tata industries profile

April 11, 2023 1BUSINESS STRATEGY

Prop . PUTTU GURU PRASADFACULTY MEMBER

INC [email protected]

BUSINESS STRATEGY

OF TATA GROUP

Jamsetji Nusserwanji Tata starts a private trading firm, laying the foundation of the Tata Group in 1868.

The Central India Spinning, Weaving and Manufacturing Company is set up, marking the Group's entry into textiles in 1874.

The Indian Hotels Company is incorporated to set up the Taj Mahal Palace and Tower, India's first luxury hotel, which opened in 1903

The Tata Iron and Steel Company (now Tata Steel) is established to set up India's first iron and steel plant in Jamshedpur. The plant started production in 1907

The first of the three Tata Electric Companies, The Tata Hydro-Electric Power Supply Company, (now Tata Power) is set up in 1910.

The Indian Institute of Science is established in Bangalore to serveas a centre for advanced learning in 1911.

The Tatas enter the consumer goods industry, with the Tata Oil Mills Company being established to make soaps, detergents and cooking oils in 1917.

Tata Airlines, a division of Tata Sons, is established, opening up the aviation sector in India in 1932..


Tata Chemicals, now the largest producer of soda ash in the country, is established in 1939Tata Engineering and Locomotive Company (renamed Tata Motors in 2003) is established

in 1945 to manufacture locomotive and engineering productsTata Industries is created for the promotion and development of hi-tech industries in 1945Jawaharlal Nehru, India's first Prime Minister, requests the Group to manufacture cosmetics

in India, leading to the setting up of Lakme.India's major marketing, engineering and manufacturing organization, Voltas, is established in

1954.Tata Finlay (now Tata Tea), one of the largest tea producers, is established in 1962Tata Exports is established. Today the company, renamed Tata International, is one of the

leading export houses in India in 1962Tata Consultancy Services (TCS) in 1968

India's first software services company, is established as a division of Tata Sons 1968.Tata McGraw-Hill Publishing Company is created to publish educational and technical

books in 1970Tata Economic Consultancy Services is set up to provide services in the field of industrial,

marketing, statistical and techno-economic research and consultancy in 1970Titan Industries – a joint venture between the Tata Group and the Tamil Nadu Industrial

Development Corporation (TIDCO) – is set up to manufacture watches 1984Tata Teleservices (TTSL) is established to spearhead the Group's foray into the telecom sector

in 1996Tata Indica – India's first indigenously designed and manufactured car – is launched by Tata

Motors, spearheading the Group's entry into the passenger car segment 1998.

April 11, 20233

BUSINESS STRATEGY

Tata Tea acquires the Tetley Group, UK. This is the first major acquisition of an international brand by an Indian business group in 2000

Tata AIG – a joint venture between the Tata Group and American International Group Inc (AIG) – marks the Tatare-entry into insurance In 2001

The Tata Group acquires a controlling stake in VSNL*, India's leading international telecommunications service provider 2002

Tata Motors launches CityRover – Indicas fashioned for the European market. The first batch of CityRovers rolled out from the Tata Motors stable in Pune on September 16, 2003.

Tata Motors acquires the heavy vehicles unit of Daewoo Motors, South Korea in 2004TCS goes public in July 2004 in the largest private sector initial public offering (IPO) in

the Indian market, raising nearly $1.2 billlionTata Steel acquires Singapore-based steel company NatSteel by subscribing to 100 per

cent equity of its subsidiary, NatSteel Asia in 2005Tata Credit Card launched in 2006


Ratan N Tata, chairmanNoshir A SoonawalaFarrokh K KavaranaIshaat HussainRK Krishna KumarKishor A Chaukar, managing directorS RamadoraiNawshir MirzaB MuthuramanPrasad R MenonRavi Kant


http://www.tata.com/0_about_us/management/ratan_tata01.htm

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http://www.tata.com/0_about_us/management/krishna_kumar.htm

Mr Tata received a Bachelor of Science degree in architecture from Cornell University in 1962.

He worked briefly with Jones and Emmons in Los Angeles, California

He completed the Advanced Management Program at Harvard Business School in 1975


The government of India honored Mr. Tata with one of its highest civilian awards, the Padma Bhushan, on Republic Day, January 26, 2000.

An honorary doctorate in business administration by the Ohio State University, technology by the Asian Institute of Technology, Bangkok science by the University of Warwick.

Mr Tata joined the Tata Group in December 1962

He was appointed the Director-in-Charge of The National Radio & Electronics Company Limited (Nelco) in 1971.

In 1981, he was named Chairman of Tata Industries.


Ratan N Tata is the Chairman of Tata Sons, holding company of the Tata Group, and major Group companies including, Tata Motors, Tata Steel, Tata Consultancy Services, Tata Power, Tata Tea, Tata Chemicals, Indian Hotels, Tata Teleservices and Tata AutoComp. He is also Chairman of two of the largest private sector promoted philanthropic trusts in India. During his tenure, the Group has further expanded its global reach, with its revenues growing over sixfold to Rs 97,000 crore ($21.9 billion).

In 1981, he was named Chairman of Tata Industries, the Group's other holding company, where he was responsible for transforming it into the Group's strategy think-tank and a promoter of new ventures in high-technology businesses.

April 11, 2023 BUSINESS STRATEGY 9

Established in 1945, Tata Motors is India's largest automobile company that extends across commercial, passenger and utility vehicles, the company generated revenues of Rs.32,426 crore (USD 7.2 billion) in 2006-07

The company began manufacturing commercial vehicles in 1954 with a 15-year collaboration agreement with Daimler Benz of Germany.

The company launched the compact Tata Indica in 1998, the sedan Indigo in 2002 and the station wagon Indigo Marina in 2004. The next car that was rolled out was Nano, in January 2008. Tata Motors already distributes Fiat-branded cars in India

Tata Sumo was launched in 1994 and Tata Safari in 1998. Variants of these models are also available in the market.


Tata Motors has over 1400 engineers and scientists in six R&D centers in India, South Korea, Spain and the UK.

The company's R&D facilities include India's only certified crash-test facility and a hemi-anechoic chamber for testing of noise and vibration.

The company draws on the expertise of leading international design and styling houses such as the Institute of Development in Automotive Engineering and Stile Bertoni in Italy.


Mr. Ratan N. Tata said, "I observed families riding on two-wheelers - the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family. Tata Motors' engineers and designers gave their all for about four years to realize this goal.

Stylish, comfortableFuel-efficient engineMeets all safety requirementsEnvironment-friendly


The Tata Motors has signed the Jaguar and Land Rover (JLR) deal with Ford last evening, which is estimated to be valued between 2-2.5 billion dollars.

Commerce and Industry Minister Mr.Kamal Nath said “My congratulations to the Tatas and entire corporate world as they have held India's private sector flag high. The world is looking at India.”


STRATEGIESThe wave of liberalization has given Indian corporate a new dimension to ‘Globalization’. Tata Motors, a trendsetter in the Indian automobile industry, is setting a new direction to the globalization of the Indian auto industry.

The question that has been in the minds of the senior management at Tata Motors was — Will we remain exporters of vehicles or do we venture into the international automobile market as a company that can match the best in the business?

Answer: The first step was to align the international business to the two business units — the Passenger Car Business Unit (PCBU) and the Commercial Vehicle Business Unit (CVBU), to bring greater focus and increased synergy between the domestic and international operations.


Dr.V. Sumantran, Executive Director, PCBU, says, "The company has now embarked on a road where we have made exports an integral part of our business. We do not think of sales outside the country as a separate activity. It is now integrated within the mission of each of its businesses.“

Ravi Kant, Executive Director, CVBU, says "In a cyclical business such as ours, it is important that we hedge against cyclicality.

International business offers an opportunity as different countries go through peaks and troughs in demand at different points in time. Our capacity utilization is more effective and risks of downturns can be mitigated."


The Business Units have classified different markets in terms of size, growth opportunities, product segments and target volumes. Therefore, from being present as an exporter in 70 countries, the company today focuses on 15 to 20 key countries, where it will have a significant presence in terms of volumes and market shares. As Dr Sumantran says, "With this integration and focus, we have stepped out in specific areas with specific products. It will be unrealistic for us to be in all places and all product segments. We will choose regions very carefully and base our strategy on well-connected product strategies. We should be in the right regions with the right product at the right time."


The implementation of the business strategy will be in three stages:

•Product up gradation

•Sales and distribution processes

•Penetration into new markets

Tata Motors has taken a number of initiatives to strengthen both product reliability and durability and marketing processes.

Enhancing distribution reach and a robust sales process system have been key elements in consolidating the company’s leadership position in the domestic market.


Mr Kant “said” "What we needed was an integrated approach where we invest in all the critical elements — product up gradation, sales processes, distribution and above all, people.“

Sales process system and face-to-face customer meets through road shows and service workshops has started yielding results.

Recently, a large contingent of dealers from South Africa was invited to visit the company’s facilities in Pune and experience the new face of the international business.


The second part of the business strategy is to make an entry in new and yet uncharted markets, such as China and other countries. Besides the assembly plants that Tata Motors has in Bangladesh and Malaysia, the company’s recent order for 500 buses from Senegal will involve providing technical and commercial assistance to the Senegalese government for setting up a bus body building plant.

Tata Motors has been short-listed for South Africa’s "Taxi Project" in which the government will provide an entirely new transport system in that country. A joint venture project for bus body building in Ukraine and serious due diligence into the opportunities available in the Chinese market are other areas where Tata Motors is looking to create new opportunities.


Identified new segments in these regions. The business strategies will be country specific. The nature of our business will depend on the country we are working in. In addition, inorganic growth through acquisitions could also quicken the process of internationalization.

" The company recently signed a MOU with Daewoo Commercial Vehicle Company in Korea to acquire its truck plant. The synergies are significant – a presence in the 250 to 400 HP range of trucks is what the Korean company brings to the table. This complements the existing product range of Tata Motors which delivers vehicles up to 210 HP. In the commercial vehicle business, says Mr Kant,


"One must understand that different markets are in different stages of evolution, depending on that country’s economic development. Our competitive edge will be in our ability to offer cost-effective products and services to each market, suited to the stage of development of that market. Our capabilities in design, world-leadership, software skills, technology assimilation capabilities and labour productivity will ensure that we are not only benchmarked with world-class companies, but are ourselves benchmarks in certain areas.“

On the road to globalization, Dr Sumantran points out that the Rover agreement has been an important step in helping Tata Motors to gain very quick access to a fairly large market and a large distribution network. "Working alone in this area would have taken us much longer to create a distribution network.


“The exposure that the company and the products have received through the agreement validates the belief that we have arrived at a significant milestone in promoting the Tata brand," elaborates Dr. Sumantran. "Rover is getting a Tata product. It is a road that many automakers have tread in the past. It will take us more than three years to arrive at our goal. But at least we have started the journey in that direction.“

By remaining connected with the international markets, one’s learning improves. One is able to draw on experiences in different markets and create strong synergies. In doing so, the company will have created world-class products to fight competition in the domestic market as well, with little extra investment. This assures a greater degree of stability and, going forward, will strengthen the company’s ability to manage risk.


Clearly, it takes the right mix of people with the right skills to make this happen. Innovation, knowledge, commitment and pride have been Tata Motors’ greatest asset. It has amply demonstrated that it can meet the challenge of change. "The company is now on a course that will need a new mindset," says Mr Kant.

What drives the Tata Motors strategy?With the Nano on one end and the Land Rover-Jaguar deal at the other, is Tata Motors trying to do too much, in too little time?

Tata told that "a promise is a promise", hinting at the ability of his

company to deliver even in the face of brutal skepticism.


Why the world is looking at Tata Motors, the Tata Group's automobile venture?

The company is associated with American auto maker Ford's premium brands Land Rover and Jaguar.

Tata is competing with a group of private equity players including one with Jacques Nasser, former Ford CEO, at the helm. Between launching the Rs 1-lakh Nano and the Land Rover and Jaguar that are priced anywhere between 30 and 100 times more, Tata Motors is aiming for a presence across the spectrum.


At one level Tata might well compete with two-wheeler manufacturers - Ratan Tata has admitted that Nano has been inspired by the vision of middle-class Indian families, complete with children, balanced precariously on two-wheelers.

Too much, but too late? “Smaller automobile companies like Tata Motors or the French automaker Renault have little option but to develop low-cost cars to grab global attention," says another analyst.

His rationale: All the bigger car makers are concentrating on developing bigger, sturdier and more powerful cars, because that is where the demand is. In most developed car markets, even the small car (hatchback) is no longer a sub-1,000 cc car, but a more powerful 1-litre (1,000 cc)


"No automobile company today can survive with presence in one single market alone. You have to go global," states Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers (SIAM). Chenoy adds that companies need to grow volumes in other markets, not just by exporting but by establishing manufacturing facilities in these countries. For instance, the Tata Group has started production facilities in Thailand and South Africa for its commercial vehicles (it also has assembly lines for cars).

One in a billion The 623-cc Nano targets a market that has been left vacant and unguarded by most global players. The Nano may meet not just the requirements of the Indian market, particularly in the smaller, tier-three and tier-four towns, but could also find a huge export market in other South Asian, African or Latin American countries.


The Nano could also give Tata Motors crucial global-scale volumes and access to a larger distribution network, besides helping it to churn its models faster.

Typically, Indian car models roll out of plants for a far longer time than any global car. For instance, it took Tata's first car, the Indica, about nine years to roll out million cars. Even that was a record, of sorts, in India.

Brands or high technologyIf the Nano is intended to reach the masses across the globe, much like the global small cars Model-T, Beetle and Mini did in the 20th century, what is the strategy behind bidding for the Land Rover and Jaguar? That's a question others, too, have pondered.


Some feel that the Tatas can leverage the benefits of the acquisition with their existing business, others pooh-pooh the suggestion.

The Jaguar-Land Rover deal is meant to fuel Tata Motors' global aspirations. This buy-out will establish its global footprint as a company with premium brands," says Nagporewalla.

The acquisition can give Tata Motors access to a readymade product pipeline and technology. Developing a car from scratch could otherwise take the company anywhere between two and five years. The Nano, for instance, has been talked about for more than four years.


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