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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

4. Do some research on the Tata Group [wvvw.tata.com]. What is its purpose? How would its core values Influence strategic choices? Does its international strategy approach seem to be working?

5. Do you think an international conglomerate would be more difficult or less difficult to strategically manage than a more focused company? Discuss.

6. What Implications does the statement about "surviving on the world stage" have for the future strategies pursued by the Tata Group?

THANK YOU!

Answer 1

4. Tata group is one of the oldest and greatest Indian origin Company and was founded by Jamsetji Nusserwanji Tata in 1868, headquartered in India. Tata is a global business conglomerate, which is operating in over 100 countries in all over the globe. Tata is indulged in diverse industries like agriculture, consumer products, automotive, construction and finance. Tata is one of the most respected and ethical company. Present chairman of Tata Mr Ratan Tata always stands for India and it's enhancement. The main purpose of Tata is to contribute more and more in the development of the nation via its organisation. Mr Ratan Tata always have high focus on ethics, values, fairness and positive objectivity on self. Tata group always strengthen the Indian industrial base. The purpose of the Tata group is to serve its nation and whole world with its positive code of conducts so that it always contribute in the development and enhancement of the world in each of the sectors in which it is serving.

The core values of Tata includes high integrity with environmental and social responsibility of its business, honest ethical and transparent code of conduct, always focused on high level of standard quality in order to achieve its objectives, cooperative and coordinative, bold and Ajay and courageously take all the challenges and overcome it. All these core values of Tata always influence its strategic choices. International strategy of the Tata company is working well as it always contribute to the development of its people and overall organisation. Tata always work for its corporate social responsibility.

5. International conglomerate would be more difficult to strategically manage as it have to manage in all over the world in order to provide profitability to all its business segments. International conglomerate have to to work on different business policies and trade policies of all over the word where it operate its business. Every country has its own way of doing business and policies which have to be followed by each and every company operating over there, so for international conglomerate various legal and different business policies have to be taken into proper consideration. There is diverse strategies in international conglomerate and every strategies are highly dependent upon the the country in which the business is going on so the operating diverse strategies is quite difficult but not impossible for any business tycoon.

6. "Surviving on the world stage" provide the future strategies pursued by the Tata Group as Tata is an international business conglomerate, so it is a world class company which have to make its strategies on the world level. Tata have to compete all other companies on world stage so it's strategies should be in the way that it compete with a very high density with other world class Companies.