Insights From Tata Group's Essay On Emerging Multinationals In Emerging Markets.

Secondary problems

Discuss About The Emerging Multinationals In Emerging Markets?

Among the business titans in Asia, Ratan N. Tata stands out for his modesty. The Tata group is a global enterprise that was found in 1868, by Jamsetji Tata (Sen, 1975). With their headquarters based in India, the group operates in more than 100 countries worldwide with more than 100 independent companies (Thomsen, 2011). The company is involved in goods and services including; software, beverages, steel, cars, consulting services, hotels, and phones. As at 2015/2016, the revenue earned by Tata was $103.5 billion and the employee strength was of over 660,000 people ("Standalone Results", 2018)

The case explains the aggressive expansion implemented by Tata group in the last several years under the leadership of Ratan Tata. This aggressiveness and diversification led to challenges and issues that affected the company on a long term and short-term basis as discussed.

The rapid growth of Tata group resulted in the emergence of 300 subsidiaries companies in different 50 businesses ("Standalone Results", 2018). This aggressive growth resulted in different problems, which were short-term and long-term. They included:

According to Osagie (2012), the emergence of two different organizational structure in different geographical location can represent a significant problem in productivity and quality when the aggressive acquisition of business occurs. From the case study of Tata, the group tried to trade their motors from their production under another company in Britain named “Rover,” but the venture did not succeed as it lasted for only two years along with critics about quality (Ramamurti and Sigh, 2009). Dailymail (2012), Listed the car as the least reliable car in the UK with a failure rate of about 70%.  It was followed by another affiliate of Tata jaguar with the failure rate of 45% (Massey, 2012).

The aggressive growth of Tata led to the acquisition of several companies and other companies merged such as the acquisition of Tata BP solar limited and Daewoo’s truck unit. Therefore, in case of acquisition of merger, a process should be installed to manage cultural differences between organizations. This created a long-term issue for Tata group since it is almost impossible to create one strategy to serve more than 100 companies with 300 subsidiaries (Taylor, 2000).  A more aggressive risk deal is faced by Tata group at the global level where some measures are being implemented by Tata to compensate for their global competitive weakness.  

Emerging organization structure

Due to complaints by workers against corporation concerning abuse and exploitation of tea pickers, an investigation was launched against international Finance Corporation. The workers were complaining about poor working conditions, long working hours with poor wages, and being forced to buy shares without adequate information ("Standalone Results", 2018).

The investigations realized that ICFC could not address and identify some issues regarding social, labor, and environment that could violate the international and India law.

 Cross-Cultural management must be applied in MNC’s such as Tata Group to overcome future obstacles that will create conflict within the organization, further insight whether the new employ or current employee may want to continue with their previous culture, which in turn may lead, to lack of cooperation in the organization should be looked at. This may result to emotional conflict thereafter affect the impact on job performance, individual performance and Tata group success (Genc and Cuervo-Cazurra, 2008). Tata group operates more than 300 subsidiaries from 100 companies. Therefore, an old strategy or an organized structures with no reforms will results in critical emotional conflict, high staff turnover, and reduce in social assimilation between the employees in the firm. As acquisitions and simultaneous structural integration still being used, it may result in favoritism and biased atmosphere within the firm (F.Pinar, 2010). Accordingly, deep-level diversity is the variances in delicate, complexity to perceive attributes such as attitude, value, and personality. While surface-level diversity is characterized by an obvious variance and easier to distinguish such as gender, race, and age (F.Pinar, 2010). Refer to Appendix A.

Tata tea is number one brand in India and is the large brand by value and volume. The Tata Global Beverage (TGB) is ranked second in the world and host many regional and global brands in the world according to Tata Global Beverage (2016), Tata tea had a turnover contribution of 36%.

The pride of Tata as mentioned by Srivastava et al., (2012) comes from its strong corporate social responsibility across all their business entities. The TGB’s culture is helped by five core values that act as a guiding principle for the entire organization. One of their core value is doing well which ensures that they do the right thing to both community and environment and their actions are ethical.

Having strong corporate responsibility image, it was a blow for the company to be linked to human and labor rights abuse (Shah, 2014). The image and the reputation of the company were affected, and the trust that the company received from the shareholders, suppliers, consumers, and employees was compromised. When the image of the company has been tarnished, it is hard for the public and stakeholders to restore belief in the company. This may affect the sale of production, as consumers will neglect the company that has broken their trust (Thite, 2013).

Divergence of ventures and investments

Tata group may consider employing development practitioner who is an expert in applied behavioral science, experience in organizational development, and conversant with different culture (Khanna and Palepu, 2010)s. This will help in bringing different groups together and making strategies that will favor all parties

Tata will have to consider the successor (Hult, Snow and Kandemir, 2003), who will implement strategies that will be welcomed by both groups. The successor must work in hand with strategists to ensure all workers recognize the culture of the organization.  Establishment of (TQM) total quality management facilities should also be employed to ensure brands such as Land Rover and Jaguar stabilize in quality.

With the increase in the development of technology, managers tend to neglect older employs for reasons such that they are resistant toward new technology (Henkens, 2005). According to Heywood et al (2010)., older workers have are productive, experienced and have higher motives.  The successor Natarajan Chandrasekaran should consider mixing old workers and new workers for better performance.

Plans have been made by the new CEO taking over the operations of the firm,  small firms of Tata that do not bring many profits are going to be merged. This will increase the efficiency of the company (Mohile, 2017). One of the directors of the board Ajay Piramal suggested that a group of outside professional be brought up. This was in an attempt of creating independence and unbiased decisions and inputs.

Culture conflict management will be supervising, monitoring, and integrating harmony between cultures within the firm (Choi, 2013). This implies that in hiring an expert, the expert must be well conversant with the different cultures within Tata Group organization. 

It is important to have the contribution of older workers who have been with the firm for  long.  This will help in creating more productive decision-making. When these decisions are blended with those of hired expertise, the new C.E.O will have an easy time in making a decision.

Adopting Macoby and Scudder 5 steps of managing conflicts associated with different background

1. Except – conflict can be foreseen by getting information
2. Stop – a strategy can be formed that prevents conflict from occurring
3. Identify – you must understand what the conflict is all about
4. Manage – be diplomatic in managing conflicts
5. Resolve – get good ways of solving your conflicts (Maccoby, 2012).

About internal and the external team, it is important to delegate work to different groups regarding their expertise. This will ensure that specialization is maintained and a good response is gotten from all areas.

References

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Khanna, T., & Palepu, K. G. (2010). Winning in emerging markets: A road map for strategy and execution. Harvard Business Press.

Sen, S. K. (1975). The house of Tata, 1839-1939. Calcutta: Progressive Publishers.

Thomsen, S. (2011). Trust ownership of the Tata Group.

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