Introduction
Tata Group is India’s largest company and has an annual turnover of more than $100 billion. Founded in the year 1868 by Jamsetji Tata it was established by his son Dorabji Tata. The company is the largest employer among the private limited companies with employee strength of more than 600,000 people. The company acquired a large number of global companies with huge investments and was recently in news for two of the largest takeover by any Indian company in the recent pasts which were the acquiring of British Steel Giants Corus and British Automobile giant Jaguar and Land Rover. The influence of the chairman of the company Mr. Ratan Tata has been the main study matter of this report.
Sourcing the Problem
India’s economy was in a mode of transformation from the middle of the 1990’s and Tata group played a pivotal role in such an economical modification. Ratan Tata was the main pioneer behind the emergence of Tata Group in this critical era (Ambos et al. 2014). It was estimated that more than a cent billion amount was needed for eradicating poverty from India. Another main problem that lay ahead of the company was the lack of leadership ability apart from the chairman of the company.
The Secondary Problems
There are different secondary problems that posed a key challenge to the growth of the industry (Jain et al. 2016). Short term as well as long term problems exists within the industry. The short term problems are;
- The acquisition of Corus was a hasty decision and it did not help the cause of the company. Tata’s debts increased by more than $ 7 billion and to add to their woes the employees of Corus Group demanded a large investment from Tata to make sure that their jobs are secured.
- Another blunder committed by the organization was to acquire the automobile business of Jaguar and Land Rover. It was a very bad decision because owning such a luxury brand attracted loss (Ambos et al. 2014).
- The problem that lay ahead of the industry was to control the extensive loss that the brands had suffered.
- Problems also crept up on Tata’s decision to make super cheap cars for the middle class of India. Though Nano, which is the brand name of the car, earned profit in the first year it suffered extensive loss in the following years (Pathak et al. 2016).
- Developing quality talent for the future was another challenge to the company as there was an absence of proper communication, absence of a motivated leaders and motivated employees made the organization vulnerable to the external threats.
The mergers and acquisition process of the organization to establish itself globally has diverted the attention of the company from the main industries under its fold that actually earns profit.
Critical Analysis
As mentioned earlier the mergers and acquisition process of the company have not helped the organization as they face a complicated situation both internally as well as externally. The company was accused of damaging the environment in Jamshedpur and other areas where its plants were located (Pathak et al. 2016). The recession period of 2008 was another huge negative factor that made the company vulnerable. The high marginalized cost of producing steel in Europe and catering to the demands of the European markets was a huge challenge for the industry. It was seen that Land Rover and Jaguar failed to meet the expectations of the European market as there were a number of different complains regarding the quality of the cars. Tata have to fuel up all their resources to bring the following companies on track. The analysis made in this project depends on some theories;
- Internalization Theory- Internalization theory is based on the intangible assets of the organization. The presence of large number of assets helps the organization to have a large share of market and in turn have a good profit margin.
- Transaction Cost Theory- Tata is already an established company of India as well as Asia. The merger and acquisition process of the company has been in full swing in the recent past (Tietze, Susanne 2013)
- The particular theory has helped to determine the strategy of the organization to acquire large amount of raw material for its global expansion (Deresky et al. 2015).
Tata Group has implemented a five stage model to carry on its acquisition process;
- Strategy Planning- This model is applied by Tata just before the acquisition process. Planning the strategy helps the organizations to make wise and clear decisions
- Organizing the acquisition process- Tata appoints different management team, legal team to look after the entire acquisition process. This team is responsible for analyzing and taking the decisions related to the deal.
- Finalizing the deals and negotiating with the buyout amount- This is the period when the deal between Tata and Corus finalizes after long negotiations.
- Performing Audit and other financial activities- The last stage of the five stage model is the performance of the Audit of the acquired company to get an idea of the present financial conditions.
Tata Group has suffered more loss than any other Indian company not just because of its globalization plans but also because of some internal factors within the organization like employee unrest, union problems, corruption and many more such problems.
Recommendations
A number of recommendations can be suggested for the company to attain success and turn the future of the acquired ailing companies.
- Communication- Communication is one of the most vital resources that must be present within the organization aiming to attain great heights of success. The language barriers among the industry professionals and the employees must be sorted out for a smooth operation (Borah et al. 2015).
- Culture- Tata must ensure that it follows a strict British culture while operating Corus and avoid the implementation of Indian culture in the company. The employees of the organization would feel much free to work in their well known workplace.
- Planning- Tata must get its act together and plan the revival strategies of the ailing companies much in advance so that their tasks becomes much easier. Planning earlier helps the organization to avoid hasty decisions (Garg et al. 2014).
- Developing skills- One of the primary aims of Tata must be to select a talented group of employees and train them to develop their skills which would be essential for the organization.
Conclusion
The report has highlighted the contribution of Mr. Ratan Tata in the growth of Tata Group of industries. The remarkable achievement has been possible after hard work by him. The recent expansion plans of the organization though highly criticized is believed to be a wise decision by Mr. Tata. The analysis of the following report points to a super human organizational capability of Mr. Ratan Tata which might be left void after this retirement.
References
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Tietze, Susanne. International management and language. Routledge, 2013.
Deresky, Helen, and Elizabeth Christopher. International management: Managing cultural diversity. Pearson Higher Education AU, 2015.
Pathak, Atul Arun, and Atul Arun Pathak. "Tata Motors’ successful cross-border acquisition of Jaguar Land Rover: key take-aways." Strategic Direction 32, no. 9 (2016): 15-18.
Borah, Dhruba Jyoti, Solmaz Filiz Karabag, and Christian Berggren. "Drivers for a successful acquisition: The case of Jaguar Land Rover’s acquisition by Tata." In 23rd International Colloquium of Gerpisa, Paris, France, 10-12 June 2015. 2015.
Garg, Manika, Arnav Singal, and Anubhav Gupta. "Event study of Tata's global growth through acquisition: Tata's takeover of Corus." International Journal in Management & Social Science 2, no. 1 (2014): 85-105.
Jain, Dhiraj, and Romni Kondeti. "Tata Corus Deal-Where Did They Go Wrong?." (2016).
Haldipur, Rajesh, Kulbir Singh, and S. R. Vishwanath. "Financing Strategy at Tata Steel." Asian Case Research Journal 19, no. 02 (2015): 259-289.
