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Secondary Problems

Discuss about the Tata Consultancy Services and Satisfaction.

According to the case study, currently, Tata Group comprises of about 100 companies along with 300 subsidiaries operating in 40 businesses. It is indeed a challenge when the group has to succeed in all the businesses especially when the Indian economy would be showing and some of the affiliates of Tata would be stumbling. Therefore, the Tata Group should require to take up some significant spin offs to ensure for further expansion globally across verticals.

Ratan Tata’s big passion of “one lakh” car has not turned out to be as successful as projected. Ratan Tata himself opines that the car has failed to meet up to lofty aims as previously conceived. It has failed in terms of innovation as it did not re-invent any new business.

Tata has taken mammoth risk of overtaking Corus. It is estimated that the company would have to bear Corus’ debt of $7.4 billion along with Corus’ high cost operations.

Taking over Jaguar and Land Rover can be challenging as Tata would have to climb quite high to bring back the lost status of Jaguar as luxury vehicle.

Long Term

The company is yet to slim down so that it can spend more on innovation and other profitable ventures. Currently, the company is operating in 40 major businesses with over 400 companies and subsidiaries.

Ratan Tata the brain behind Tata’s expansion since last few decades would be retiring and a new leader has to be chosen. So, in the coming years as Tata Group would be advancing it would be more in need of skilled workforce, succession planning, diversify with innovation. 

As per SWOT analysis one of the major strengths of Tata Group has been its human resource retention policies, superlative training and CSR policies. These two major strengths have led Tata to operationalise CSR being a family held business and gain as most trusted and valued group of companies. The significance of human element while making strategies for ensuring organizational development in each decade increased the capability domain as a firm. The perks and allowances offered by the Tata Group are considered to be one of finest within its home country, India. Tata Group has been taken to be one of the pioneers of initiating for employee training, quality initiatives and productivity. The CSR policies dating back to pre-independence period backed Mahatma Gandhi during his agitation for rights of immigrant Indian in South Africa (Srivastava, Negi, Mishra, & Pandey, 2012).

Long Term

One of the main reasons behind the group’s substantial expansion in India since the 1990s was its ability to adapt quickly, enjoy the first mover advantage against the competitive business environment. The government adopted the policies of privatization, liberalization and globalization resulted in influx of Japanese, Korean majors using FDI route, and Tata adopting Internationalisation route (Kamath, 2006). As a result of which, the companies were freed from dead-end policies like the licensing policies. Tata Group took best of the changing business environment and opportunities accompanying with it. As mentioned in the article, as India was dismantling business controls, the Tata took risky plunges into the telecom like NTT Docomo (Japan) and enter other areas of manufacturing sector engaging in forward and backward integration. The Tata Group can also be said to have applied the survival theory in a way where it has to an extend disregarding human resource based theory (Seshadri et al. 2006). After opening of markets, the domestic market was expected to have become all the more competitive, they involved advanced level of technology and innovate to increase productivity and hence ISO, TQM, TPM, Six sigma were deployed (Maroor, 2015). Inward looking strategy to align its elements against the drastic step of downsizing its employee based was adopted and  Tata invested the capital saved to diversify , enhance innovation and technological infusion.  So, basically, on taking external business environment it is more of the concept of contingency theory, Tata Group organic growth happened through M&A, stakeholder buyout. It has enabled it to foray into new unrelated ventures (B2B) by prospecting the business environment grabbing the opportunity like Tata BP Solar (Bhattacharya & Datta, 2010).

The theory of profit maximization and competition-based is expressed on the notion that the main objective of business entity is to maximize profits for long term period followed by development of a sustainable competitive advantage over the business entity’s rivals belonging to its external market (Nadkarni & Branzei, 2008). Tata Group has been identified to have made use of this theory quite effectively when it in the last two decades the Group has taken some big steps to go global. For instance, Tata Steel’s taking over of Corus followed by Internationalisation theory aggressively bidding for Jaguar and Land Rover, Corus steel in steel industry when it comes to the context of the company’s bold global outlook of strategy building (Economist, 2012).

Streamlining TQM, TPM that aids in productivity and efficiency Tata Group has diversified into unrelated fields driving the stupendous growth was led by Ratan Tata (Sarkar & Hazarika, 2010). But as he is growing old he has understood the changing global business scenario and direct towards diversifications at right time even in new markets or enter new line of business. According to Ratan Tata, the number of group branches was consolidated to have more focus on profit making sectors, related business areas. One of the major disadvantages of Tata Group is that its home country India is still developing but it has aptly harnessed the technology based competencies of students in engineering education to adapt to the challenges of the domestic job (Singh, 2008). Upskilling and training to compete at world level saw Tata scaling down from a truck/trailer to built world’s cheapest car (under $2500) unveiled at Geneva motor show (Kang & Sidhu, 2011) (The Economist, 2009). It faced competition at home with Japanese and Korean auto firms, but continuous R&D led to evolution of Tata Group. Labour in India is cheap but not that efficient when professional skill and knowledge are taken into account (Seshadri  et al. 2006) Therefore, when the boom period of India would be fading, Tata Group can face problems especially when it would be lacking market share due to intense competition.

Analysis

The Group faces both short and long term problems. However, if competitive advantage of the organization is analysed, it would be found that the Group can overcome its problems if right mix of competencies, previous experience, enabling effective business decisions by the new leadership and IT. The following are the perceived competitive advantage of Tata:

  • Tata Group has advantageous position as it is cash rich. This will enable to group to have adequate time to take recover from sudden jolts.
  • The Group has a very strong benevolent corporate image and CSR agenda. This is indeed an asset for the green technology in engineering and product reengineering to survive in local and global market (Shao, 2013).
  • The group has successfully been able to establish connections at global level with business partners like Corus and Ford.
  • The group has huge domestic market to cater to. So, the domestic market work more as a safe cushion even when there are some crisis in the international market.
  • Tata Group has still the advantage of huge pool of low cost labour
  • The company has long standing relationships low political risks, with the state and the government in India  

Goals of Tata going forward are to meet the emission norms, and the target is to switch to green technology reengineering to sustain the business verticals. Thus an apt operations agenda to focus on production and efficiency reach 98% to equip any line of business Tata in 2016. Increase of targets 2016-2017, the market share for profit making verticals, reducing workforce by half, deploying IT and non performing verticals to be hived off by end of 2016.

According to Hofer & Schendel (1980) the main emphasis for turnaround strategy happens through the cost reduction, asset reduction, revenue increasing, combination in the operations while the predominant method is to foray into the new business jump. Analysing Tata, it seems that the conglomerate has quickly done acquisitions at home and abroad by each Tata company, and the challenge is to consolidate. The learnings from the sheer aggressiveness of Chinese firms inspired the Tata management to shun any central strategy but more of opportunist strategies (Economist, 2012).

Short Term

To set the business level goals to drive the Tata Nano car sales in 1 year’s time, expand Tata Fiat JV, to launch diesel cars, trucks in variants with 5% marketshare and exports options. This is a turnaround strategy for the Tata Nano segment.

Adopt lean tools to align production KPIs to meet the quality, demand centric pull to reduce steel production cost (10%) by mid 2017, capacity to improve (10%) at global level by 2017-18. This is a market concentration and asset reduction strategies that will help Tata to focus.

Employees encouraged to be empowered for idea generation to start now, real time IT based collaborative integration by end of December 2016, to redesign of existing processes Tata enabling sustainability of business goals by mid of 2017. This is a profit strategy for all Tata verticals that will save expenditures from being wasted.

Long Term

Development of new prototypes through incremental (product, service) innovation, in each Tata vertical by 2016 -17. This is forward looking, long term marketshare increasing strategy, that combines with the liquidation strategies to discard productline, SBUs if it is not making profit.

Criteria Evaluation

Adopt DMADV, Lean- sixsigma framework at enterprise level in Tata, that allows the conceptual design translated into reality to be optimized through statistical techniques starting from 2016. 

Focus on the loss making Tata businesses by 2016 Dec, that has declining PLC & slow moving goods by applying Hofer & Schendel (1980) turnaround model.

Training and up skilling the employees, implement idea generation, adoption of IT to collaborate, integrate and achieve sustainability by 2016-17.

All of the above points to Tata’s harnessing of capabilities, lowering cost in operations, calculate ROI of investments made, focussing on revenue generation as per Hofer & Schendel (1980) model therefore seeks a combination of operations centric approach to respond to the global business environment.

Long Term

Aligning the operations to meet the market based demand, and forecast for each line of business vertical in Tata should be mapped to final decision of sustainability, CSR issue and future existence. Predominantly a top level decision, it will allow to analyse and evaluate ‘as is’ and ‘to be’ feasibility and viability for each Tata venture.

Strong

Average

Weak

Embryonic (development)

 

Coming to market (growth)

 

Market shocks (competitive pressure)

   

Maturity & market saturation

 

Decline & exit from market

Figure 1: Hofer Matrix

  • Tata Nano of Tata Motors which did not climb growth phase, loser needs strategy to take on competition (Tripathy et al. 2012).
  • Tata BP Solar is poised towards robust growth in alternate energy solution (B2B, B2C).
  • TCS strong growth, seek new verticals to enter product to services, maintenance sector.
  • Tata Steel at domestic and Corus UK have challenges, (capacity expansion) by 2016-17.
  • Tata Ginger hotels, with website and mobile boom need to capture Indian market by 2016.
  • Tata Daewoo Trucks for electric bus, Tata Fiat car and trucks JV to challenge Indian and global market by 2016 Dec.

The global meltdown and the US, Greece crisis in last decade is a weak indicator that prompts the conservative Tata to utilize the time and align its internal issues in each country and verticals. To allow a strategy of quality and lean sigma approach will help Tata to change the reengineer, redesign the existing process, lower the cost minimisation agenda, increase capability. In order to comply the emission norms, reduce GHG, shifting to green technology requires Tata’s value driven action oriented framework offshoot of CSR to innovate, at rapid pace in order sustain the future growth and the create new markets globally (Sivakumar, 2008). Distributed leadership in Tata to drive this lean philosophy amidst the global falling markets, and the emergent strategy is countering the diversification and internalization strategies that were predominantly followed.. However, the application of the lean methods will lead to innovation, waste minimization and consolidation strategy to gain efficiencies of volume, production and output. However, it needs leadership vision and strategy to adapt the KPIs in existing production practices to enable and strategise to meet the new business goals. This is an apt period, as lean and innovation will shift the product PLC curves and incremental progress can make the Tata to be ready in 3-7 years timeline.  

The success of the above recommendations needs a strong training support, in order to drive continuous innovation across Tata. The low cost technological skill in product development in Tata with its Nano under $2500, showed that it has been able to overcome obstacles in the innovation (Gaur & Sahdev, 2015). Going forward, the Tata management needs aligning OD(organisational development), seeking opportunities converting weakness into strengths in operations for creating a market responsive organization. This control and a radical shift towards lean and green technology, needs the management to track and measure the KPIs which is the key to achieving the NPD (new product development) for Tata’s sustainability.

Alternatives

The above approach will lead to consolidation of Tata businesses where the wastes (time, cost) and product obsolescence failing to generate profit is an indicator for Tata management to think from scratch. The sustainability issues of each vertical therefore are managed by the head of the businesses, though lean and DMADV will drive the reengineering methodology. This action oriented plan for next three to five years will streamline, optimize and allow Tata to adopt green technology and gain efficiencies in the production. It will consolidate loss making verticals and promote the profitable ones to new heights strengthening the shift towards green technology. 

References

Bhattacharya, K. & Datta, B. (2010). TATA Steelium -- A Success Story in B2B Branding. Vikalpa: The Journal for Decision Makers, 35(2), pp.101–126.

Economist, 2012. The Tata Group - Out of India. The Economist, pp.1–7.

Kamath, C.D. (2006). A Case Study in Intrapreneurship: The Turnaround at Tata Refractories. Vikalpa: The Journal for Decision Makers;, 31(1), pp.117–121.

Kang, L.S. & Sidhu, H. (2011). Talent Management at Tata Consultancy Services. Global Business Review, 12(3), pp.459–471. Retrieved 22nd September 2016 from: https://www.scopus.com/inward/record.url?eid=2-s2.0-80052373713&partnerID=tZOtx3y1.

Maroor, J. (2015). Customer Satisfaction towards Services offered on Passenger Cars: A Case Study of Tata Motors, Mangalore. MANTHAN, 2(2). https://dx.doi.org/10.17492/manthan.v2i2.8611

Nadkarni, A.G. & Branzei, O. (2008). The Tata Way: Evolving and Executing Sustainable Business Strategies. Ivey Business Journal, 72(March), pp.1–8.

Sarkar, P. & Hazarika, D. (2010). Development of engine management system - Tata Nano - The value car. SAE Technical Papers, (Figure 2). Retrieved 23rd September 2016 from: https://www.scopus.com/inward/record.url?eid=2-s2.0-84877239433&partnerID=40&md5=e7435e8714e41768ce08868752993135.

Seshadri, D.V.R., Tripathy, A. & Ramesh, G. (2006). Reinventing a Giant Corporation: The Case of Tata Steel. Vikalpa: The Journal for Decision Makers, 31(3), pp.133–146.

Seshadri, D.V.R., Tripathy, A. & Ramesh, G., 2006. Reinventing a Giant Corporation: The Case of Tata Steel. Vikalpa: The Journal for Decision Makers, 31(3), pp.133–146.

Shao, H., 2013. Tata Consultancy Services. Forbes Asia, 9(10), p.105. Retrieved 22nd September 2016 from: https://ejwl.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=99941989&site=ehost-live.

Singh, J., 2008. Tight Rope Walk at Tata Steel : Balancing Profits and CSR [ Psi ]. South Asian Journal of Management, 15(1), pp.118–136.

Sivakumar, N., 2008. The business ethics of Jamsetji Nusserwanji Tata - A forerunner in promoting stakeholder welfare. Journal of Business Ethics, 83(2), pp.353–361.

Srivastava, A., Negi, G., Mishra, V., & Pandey, S. (2012). Corporate Social Responsibility: A Case Study Of TATA Group. IOSR Journal Of Business And Management, 3(5), 17-27. https://dx.doi.org/10.9790/487x-0351727

Hofer, C. W., & Schendel, D. (1980). Strategy formulation: Analytical concepts. West Publishing.

Tripathy, M. R., Pandey, S. K., Srivastava, A., Vyas, R., & Agrawal, M. (2012). The Turnaround of Tata Nano: Reinventing the Wheel. Vision: The Journal of Business Perspective, 16(1), 53–59. https://doi.org/10.1177/097226291201600106 

The Economist. (2009). Inside the Tata Nano: No small achievement. The Economist.

Gaur, L., & Sahdev, S. L. (2015). Frugal innovation in India: The case of Tata Nano. International Journal of Applied Engineering Research, 10(7), 17411–17420.

Economist. (2012). The Tata Group - Out of India. The Economist, pp. 1–7. https://doi.org/10.1126/science.caredit.a1200079

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