MGT505 IB Assignment2

Case Study: House of TATA

Table of content
Introduction

Question 1

Question 2

Question 3

Question 5

Question 6

10

Reference

13

Introduction
The Tata Group was founded in 1868 by Jamsedji Tata in India, Mumbai. Tata currently
consists of more than 100 businesses located over 80 countries in 7 business categories:
communications and information technology, engineering, materials, services, energy,
consumer products and chemicals (Tata.com, 2016). Despite being a family owned group of
companies, but each company is part of a group that operates as an independent entity.
Tata Group is among the richest in India with a market value of USD $ 108,780,000,000 a
year from their 2015 with 30 listed Tata enterprises and shareholder base of $ 4 million under
Tata Sons Ltd. (Tata.com 2016) Tata Group has more than 600,000 employees worldwide
and offers a variety of products and export to over 80 countries.
Under the leadership of Ratan Tata, Tata Group has expanded dramatically, and achieved
revenue growth from 2011-2012, an increase of over US $ 83 billion (Tata Group in 2012),
he was capable of. proven on as he does and is committed to investing large amounts of
money.
Even with the wealth and success that he has achieved Ratan Tata expressed a strong sense of
giving back to society through his unwavering efforts to promote CSR in the Tata Group.
Furthermore, Tata has always been value driven, and their values system continues to
direct the growth and business of the Tata companies. Their five core values are: Integrity,
Understanding, Excellence, Unity and Responsibility.

Question 1: What advantages does the Tata Group gain from being a conglomerate?
Conglomerate Strategy involves diversification into fields which are not significantly similar
or related to the primary business mission. This is an attempt to diversify the industry. There
are many advantages to a conventional strategy.
First, the parent company is often the ability to raise capital more easily than any of
independent entities that can be separated from each other that the Group is able to guarantee
a solvent for members of their emerging. markets, banks are often willing to provide funding
for home business (Gopalan 2007) the conglomerate could use internal funds to support the
growth of existing subsidiaries. In the same way, it is also useful when a company has excess
cash. But do not have enough opportunities for investment growth in industry and hence the
acquisition of new businesses or enter the industry as the best opportunity for the company,
which will have a surplus. Cash, resulting in a better use of cash than the company sitting on
idle cash. Tata Group has a long tradition of diversification in new business with their own
funds within the Tata Group, for example, has a long tradition of diversification in new
businesses with internal funds. The two promoters, Tata Sons and Tata Industries is working
vehicle joint venture has brought the group into new industries such as information
technology and oil field services (Khanna et al., 2008).
Second, the overall risk may be reduced due to a reduction in the risk of fluctuations in the
business cycle, a conglomerate merger will allow the company to diversify, so the company
is less vulnerable to loss. due to lower sales in certain sectors or industries. For example,
during the oil crisis in sales revenue of the car is reduced, while the Tata Group will continue
to produce steady cash flow for the company, which makes the company vulnerable to a
couple of companies that do not. it offers a variety In addition to this competitive threat could
pose less risk due to any threat is only likely to affect the operations of the company, for
example, in the near future, the Chinese auto companies to produce cars. with prices cheaper,
more beautiful and functional than the Tata Nano Tata. 'Cheapest car in the world, and then
lose the advantage in the competitive auto market. However, because of diversification of the
company can more easily unlock operations unprofitable and new operations.
Third, the parent conglomerate to increase and improve the capacity of the pool they need
from workers within their own over 425 000 people across seven sectors around the world to
grow their businesses while. the companies in the sector are working to manage and attract
talent of the Tata group, Tata is used in administration (TAS), the training program of the
Tata elite in order to cut costs and recruiting. treatment The candidate selected candidates
will rotate in several Tata group interactive sessions over the management of and access to
counseling, as well as planning services, professional (Khanna and Palepu, 1997) after
completion of the program the. potential applicants for high-level executives in the Tata
group. This program will help them to source talent from group companies and retain talent
pool overall.
Finally, the company conglomerate could use a good reputation as a tool to make market
share and increase the customer base of the company and hence the company can cross sell
products to new customers, which will lead to. the increase in its sales. The main products
that lead to higher profits for the company by investing in a brand name and reputation for
standing up strong and high-quality products and services to all companies in the Tata group
will benefit greatly. This is true especially for the Tata Group brand stands for integrity, as
well as the quality and popularity of the Indian consumers, rich as well as poor consumers. A

good reputation is also a way for the Group in emerging countries to build long-term
partnerships with distributors and investors in developing countries. In the case of the Tata
Group's excellent reputation has led to a joint venture with international heavyweights such
as AT & T and Mercedes-Benz (Khanna and Palepu, 2000).
However, the main challenge for the strategy of the group is that the complexity of managing
a conglomerate group because it requires that administrators be familiar with a wide array of
business and marketing than if the relevant distribution. risk
A successful conglomerate requires management depth to develop a strategy for managing
complex related business.

Question 2: What are institutional voids? Why might they encourage the conglomerate form
of organization in emerging markets?
In contrast to the developed world, firms in developing countries often do not have
the luxury of relying on government-built infrastructure that enable them to specialized
efficiently. Among other things, the lack of necessary infrastructure, labor underdevelopment
illustrates the institutional gap that forced the company to divert the focus from their core
business and investing in areas outside their core competency. In this situation, a vertically
and horizontally integrated company in a better position to get a higher return than their pureplay partner.
It is a common situation in developing markets, companies are forced to run sub-optimally
because of the -The lack of physical infrastructure can not effectively perform its core
business. Investment in infrastructure needed to help the group to get higher returns than
small businesses and independent uncontrolled supply chain, their affiliated companies may
get together on many. IPO business, marketing and administrative costs. Suppose a small
steel mills in rural India have to deal with a power outage region every few days off the
energy company that provides power to the region's coal supply, claiming irregularities.
Because coal-fired power plants running out of coal, oil, forcing the company to stop its
origin. It turns out that the railroad can not deliver coal to the region to create energy
management, logistics, ineffective and poorly managed. As a result, steel mills, electricity
and railway companies all suffer. But if there are problems in the railway company have been
resolved, the profitability of these companies to better merge the three companies and
centrally manage them as a conglomerate to die expenses related to communication and
synchronization. work Also, it may be due to better forecast supply is predictable and
ultimately improve performance. It is also an opportunity for new companies to be formed.
Cross-selling This may seem unrealistic in North America and in Western Europe since the
institutions and infrastructure that enable the effective employment and expertise will be
always be (,).
While the institutions and infrastructure are well developed and effective in most of the
developed countries. But have not yet applied to the developing counties like India. In many
emerging countries, institutions and infrastructure are unreliable. This market continues to be
developed and monitored by officials, inadequate, making it difficult for independent
companies to find investors who are willing to help finance new ventures (Khanna. , 2005) as
well as emerging countries, etc., India suffers from a shortage of trained group affiliates can
use the labor market in order to increase and improve the capacity of the pool with them.
want to grow their business. This reduces dependence on inefficient and immobile labor
prevalent in emerging economies in a way that was not possible for the company to release
this because most of the emerging countries continues to be a high-level corruption.
environment and unpredictable enforcement of the conglomerate can work whenever
intermediaries affiliates or business partners abroad, their need to interact with highly
bureaucratic and corrupt state institutions. Times of India reported that despite a large group
of Indian industries maintain embassies in the capital to facilitate these interactions. In
addition, Tata maintain good relations based on the ranking of the highest politicians, Ratan
Tata, such as the President, the Minister of Finance's investment committee consists of three
businessmen Indians revered and set to. attracting foreign direct investment. (Times of India,
2004).
While the above discussion, it is clear that this form of corporate conglomerate could be

useful for companies in emerging markets. Tata Group has a strong record of taking
advantage of the corporate form is not only major corporations such as Tata Group, South
Korea's Samsung, Charoen Pokphand Group, Thailand and the United States Institute of
General Electric created a void in the market.
By having a conglomerate of companies, these companies can internalize the exchange of
goods instead of depending on the marketplace for it, and therefore overcoming the challenge
of acquiring resources in emerging countries.

Question 3: Many corporate takeovers involve the acquiring firm installing its own managers
and slashing the payrolls of the acquired firm. Why has Tata chosen to retain the existing
management teams of the foreign companies it has taken over?
Most takeovers result in two organizations becoming one. Companies usually replace their
acquisitions top management teams as one of the first steps of integration. In addition to
signaling the willingness of buyers to change all of these actions is to align strategic vision
and practical implementation of the two companies, in fact, many experts believe that the
company can create value. from the occupation simply by changing management teams are
responsible for managing their own skills more.

Instead of rushing to the integration of the businesses they have acquired foreign companies
are allowed to Tata's acquisition of them will continue to operate independently, almost as if
there is no change of ownership. Tata Group to do everything they can to keep the team
intact, because in the case of Tata takeover as they look to acquire successful. So Tata has
confidence in the operations of the acquired company's strategy and the quality of the talent.
In terms of purchasing Jaguar Land Rover RatanTata - CEO of the Tata Group said. "We are
extremely pleased at the prospect of Jaguar and Land Rover being a significant part of our
automotive business. We have enormous respect for the two brands and will endeavor to
preserve and build cultural heritage and competitiveness, keeping their identities intact of
them. We aim to support their growth, while holding true to the principles of allowing the
management and employees to bring their experience and expertise to bear on the growth of
your business. we. "In this deal, Tata allow companies has been to focus on what it does best
and give them the freedom to operate almost completely, even when they are in the same or
related. For example, the greater is the acquisition of Tetley and Corus Tetley and Corus
continues to operate as a business stand-alone, even with the new owners for three years or
more as a result, acquirers no loss of human capital. social or knowledge of the industry and
company-specific teams; In fact, they can control everything for the benefit of both parties,
the CEO of Corus by Tata, which bought it in 2007 admitting that "we paid for Corus assets
as well as their capabilities. Many of them are institutions in their areas of expertise. "

Although the company has released a free will not result in significantly reduced costs as in
the case of acquisitions absorption. But independence allows the new owners to avoid
mistakes and punishing waves to merge the operations of the company operations and hinder
the activities of the two organizations. The process of creating, sharing and reporting
relationships are very complex, the importance of time management and may have an impact
on customers, suppliers, employees and organizational climate. As mentioned earlier, Tata
chose to buy the company so successful, so it is not necessary to define operating procedures
slash hiring of new companies acquired and managed the installation itself.

Although Tata has made acquisitions. But of course, Tata acquired the companies, as a
partner in a strategic alliance. Tata acquisitions and maintain its own identity. Tata continues
to executives, particularly CEOs of the companies they buy and provide them with the same
power of their own, they used to enjoy. Tata Group just put its value into the company that it
serves as a guide and support organizations, investors, or the necessary resources so they hunt
for working together in a few carefully selected people. not disruptive to business
acquisitions, in other words, they have come to be regarded organization as it is a partner in a

strategic alliance. By doing so, the Tata Group is able to manage the enterprise business
drivers' in the nonthreatening. Reduce the side effects of integration and create an
environment in which companies can easily share knowledge and best practices.

Question 4: The Tata group has a strong commitment to high ethical standards and corporate
social responsibility. Does it gain any competitive advantage in the marketplace because of
this commitment?
Todays companies around the world do invest corporate social responsibility as part of their
business strategy to become more competitive in the market place (Porter and Kramer, 2006).
As ethical behavior and corporate social responsibility is becoming increasingly important in
achieving and sustaining competitive advantage, many companies have signed on to the
initiative, pro-environment and pro-social.
After Ratan Tata settled into the role as chairman of the Tata Group replaced JRD Tata in
1991, he has been cultivating his commitment to integrity and ethical principles of socially
responsible companies in the Tata Group, one of the CEOs. the company, he said, "Tata has
shown that there is no other way he could do other than doing it ethically. He believes in the
way of strong leadership in the business. The initiative started with exercise Tata in 2001
Ratan Tata, CEO of Tata is developing well integrated embedded the idea of sustainable
development in their systems and processes.
In 2008, Tata Tata Nano declared the most expensive car in the world for many a
revolutionary new way to change the position of the automotive industry. Tata Nano will cost
only $ 2,500, but it has a solution for the transport of carbon dioxide emissions low and
without a press pass their workforce. For Tata Motors, India's largest automobile company,
Nano is more than provocative alternative transport for the people of India. The safety car is
environmentally friendly as well as the bold stand of the century, Tata asked the trust and
cooperation with the local community.
The Tata Nano is a huge success in 2010, both in market share, sales, design and ecofriendly. Those who want to buy from businesses they respect and social responsibility and
commitment to high ethical standards. One example of success is the fruit of Nano Tata
company strives continuously to surface the best businesses in the service of the people in
India and around the world.
The success of Tata Consultancy Services Limited (TCS) global provider of consulting, a
leading information technology are other examples Tata Consultancy Services Limited (TCS
wins Global Award from Business in the Community (BitC) responsibility. corporate Index
(CRI) of the UK's leading benchmark of responsible business practice. In 2006 TCS achieved
gold band for the performance of companies in the Community Index score of 94.7. It is
known internationally for business success of TCS has a warm spot in the hearts of many
Indians for. the project functions as a computer. This application allows the illiterate adults
learn to read in their own language, say in the range of. 30 to 45 hours spread over 10 to 12
weeks, the program is a multimedia-driven and goal. 15 to 30 years - setting them on course
to gain the skills, knowledge, including writing and mathematical abilities without any
interruption in their production activities. Five years later, the project has spread to more than
1,000 centers in Andhra Pradesh, Tamil Nadu, Madhya Pradesh, Maharashtra, Uttar Pradesh
and West Bengal, and it has helped more than 46,000 people learn how to read. It also has
inspired employees, TCS is married closely excellence of their IT initiatives in local
operations around the world, and they will gather and share the Tata wherever they are. work
Despite the many differences between the samples of the example of Tata Motors and Tata
Consultancy Services Limited (TCS), but both shows. commonalities Important as it was, the
two companies under the same umbrella of Tata Group intends to show a strong commitment

to high ethical standards and social responsibility in their daily lives and wherever they go both locally and around. Earth Behavior, moral values, social and environmental performance
of their building to strengthen and promote the brand Tata Group to become the world (,)
initiative they relieve the century-old community care model. the use of the main operation to
make a lasting impression on the communities in which they operate. This deeper awareness
of how businesses will benefit stakeholders by a multi-mission design and continually
renewing the Tata corporate identity in ways that reinforce the brand and competitive
advantage in. domestic and international market
By investing in a brand name and reputation for standing up strong and high-quality products
and service to all of its affiliates, businesses will benefit greatly. This is true especially for the
Tata Group brand stands for integrity, as well as the quality and popularity of India as rich as
well as poor. A good reputation is also a way for Tata at least partly alleviate the problem of
enforcing contracts blowing in emerging economies. Tata House has been able to build longlasting partnerships with suppliers and investors.
In the case of the Tata Group, the excellent reputation has also led to joint ventures
with international heavyweights such as AT&T and Mercedes-Benz (Khanna & Palepu,
2000).

Question 5: What advice would you give to Cyrus Mistry, Rajan Tatas successor? What are
the primary challenges that Mistry faces? What changes, if any, would you recommend to
make the Tata Groups policies and procedures?
In 2012, Ratan Tata stepped down from his position as head of Tata Group and he named
Cyrus Mistry as his successor. Cyrus Mistry is the son of Indian construction tycoon Pallonji
Shapoorji Mistry. His father currently holds 18.5% in stage Tata Sons, making him the single
largest shareholder. Cyrus Mistry has been on the board of Tata Sons since 2006, replaced the
chair his father. Although his family was not Tata. But he has close family connections with
Tata because one of his daughters is married to Ratan Tata requesting a brother. Now Mistry
as the sixth president of the group and the second not named Tata.
However, any change of leadership in business as nervous moments. When a business is
large and is highly respected and a leader who has been in post for more than two decades, is
growing more tense. As for Ratan Tata's leadership group Tata, Cyrus Mistry, a lot of
discussion both inside and outside the group (,) reviews the debate among managers Tata
Tata and. shareholders in common is that they are not sure that the new heir to carry on the
legacy of Ratan Tata. In fact, Ratan Tata had left his successor a legacy very healthy. After
the procedure to Ratan Tata, chairman of Tata Group, he has been transformed Tata Group is
a major global player business with $ 100 billion. Annual revenue and more than 65% of
revenue comes from operations and sales in over 100 countries, Cyrus Mistry the successor
of Ratan Tata, is the challenge of this company forward.
(Tata group, 2015), although they have received financial growth over the last two years, the
absence of a central strategy is a major concern that organizations should look to address (the
Tata group, 2015) are available. such a variety of products and services, Tata group continues
to try to ensure that everyone in the organization to work towards common goals and
objectives. Otherwise it would defeat the purpose and vision of Ratan Tata had originally
envisioned for them. Currently, the group is bound together by a small staff of Tata Sons and
Tata Industries holding company. Now these two chairs by Mistry, Tata Tata brand strategic
vision control and lend a hand in the deal that large. There is a need for more of a small
company and other subsidiaries will be involved and actually be part of the growth of the
back seat and was just going through the motions.
Hint: Mistry to be in order and make sure there is a central strategy on how Tata possible
future work. He should change the corporate structure of the Group, Tata will work together
as a unit, each company and its subsidiaries have played a part of it and participate instead of
just a backbencher strategically more central to the group oriented. in any team sport,
everyone has a specific role to play - but the goal is always the same. This will foster a sense
of ownership among the group companies Tata.
Second, the fact (L2) new economy, the global recession has meant that Tata would have to
control spending in the past year. In November 2012, Tata Europe announced 900 job cuts to
reduce the number of jobs at the company's European operations to more than 3,000 in just
three years. Job cuts became necessary after the European operations reported a loss of Rs 40
crore in the March quarter. The legacy of the $ 12 billion acquisition of Corus by Tata Steel
with nearly $ 10 billion in debt, half of which will come up for refinancing in the next three
years. Also, at the same time, the slowdown in the country has meant that the volume and
profitability of the steel industry is still under pressure.

Tip: Instead of continuing to make investments in the acquisition of them will now have to
look at ways to reduce costs, business and abusing a number of industries that are still
profitable Cysus Miss. treatment should hold off while Tata does not make rash investment
anymore because the current state of the economy is very volatile. Mistry should hold off
until there is more stability in that sense. Monitoring and try to improve the situation in India
now appears to be more feasible. In addition, the reduction and cutting-edge industries and
companies or grouping them under a larger unit may help to solve this problem as well.
Third, the Tata Group is constantly seeking new opportunities in various industries, the level
of corporate social responsibility has a huge impact, but not as a social responsibility has
been known to be a factor. the Tata Group is very important in business and maintain their
competitive advantage in continuing to ensure that their goals are met on this page. But with
the economy slowing down during the last CSR may not take such a high priority in the way
that businesses and operations will be run (The Economist 2014) is shown. the Tata in social
welfare and environment-related projects each year, it is still very high at USD $ 149,000,000
annually (Tata group, 2014): "during the past decade, spending our. Social investment
between Tata and Tata has been in excess of Rs.8,000 crore, "Mukund Rajan, member of the
management group and the parent brand of Tata sons Ltd, said.
Hint: Cyrus Mistry will remain grounded even with the current position has been given to
him. Making sure that they stay focused on the purpose of the Tata Group and remembering
their roots and the idea of social responsibility. Tata Group will continue to focus on their
quest is recognized around the world who have contributed greatly to society through a high
level of social responsibility. However, at this time is extremely challenging due to the
current state of the global economy, the Group Tata should focus more on the impact of
corporate social responsibility is more than that amount. Mistry should be eliminated from
the CSR program, low impact and has changed the policy of each company project to
separate CRS project's CSR unitedly.
Past challenges that may face the Tata Group Ratan Tata is that the staff and other board
members may not accept the new changes introduced Cyrus Mistry. Different styles of
leadership can be expected, and it is a form of resistance to some changes. Organizations can
also take advantage of the vulnerability of Cyrus Mistry was thrust into a new position with a
lot of expectations. Also, there may be jealousy among some of the other candidates seeking
to take over the position, Ratan Tata, they can be harmful to both groups, with Cyrus Mistry
future.
Recommendation: Organizations that want to help, Cyrus Mistry to prove his worth. People
should not have too much importance on how his start and give him the opportunity to learn
and create a legacy of his own.
At the end of the day, most of the steps that are essential for beating the challenge requires a
great deal of planning and carefully observed.
The observation must be concise and Cyrus Mistry, new leaders of Tata Group, must
be prepared to deal with any other changes that might arise.