Loading presentation...

Present Remotely

Send the link below via email or IM


Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.


TATA Group

No description

Wong Shu Wen

on 9 September 2015

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of TATA Group

TATA Group
Indian conglomerate headquartered -
Encompasses several primary business sectors:
chemicals, consumer products, energy, engineering, information systems, materials, and services.
Pioneers and leaders in fields ranging from crop protection and nutrition to fibre optic communication systems, from drug discovery and development to supercomputing technology and e-commerce, and from personal armour to personalised jewellery.
2013-2014 financial revenue:
$103.27 billion

Source: (The Economic Times, 2015)
Discuss how does TATA Group create value by using a diversification strategy?
Adding new business units producing
new products

from the existing core business.

How diversification strategy creates value for TATA group?
What environmental factors that influence TATA Group to design TATA NANO ?
1. Inflation of oil prices (economic)

2. High demand for cheaper alternatives (demographics)

3. Competition
Evaluate the effectiveness of TATA Motor's corporate-level strategy that the company used to protect its market leadership in mini vehicle segment.
Corporate-level strategy :

Actions taken by a firm to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.

To achieve
(Beard & Dess, 1981).

Generally are for large organization (Aykan, Aksoylu & Sommez, 2013)
Which corporate strategy does TATA Motors used?

TATA Group
Wei Wen
Shu Wen

97% of the parts are locally sourced (cheap indian labour market & potential skilled workers)
For instance: Tata Steel
Vertical integration

Involves variety decisions - provide goods/services
- purchase from
(Harringan, 1985)
Taper integration
Horizontal Integration
Acquisition of Jaguar & Land Rover
Invest outside of the Asia zone
Target not only the middle class but the luxury automobiles market as well
Acquisition of Korean truck division [Daewoo Commercial Vehicle Company]
- strong potential of export
- market shares/profits
- art of doing international business
- different work experiences (culture, language, management practices)
Cars and trucks (manufacture in different factories)
Related Diversification
Market development
Acquiring suppliers or customers (vertical integration)
Defensive / offensive strategies
Acquiring competitors (horizontal integration)
Market development by entering different geographic markets
Jamsedji Tata
Related Diversification
Unrelated Diversification
or related product and service line to an existing core business.
Related and Unrelated diversification
Foundation (1868-1931)
Textile industry (1874)
The Central India Spinning, Weaving and Manufacturing Company is set up.
Iron and steel industry (1907)
Tata Steel is established to set up India's first iron and steel plant in Jamshedpur.
Education and Training (1911)
The Indian Institute of Science is established in Bangalore to serve as a centre for advanced learning.
Consolidation (1932-1989)
Chemicals Industry (1939)
Tata Chemicals, now the largest producer of soda ash in the country, is established
Engineering Sector (1945)
Tata Engineering and Locomotive Company is established to manufacture locomotive and engineering products.
Expansion (1990 onwards)
1996: Telecom Sector
2001: Insurance Industry
Tata AIG - a joint venture between the Tata group and American International Group Inc (AIG) - marks the Tata re-entry into insurance.

2006: DTH Sector
Tata Sky satellite television service launched across the country. Foundation stone for the Tata Medical Centre unveiled in Kolkata.
2009: Tata Motors
Tata Motors announces commercial launch of the Tata Nano; Tata Motors ushers new era in Indian auto industry with its new, world-standard truck range.
2014: Aviation Sector
India’s newest airline, Air Vistara, is expected to make its debut later in the year. Vistara is a joint venture between India’s Tata Sons and Singapore Airlines.
Tata Teleservices (TTSL) is established to spearhead the group's foray into the telecom sector
Motive of diversification strategy
Greater amounts of diversification reduces managerial risk

Emerging economies’ multinationals

These companies may use acquisitions in order to access resources they do not have, rather than to deploy un-imitable ones in the way that is predicted by the standard models of traditional multinationals

Sharing resources and transferring the capabilities across two businesses to reduce cost.
For Example:
Tata Motors manufacturing plant in Jamshedpur, India.
Multi-axle tucks, tractors-trailers and mixers.
New Tata Prima (2009)
World-class Technical Training Centre and Driver Training centre.
The Plant incorporates a flexible approach to manufacturing.
Ready to respond rapidly to changing customer needs.

Source: Tata Motors (2015)
Indonesian coal mines couldn’t meet some of its “financial covenants” last fiscal.
Tata Power Co. Ltd plans to transfer three quarters of its stake in Indonesian coal mines.
This restructuring gives comfort to the cash flows.

Source: Shivanshtyagi (2012)
Economic of scope
Tata's Corporate Relatedness
Restructuring of assets
What is a Tata Nano?
100,000 rupee (US$1,500)
A car that has :


Tata Nano (2008)
Manufactured in India, Sanand plant in Gujarat
Target market : low- middle income earners mainly rural population

(Strategic Direction, 2009)
Environmental factors that affected Tata Motors :
Economic segment
: nature and direction of an economy of which a firm competes in
Rise in oil prices around the world (1.3% increase India)
Developing countries (eg : India) suffer more
High Demand for cheaper alternatives
Demographic segment
: concerned with the characteristics and features of a population
Population size is 1.175 Billion (70% rural)
Income groups in India :
Low (0 - 3,000 Rs)
Middle (3,001 - 25,000 Rs)
High (25,000 Rs and above)

Travel demand and road transport led to a increase demand for cars by 9.8%
Related and supporting industries
: where firms coordinate or share activities in the value chain or value system (supply chain)
Industrial production growth rate (7.5%)
Communication :
a) Internet users (5.3%)
b) Telephone mobile users (6.1%)

Main competitors : RE 60 (Bajaj Auto), Maruti 800 & Alto (Suzuki)
Inflation of oil prices
(Bhattacharya, 2001; World Bank 2015)
(Storchmann, 2005; World Bank, 2015)
Conclusion : Competitive
Factor Conditions
: refers to inputs used as factors of production
India's automotive industry provides very low average manufacturing wages (US$ 430 in 2006)
Inbound FDI ( 6,598 million US$)

Demand Conditions
: the size and growth as well as the sophistication of domestic demand
Domestic Automotive sales growth (7.5%)
Home country firms need to continually innovate and upgrade their competitive positions (Smit, 2010)
Indian consumers demand sophisticated products at a lower price (Choudhary et.al, 2012).
Consumer Goods Industry (1917)
Tata Oil Mills Company being established to make soaps, detergents and cooking oils.
Aviation Sector (1932)
Tata Airlines, a division of Tata Sons, is established, opening up the aviation sector in India.
Beverage Industry (1962)
Tata Finlay (Tata Tea), one of the largest tea producers, is established. Tata Exports is established.
Source: (Allen. D & Gorgeon. A, 2002)
TATA Motor

it remains the world cheapest car
increase pollution
Unrelated Diversification
Operational Relatedness
Corporate Relatedness
Tata Motor
Tata Nano
Magic Iris
Tata Bus
Tata Bolt
Sumo Gold
Super Ace
source: Tata Motors, 2015
Source: Tata Motors, 2015
Related diversification increases performance as compared to unrelated diversification (Park & Jang, 2013).
source: Tata Motors, 2015

Same industry doing the same stage of production for the creation of a monopoly.
TATA Motors
Unique designs to suit different requirements in international market (Africa, South Asia, Latin American)
(Sardy & Fetscherin, 2009)
(Sardy & Fetscherin, 2009)
Expand the business to different countries :
Europe, Russia, Africa, Middle East, South America & South-East Asia
source: Tata Motors, 2015
source: Tata Motors, 2015
Allen. D & Gorgeon. A (2002). Diversification Strategy. IE Business School De2-106-1.
Retrieved from http://openmultimedia.ie.edu/OpenProducts/diversificacion_i/diversificacion_i/Curso.pdf

Aykan, E., Aksoylu, S, & Sonmez, E. (2013). Effect of support programs on corporate
strategies of small and medium-sized enterprises. Procedia – Social and Behavioral Science, 99, 938-946. doi: 10.1016/j.sbspro.2013.10.567

Beard, D.W., & Dess, G.G. (1981). Corporate-level strategy, business-level strategy and
firm performance. Academy of Management Journal, 24(4), 663-688. Retrieved from: http://www.jstor.org/stable/256169

Bhattacharya K., & Bhattarcarya I. (2001). Impact of Increase in Oil Prices on Inflation
and Output in India. Economic and Political Weekly. 36(51), 4735-4741.

Briglauer. W (n.d). Motives for Firm Diversification: A Survey on Theory and Empirical
Evidence. Austrian Economic Research Institute. Retrieved from

Choudhary V., Kshirsagar, A., & Narayanan, A. (March, 2012). How multinationals can
win in India. Retrieved from http://www.mckinsey.com/insights/winning_in_emerging_markets/how_multinationals_can_win_in_india

Contemporary Strategy Analysis (n.d). Chapter 15 Diversification Strategy. Notes and
Suggestions on Self-Study Questions. (6th edition). Retrieved from http://higheredbcs.wiley.com/legacy/college/grant/1405163097/self_study_ans/ch15.pdf

Goldstein. A (2008). The Internationalization of Indian Companies: The Case of Tata.
CASI Working Paper Series Number 08-02. Retrieved from http://www.sajaforum.org/files/AG-WP-final.pdf

Hanson, D., Hitt, M.A., Irelnd, R.D. & Hoskisson, R.E. (2014). Strategic management:
Competitiveness & globalization (5th ed.). South Melbourne, Australia: Cengage Learning

Harringan, K.R. (1985). Vertical integration and corporate strategy. Academy of
Management Journal, 28(2), 397-425. Retrieved from: http://www.jstor.org/stable/256208?seq=1#page_scan_tab_contents

Kakani. K. R & Joshi. T (2006). Cross Holding Strategy to Increase Control: Case of the
Tata Group. XLRI Jamshedpur School of Management Working paper: 06-03. Retrieved from http://www.hajarian.com/esterategic/tarjomeh/akbari2.pdf

Madhok. D & Dutta. S (2014). India’s Newest Airline, Singapore Airlines joins Tata in
Indian skies: Ten things we know about Vistara. Quartz India. Retrieved from http://qz.com/247470/singapore-airlines-joins-tata-in-indian-skies-ten-things-we-know-about-vistara/

Ojha, P. D., & Bhatt V.V. (1964). Pattern of Income Distribution in an underdeveloped
economy: A case study of India. 54(5), 711-720.

Park, K., & Jang, S.C. (2013). Effects of within-industry diversification and related
diversification strategies on firm performance. International Journal of Hospitality Management, 34, 51-60. doi: 10.1016/j.ijhm.2013.02.009

Sardy, M., & Fetscherin M. (2009). A Double Diamond Comparison of the Automotive
Industry of China, India, and South Korea. Competition Forum, 7(1), 6-16.

Shivanshtyagi (2012). Restructuring of assets by Tata Power. Indian Power Sector.
Retrieved from http://indianpowersector.com/home/2012/05/restructuring-of-assets-by-tata-power/

Smit, A.J. (2010). The competitive advantage of nations: is Porter’s Diamond Framework
a new theory that explains the international competitiveness of countries? Southern African Business Review, 14(1), 105-130.

Storchmann, K. (2005). Long-Run Gasoline demand for passenger cars: the role of
income distribution. Energy Economics, 27, 25-58.

Tata Motors (2015). Manufacturing in Jamshedpur. Retrieved from

The Economic Times (2015). Tata Group History: From Jamshedji to Ratan Tata.
Retrieved from http://economictimes.indiatimes.com/tata-group-history-from-jamshedji-to-ratan-tata/2010-tata-docomo-launches-its-3g-services/slideshow/8602574.cms

The Economist (2011). The Tata Group Out of India. Retrieved from

Xiaorong. L (2007). Diversification and Corporate Performance: Evidence from China.
Maastricht School of Management. Retrieved from http://www.msm.nl/~msmnl/resources/uploads/2013/10/Appendix-12c-XiaorongLi.pdf

(2009) Selling to the bottom of the pyramid : The case of Tata Nano. Strategic direction,
25(6), 10-12.
Full transcript