Discuss Tata Group Case - Assignment Example

a. The Tata brand idea was an innovative project that met with resistance to change from several shareholders due to the fact that it forced the members of the Tata Group to pay a fee to the parent company for use of the Tata brand. “Contribution rates would range between 0.10% to 0.25% of a company’s net income before taxes and non-operating income”(Khanna, Palepu, Wu). Despite some of the controversy over the fee scheme the idea actually was received with open arms from the executives from the different companies of the Tata Group.

The corporation was going to market itself in a manner that created a single identity for everyone. Increasing the value of the Tata brand was going to help boost the sales of the company in the long run. A con of the strategy is that the short term gains of some of the companies were going to be adversely affected by the added costs associated with the program. In an emerging market one of the advantages of such a strategy is that it creates customer awareness for the name of the brand which can help the company increase its market share. b. Building interlocks in the equity of the firm is a good way for the company to raise money and move the resources of Tata Group across its network.

There were some concerns about the plan such as potential collusion between the companies to exchange shares would violate the law. c. Selling a 20% of TIL to the Hong Kong based Jardine Matheson Group is a great strategic move that can generate a large influx of capital for the company which can be used to strengthen the operations of the different companies of the Tata Group. The deal is expected to increase the capital of the company from Rs. 476 million to Rs. 595 million. “Ratan anticipated that Jardine would contribute expertise in a wide range of business activities, such as retailing and distribution, real estate, hotels, engineering, construction, and financial services” (Khanna, et. al.). d. The purpose of Tata Administrative Services (TAS) is to recruit talented individuals for accelerated management careers within the company.

Between 1986 and 1995 the program achieved an employee retention rate of 67% which was much higher than the normal attrition rate in other Indian companies of 10% to 25%. Ratan plans to give glory back to the program by bringing attention to it through media exposure. The program adds value to the company because it increases the human capital of the firm. Its participants are able to improve their teamwork, leadership, and group values. TAS plans on developing an audio visual presentation to be used by the company in its recruiting efforts of professionals from India.

The demand for high skilled workers is increasing in India, thus having programs such as TAS can help companies differentiate its business from the competition. In the coming year the company plans to recruit 25 new employees into TAS. 2) The portfolio of businesses the company has is well rounded and diversified which can help the company lower the overall business risk of the Tata Group. Diversification is a business technique that invests the assets of an enterprise in different types of businesses.

Such a conglomerate is able to deal better with factors such as seasonal sales and fluctuations in demand. The company has to reassess the composition of its holdings in order to find better synergies among the companies which can help the firm achieve higher operational efficiencies. Lowering the total overheads of the company would help increase the profitability of the firm. After taking an in-depth look at the composition of the Tata Group holding the Oriental Floratech and Oriental Seritech are two firms that should be divested due to the fact that these two firms are in the agricultural industry which is a business that is much different than any of the other industries that Tata Group has participation in.

A project that the company should continue to pursue due to its tremendous potential of generating money for the company is the alliance with Singapore Airlines to form the first private airline in India. The idea is great due to the fact that the airline industry in India currently has only two participants. Tata Group would be entering an oligopoly marketplace of three participants. In such a marketplace new firms have the opportunity to penetrate fast and steal market share away from the other participants.

With the second largest population in the world India is a country with a large pool of potential air travel clients. Work Cited Page Khanna, T., Krishna, Palepu and Danielle Melito Wu. 30 August 2006. “House of Tata, 1995: The Next Generation (A).” Harvard Business School.