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TATA Case On Unrelated Diversification
TATA Case On Unrelated Diversification
House of Tata:
Acquiring a Global Footprint
Group 15:
Amar Pratap Singh
Chandni Gupta
Jyoti kumar Rastogi
Vishal Drolia
Yash Sobti
Structure
TATA Group
Globalization Strategy
Routes
Sustainability
Globalization
Why Globalization?
Resources and
Capabilities
Technology
Superior Human
Resources
Innovation
Government Regulation
and Taxation
Risk Diversification
Export
Transport
Costs
Tariff Barriers
Set-up
Subsidiary
Marketing
Manufacturing
Full Scale
Operations
Joint Venture or
Alliance
Independent
Operations
Free Trade
Agreements
- Started in UK in
E
1907 as first
U
base
R
- Largest Indian
O
Employer in UK
P
- 45000 Strong
E
Workforce
- Strong Base
A - Headquarter in
S
India
I - Building
A
significant
presence in China
Australia
- Operating here for
over 30 Years
South America
- Presence since 1990s
- More than 8000
employees across S.
America and Latin
A
F
R
I
C
A
- Began
Relationship in
1977
- Over $100mn of
Investment
Tata company
Acquired company
Country
Stake acquired
April
Tata Chemicals
Republic
of
25.1 per cent
Gabon
August
Tata Chemicals
Canada
January
Tata
Communications
UK
April
TRF
UK
December
Rallis India
(through Tata
Chemicals)
India
Tata Chemicals
British Salt
UK
India
76 per cent
India
76 per cent
Tata
Neotel
South
Africa
30 per cent
Grand
Russia
2011
2010
2009
January
Communications
March
Tata Tea
(now Tata Global
Beverages)
July
TRF
Sri
Lanka
51 per cent
October
Tata Motors
Hispano Carrocera SA
Spain
Tata Chemicals
US
Tata Projects
Artson Engineering
India
2008
January
March
June
Tata Motors
UK
Serviplem SA
Spain
79 per cent
Lebrero SA
Spain
60 per cent
Tata Communications
China Enterprise
China
Voltas
interest
India
51 per cent
Geodynamics
Australia
10 per cent
Norway
Centre Plc
Miljbil Grenland /
Innovasjon
TCS
US
January
Tata Steel
Corus
UK
March
Tata Steel
Rawmet Industries
India
April
Indian Hotels
US
Tata Power
India
Poland
South
December
2007
Africa
June
October
Tata Power
Indonesia
stake
TRF
Tata Metaliks
India
Tata Interactive
Germany
90 per cent
Tertia Edusoft AG
2006
January
February
TCS
Tata Infotech
India
March
Tata Chemicals
UK
Thailand
Chemicals Europe)
April
Tata Steel
May
Czech
Republic
June
Tata Coffee
US
South Africa
Millennium Steel
Ritz-Carlton hotel
US
Tata Steel
Singapore
Tata Motors
Hispano Carrocera
Spain
21 per cent
March
Tata Chemicals
Morocco
Equal partner
April
Tata Motors
Tata Finance
India
Merger
July
Indian Hotels
The Pierre
US
Management contract
Tata Industries
Indigene Pharmaceuticals
Inc
US
Tata Communications
Teleglobe International
UK
Tata Technologies
INCAT International
UK
Trent
Landmark
India
Wndsch Weidinger
Germany
November
2005
February
August
76 per cent
October
(GB)
(now Tata Global
Herb Inc
US
Beverages)
TCS
Australia
TCS
Pearl Group
UK
November
TCS
Comicrom
Chile
December
Indian Hotels
Sydney
Structured deal
Tata Chemicals
UK
TCS
India
2004
January
India (AFS)
owned)
March
Tata Motors
Daewoo Commercial
Vehicle Company
Korea
June
Tata Chemicals
India
Amalgamation
November
Tata Communications
US
Tata Communications
Gemplex
US
Tata Sons
Tata Communications
(formerly VSNL)
India
Regent Hotel
India
India
Tetley group
UK
2003
July
2002
February
2000
February
M&A Analysis
Tea Industry
S
t
r
a
t
e
g
i
c
O
b
j
e
c
t
i
v
e
s
Tetley (UK)
India Hotels
(IHC)
Regeant Hotels,
The Pierre, W
Hotel, Ritz
Carlton Boston,
Innovative Foods
Steel Industy
Automotive
Corus (UK),
NatSteel (Spore)
and Millennium
Steel (Thailand)
Daewoo
Commercial
Jaguar Land
Rover (Under
Consideration)
M&A
Companies
Access to
developed Markets
complementing
Tata tea brands
Chain of hotels
seamless
support internal
and external
guests
Yes
disintegrated
strategy
Yes
complementing
exciting
product
portfolio
Strategic Fit
for the TATA
Group
In line with
management vision
of global expansion
Yes access to
gateway markets
Yes
Alignment
with
Management
Vision?
Addition of value
added tea brands
New premium
properties
Diversified
Product Mix
Product
Portfolio
Access to new
markets
Yes New
international
markets
Access to new
strategic
markets
Yes reach
middle class
and bottom of
pyramid
markets
Diversification
of product
portfolio
trucks, buses,
cars (low to
premium)
Access to new
markets
specifically in
Europe and
USA
Software/Servic
es
CMS, Phoenix,
Hughes Telecom,
Aviation
Software, TKSTeknosoft, Total
Communication
Solutions
Yes
frontrunner for
Global market in
India First
Mover
advantage
Yes achieve
global presence
and brand
building
Diverse
Mature and
emerging
Markets
M&A Analysis
S
t
r
a
t
e
g
i
c
O
b
j
e
c
t
i
v
e
s
Market Reach
N/A
N/A
Access to niche,
advanced
technology
Yes access to
advanced
technology
Technology
Yes
Complimenting
TATA tea with
Tetley
Yes leveraging
the Taj brand
Synergies
with TATA
Group
Companies
EVA Positive
Yes
Yes
Yes leverage
each others
strengths and
achieve
backward
integration
Yes
Yes
complementing
the already
existing
products of the
TATA stable
Not yet
Complimenting
and synergistic
with existing
portfolio
Yes complementing
the already
existing products
of the TATA
stable
Yes
Yes
Yes
Yes
Yes
Yes
Achieve
Economies of
Scope
Yes
N/A
Yes achieve
synergies
across the
supply chain in
diverse markets
N/A
Supply Chain
Yes
N/A
N/A
Yes
achieve
synergies
across the
supply chain
in diverse
markets
Despite of all pits and falls, it is moving its wing Over India. The way TATA is
growing, definitely we can not neglect its role in Globalization.
Tactics Used:
Strengths
Weakness
Experience
Distribution
Resource
capabilities(People and
raw material)
Macro environment
Business model
culture
Opportunities
Threats
Exports
Free market
New products
Low barriers
New markets
Globalization of
economy
Acquisitions and
mergers
Situational Analysis:
MARKET SHARE
Cars
17%
Light trucks
34.82%
Medium/heavy
trucks
64.74%
Buses
51.12%
Analysis of JLR:
Advantages of Acquisition:
Access to the high end of the auto business
Customer having various options to choose the product, with increased
portfolio
Strategic opportunity to acquire brands with global presence and a
repertoire of well established brand (opportunities to become one of
the major players)
Reduced dependence on the Indian market which accounted for
majority of sale(help mitigate risk)
Access to latest technology, robust designing and R&D capabilities
which can help in improving their core products in India
Synergy creation
Cost competitive advantage and opportunities of synergy by using
Steel supplied by Corus
Established brand available at affordable investment ($1 bn-2bn)
Strong brand image of JLR can facilitate the acceptance of Tata product
in the international market.
Using JLR distribution channel for their product to enter in US market
which seems unlikely without the acquisitions
Road Ahead:
Tata Motors should go ahead with the deal as it gives
access to Global market
They should be able to leverage the existing
distribution network
Should be able to instill confidence that the premium
brand is in safe hands
They should handle the union judiciously and
employee productively
Integration of the culture of the two companies as a
part of their corporate strategy.