1.

TATA GROUP OVERVIEW:

"Price is what you pay .Value is what you get."

-WARREN BUFFET

The TATA Group is a multinational conglomerate founded by Jamshetji Tata in 1868 in Mumbai,

India. Tata Group is the largest private corporate group in India in terms of market capitalization and

revenues. It has operations in more than 85 countries across 6 continents and its companies export

products and services to 80 nations which comprises of 98 companies in 7 business sectors. It has

interests in steel, automobiles, information technology, communication, power, tea and hotels. The

Group takes the name of its founder, Jamsetji Tata, a member of whose family has almost invariably

been the chairman of the group. The current chairman of the Tata Group is Ratan Tata, who took over

from J.R.D. Tata in 1991 and is currently one of the major international business figures in the age of

globality.

( Times of India )

2. INTERNATIONAL STRATEGY:

• Driven by operating companies

• Geographically selective

• Partner development of select countries.

3. CUSTOMER PREFERENCE:

To have gain in business, one should be and think like a customer. Adding value to their needs,

reaching their expectations and giving the expected product to the customer plays key role in success

of business. But discovery demands more commitment instead of surveys among different people. It

needs concentration to their requirements along with imagination and creativity but not knowledge.

The key points to add value to customers are furnished hereunder:

• Think yourself as a problem solver, rather than of services or products.

• Always treat customers as we ourselves would like to be treated.

 • Distinguish between what you sell and what the customer buys?

• Have an overall and broad view over the problems that your customer goes beyond you and

your products.

• Price in terms of value given rather than cost.

• Always deliver what we promise. If in doubt, under-promise and over-deliver.

Adding value is most important factor which can be done in many ways. It can be delivered by

serving at their best, being innovative, being realistic, giving high quality, being technically forward,

being faster and more responsive with what you produce, exceeding customer’s expectations and

offering at low prices than your competitors.

(Tata company)

4. VALUE PROPOSITION:

Value proposition is a description of the customer problem, the solution that addresses the problem,

and the value of this solution from the customer's perspective. TATA is giving more value to the

customer by reducing the price with qualified technology. And it’s making the products as per the

needs of people by knowing the problems faced by the customers .The number of mobile models
released are as per the taste of customer requirements and expectations rather than operating and

equipment prices. And it’s offering many attractive things with inbuilt broadband, gprs, and mms ,

highly technical facilities at low cost. Successful companies are those that focus their efforts

strategically. Strategy should be a stretch exercise, not a fit exercise. To meet and exceed customer

satisfaction, your business team needs to follow an overall organizational strategy. A successful

strategy adds value for the targeted customers over the long run by consistently meeting their needs

better than the competition does.

5. PEST ANALYSIS:

It is important in a macro environment to identify the factors that might in turn affect a number of

vital variables that are likely to influence the organization’s supply and demand levels and its costs.

PEST analysis is a useful strategic tool for understanding market growth or decline, business position,

potential and direction for operations. PEST is useful when a company decides to enter its business

operations into new markets and new countries. It is a framework which categorizes

environmental influences as Political, Economical, Social and Technological forces. In conducting

PEST Analysis, overall business environment is determined by the PEST factors. It is a useful

strategic tool for understanding market growth or decline, business position, potential and direction

for operations. (group work)

6. CHALLENGES FOR TATA:

Running business at global level is not so easy. The problems that may a company face while

operating at international level Tata had few challenges for its global operations. Acquiring Corus

was not a smooth acquisition for Tata as other bidders were trying their best for Corus. The degree of

challenge can be imagine as UK based steel maker Corus with a strong capabilities of manufacturing

of eighteen million tonnes of steel per year was at the 9 th position in the world and on the other hand

Tata had just half a capacity of production i.e. only nine million tonnes of steel per year was at the 55 th
position in the world. The successful deal of Corus put Tata on 5 th position in the world in steel

production with total capacity of twenty six million tonnes of steel per year. According to BBC

News (2006), the chairman of Tata Group Ratan Tata while signing the deal said that “his proposed

acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of

growth through international expansion”. Tata faced challenge at very critical stage. The deal was

about to signed between both the parties and at the end moment rival bidder CSN twisted the deal by

increasing bid. If Tata would have lost Corus deal Tata would have wasted all the effort made by it for

deal. According to Smith and Rangan (2006), “it was unlikely that Tata Steel will walk away from

Corus after investing so much and effort in the process but Corus will likely find it difficult to

continue to back Tata unless the latter revises its bid upward.” To overcome this challenge Tata raise

its bid by $ 9.1 bil and on the other hand CSN offered $ 9.6 bill against Tata’s bid. Eventually Tata

acquired Corus. However, Tata was also challenged when many (mentioned above) criticised Tata’s

decision by saying Tata overpaid for Corus. According to Hung L (2008) experts said that in 2000

Tata Tea had borrowed a big loan for the acquisition of UK based Tetley which was not paid at that

time whereas Tata Steel was not under any liability of long term loan needs funds to supports it

acquisition for Corus. This was the Tata’s main challenge to manage it finance because if Corus deal

would not turn out beneficiary Tata would be under a huge burden of long term loan.

(Tate groups)

7. Discussion:

This chapter discussed about how Tata overcome its challenges. In this chapter the main plot of

discussion would be to understand how deals with its problems while dealing at international level. In

other words this chapter would focus on the main aim of this study which is to explore and understand

Tata’s strategy.

When Tata acquired Corus Tata was in need of funds to buy it. As Tata already had loan for acquiring

Tetley Tata was facing problems to manage fund for Corus. In response to this challenge Hung (2008)

Executive Director of Tata Sons Gopalakrishnan said that they are strong enough to raise funds for
buying Corus “The deal may be large or small, but we are looking at its fit, rather than the size of the

deal, we are not short of resources… we have strong balance sheets.” Tata ensure that the deal should

go smoothly Tata Steel’s bankers were already informed that Tata may need funds to support its

acquisition. As per Tata’s instructions ABN Amro and Deutsche Bank successful raised $ 6 billion for

Corus Deal. Tata ensure all the aspects of Corus deal and was full prepared to get it. As explained

earlier that if Tata would have lost it Tata would have wasted all the effort made for this deal but Tata

was no prepared to gave and manage to get fund from bankers. Therefore the noticeable thing is when

a company entered into a global market for trade or acquisition needs to ensure that it can face any

unexpected situation. Another remarkable aspect that makes Tata so confident for Corus acquisition

was its resources. It can be observed here as Gopalakrishana said that Tatal Steel does not have any

problem for raising funds as the company is fully equipped with its resources. Shortage of resource

may create problems while raising funds from banks as banks scrutinise all the aspects of business

before approving any loans. If a company enters in to deal and does not have enough resource it may

lost the deal and all the effort made can go in vain.

Again it can assumed here that Tata might knows that it is overpaying for Corus deal but was also

aware that the advantages are bigger that what is being paid as ultimately Tata Steel will be the main

supplier of Tata Motors. Again coming back to the main point of resources discussed earlier arguably

it can be said that Tata group has well design its corporate strategy as Tata Motors might have act as a

resource for Tata Steel where Tata Steel would be enhancing its advantages through Tata Motors for

being main supplier of Tata Motors. This might have help Tata to increase its bid against CSN.

All this explain how Tata’s strategy overcomes challenges and take towards growth and expansion in

international market. Besides the above discussion that shows strengthen of Tata’s strategy on

globalisation, there are few more issues which are worth discussing to understand Tata’s growth

strategy in global market. However these issues are not directly connected with any challenges but

they might be a vital part of Tata’s growth strategy. (Tata group)

As Tata recorded remarkable success in global market it ensures that it would not loss its grip over the

domestic market. It could be a part of Tata’s growth strategy to ensure its position in domestic market

while moving towards global market. According to Tata - Online Articles (2005) Ratan Tata said
“However, while we need to look beyond the boundaries of our country to grow our business, it

should not be at the cost of our home market. It is essential to first achieve leadership in the domestic

market; only then can we go international.’’ It is clear that Tata do not want global business at the

cost of domestic market. It can be observed that before Tata acquire any companies in global market

Tata ensure it strong position in domestic market. It is Tata’s growth strategy that Tata does not

believe in global business at the cost of domestic market and also ensure its leading position in

domestic market. The below table give overview of Tata as a pioneer

Year Events
1902 Taj Mahal Palace Hotel – First in Luxury Hotels
1907 Tata Steel – Asia’s First Steel Giant
1910 Tata Power – First in Hydro Power
1932 Tata Airlines – First in civil aviation
1968 Tata Consultancy Service – India’s First Software Service Company
1961 Tata Motors – India’s First indigenous car
1912 Industrial Practices – 8 hours working day
1915 Free Medical Aid
1917 Schooling Facilities for Children
1920 Leave with Pay, workers provident fund scheme.

Source: www.tata.com

It is Tata’s strategy to be a market leader or one of the market leaders on the ground of local market

before going global. The reason behind this is Tata is ensuring it strong pillars in local markets so that

if any uncertain situation arises in global market it can survive with the help of local business.

Another important thing can be observed from the above findings and analysis is that Tata first

entered in to global market in the year 2000 when Tata acquired Tetley. Since Tata founded till the

year 2000 Tata significantly diversify business by entering into numerous industry and business

sector. The main advantage of this strategy is Tata Group does not need to depend on one industry or

business sector. Such diversified business can easily survive if economy hit one or few industry or

business sectors.

8. CONCLUSION:

The main aim of this study is to analyse and explore Tata’s growth strategy in global market which

helps to understand the success factors for growth in international market. In short, the aim of this
study is to explore the factors affecting the success level in global market. There was no special

technique used in the selection of Tata. Tata has established strong benchmarks in world economies

and in globalisation (Stewart B, 2010 – Financial Times). Tata has recorded an outstanding pace in

merger and acquisition outside India. (Gaiger, P 2011).

9. BIBLIOGRAPHY:

Book Reference:

1. WARREN BUFFET,1996, 2th edition (pages 48-49)

2. Times of India in 2003 edition

3. Gaiger, P 2011

4. Stewart B, 2010 – Financial Times

Web Reference:

1. (Tata company)[WWW]http://www.tata.com/company/cus/apex (Accessed on 25th

Jan 2011)

2. (Tata group)[WWW] http://www.tata.com/groups/chll/index/apex (Accessed on 26th

Jan 2011)

3. (Tata com)[WWW] http://www.tata.com/company/index/apex ( Accessed on 27th Jan

2011)