Cash Cows (low market growth, high market share), Question
marks (high market growth, low market share) and Dogs (low market growth, low market
share). The ideal strategy is to hold on to the Stars and the Cash Cows, divest the Dogs and
take a call on the Question Marks (hold/divest).
We have conducted a detailed analysis (using the BCG Matrix) of the portfolio of companies
in the Tata Group. This involved analyzing the sectors in which the Tata group operates as
18

well as the companies in the Tata Group within each sector. We studied the operational and
financial performances of each company to understand their growth stories. Special emphasis
was laid on identifying the organic and inorganic growth routes pursued by each of these
companies under the Tata umbrella. The conclusions drawn about these companies are based
on analysis of the global strategy of the Tata group and on detailed conversations with top
executives in the Tata Group.
The analysis reveals that Tata Steel, Tata Power, Tata Motors and Indian Hotels emerge as
clear Stars (high market growth, high market share). Hence, they should be retained and the
investment in these companies should be increased. Tata Chemicals and Tata Tea emerge as
the Cash Cows (low market growth, high market share) and should be held on to for the time
being. Some of the Question Marks (high market growth, low market share) are Tata
Teleservices, Voltas and Tata Communications. These results are shown in Exhibit 1 below.

Exhibit 1. Portfolio Analysis of the Tata Group using the BCG Matrix
The profitability of the Tata Group in the telecommunication sector has shown a consistent
decline from 10% in 2003 to 4% in 2006-07. Despite the telecom boom in India, the question

19

on the presence of the Tata Group in the telecommunications sector warrants further
discussion. For the Tatas, the broad objective behind entering any sector is to be among the
top 3 in that sector. Despite having had a presence for many decades in the consumer
durables segment, the Tatas have been unable to capture the leadership position in the
segment through Voltas. Moreover, the growth registered by Voltas over the past few years
has also been far from impressive which necessitates the need to critically evaluate its
performance in this segment.
In addition, the question of operating so many companies under the Tata Group needs to be
looked into. Does it make sense to have so many companies in the first place? Should there
be a relook into the question marks like Voltas, Tata Communications and Tata Teleservices?
These are hard questions that need to be answered as the group keeps going forward. With
close to 100 companies under one roof, the question arises whether all of them should be
under the Tata Group or should some be spun off.

Ethics:The Tata Steel Group has built an enviable corporate reputation founded on ethical and
transparent principles. It believes in adopting the best practices in terms of corporate
governance that have continued to evolve over the years. Integrity, transparency and
accountability are integral to the way the Group conducts its business in every sphere. Tata
Steel is proud of the longstanding respect it has earned as a fair and caring employer, and
respects all human rights both within and outside the workplace.

What binds together every member of the global Tata Steel family is a shared corporate
culture shaped by the value-based guiding principles that underpin every business decision.
All employees of Tata Steel have a personal responsibility to help preserve the human rights
of everyone at work and in the larger community. Besides a Corporate Ethics Department
responsible for the Management of Business Ethics, the Company drives inclusive growth
and its agenda of common good through social agencies.

20

The Tata ethos, Company vision and goals serve as guiding philosophies for Tata Steel
Limited, with the Tata Code of Conduct acting as its ethical roadmap.

The Code of conduct:The values and principles, which have Governed Tata Steels business for a century, have
been deployed through the implementation of the Tata Code of Conduct ( TCOC, often
referred to as the 'Code' ), which was first formally articulated in 1998. This was intended to
serve as a guide to each employee on the values, ethics and business principles expected of
him or her in personal and professional conduct. In the context of Tata Steels increasing
global presence the Tata Code of Conduct has been reviewed to accommodate required and
appropriate modifications. This has ensured that diverse cultural and business related issues
are addressed universally across the Group.
The business ethos of the Tata Code of Conduct is deployed through a specially formulated
structure - the Management of Business Ethics (MBE) - which is based on four pillars:
LEADERSHIP - The Managing Director is also Tata Steels chief ethics officer. A designated
Ethics Counsellor, supported by Departmental Ethics Coordinators, reports directly to the
Managing Director and has access to the Board of Directors.
COMMUNICATION AND AWARENESS - Compliance to the Code is a condition of service
for all employees and is also a pre-requisite for service for suppliers, contractors and vendors,
who must agree to respect it. Employee seminars, compliance training and ethics awareness
workshops are conducted at frequent intervals.
EVALUATION OF EFFECTIVENESS - The MBE Programme is evaluated and reviewed
and new initiatives as required are introduced under the MBE Annual Business Plan.
COMPLIANCE STRUCTURE - A number of systems and processes based on zero tolerance
have been put into place to ensure that governance standards are met. These include Gift
Policy, Whistle Blower Policy,
Vendors Whistle Blower Policy, Sexual Harassment Prevention and Redressal Guidelines.

21

Issues with TATA:

Every successful business has a source of inspiration. For the Tata group of
companies, the inspiration is the chief executive. Ratan Tata has driven the business
from a modest one into one of the most reputable companies in and outside India. The
decisions that he has taken in his 16 years at the helm of the company have had the
most impact in the last five years. All the executives in the company despite having
their own contributions to the success of the company concede that Mr. Tata has been
the brainchild behind the success that the company now enjoys. Therefore, at 70 years
of age, the fact that the chief executive has not named a successor is disheartening to
some. Mr. Tatas efforts have been on the production low cost products for the
betterment of the poor. This is evidenced by the Indica project that was aimed at the
production of motor vehicles that are inexpensive. The idea of a one lakh car and
the production of low cost solar energy in conjunction with BP also show that he is
committed to improving the livelihoods of the poor. The worry is that if he leaves,
then his successor might abandon such projects and concentrate only on high-end
brands in order to spin off during tougher times.

Some analysts concede that the company has largely underutilized the resources at its
disposal. Although the company has its business located in Jamshedpur which has a
population of 700,000 people, the company only employs 20,000 of them despite spending
$40 million a year in the provision of civic services and schools. The worry is that such a
large amount of spending is not sustainable as ultimately the company gains less than it
spends on the people. The provision of services by a company to the population is part of its
corporate social responsibility. However, the relationship is usually a give and take where the
company supplies the community with the basic amenities and in turn employs members of
that community to work for it.
Tata Company is reported to be on the verge of acquiring Fords Jaguar brand as well as Land
Rover. Undoubtedly, these brands will improve the companys portfolio in the market but
could face an uphill task in the resurgence of the brands to global prominence. Perhaps, the
hasty acquisition of brands that have been underperforming is not the best way for the
company to go. In most cases, an acquisition is usually less risky that the development of an
22

entirely new brand. However, acquisition of underperforming brands could further hurt the
reputation of the company and could curtail the invention of better brands in the future.
Today, companies are looking towards the development of brands that are less harmful to the
environment. One of the ways to achieve this is to reduce reliance on carbon fuels. This is the
direction that the company should take in order for it to compete with others in the global
market.
The Indica has been a revelation for the company. It has received good reception in India,
Italy, South Africa and Spain. Whereas this is an indicator that the brand has the potential for
success, the company has been relatively reluctant to promote the brand in other markets
which may be lucrative for the brand. Compared to other makers of affordable automobiles
like Toyota and Nissan, the company is minimally involved in the marketing of its brands.
Rattan Tata concedes that his aim in 1991, when he took over the reins in the company, was
the vision of paring the group to about a dozen or so companies. Although several have been
dropped from the portfolio, he has added to the original number with acquisitions and
buyouts. This means that there are companies that take up the groups time and which are
underperforming compared to others. This therefore becomes a problem since maximization
of opportunities present in different markets is stagnated by concentration on industries that
do not yield much in return. There is need to focus on the reduction of the number of
companies in the group so as to increase revenue in those that yield more.
The company has an unorthodox structure and does not have a central strategy. It hence relies
on a small number of companies to run it. The group also relies on the individual companies
to capitalize on the opportunities and threats that occur in the distinct markets that they
operate in. This strategy, or lack of it, has worked well so far for the group as it operates in a
developing economy. However, the trend is not healthy as the economy could stagnate in the
future hence the market will become saturated. The consequence will be that the company
with the soundest strategy will be the market leader while those without a strategy for growth
will be pushed out of the market. Koreas Daewoo, Thailands Charoen Pokphand and
Indonesias Salim Group are some of the companies that performed exemplarily during high
economic tides but collapsed ones the conditions became rough due to the lack of a sound
strategy. Every successful business has a source of inspiration. For the Tata group of
companies, the inspiration is the chief executive. Ratan Tata has driven the business from a
modest one into one of the most reputable companies in and outside India. The decisions that
23

he has taken in his 16 years at the helm of the company have had the most impact in the last
five years. All the executives in the company despite having their own contributions to the
success of the company concede that Mr. Tata has been the brainchild behind the success that
the company now enjoys. Therefore, at 70 years of age, the fact that the chief executive has
not named a successor is disheartening to some. Mr. Tatas efforts have been on the
production low cost products for the betterment of the poor. This is evidenced by the Indica
project that was aimed at the production of motor vehicles that are inexpensive. The idea of a
one lakh car and the production of low cost solar energy in conjunction with BP also show
that he is committed to improving the livelihoods of the poor. The worry is that if he leaves,
then his successor might abandon such projects and concentrate only on high-end brands in
order to spin off during tougher times.
Some analysts concede that the company has largely underutilized the resources at its
disposal. Although the company has its business located in Jamshedpur which has a
population of 700,000 people, the company only employs 20,000 of them despite spending
$40 million a year in the provision of civic services and schools. The worry is that such a
large amount of spending is not sustainable as ultimately the company gains less than it
spends on the people. The provision of services by a company to the population is part of its
corporate social responsibility. However, the relationship is usually a give and take where the
company supplies the community with the basic amenities and in turn employs members of
that community to work for it.
Tata Company is reported to be on the verge of acquiring Fords Jaguar brand as well as Land
Rover. Undoubtedly, these brands will improve the companys portfolio in the market but
could face an uphill task in the resurgence of the brands to global prominence. Perhaps, the
hasty acquisition of brands that have been underperforming is not the best way for the
company to go. In most cases, an acquisition is usually less risky that the development of an
entirely new brand. However, acquisition of underperforming brands could further hurt the
reputation of the company and could curtail the invention of better brands in the future.
Today, companies are looking towards the development of brands that are less harmful to the
environment. One of the ways to achieve this is to reduce reliance on carbon fuels. This is the
direction that the company should take in order for it to compete with others in the global
market.
The Indica has been a revelation for the company. It has received good reception in India,
Italy, South Africa and Spain. Whereas this is an indicator that the brand has the potential for
24

success, the company has been relatively reluctant to promote the brand in other markets
which may be lucrative for the brand. Compared to other makers of affordable automobiles
like Toyota and Nissan, the company is minimally involved in the marketing of its brands.
Rattan Tata concedes that his aim in 1991, when he took over the reins in the company, was
the vision of paring the group to about a dozen or so companies. Although several have been
dropped from the portfolio, he has added to the original number with acquisitions and
buyouts. This means that there are companies that take up the groups time and which are
underperforming compared to others. This therefore becomes a problem since maximization
of opportunities present in different markets is stagnated by concentration on industries that
do not yield much in return. There is need to focus on the reduction of the number of
companies in the group so as to increase revenue in those that yield more.
The company has an unorthodox structure and does not have a central strategy. It hence relies
on a small number of companies to run it. The group also relies on the individual companies
to capitalize on the opportunities and threats that occur in the distinct markets that they
operate in. This strategy, or lack of it, has worked well so far for the group as it operates in a
developing economy. However, the trend is not healthy as the economy could stagnate in the
future hence the market will become saturated. The consequence will be that the company
with the soundest strategy will be the market leader while those without a strategy for growth
will be pushed out of the market. Koreas Daewoo, Thailands Charoen Pokphand and
Indonesias Salim Group are some of the companies that performed exemplarily during high
economic tides but collapsed ones the conditions became rough due to the lack of a sound
strategy.

Tata may have agreed to pump millions into Jaguar Land Rover, but the Indian conglomerate
has problems nearer home as it struggles to deal with the world economic downturn.
According to reports in India, the group is planning to raise more than 150bn rupees (2bn)
as it tries to cope with the collapse of some of its core businesses and looks for ways to
salvage acquisitions such as the $2.3bn (1.5bn) Ford marques and Corus, the British
steelmaker, bought for 6.7bn nearly two years ago.
The 2bn is on top of $2.76bn it banked last month from the sale of its stake in telecom
company Tata Teleservices.

25

The reports have led to speculation that not all is well in the Tata Empire, which started out
making textiles but now spans sectors from steel to solar power to tea.
"Until last year the Tata Group was cash-rich, but after borrowing heavily for acquisitions
abroad even its flagship companies, such as Tata Steel and Tata Motors, are now under
tremendous pressure thanks to the fall in demand for their products," a Mumbai-based
business analyst said. "Tata Motors, for instance, is the country's largest commercial vehicle
manufacturer but is in serious trouble as demand for trucks has come down by almost 60%."
Tata Motors needs to repay by next June a $3bn bridge loan which financed the purchase of
Jaguar Land Rover and its initial working capital requirement. It held a $1bn rights issues
earlier this year and has tried to raise cash through public deposits.
A car analyst with a Mumbai securities firm added: "There's no doubt Tata Motors is in a
tight spot. That's why any fiscal package from the UK government to bail out Jaguar will go a
long way in meeting the urgent working capital requirement."

Debasis Ray, a Tata Motors spokesman, declined to comment on reports that the company is
seeking funds for its domestic operations as well as to invest in Jaguar Land Rover.
New Delhi has unveiled a fiscal package to boost domestic demand, but the Tata Group wants
the government to do more. Tata Motors managing director Ravi Kant complained to the
Times of India yesterday that the government's fiscal package is "just too small".
"In this kind of situation, the government should go for a big-bang approach," he said, and
appealed to banks to pass on the extra liquidity provided by the government. "People who
want to buy commercial vehicles are not being able to do so without help."
Tata Motors' much-touted Nano "people's car" is also running well behind schedule.

Tata Motors has been rapidly losing market share to Mahindra & Mahindra in the
passenger vehicle segment as the younger Anand Mahindra has brought in new SUV
models and technologies to outgun Tata vehicles such as the Sumo and Safari. The sales
26

of the Nano have been far from impressive and the company has been offering discounts
to push numbers. The Indigo family, on which it was banking to boost car sales, appears
to have lost out to rivals such as Volkswagen and Ford.

27