Tata Group Growth Strategies
Companies operating in more than one country are referred to as multinational corporations (MNC). The world’s largest MNCs are the leading players in the international business world. Tata Group was founded in 1868 and enjoys a global presence in more than 100 countries across the globe. The company is headquartered in India and has diversified its operations in over 100 independent operating businesses. Tata Group is among the world’s leading players in the global steel manufacturing industry. This report seeks to explain Tata Group’s strategic growth strategies in the world market. The report will describe the business model innovation and technological innovations adopted by Tata Group through strategic alliances, M&As. Also, the report will present the company’s portfolio, integrated organization perspectives, and competitiveness in the industry. Further, the report will present Tata’s corporate governance, CSR, leadership, and sustainability in the market. Finally, I will present personal reflections on learning and understanding of the global steel manufacturing industry competition based on Tata Group’s case.
The business world has turned out to be very competitive with most players adopting sophisticated technologies in their day to day operations. Most multinational companies are taking different strategies to boost and maintain their competitiveness in the global marketplace. Global strategy by multinational companies comprises of global, transnational, and the international approach used by these organizations in an attempt to achieve their international expansion objective (Bruche, 2010, p. 55). On the other hand, global corporate strategy entails the formal plan formulated by a corporation to expand its operations into multiple countries all over the world. Multinational corporations utilize various tactics in achieving global expansion plans, some of them include exportation, business mergers, and acquisitions, licensing, and building strategic partnerships among other strategies. The global steel manufacturing industry is among the world’s leading and competitive sectors, where most companies operating in the industry are using different approaches to gain a competitive advantage over its rivals. Tata Group is a multinational company working in the global steel manufacturing industry whose tireless efforts in expanding its operations beyond borders is commendable (Lindgreen and Swaen, 2010, p. 5). As a significant player in the industry, Tata Group is succeeding within the international arena. The mission of Tata Group is improving the quality of life of the communities it serves internationally, through establishing long-term stakeholder value creation based on Leadership with Trust. The aim of this assignment is explaining Tata growth strategies in the international business world.
Portfolio, Integrated Organization Perspectives, and Competitiveness
Tata Group operates in a fast-changing dynamic global business environment. As a result, the management of the company is adopting portfolio and integrated organization perspectives and competitiveness in managing its wide range of products. Tata group consists of different companies in seven sectors across six continents. This necessitates proper portfolio integration of the company in order to gain competitiveness, position, and sustainability in the world industry. In the 2016-17 financial year, Tata Group of companies realized revenues worth $100.39 billion. Regarding workforce, Tata Group collectively has over 695,000 employees. Important to note, each Tata enterprise operates independently under the supervision, control, and guidance of the management and its shareholders (Maheshwari and Ganesh, 2009, p. 80). Tata Group of Companies adopts both portfolio organization perspective and the integrated organization perspective in managing its wide range of products.
Merits of Adopting Portfolio Organization Perspective
Based on the 2016-17 financial year report, Tata Group of companies benefits significantly from adopting effective portfolio organization perspective strategies in its multinational business operations. These include:
Better decision making
Tata Group benefits in its portfolio organization perspective by being able to drive better business decisions. Making sound decisions calls for accurate financial data both from strategic, top-down perspective and based on a bottom-up tactical perspective (Erel, Liao, and Weisbach, 2012, p. 1050). In its business operations in the global steel manufacturing industry, the company encountered closure of critical mines in the 2014-15 financial periods. In the same financial year, global steel stagnated. However, the ability to stay alert to the dynamics of steel industry made the company make the right decisions that made it come out stronger in the 2016-17 financial period.
Portfolio organization perspective greatly benefits Tata Group in ensuring maximize use of resources in the global steel manufacturing industry. According to the 2014-15 financial year, the management of the company established various initiatives and projects that contributed significantly to increased revenues in the 2016-17 financial period. The superior visibility in the micro and macro business environment makes it possible for Tata to achieve maximum control over its steel manufacturing projects which are impossible without a PMO environment (Rugman and Verbeke, 2017, p. 66).
Prove the value to stakeholders
Tata Group had incorporated 29 publicly-listed companies with a combined market capitalization of approximately $130.13 billion in terms of revenue by March 2017. Tata Steel is among the major Tata companies with a significant scale that benefits stakeholders of the company from one year to another.
Proper portfolio organization by Tata Group enhances its ability to lower its exposure to financial, personnel, and industry risks. According to the 2015-16 annual report, the company was exposed to the closure of its steel manufacturing business. However, due to the proper portfolio organization, the company rescued its pressured margins and managed the impacts of these issues and came out stronger in the industry (Tiwari and Herstatt, 2012, p. 100).
Demerits of Adopting Portfolio Organization Perspective
On the other side, the use of portfolio organization perspective disadvantages Tata Group of companies in the segment of steel manufacturing.
Possible loss of competitiveness in the industry
The adoption of portfolio organization perspective by Tata Group exposes it to the risk of losing competitiveness in the industry. Operating in the steel industry only could make Tata Group lose its efficiency and productivity in the market (Dhanesh, 2015, p. 120). For example, the 2014-15 annual report shows that the company’s margins decreased due to industry challenges. This necessitates Ta Group to integrate its segments to create a balance in its productivity.
There is a possible stagnation of demand and surging of imports for the steel manufacturing products and raw materials by Tata Group if it uses portfolio organization perspective. Before 2016, the global steel demand stagnated, and this posed a threat to Tata’s sales and profitability due to demand challenges.
Merits of Adopting Integrated Organization Perspective
Tata Group applies integrated organization perspective in successfully meshing its steel manufacturing business with its other business portfolios such as Tata Motors, Tata Teleservices, Indian Hotels, Tata Power, Titan, Tata Chemicals, and Tata Communications among others (Zhang, Zhou, and Ebbers, 2011, p. 80). The major benefits of adopting integrated organization perspective by Tata Group include:
Based on the 2016-17 annual report, Tata Steel has realized excellent leadership positions in over 100 countries and across six continents in the global steel manufacturing sector. The strong presence of Tata Steel is contributed by its proper integration of its segmentation in diverse industries and hence making it competitive in the industry (Iskanius, Alaruikka, and Page, 2008, p. 250).
Tata’s multi-brand portfolio integration is making the company advance its global footprint and steel brand recognition in over 75 percent of the world’s continents. The 2016 report by a UK based consultancy firm, Brand Finance valued Tata’s multi-brand portfolio integration at approximately $23 billion.
The adoption of an integrated organization perspective by Tata Group has made the company sprawl numerous innovations in the steel industry (Singh, 2008, p. 118). Recently, innovations like Silent Track technology has been manifested in Tata steel portfolio and this is due to the advanced brand diversity and integration in the enterprise. A Student Sample: ORDER YOUR PAPER NOW
Disadvantage of Adopting Integrated Organization Perspective
While the adoption of integrated organization perspective at Tata Steel benefits the company, this strategy is also disadvantageous to the company in the following ways:
Control is resource consuming
Control of two or more than one project portfolio is time consuming and requires a lot of resources in terms of workforce, raw materials, finance, and time (Nayyar, 2008, p. 125). For instance, it was difficult for Tata Group to manage the impacts of the 2014-15 and 2016 challenges of steel demand, reduced imports, and environmental problems due to the high cost of resources.
Based on my evaluation, it is possible for Tata Group to adopt both portfolio and integrated organization perspectives in managing its wide range of products. This is because both minimize risks and enhance decision making hence fostering improved competitive of the company in the steel manufacturing industry.
Business Model Innovation and Technological Innovation through Strategic Alliances, M&As
Tata Group greatly focuses on business model innovation and technological innovation through strategic alliances. The huge focus on model innovations by Tata Group have helped the company improve, modify, and advance its products, services, and solutions that meet customer needs in the steel manufacturing industry (Tiwari and Herstatt, 2012, p. 100). For instance, the “Innovent” programme has enabled Tata Group to enter new global markets in different continents such as the steels door segment. Also, the company has introduced new steel doors under a brand name “Pravesh” and has gained a positive response from the target market, thereby establishing new markets for the company in the world (Goerzen, 2009, p. 500). In the 2014-15 and 2016 annual report, the company extended its brand operations to more countries beyond India and Australia. As a result, the company has reported increased revenues in the 2016-17 annual financial report due to increased sales of “Innovent” and “Pravesh,” new steel products in international market segments.
Tata Group also pioneers an entrepreneurial spirit whose innovations have contributed to the creation of new products in the steel manufacturing industry. In 2016, Tata Steel Europe innovated the “Silent Track” technology and infrared laser scanning steel that assists users in predicting the terrain of steel in the products they purchase. Also, the company innovated a “Wade Aid” that helps global customers in predicting water depth in the steel products, and this has increased stakeholders trust in its operations. This has assisted in optimizing Tata Steel in aligning its silent track and wade aid business with technology hence boosting its coverage in international markets (Barney, 2012, p. 4). As a result, Tata Steel has been able to extend its operations beyond borders through these strategic alliances and innovations. This has, in turn, helped the company in improving its product differentiation and supply chain connections with other foreign players.
Tata Steel benefits from technological innovations as a strategy for expanding its business operations in the international market. In 2015, Tata Steel introduced a new brand in the market based on EconCore’s patented honeycomb core production technology that until today helps the company in combining steel with a polymer honeycomb in a non-interrupted process. Recently, Tata invented a state-of-the-art product whose brand name is “Coretinium” in Stuttgart, Germany. The company has partnered and merged with Germany based players in marketing this product in the market, and this is a perfect foreign market entry strategy by Tata Steel. Coretinium innovative product is a brand of choice for transportation market segments and European building. Due to this, the European Union is a sure market base of the product by the company. In the innovation, Coretinium has combined a highly optimized polypropylene honeycomb and other anticorrosion steel coating technology hence highly demanded in the market. In this regard, innovation is one of the most common global market entry strategy used by Tata Steel as the company seeks to meet customer demands.
Tata Steel’s strategic mergers and acquisitions are established around a shared business vision. In 2012, Tata Steel created an alliance with Fiat as a strategy of entering foreign markets. The primary aim of this merger was to increase sales, benefits, and steel design, models. This merger created a new market for Tata Steel and increased its competitive advantage against other steel manufacturers such as Kobelco, Gerdau, Nucor, Posco, and Arcelor Mittal among many others. Due to the competitive position of Tata Steel over its rivals in the market, the company finds it easy acquire smaller steel manufacturing companies in the global markets (Brouthers, Nakos, and Dimitratos, 2015, p. 1170). In this regard, Tata Steel extends its steel manufacturing operations in the global markets in a manner that maximizes its profitability. In 2012 annual report, Tata Group of Companies reported a net increase of 7,700 million of Euro due to M&As Fiat and other companies found in the 100 countries in which it operates. A Student Sample: ORDER YOUR PAPER NOW
Corporate Governance, CSR, Sustainability, and Leadership
Tata Group’s vision is becoming a global benchmark in steel value creation and corporate citizenship. The company’s long-term CSR goal is improving the quality of life of the communities through long-term stakeholders’ value creation.
In its corporate governance value and purpose, the management should encourage innovation so as to advance the quality of products it manufactures to the target market and ensures that the community’s quality of life is enhanced. This can only be achieved by establishing a conducive work environment in terms of culture, creativity, resources, and support to the employees (Shaw, 2015, p. 20). Also, the company needs to modify its code of conduct when it comes to employees’ treatment and value.
The corporate goal of the company is becoming a reliable steel manufacturer and supplier to customers located in both the domestic and international markets. There is need to ensure that the code of ethics laid down by the company is strictly adhered to by the employees of the company. Also, customer services and support must be maintained at a high level that foster increased the competitiveness of the company across various geographies all over the world.
Corporate Social Responsibility
Tata Steel contribution towards enhancing community welfare in India and other countries where it operates has been immense. Tata Group has an endless vision towards the society in which it works and has firmly positioned itself in the steel manufacturing industry due to its unique value and contribution to society growth and sustainability. The company operates in the principle that the profit-making goal must go hand in hand with tireless commitments towards upgrading the society through social development initiatives, projects, and programs that boost the community’s standards of living (Cavusgil et al., 2014, p. 60). The main CSR activities of Tata Group (Steel) to the community include:
Funding educational programs in the society: Tata Steel has established educational programs in an attempt to meet its CSR objectives in the society (Srivastava et al., 2012, p. 18). For instance, the company finances and offers donations to the disabled children. Also, the company funds scholarships to the needy and meritorious students in India.
Health CSR programs: Tata Group has established numerous dispensaries, clinics, and hospitals across different locations in India. Also, the company has partnered with health NGOs to fund health education and camps to the society (Tahriri, 2008, p. 75). Further, Tata Steel runs mobile vans to the sick on various locations across the country as a way of giving back to the society.
Livelihood CSR programs: Tata Steel also helps the community by funding the construction of irrigation facilities and harvesting structures. Also, the company supports agriculture across the country (Mitra et al., 2015, p. 240). Further, Tata Steel has been on the forefront in supporting upcoming entrepreneurs through training and funding assistance when their ideas are found feasible.
Sports CSR programs: Tata Steel supports sporting activities by promoting sports adventure, offering sports infrastructure such as stadiums, and promoting indigenous sports. Also, the company has been keen on running sports training centers as well as providing scholarship support on the sports equipment to women, youth, and men in the society.
Environmental protection CSR activities: Tata Steel preserves and conserves the environment in its steel manufacturing processes which helps the society to have clean air to breath and water to drink. Additionally, the company has been funding campaign programs about environmental conservation by NGOs to the society (Rothaermel, 2015, p. 12). Also, the company promotes afforestation and plantation activities in the society, and this recharges community groundwater.
Sustainability and Leadership
Tata Group continues to maintain great focus on corporate social responsibility since this contributes to enhancing the success of corporate government, competitiveness, and sustainability in the marketplace. The society in which the business operates forms the customer base of the company; so giving back to the society through CSR projects helps in enhancing its sustainability, growth, and competitiveness across different geographical backgrounds (Athreye and Kapur, 2009, p. 210). The senior management of Tata must ensure that its CSR programs contribute to increasing its value, reputation, position, and competitiveness in the global markets.
Personal Reflections on Learning
The global steel manufacturing is among the world’s most competitive industries. Tata Steel faces stiff competition from Kobelco, Gerdau, Nucor, Posco, and Arcelor Mittal among other major players in the steel manufacturing sector. Foreign market entry by a company requires proper strategizing and the adoption of suitable entry mechanisms such as the establishment of strategic alliances, mergers and acquisitions (M&AS, and corporate leadership policies and practices (Mitra Debnath and Sebastian, 2014, p. 15). For a company operating in the steel manufacturing industry to succeed in exploiting foreign markets, innovation of new products and brands that meet customers’ demands is paramount. The proper evaluation of a market helps companies understand the needs and demands of the given market hence leading to appropriate decision making on the approach to use to boost competitiveness and sustainability in that market.
Strategic alliances play significant roles in the success of a company’s corporate strategy. Tata Steel’s strategic partnerships with more businesses in different industries through strategic innovations have largely increased its competitiveness and presence in the global markets. Most of the company’s foreign enterprises have been more of business ventures and virtual collaborations, and this has greatly boosted its sustainability in the international market. These strategic alliances have brought an enormous sense to Tata Steel operations across various geographical backgrounds (Marks and Mirvis, 2010, p. 9). As a result, Tata Steel has been able to partner with many foreign suppliers and corporate customer service companies where it markets and responds to customer needs appropriately.
In my understanding, mergers and acquisitions remain central to gaining a competitive advantage in the steel manufacturing sector of the global economy. Joining of Tata Steel operations with other minor steel manufacturing companies, mergers help in increasing market share, competitiveness, and position in the worldwide marketplace. Also, acquiring other companies in the industry has been proved as an effective strategy of Tata to becoming competitive in the foreign market at over 100 countries worldwide (Gubbi et al., 2010, p. 400). The management of the company exercises due diligence on the foreign market in its mergers and acquisition practices, and this makes the company stand out as a strong brand. In this regard, the company has the best corporate leadership strategy that increases its brand value and strategic competitiveness in the global market sustainably.
Going forward, Tata Group of Companies seek to build multinational businesses that will help in differentiating themselves from the other steel manufacturing players in the industry through entrepreneurship, innovation, value-driven operations, customer centricity, and trustworthiness while creating a balance of diverse stakeholders interests including shareholders, employees, and the society at large. The company operates in more than 100 countries globally and aims at setting up new businesses in all world continents through strategic alliances, innovation, mergers and accusations among many other foreign market entry strategies. However, there are various players in the steel manufacturing industry that poses stiff competition threat to Tata Steel. This requires the top management to establish viable corporate strategy visions, missions, and objectives which are significant in helping the company gain a competitive advantage over its rivals as well as increasing its global presence in more countries. A Student Sample: ORDER YOUR PAPER NOW
Athreye, S. and Kapur, S., 2009. Introduction: The internationalization of Chinese and Indian firms—trends, motivations, and strategy. Industrial and Corporate Change, 18(2), pp.209-221.
Barney, J.B., 2012. Purchasing, supply chain management and sustained competitive advantage: The relevance of resource‐based theory. Journal of supply chain management, 48(2), pp.3-6.
Brouthers, K.D., Nakos, G. and Dimitratos, P., 2015. SME entrepreneurial orientation, international performance, and the moderating role of strategic alliances. Entrepreneurship Theory and Practice, 39(5), pp.1161-1187.
Bruche, G., 2010. Tata Motor’s transformational resource acquisition path: A case study of latecomer catch-up in a business group context (No. 55). Working papers of the Institute of management Berlin at the Berlin school of economics and law (HWR Berlin).
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.
Dhanesh, G.S., 2015. Why corporate social responsibility? An analysis of drivers of CSR in India. Management Communication Quarterly, 29(1), pp.114-129.
Erel, I., Liao, R.C., and Weisbach, M.S., 2012. Determinants of cross‐border mergers and acquisitions. The Journal of Finance, 67(3), pp.1045-1082.
Goerzen A. 2009. Alliance networks and firm performance: The impact of repeated partnerships. Strategic Management Journal. 2009 May 1;28(5):487-509.
Gubbi, S.R., Aulakh, P.S., Ray, S., Sarkar, M.B. and Chittoor, R., 2010. Do international acquisitions by emerging-economy firms create shareholder value? The case of Indian firms. Journal of International Business Studies, 41(3), pp.397-418.
Iskanius, P., Alaruikka, A.M. and Page, T., 2008. Streamlining information flow in steel product design and manufacturing industry network. International Journal of Integrated Supply Management, 3(3), pp.244-260.
Lindgren, A. and Swaen, V., 2010. Corporate social responsibility. International Journal of Management Reviews, 12(1), pp.1-7.
Maheshwari, S.K., and Ganesh, M.P., 2009. Ethics in organizations: The case of Tata Steel. Vikalpa, 31(2), pp.75-88.
Marks, M.L. and Mirvis, P.H., 2010. Joining forces: Making one plus one equal three in mergers, acquisitions, and alliances. John Wiley & Sons.
Mitra Debnath, R., and Sebastian, V.J., 2014. Efficiency in the Indian iron and steel industry–an application of data envelopment analysis. Journal of Advances in Management Research, 11(1), pp.4-19.
Mitra, A., Parkhi, U.S., Pramanick, P., Fazli, P. and Zaman, S., 2015. Floral Biodiversity of Kalinganagar Project site, TATA Steel, Odisha, India. J. Environ. Sci. Comp. Sci. Eng. Tech, 4(1), pp.234-247.
Nayyar, D., 2008. The internationalization of firms from India: Investment, mergers, and acquisitions. Oxford Development Studies, 36(1), pp.111-131.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education. 12(4).
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Shaw, K., 2015. Foreign Market Entry Strategies. China-USA Business Review, 14(8). P. 20.
Singh, J., 2008. Tight Rope Walk at Tata Steel: Balancing Profits and CSR [Psi]. South Asian Journal of Management, 15(1), p.118.
Srivastava, A.K., Negi, G., Mishra, V. and Pandey, S., 2012. Corporate social responsibility: A case study of TATA group. IOSR Journal of Business and Management, 3(5), pp.17-27.
Tahriri, F., Osman, M.R., Ali, A., Yusuff, R.M. and Esfandiary, A., 2008. AHP approach for supplier evaluation and selection in a steel manufacturing company. Journal of Industrial Engineering and Management, 1(2), pp.54-76.
Tiwari, R. and Herstatt, C., 2012. Assessing India’s lead market potential for cost-effective innovations. Journal of Indian Business Research, 4(2), pp.97-115.
Zhang, J., Zhou, C., and Ebbers, H., 2011. Completion of Chinese overseas acquisitions: Institutional perspectives and evidence. International Business Review, 20(2), pp.226-238.