Tata Group (TG) is a multinational conglomerate with 139-year history with HQ located in Mumbai.

It has mixed ownership consisting of Tata Sons, MFs, Gov., Foreign Investors and others. It grew rapidly through M&A into mainly unrelated businesses. The TG achieved a point when it re-focused its strategic objectives from global expansion of a global conglomerate to a more unified entity. As of 07 it comprised 96 companies in various industries. Its operating companies could be divided into 7 main categories: Engineering, Services, Materials, Energy, Chemicals, Info Systems and Communications and Consumer Products. The key decision maker in TG is Ratan Tata the Chairmen and grandson of the TG founder. In my analysis I will focus on 2 major sectors, that has the biggest share in overall TG revenue Engineering (Tata Motors) and Materials (Tata Steel). They represent 30.1% and 21.4% of total TGs revenue accordingly. There is another sector that has the second largest revenue share - Info Systems and Communications and Consumer Products it represents 25.1% of the revenue. However the case does not have enough information to do an in-depth analysis, thus I am going with the 3-rd largest sector. The two industries under the focus are steel industry and automotive industry.

Overall, both groups are staying healthy, though several balance sheet changes (M&A) impact ratios and debt levels which are really high. Compared to its competitors Tata Steel remains a smaller player in revenues with $1.4B in revenues and only $9.8B market share (the smallest compared to biggest peers). On the other hand, it demonstrates higher profitability then the rest of competitors with one of the highest ROE and stable revenue growth, unlike many of competitors that experienced negative growth. However it had the highest in the industry leverage ratios; that could impact future company ability to borrow. In Auto Industry, Tata Motors was the biggest leader with Rs.270B market share as of 07 and Rs.325B in revenues. Its PM was somewhat on a lower end of 28%, compared to the highest in the industry 48%. Tata Motors had strong, 2nd highest ROE, missing only 300bps from the leading 34.09%. It showed mediumstrong revenue growth as well. Overall both sectors exhibit healthy indicators compared to the industries peers. Steel Industry (international): Power of Suppl. M-L. Raw materials are commodity. It has low switching costs but is vulnerable to price changes. There are many examples of backward integration to leverage dependence on ore price. Power of Buyers is medium. Buyers have low switching costs and price-sensitive, overall demand depends on multiple economic factors high fluctuations in demand/supply. Rivalry is M-H. there is high competition within India and outside of it. Competitors are numerous and close in size, high exit costs, industry growth is high in double digits. Threat of substitutes is low. Steel is still widely used though there are alternatives to it. Threat of new entrants - medium. Though customer switching costs are low, the capital requirements are high; there are high government barriers for new entry. What makes the industry attractive, besides the growth is that it lives through structural changes in the global market it presents new opportunities. Auto industry: suppliers M-L. Some switching costs could be low, while others could be extremely high (e.g. specific car parts), it gives more power to suppliers. Power of buyers is high. Consumers are price sensitive, it represents a significant fraction of consumers costs; require quality of product and related services (e.g. complaining about high price for car parts). Power of substitutes is high. Potential substitutes could be-public transport, 2-wheel vehicles, walking etc. Rivals power is high. All competitors are numerous, of similar size and fierce rivalry; the exit costs are high, the market though is growing (due to Asia market), it has its limitations. New entrants is low: the capital requirements are high; multiple governments exhibit high barriers for new entry. Overall the industry is attractive due to high margins and potentials in Asian markets. Profit pools within TG. Two highest categories with the potential for higher profits are steel industry and consumer products. There is a huge potential for growth in the consumer industry group that TG should capitalize on. (see Table 1) Resources and capabilities: Tata Group major resources are: its brand equity, its experience as the leader on the forefront of developing industries in India, intranet and its lateral capabilities throughout the group (innovation and leadership has been encouraged throughout the entire group). Its core competencies include: shared knowledge across the company, company networks, availability of capital through the size of TG (please refer to p.10 of the case) for future growth and vertical integration. It would be hard to reduplicate the recognition and reputation of the brand, the 100 years of entrepreneurial expertise that could be applied to any industry or any market as well as the shared knowledge across the group. TG overall diversifications strategy is similar to its two groups diversification strategies: it is a combination of dominant logic aimed to achieve and fully realize synergies. They have been heavily working toward developing corporate culture, and overall diversification approach that would aim the long term profitability of the group. The most recent M&As show that TG has switched from traditional strategy of 80s-90s into alternative diversification strategies a string-of-pearl acquisition strategy they not necessarily try to lead by the size of the merger (though, the M&As are quite big), rather they try to buy and add what could strategically add to TGs missing gaps in the current structure. They try to re-focus from how big thinking into how wouldit get us to the point we want to be diversification strategy.

Table 1