Tata Group Business Strategy

Topics: Tata Group, Developed country, Tata Consultancy Services Pages: 6 (2163 words) Published: April 15, 2013
TATA steel strategy was to integrate the value chain of steelmaking to aid the growth of Asia’s bubbling construction economy. When presented with the opportunity (financially the government policies made it easier) to gain access to the other markets, they later acquire CORUS which was an established name in Europe, but were not cost effective in their operations (Tarun Khanna, Krishna G. Palepu and Richard J. Bullock, 2009). This acquisition provided them the right synergy by combing the low cost upstream production in India with the high-tech research aspects of Corus and areas like procurement, marketing, back office operations and R&D. This was also required due to the trends in world steel industry whereby there has been a global consolidation (Tarun Khanna, Krishna G. Palepu and Richard J. Bullock, 2009) as key players look to gain economies of scale, accessing new and growing markets and increasing their purchasing power when negotiating with supplier and buyers (Kimberly Freeman, Suresh Gopalan and Jessica Bailey, unknown). TATA Steel therefore had to acquire Corus or risk being acquired and it also provided with them with the added capability of entering the global supply chain business. TCS on a contrary had a global presence and was considered born global (Charles Schell, Axele Giroud, Rudolf Sinkovics and Mo Yamin, 2013) since 91% of their revenue was from outside India. The uniqueness of TCS business was that their service could be delivered from India to any part of the world and TCS leveraged on cheap skilled labour via arbitrage, aggregation and adaptation as they had the economies of scales to deliver cheap solution and later on, they started to adapt according to their customers’ requirements across the different industries (i.e. Financial, Aviation, etc). In order for them to increase their revenue and prevent other competitors challenging their position in the market through arbitrage and aggregations, TCS grew organically via undertaking larger projects and at the same time acquiring firms overseas which were focusing on business process outsourcing (BPO) which was an emerging business. This equipped them with the BPO knowledge and thereby differentiating them from their competitors since they now have the ability to offer their clients a more complete solution to their IT needs (i.e. not only managing their IT equipment, but also providing them with functions like HR, payroll) while at the same time gaining new access to markets which were previously untapped. This added capabilities also allows them to cross sell solutions to their customers and further embed them into TCS as they become a 1 stop for all IT solutions. Indian Hotels globalisation plan employs a multi-domestic strategy due to a lack of market in India for hotels. Since their products are not highly standardized and were of high quality, they could not employ an economies of scales strategy like TCS. In-order to maintain their branding, it is vital for them to have controlling stake in joint ventures (JV) and this resulted in them selling minority stakes to strategic partners in their earlier forays in turning global. Instead, they climbed the value chain through management contracts, which helped them developed a global presence in the market while at the same time lowering their CAPEX. Using the uppsala model (Charles Schell, Axele Giroud, Rudolf Sinkovics and Mo Yamin, 2013) this allowed them to gain the necessary knowledge of operating in a new market through an establishment chain which they later selectively entered "gateway cities” via acquiring properties since their name was established and at the same time catering to the needs of their clientele. This strategy was also helped to diversify their risks as management contract was less sceptical to revenue and profit volatility but at the same time meeting the demand for their product. They later tried to diversify into new areas of processed food by acquiring Innovative food...

References: Charles Schell, Axele Giroud, Rudolf Sinkovics and Mo Yamin (2013) International Business Strategy. McGraw Hill: Manchester Business School
Tarun Khanna, Krishna G. Palepu and Richard J. Bullock (2009) House of Tata: Acquiring a Global Footprint. ECCH: Harvard Business School
Mohit Chandra (2010) Emerging market acquisitions in developed economies. KPMG LLP
Rishikesha T. Krishnan* Srivardhini K. Jha** (2011) Innovation Strategies in Emerging Markets:What Can We Learn from Indian Market Leaders. ASCI Journal of Management 41(1): 21–45
Rafiq Dossani and Martin Kenney (2004) Moving Tata Consultancy Services into the “Global Top 10”. Senate Hall Academic Publishing: Journal of Strategic Management Education
Kimberly Freeman, Suresh Gopalan and Jessica Bailey (unknown) Achieving Global Growth through Acquisition: Tata’s Takeover of Corus. Journal of Case Research in Business and Economics
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