Tata Group
Tata Group
The Tata group is 134- years old existence with almost 95 operating companies which consider as the largest private sector employer and Indian greatest foreign exchange maker, Tata Company domestically control the main private steel production and also operates the major chain of luxury hotels in the country.
At the moment, Tata groups 96 companies have been functioning in several industries such as: steel, automobile, chemicals, technology etc. Tata group operates in more than 100 countries and consider as a worldwide company and you hardly can name an industry that they have not been involved in across the globe.
In this report we try to explain the facts of Tatas current strategies in terms of globalization the main strategy that they implement in terms of involving in worldwide market is Merger and Acquisition (M&A) however they faced some issues in this regard.
Analysis of the Facts Surrounding the Case
Tata group had applied the integrating acquisition due to expand their business; for example in case of Tata tea group success in order to achieve advantages of integration and add more value and sales present in advanced market, they integrate with the U.K.-based Tetley, actually the share cost was about 271M GBP and base on the companys feedback they reported that “make this decision did not hurt the shareholders of Tata tea however it has no profit returns in a short term” basically the mission got profitable in few years after the M&A which had made. Indian market is well known as the largest marketplace which export high quantity of tea therefore Tata group require to add more suppliers to satisfy the domestic market so they merge with Tetley to first be a part of the brand and improve their productivity in order to assure meeting customers demand.
Tata steel consider as another company based on the parent group, they also faced the same problem aim to be international, but the origin reason for the Tata steel to apply the Acquiring is totally different from the Tata Tea case, Because in the early 1990s Tata steel was not as good as what is at the present, the capacity was low, and they had to face other large competitors as well at that time, the acquiring is a way for them to improve their capacity also reduce the cost and develop the management skill through the “mature market M&A” and raw materials security M&A. This strategy helped company to become the largest steel market in the world during 56th to 6th. In additional the Tata steel had made profit out of the acquiring strategy but unfortunately the price had declined in some certain period of time.
Tata motor which makes acquiring very currently for two brands which are Land Rover and Jaguar is the most popular topic in Tata group these days. In the past the main target market of Tata motor was commercial trucks and passenger cars primarily catering to middle-class consumers in India, but merging with two western luxury brands the company now steps into the higher class of the customers which caused by the increasing of the economy sector in the country or is that the plan which company get involved into, the luxury market of car, However in this process in the long term a large reduction of the price of the share occurred, which put shareholders in the condition to suffer. The company now may earn the profit from that two brands which could cover that lost that they faced, in the other hand because of the nature of the company which is the family group making decision is much easier to compare it with hierarchy structure of other companies therefore top managers must change the regulation of acquiring in company.
Define Key Issue
According to the case, the key main issue that we decide to follow is that in case of acquisition except reaping the benefits of this strategy, what are the possible threats for Tata group? And how company supposes to deal with it?”
Based on the economic growth perspective in India, Tata was considered as “rising stars” in the emerging markets. Tata expanded the economics of scale in the global market and satisfy the demand of domestic market through the M&A approach in terms of the integrating acquisition which is beneficial, However Tata management chose to ignore the financial crisis in order to enter into the integration market, it brought uncertainly future for the Tata group. In the following, three aspects which include challenges in management of integration, financial burdens and the market environment key issues will be described.
Firstly, Tata management is very unique the company originally belongs to a family business; in additional Tata group tried to hire talent to manage companies thats why Tata family is still playing the most