Tata Group Comprehensive Cases - Essay Example

?Question Tata Group is one of the most successful businesses in the world and this is due to innovative thinking and strategic planning of one person named Ratan Tata. Yes, almost all of this transformation can be attributed to him. When Ratan Tata took over Tata group of companies, he brought in many innovative changes, which transformed this slow and huge company into a sleek, fast paced organization. Ratan Tata was indeed an aspiring leader who was able to materialize his visions and implement his ideas. He enforced mandatory retirement policy which helped remove many CEOs, who even though were in the organization for years, were unproductive and therefore impeded growth of the organization. This raised quite a stir as people thought Ratan Tata was an insecure person who wants to remove all experienced people form the company. Ratan Tata was no doubt and excellent leader as instead of paying heed to such skepticism he hired fresh talent for the company and therefore was able to bring in new ideas and motivated new employees for the business. He now developed Tata Business Excellence Model (TBEM), which was implemented with the help of Tata’s quality management service. With the help of this model he was able to enhance the productivity and efficiency of the organization. Ratan Tata believed in employee empowerment. His leadership style and long term vision were two important reasons for his success. According to the executive director of Tata Sons, Ratan Tata did not tell them what to do or gave orders like a typical boss, instead he would ask them what we wanted to do and how they would achieve their goals. This gave a sense of responsibility to the employees and empowered them. Ratan Tata brought in a new culture in the organization. His managers were now bolder and risk taking. They were allowed to experiment with new ideas and implement unique thoughts into action. Ratan wanted his employees to have a strategic vision and yet realistic goals. He was directing the company in two directions. In one direction the company was focusing on mass markets of India, where as in the other he went international. He understood how globalization was taking over and in a few years it would be difficult for him to compete in his own market if new measures were not taken. He then started an extensive marketing plan where he advertised his company in major public events like concerts, games etc. He also believed that in order to be on top, a business needs to have technological advantage. For this reason he threw out all obsolete equipment in the Tata Steel Mills and brought in new efficient models of those equipments. In just a few years time Ratan changed this slow moving giant in to a sleek model of quality and success. It is not an easy task to bring in and manage change in an organization. Ratan Tata was a leader with many qualities who was able to single handedly, bring in these changes and manage them effectively. He had vision, conviction and clarity. His was socially conscious and held ethical values which helped him transform this organization into what it is today. Question No 2 As soon as Ratan Tata took over Tata group of companies he started restructuring and streamlining the company as he thought that the presence of Tata in such diverse businesses affects its ability to respond to market changes promptly. Through this streamlining process Ratan Tata was able to remove all Tata companies which, instead of being productive were a liability for the Tata group of companies. He closed down businesses of cosmetics, consumer electronics, toiletries, pharmaceuticals, paints and oil, cement, textiles etc. On the other hand, he saw some potential in businesses such as passenger cars, auto components, telecom retail and power insurance, and therefore invested more in these businesses. Ratan Tata believed in being on the top. When he was asked why he exited so many businesses he replied that if any of his companies was not among the top three companies, he would take extreme measures to either do something about it or close it down. The biggest advantage associated with this streamlining process was that Tata group of companies quickly hopped back on its feet. Tata business before Ratan Tata still operated in the pre-liberalization era. Lethargy was tolerated and jobs were secured despite the performance decline. Ratan Tata’s streamlining process helped remove this concept of ‘un-productive presence’ on a job. Another advantage associated with this streamlining was the fact that even though Tata was still present in many businesses, all these businesses were not detached. They had a sense of liaison which helped them stay together and focus on enhancing the productivity of the parent company. This streamlining process also helped Ratan Tata bring in new technology and replace older and inefficient machines and tools. Being technologically sound, Ratan Tata was now able to align all the businesses of the Tata group of companies and streamline them accordingly. His ability to have a bird’s eye view of the entire organization helped him steer the entire group of companies towards one direction. The Tata group of companies was now generating profits like never before. This streamlining helped remove all inefficient businesses and made productive businesses more efficient. This streamlining process, I believe did not have any disadvantages, however it was before Ratan Tata started introducing new companies. During the streamlining process, Ratan Tata became the glue which helped all the companies stay together. Now these companies had a vision and had various realistic goals to meet. Streamlining these businesses only brought positive changes and rarely had any set back. An excellent leader is always able to take calculated risks. Ratan Tata was no doubt an exemplary leader as he transformed Tata group of companies into fast moving sleek organization. This streamlining helped them respond to markets more accurately and promptly. Moreover, it also helped them bring in new and innovative ideas and implement them. Before this streamlining Tata group of companies was a true example of the phrase ‘Jack of all Trades and Master of none’. However, this transformation helped Tata become leaders in whatever business they did. Question no 3 Ratan Tata was a visionary leader and when he saw that the downturn in India’s economy brought him huge losses, he understood that he will have to devise a company which is not affected by these changes in the economy and is able to work independently. It was then he started to go global with the help of acquisitions. In February 2000 he acquired Tetley Tea Company for $407 million. His other acquisitions included Daewoo commercial vehicle, NatSteel’s steel business, Corus group, Campton Place Hotel etc. All of these acquisitions came with their risks and benefits. The biggest benefit was that Tata was now in the international market and had a huge set of opportunities. With the help of these acquisitions Ratan Tata was able to transform this organization into 39th most valuable brand in the world. With every benefit that came along with these acquisitions, came various risks too. For example when Tata did the Corus acquisition, the financial analysts criticized him by saying that he had overpaid for this deal. Due to this skepticism, as soon as this acquisition was done, the share price of Tata fell by10.7 percent. Moreover, as these acquisitions were made, the debt burden of Tata began to grow. Tata had to borrow more money every time an acquisition was made. It was then said that the Indian businesses did not have expertise to acquire international business and therefore these acquisitions will actually have adverse affects on the existing businesses. The board of directors of Tata group of companies did these acquisitions based on their strategy of growth and international expansion. These acquisitions helped Tata expand, but not all of these acquisitions actually profited the business. Tata’s strategy of growth and globalization was implemented to become leaders of international markets too, but the top management was somehow unable to speculate the risks associated with these acquisitions. Tata also acquired Jaguar and Land Rover in 2008. The reason behind this was to reduce dependency on Indian markets. It was after this acquisition Ratan Tata decided to own the cheapest car in the world by the name Nano. Acquisition of Jaguar and Land Rover proved to be very profitable for Tata and they got an instant recognition and credibility in international markets. However, like any other acquisition, this also had some disadvantages associated with it. Firstly, Tata had to spend almost $2.3 billion on this acquisition. Secondly, more money needed to be invested as the economic condition of Europe and the United States of America deteriorated and they were the key markets for this brand. Tata group of companies had to go for yet another loan which affected the balance sheet of Tata. It can therefore be seen that even though these acquisition had many advantages associated with them i.e. helped the business go international and minimize the effect of Indian economy on the business; they also had many risks associated with them. Read More