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CASE #3 TATA'S TIME(STRATEGIC MANAGEMENT IN ACTION SIXTH EDITION)

It holds the number 6 spot on the list of the world's most admired companies in the steel industry. The Tata Group, based in Mumbai, India, is the largest conglomerate in that country. Its lat­est revenues are estimated at $67.4 billion, of which 61 percent is from business outside India. Tata has more than 100 operating companies in seven main business groups doing business in 80 countries: chemicals, information systems and communications, consumer products, energy, engineering, materials, and services. Its two largest businesses are Tata Steel and Tata Motors. Its Tata Tea, which owns the valued Tetley brand, also is one of the larg­est tea producers in the world. Ratan Tata, Tata Group's chairper­ son, has forged a strategy that encompasses the globe. In 1999, he issued a "clarion call to push outside India with acquisitions and exports." One of the company's executive directors recalled, "We didn't know what to expect, to be honest."

Today, Tata controls many businesses ranging from Eight O'clock Coffee Co. in the United Sates to the Taj Group of hotels, which took over management of the landmark Pierre Hotel on Central Park in New York City. Tata made its boldest global strategic push, however, in October 2006 when Tata Steel formally proposed buying British steelmaker Corus Group PLC for about $8 billion USD. Corus, which was formed by a merger of British Steel and Hoogovens, was three times the size of Tata Steel. The buyout offer soon turned into a bidding war when Tata Group discovered another company, Companhia Siderùrgica, Nacional of Brazil (CSN), was also preparing a bid and therefore upped its opening offer to $9.2 billion; CSN then raised the stakes by offering to pay $9.6 billion. A Tata Group spokesman said that the company's attempt to acquire Corus was "based on a compelling strategic rationale." Ratan Tata explained further by saying, "The revised terms deliver substantial additional value to Corus shareholders." The increased takeover bid did not impress investors as the company's share price fell 6 percent after the news was announced. Analysts and investors both "expressed concern that Tata is overpricing Corus, whose operating costs are among the highest of any steel maker—something that would affect its profitability and its plans to expand in India." However, Ratan Tata knew that the acquisition could catapult Tata Steel from its mid-50s ranking in the global steel list to the sixth-largest industry competitor. He said, "Analysts were taking a short-term, harsh view of the deal. Hopefully, the market will look back and say it was the right move." By the end of JanuaQi 2007, the U.K. Takeover Panel called an auction in order to end the bidding war and "presided over the contest that started on Tuesday, January 30." The "contest" continued for several hours until CSN pulled out. Tata Steel won its coveted prize for $12.2 billion—a 22 percent premium over what it had originally offered. That acquisition represented the latest consolidation in the global steel industry. The combined Tata-Corus can produce 25 million tons of steel a year. The deal also represented the largest foreign acquisition by an Indian company and made the diversified Tata Group the largest company in India.

In 2008, Tata made an even bigger global splash, at least in terms of recognized consumer brand names. It acquired the Land Rover and Jaguar brands from Ford for an estimated $2.3 billion.

Tata's leaders believe the group "can survive on the world stage only by being both too big to beat and too good to fail." In December 2012, when Chairman Ratan Tata steps down, Cyrus Mistry will take over as chairman of Tata Group and he "faces the daunting challenge of steering a giant, increasingly multinational conglomerate of more than 100 companies through economic headwinds at home and abroad."

DISCUSSION QUESTIONS

1. Discuss the advantages and drawbacks of going international using Tata Group's experiences.

2. What strategic challenges do you think Cyrus Mistry might face as he guides his company? Using what you know about managing strategically, how might he respond to these challenges?

3. Do some research on India's economic and political-legal environments. What opportunities and threats do you see?​​​​​​​ In light of these, do you think Ratan Tata's strategy of push­ing outside India makes sense? Explain.

​​​​​​​THANK YOU!

Answer 1

Answer:-

1) The advantages of going international utilizing Tata Group's encounters are an expansion in deals and profits on the grounds that the client base is expanded. Likewise, this permits the business to decrease reliance on their nearby and national economies.

With the assistance of innovation, the time and separation confinements are disappeared. The disadvantages are that profits and deals may not appear during the start of the period. The company likewise has to know the neighborhood advertise and the guidelines. There's likewise a different culture.

2) The test Cyrus may look as he controls his company is to make due on the world stage just by being both too huge to beat and too great to even consider failing. Notwithstanding his, He faces the overwhelming challenges of guiding a monster company as global combination progressively turns out to be in excess of 100 organizations through economic headwinds at abroad and home.

Different challenges incorporate economic and budgetary dangers, multifaceted nature of more prominent conveyance and systems everywhere throughout the world, and acquisitions. In light of what I have realized a portion of the vital choices accessible for Tata are worldwide re-appropriating; Exporting/bringing in, diversifying or permitting, and outside direct contribute by setting up a remote auxiliary.

Goodbye is enormous speculation company with the goal that it would be in an ideal situation to utilize vital partnership joint endeavor and remote direct venture. Notwithstanding, as a key administrator, there are numerous components that ought to be considered before picking and going for the other options.

3) Political-legal environment:-

The general condition of legislative issues in India

The degree of politicization of business and money related issues

The level of political morals

The political way of thinking and practices of the gathering in power

Specific legal portrayals

Blueprint in which the organizations need to work

Economic Environment:-

Job of Private and Public area

Level of development of GDP, GNP, and Per Capita Income

Level of Saving and Investment

Equalization of Trade

Cash Supply in the Economy

International Debt

Identify opportunities and threats, and if Ratan Tata's strategy of pushing outside India makes sense?

Ratan Tata's strategy of pushing outside India totally makes sense.

Opportunities include:

Bigger market

Expanded diversification

Threats

Stiff contenders from more grounded international adversaries

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