Why Tata Group Is Recognized Globally - Case Study Example

? Business Proposal Introduction The Tata Group has been a foremost in global business platform comprising above 100 companies in around seven industry sectors. The group at present operates in more than 80 nations and also it performs export activities of its products as well as services to nearly 85 nations (Tata Sons Ltd, 2012). Tata Group is recognized globally for ensuring leadership with trust which engages people all around the globe to be a part of various endeavors of the organization. Tata Group performs its business activities in collaboration with various departments of health, environmental conservation, education, training of youth, sustainable development, women and child development. The trust that has been created at various departments of the company has helped Tata to establish several institutes like Indian Institute of Science, Tata Institute of Fundamental Research and Tata Institute of Social Sciences among others. The employee welfare aspect of Tata is so strong that it had created various facilities for their employees. The employees have to work 8-hours during the day; provident fund and maternity leave are a few of the facilities that are provided to the employees of Tata Group. In the year 2010-2011, Tata Group had contributed around US$170 million towards the upliftment of social causes (Tata Sons Ltd, 2012). The main objective of the paper is to develop a comprehensive understanding of the leadership strategies implemented by Tata Group to facilitate its business in India and all around the world. Based on the analysis, business proposal will be presented to the company which can enable it to gain further benefits and ensure sustainability. Role of the Leader in Initiating and Managing Change Leadership in any organization plays a vital role to take it to newer heights. Similar scenario can be observed in case of Tata Group as well. It is recognized to transform its operations in recent years for initially operating as a slow-moving giant which is risk-averse to a conglomerate which is dynamic and aggressive in its decision making. In this turn-around of approach, the leadership standpoint of Mr. Ratan Tata, the Chairman of Tata Group has been a major factor. He has taken certain remarkable initiatives that have led the organization to attain major growth and distinction. Thus, Mr. Ratan Tata, as a pioneering and diligent leader can be largely attributed to the ensuing growth of Tata Group (Prasad, Govind, & Sesha, 2008). The leaders of Tata have set up various strategies in order to get through the diverse competitive situations that took place at the organization. The leaders at Tata under the guidance of Ratan Tata have an immense sense towards directing the company at different directions depending on the demand of the company. The leaders of the company provide utmost significance to the employees of the organization and they gain a lot of importance in the company. The company shares five important principles like excellence, understanding, integrity, responsibility and unity (Prasad, Govind, & Sesha, 2008). The leaders of Tata utilize all the five principles to overcome all the changes that take place in the company. Tata Group has set up cost leadership approach for further expansion of the organization. The leaders had analyzed the position of Tata through the business model of the organization. The Tata Business Excellence Model (TBEM) has been the major driving force behind the transformation which has taken place in the organization. This business model has facilitated the company to ensure that business objectives of the company are attained keeping in consideration the due significance of rendering quality to the consumers (Prasad, Govind, & Sesha, 2008). The leaders at Tata finally decided that if the products of the company become more standardized then the cost of those products can be reduced quite easily. This strategy helped the company to develop a steel industry at Jamshedpur. Moreover, it has been viewed that the leaders at Tata has gained success through their own strategies and cleverness. Moreover, Tata has become successful also through the directions provided by the top level managers in the various segments of the group to carry on different changes that take place in the company. Leadership approach taken Tata enables the employees to put forward their problems regarding the organization at any point of time, which ensures that valuable inputs are gained by the top level management from the employees that facilitate in rendering the desired changes. This strategy helps the organization to gain trust from their employees and fulfill the objectives of the company quite competently. A number of Indian leaders over the years have been involved in societal issues. Similarly, in Tata the leaders are very much concerned regarding the wellbeing of their employees. The company has set up schools, quarters and women empowerment facilities in order to provide their employees with security and motivation. Leadership approach of Tata led by Mr. Ratan Tata is one of the best examples to any other organization because the leaders have taken due care about the employees as well as looked after the sustainability of the organization. It is due to the leaders of the company that it has been able to gain a beneficial position as compared to a number of its competitors (Cappelli, Singh, Singh, & Useem, 2010; Tata Sons Ltd, 2012). Advantages and Disadvantages of Streamlining the Businesses Tata Group of Companies in recent years has streamlined its business portfolio, which has provided it with certain advantages as well as disadvantages. Advantages gained through this strategy include an ability to focus on certain profitable business segments. It has enabled the company to provide more financial consideration towards its growth oriented ventures such as Tata Motors and Tata Consultancy Service Limited. Therefore, the group has leveraged greater prospects out of these business segments. In terms of the Tata Motors’ growth initiatives and subsequent advantage to the Tata Group, one of the biggest innovative ideas of the company was to launch Tata Nano. The car has been observed to be targeted towards making it affordable for most of the customers. Nano has become the best alternative solution to the Indian customers as it is a two-cylinder car with minimum amount of carbon footprint. The car has created a sense of trust and belief among the local communities of India towards Tata Group. The car has proved to be very much safe for the customers with minimum investment. Furthermore, Tata Consultancy Service Limited (TCS) is the other prosperous business portfolio of Tata Group. The company provides huge amount of employment opportunities to the people having Information Technology (IT) background in their academics. TCS has gained a huge amount of importance among the people of India due to its impact on computer based knowledge. The company has introduced a Computer Based Functionality Literacy project in order to educate the illiterate adults. The motive of the program is to assist the learners to develop better understanding and also to know their own vernacular language through proper reading and writing. The project was introduced to around 1000 centers of India including Andhra Pradesh, Uttar Pradesh, and Maharashtra among others (Nadkarni & Branzei, 2008). However, apart from the evident advantages, there are certain underlying disadvantages of streamlining the business for Tata. There are few disadvantages that have occurred regarding the Tata Nano car, it has been analyzed that the car can be considered to be more accident prone because Nano is made out of light weighted aluminum. Moreover, the car has less space, and only selective models have air condition, and moreover the car is not too great for highways. The company has diversified in various sections of business but due to the company’s immense diversification it becomes difficult for few companies under Tata Group to maintain their sustainability. The diversification does not allow the company to have the same kind of cash flows at its various subdivisions. For example, Tata Chemicals and Tata Tea have not proved to be very much efficient in the market for Tata. These companies had lower market growth but their shares in the market are quite high. All these companies are at its downfall situation due to their minimum amount of cash flow. The company can streamline its business by concentrating only on its main businesses like Tata Steel, Tata Motors and TCS because these companies are their core competencies through which it has expanded in India and all over the world. As of the year 2009, it can be analyzed that Tata still can further streamline its business segments to generate more leverage out of its existing business prospects, which can facilitate it to provide more concentration upon making innovations in order to meet varying consumer demands (Mukherji, Bhansali, & Das, 2008; The Financial Express, 2009). Risks and Benefits through Acquisition Strategy When Tata Group of Companies took over the strategy of acquisition, the business climate during that time was “eat-or-be-eaten” (Freeman, Gopalan, & Bailey, n.d; Khanna, Palepu, & Bullock, 2009). The company had to make decisions regarding being of an acquirer or to be the acquisition target. The acquisitions would help in enhancing the market of Tata and result in huge expansions in the global market. In the year 2007, the company made a number of acquisitions in North America and in the United States (US) mainly. There were no controversies related to Tata taking the strategy of acquisition. However, there were issues related to acquisition once the company had taken over the concept of acquisition completely. The company took those issues as challenges and expanded as well as strengthened their business through various strategies. The issues included that with the advent of acquisition the company faced financial crisis. The company’s had around 10.7% decline in share price (Freeman, Gopalan, & Bailey, n.d.). This downfall took place because of over payments that were made by Tata during the time of acquisition. Moreover, the company borrowed money in order to fulfill its demands for expansion. In the month of August 2007, it was observed that Tata had made another successful acquisition. The success was so tremendous that the company made business of around US$12.1 billion (Freeman, Gopalan, & Bailey, n.d.). Through the acquisitions the companies that were acquired by Tata gave the company a new opportunity to have an option of incorporating new technologies. The company was able to introduce and be familiar with new technologies in its operations because of the collaboration strategy that was taken over by the company. Certain collaboration enabled to combine the Indian as well as Western culture and finally brought success to Tata Group of Companies. Even though the company was able to make acquisitions with a number of companies Tata faced certain financial burdens. Acquisition helped the company to have its presence all over the world but managing the finances in a global context was quite difficult for the company to handle (Freeman, Gopalan, & Bailey, n.d; Khanna, Palepu, & Bullock, 2009). Future Proposal of Tata Group of Companies From the above analysis, it can be observed that leadership endeavors and certain crucial strategic decision making such as acquisition strategy have contributed largely towards the existing status of Tata Group. However, in this ever-changing global business scenario, the organization needs to undertake constant changes in its strategies to be a favored name in front of the consumers as well as to stay ahead of the competitors. In future, as a prominent growth oriented strategy Tata Group of Companies’ business segment Tata Motors can be desired to be established in a country like the United States. A production unite can be set up in the US which can enable the company to meet the demand of consumers in the North American region more fruitfully. From the perspective of cultural profile of the intended market, the US culture is dominated by the aspect of individualism. The uncertainty avoidance aspect in the US is also quite low according to the Hofstede’s cultural dimensions. Therefore, it can enable a new business unit of Tata Group to be fruitfully established. However, there are certain cross-cultural differences present in between the Indian and the US culture which can create obstacles for the new business unit to set up. In order to ensure effective communication a cross-cultural training can be initiated which can enable to alleviate the differences (ITIM International, n.d.). The human resource policies of Tata Group in India need to be altered in case of operating in the US, based on the cultural requirements. With the purpose of instigating Tata in US the company has to set up policies according to the business scenario in the US keeping in consideration the International Human Resource Management concepts. It can be recognized that the Indian employees get motivated according to the kind of environment that is set up in the organization whereas; the employees in the US are generally observed to be self-motivated. Tata Motors has to set up more individualistic approach in order to set up its business in the US. If Tata wants to establish its business in the US market the company needs to be concerned about the cultural differences. The company has to understand the psychology of the American employees as their approach towards business is quite different from the people living in India. The management policies of Tata have to be very much flexible in order to match up with the business policies of the US. The leaders have to understand the American style of business and proceed in the market accordingly. References Cappelli, P., Singh, H., Singh, J. V., & Useem, M. (2010). Leadership lessons from India. Harvard Business Review, pp. 1-9. Freeman, K., Gopalan, S., & Bailey, J. (n.d.). Achieving global growth through acquisition: Tata’s takeover of Corus. Journal of Case Research in Business and Economics. pp.1-17. ITIM International. (n.d.). National culture. Retrieved from http://geert-hofstede.com/united-states.html Khanna, T., Palepu, K.G., & Bullock, R.J. (2009). House of Tata: acquiring a global footprint. Harvard Business School. pp.708-446. Mukherji, S., Bhansali, S., & Das, S. (2008). The Tata Group: Challenges in managing a large portfolio. Retrieved from http://tejas-iimb.org/articles/04.php?print=true Nadkarni, A.G., & Branzei, O. (2008). The Tata Way: Evolving and executing sustainable business strategies. Ivey Business Journal. Prasad, V. N., Govind, S., & Sesha, T. (2008). Ratan Tata: Leading the Tata Group into The 21st Century. ICMR Center for Management Research. The Financial Express. (2009). Innovations at Tata Group zoom to 761 in 2009. Retrieved from http://www.financialexpress.com/news/innovations-at-tata-group-zoom-to-761-in-2009/477552/2 Tata Sons Ltd. (2012). Commitment to community: giving back to society what came from the society. Retrieved from http://www.tata.com/pdf/Tata_fastfacts_final.pdf Tata Sons Ltd. (2012). Leadership with trust. Retrieved from http://www.tata.com/aboutus/sub_index.aspx?sectid=8hOk5Qq3EfQ= Tata Sons Ltd, (2012). Leadership and learning. Retrieved from http://www.tata.com/careers/sub_index.aspx?sectid=0ttLSevanRU= Read More