House of Tata - Case Study Example

? House of Tata Table of Contents 1a. Creation of a group brand 3 1b. Building of equity interlocks among the Tata companies 4 1c. Sale of a part of Tata Industries Ltd. To the Hong Kong based Jardine Matheson Group 5 1d. Revitalization of TAS 6 2. 7 Reference 10 1a. Creation of a group brand While discussing the relevance associated with the creation of a single group based brand for the Tata, it is of high importance to focus on the business scenario that existed during that particular time period. The scenario of India before the liberalization of the economy of India was filled with challenges for the business communities and enterprises. The license raj along with the dominating factor of the red tapes brought into effect significant amount of impact in regards to the irreparable financial bleeding of the business houses and entities. A lot many barriers also emerged in the business scene because of the tremendous opposition from various political parties. With the opening of the Indian economy, foreign direct investment was allowed to flow into the country. With the removal of various government based restrictions, varying amount of investments by the private and family held organizations was allowed in multiple sectors all over the country. It is of high relevance to highlight that the opening up of the economy in regards to foreign and private investments in various sectors promoted a significant amount of business opportunities. It is of high importance to mention that the diverse range of companies that were held together under the highly efficient leadership of JRD Tata has always moved forward and operated in a decentralized structure in regards to tackling the daily business operations. Because of the power of decentralization promoted by the leader JRD Tata himself, the independent set of companies which are centrally owned by the Tatas focused on capitalizing on the various growth opportunities provided by the opening up of the Indian economy. Needless to say, the Tata companies which are apt in handling their own business ventures tried entering into business, thereby diversifying from their core set of operations. Talking in these lines, it is important to mention that through the ownership of multiple companies, the Tatas were actually providing a diversified set of value offerings in regards to its numerous products in the markets. A presence of a single brand would have helped the India’s most popular corporate house to significantly communicate a unified set of value offerings for the company to the markets of India as well as around the world. Talking in regards to the value additions that might have happened in regards to the development of a single corporate brand, it needs to be mentioned that because of the ownership of multiple companies, the Tatas needed a strong and single line of communication that will communicate the brand’s superiority to the others. While in the past, the presence of JRD Tata helped in communicating the values of the group in a central manner, in the recently changing times, a single corporate brand will solve the purpose. Talking in regards to the positives, associated with the formation of a brand, it needs to be highlighted that the single corporate brand based identity will act as a pillar of strength and communication for all the associated companies of the Tatas. Also, it will help in communicating the brand values of the Tatas in the open markets in comparison to other rival brands. Talking in the lines of negativity, it needs to be maintained that the companies will have to stick the code of ethics and values promoted by the entire group. Non failure to address the values promoted will lead to tampering of the entire brand image for the corporate house. 1b. Building of equity interlocks among the Tata companies It is of utmost importance to mention that the Tata group of companies has ownership for multiple companies. Because of the leadership style practiced by JRD Tata, who was credited as the senior most commander of the group before Ratan Tata, the Tata owned companies has tried entering into various new markets on their own efforts. Also, the opening up of the new economy played a major role in regards to providing new sets of challenges to all the companies. The entering into new avenues for the purpose of capitalizing on significant business opportunities along with the opening up of the Indian economy resulted in the increase of threats from various rival companies. Thus the development of a single brand was felt extremely necessary as it will help in a great way in the process of value communication for the subscribing companies in the open market. It is of high importance to consider that the single brand will communicate the brand values for the entire group of companies owned by the Tatas. This is a challenge in itself as it requires compliance by all the subscribing Tata companies in regards to following the discussed and accepted set of policies, core values and ethics. However, it needs to be highlighted that by developing a policy of brand equity for all the companies, it will become easier to the entire set of Tata companies to communicate the values to the desired target market in a largely competitive business scenario. The advantage associated with the equity factor is that it will help in developing a strong brand identity for the corporate ownership of the Tatas. The cons is that it will need a subscription fee for the Tata companies as well as following the rules of doing business on the lines of core values and ethics promoted by the Tata Brand Equity Scheme. 1c. Sale of a part of Tata Industries Ltd. To the Hong Kong based Jardine Matheson Group It is of high importance to mention that the supreme leader of the Tata group, Ratan Tata is a visionary. The opening of the business environment in India in the early 1990s’ through the liberalization of the Indian economy brought with itself a series of advantages and disadvantages. While the liberalization helped in reducing the government barriers and red tapes related delay, it also enabled foreign direct investment, thereby creating the roads for a hostile takeover bid by a cash rich foreign company. It needs to be mentioned that Ratan Tata had a series of entrepreneurial ambitions. For the purpose of throwing light on the ambitions of Ratan Tata, the projects comprising joint ventures in the fields of insurance, technology parks, airlines and telecommunications needs to be focused. Needless to say, that these will require significant amount of capital injections by Tata Industries Limited (TIL). The deal with Jardine, helped in beefing up the share capital of TIL to a significant extent, thereby helping in increasing the cash reserve for fuelling his own business ambitions. Also, it needs to be mentioned that the deal with Jardine has significant strategic benefits because of the possibility of contribution of expertise in regards to the retailing, distribution, real estate etc. 1d. Revitalization of TAS It has to be mentioned that the Tata group comprises of a large number of companies, which runs mostly on the basis of a decentralization structure. However, the presence of a central model of leadership is very essential as it helps in streamlining the direction of the entire Tata group in regards to the future. Also, it needs to be mentioned that the supreme leader of the Tata Group is focusing on designing and implementing a central theme of brand equity on the lines of commonly shared value and ethics for the group companies. Hence, it is of high importance for the Tata group to have central independent team of high potential candidates, whose core job is to focus on the process of promoting growth in the various group companies. Talking on the lines of value addition, it can be mentioned that the candidates who are selected for the TAS is made to learn on a long period of growth through significant amount of job rotation as well as handling of various diversified assignments. It needs to be mentioned that the division focuses on increasing the job and role related experience of the candidates. In terms of final value addition, it can be said that through the process of long term nurturing of the human talent, the Tata Administrative Services actively looks forward to inculcate some of the finest and highly experienced manpower in its multiple companies of the group. 2. The corporate strategy of the year 1995 that was supposed to be implemented in the business group managed by the Tatas has the right mix of ingredients that was necessary for a strategic multi enterprise business group. Talking in an elaborate manner, it is important to highlight that the Tata companies that were part of the business group owned and managed by the Tatas execute their day to day business operations on the basis of high level of decentralization. Though the decentralization process helped the companies to enter in the new markets, however, it also enabled the individually managed companies to face competition from the new and existing markets in regards to value based offerings of the rival companies. With every passing day in the market, it became more and more evident that the competition from the rival companies is simply going to rise. To fight back, the Tata group which has ownership of multiple companies needed a single strong identity. The strong and dominant corporate identity of the Tata group, which needed to be based on core values and ethics would have helped the multiple companies under the Tata group to fight back in the market in regards to the competition promoted by the rival firms. Hence, it can be said that the formation of the corporate brand for the Tatas can be justified as a significant strategic move by Ratan Tata, to provide stability and strength to the Tata group. While analyzing the business moves of the House of Tatas, it is of high importance to highlight that the founding stone of the Tata Group was laid by the legendary Jamsetji Tata through his foundation of the textile mill in the year 1874 (Khanna and et.al, 2006). Ever since its very foundation, the numbers of companies that are owned by the Tatas have grown steadily over the years. It has to be said that the multiple number of companies that are owned by the Tatas by the year of 1995 is the outcome of the multiple entrepreneurship efforts and endeavours. The House of Tata, is principally represented by the group holding company Tata Sons, which had varying levels of investment in many of the Tata companies. It is of high importance to mention that when the group was spearheaded by JRD Tata, he promoted a high level of decentralization in the daily management activities of the multiple Tata companies. Hence, it has to be mentioned that on their own interest, many of the decentralized Tata companies entered in to the process of diversifying as well as entering new markets. While justifying the existence of House of Tata as well as Tata Sons, a framework named triangle of corporate strategy needs to be highlighted. Source: Collis and et. al, 1999, p. 4 Discussing in regards to this, it needs to be mentioned that the competitive edge for a group is evolves through a synergy between the organization, its business processes and its resources (Collis and et. al, 1999, p. 4). The Tata Sons, through its stake in various Tata companies helped in creating a synergy between the various group companies, resources and their businesses and so naturally it provides a perfect logic in regards to the business moves of the House of Tata. Because of the process of decentralization of the companies as well as the long process of existence, many of the Tata companies entered into new markets and thereby diversified itself. However, not every move yielded results in the long term, and hence those companies have transformed themselves as non performing assets. Talking on those lines, it can be said that the Tata companies, which belong to the sunset segments like textiles and cooking oils needs to be divested. On the contrary, new emerging businesses areas, which can be termed as sunshine verticals of business, should be pursued more aggressively to promote business growth. So, the focus should be on the sectors comprising of aviation, biotechnology, alternative energy, advanced electronics and materials since they provide considerable opportunities of growth in the future. Reference Collis, D.J. and et.al, 1999. Harvard Business Review On Corporate Strategy. USA: Harvard Business Press. Khanna, T and et.al, 2006. House of Tata, 1995: The Next Generation. USA: Harvard Business School. Read More