India has traditionally been depicted as an inefficient centrally planned economy, characterised by relatively high levels of government interference

in the corporate sector, and high levels of scepticism towards foreign firms entering the domestic market. However, in recent times, since the early 1990s, the process of globalisation and the coming of the Asian Financial Crisis have forced the Indian economy to pursue a rapid development and economic transformation towards a free-market economic system. These changes, although gradual, have forced existing business groups within India, such as Tata, to make structural changes to the way their organisations do business, or risk being driven out of the market. Business Traditions of India: Similar to the strategy undertaken by the Japanese government with the establishment of the Zaibatsu, the Indian government, in the early twentieth century, believed that adopting protectionist policies would allow the nation to prosper economically. Several regulatory bodies, such as the Monopolies Inquiry Commission and the Foreign Exchange Regulation Act, helped increase government control and supervision over the private sector. The Industrial Licensing Policy for example, put imposed very strict government licensing requirements on businesses, therefore allowing the government to control entrants to a particular industry. Contracts and property rights generally lacked strict enforcement, which contributed to high levels of uncertainty amongst businesses, and made it harder (and far more risky) for smaller firms to compete with the already-established larger corporations; this gradually led to the creation of monopolies. Following what was termed the balance of payments crisis in 1991, the Indian government went about initiating a series of structural reforms to the economy, which brought about large changes in the market conditions for IBGs such as Tata. Licensing regulations were removed, making it easier for smaller firms to compete in the domestic market, government regulation in the economy was heavily reduced (through the process of deregulation), and import/export controls were greatly reduced, making it more affordable for foreign firms to establish business in the country. Further, the process of globalisation, i.e. the opening up of international borders to flows in trade, investment, people, and technology, brought along increased competition for IBGs, as overseas firms began investing in Indian markets. This essentially meant that all businesses were put on a level playing field, and therefore existing IBGs who were reliant on government support and protection to maintain business operations, now had to become more efficient to remain competitive in the domestic markets.

Manufacturers, Markets, Sales, & Profits: Aside from being the largest business group within India, TATA is also the largest employer in the Indian private sector, employing over 400,000 people. The organisation has firms operating in 7 different sectors, including Materials, Engineering, Information Technology and Communications, Services, Energy, Consumer products, and Chemicals. The group has approximately 100 companies running, the largest of which are Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, and Tata Communications. The group has over 3.5 million shareholders, and has a total estimated net worth of well over $100B US. Globalisation has opened up significant opportunities for the group to widen its international operations; TATA has established operations in 80 different countries, and exports its manufactures to 85 different nations. A clear sign of Tatas success in adapting to the challenges and pressures of globalisation is the gradual change in the proportion of its total revenue earned outside of the domestic market. Currently, its revenue from foreign operations is $38.7 billion, (the majority of which comes from Tata Motors and Tata Steel), making up approximately 57% of the groups total revenue. Although currently high, this proportion has actually decreased by around 10% in the last couple of years thanks to the effects of the 2008 Global Financial Crisis (GFC), and as such, Tata will be faced with the future challenge of having to develop products that better meet the needs and wants of other African and Asian economies, so as to further increase their influence onto international markets. Realising the importance of increasing the product relatedness of its operations and reducing the degree of unrelated diversification existent, TATA has made a number of changes to its business structure in the post-1991 Indian economic reform period. The group has entered several new markets including Passenger Cars, Insurance, Retailing, Telecommunications, Home entertainment, and Pharmaceuticals, and at the same time, has exited several markets that were seen as being unrelated, such as Soaps and Toiletries, Cosmetics, Paints, Cement, and Textiles. In saying this, Tatas operations still to this day remain relatively unrelated, the group has been able to maintain its competitiveness within the Indian economy primarily due to the fact economic reform has been rather slow and gradual, and is still ongoing. Tata will however, need to make significant structural changes in the future to further increase the product relatedness of its operations; the organisation will attempt to undertake aggressive development into the retail, real estate, and hospitality industries, and widen their focus on

financial services, as they realise this is where a large proportion of their existing business already lies. As the organisation gradually implemented reforms to its business structure, to adapt to the changing economic conditions, it has seen significant corresponding increases in overall revenue figures. Since 1992, Tatas annual revenue has risen from $5.2 billion to $67.4 billion; a large proportion of this increase can be attributed to the success of the groups rapid and aggressive expansion strategy into foreign markets. In 2010, the organisation had ownership of assets with a total worth of close to $53 billion, and made an annual net profit of $1.74 billion.