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DIVERSION OF STRATEGIC

ORIENTATIONS DURING THE


ERA OF RATAN TATA AND
CYRUS MISTRY
PRESENTED BY:
Shruti Budhia
Ronita Chanda
Dhriti Ghosh
Ragini Mathews
TATA GROUP
• MULTINATIONAL CONGLOMERATE COMPANY.

• FOUNDED BY JAMSETJI TATA IN 1868.

• IT IS A GLOBAL ENTERPRISE, HEADQUARTERED IN MUMBAI.

• IT COMPRISES OVER 100 INDEPENDENT OPERATING COMPANIES.

• THE GROUP OPERATES IN MORE THAN 100 COUNTRIES ACROSS SIX CONTINENTS, WITH A
MISSION 'TO IMPROVE THE QUALITY OF LIFE OF THE COMMUNITIES WE SERVE GLOBALLY,
THROUGH LONG-TERM STAKEHOLDER VALUE CREATION BASED ON LEADERSHIP WITH TRUST'.

Source: Tata website


Ratan Tata succeeded his
uncle JRD Tata as group
chairman in 1991.

He became chairman of
Tata companies: Tata Motors,
Tata Steel, Tata Power, TCS,
Tata Tea, Taj Hotels, Tata
Chemicals & Tata Teleservices.
STRATEGIES OF RATAN TATA
 RATAN TATA IS WIDELY RECOGNIZED AS THE PERSON RESPONSIBLE
FOR TRANSFORMING THE TATA GROUP, A LARGE INDIA-BASED
CONGLOMERATE, FROM AN UNWIELDY COLLECTION OF
BUSINESSES INTO A RELATIVELY MORE NIMBLE GROUP OF
COMPANIES BETTER PREPARED TO TAKE ADVANTAGE OF
OPPORTUNITIES.
 HE CHOSE TWO DIRECTIONS FOR GROWTH OF TATA GROUP;
INNOVATION AND GLOBALISATION.
 HE TOOK THE INORGANIC ROUTE.
 ON JANUARY 10, 2008, TATA MOTORS, A TATA GROUP COMPANY,
UNVEILED THE NANO, AN ENTRY-LEVEL SMALL CAR.
DURING RATAN TATA’S CHAIRMANSHIP, THE COMPANY
WAS DRIVEN BY HIS EXPANSIONIST STRATEGY THAT
INCLUDED OVERSEAS PURCHASES LIKE TEA MAKER
TETLEY IN 2000 AND LUXURY CAR COMPANY JAGUAR
LAND ROVER FROM FORD IN 2008.
AND UNDER HIS LEADERSHIP, TATA STEEL ACQUIRED THE
ANGLO-DUTCH STEEL MAKER CORUS IN 2007.
RATAN TATA WAS RESPONSIBLE FOR OVERSEEING A
TRANSFORMATION OF THE TATA GROUP TO PREPARE
THE CONGLOMERATE TO FACE THE PRESSURES OF
GLOBALIZATION...
OUTCOMES OF RATAN TATA’S LEADERSHIP
•1998: The Tata Indica, the conglomerate's first passenger car, was
launched this year. The car went on to become the no. 1 brand in its
segment within two years.
•2000: Tata Tea, now Tata Global Beverages, acquired the Tetley
group, the world's second largest manufacturer and distributor of
tea. Tetley is the largest tea company in the UK.
•2003: Tata Consultancy Services became the first Indian software
company to cross $1 billion in revenue. The company went public
a year later.
•2004: TATA MOTORS is listed on The New York Stock Exchange.
The company also acquires the heavy vehicles unit of Daewoo
motors the same year.
•2007: TATA STEEL acquires anglo-dutch company CORUS, the
second-largest steel maker in Europe.
•2008: TATA MOTORS unveils the Nano, the country's cheapest
passenger car. It was initially dubbed the Rs. 1 lakh car, though it
now costs Rs. 1.5-2 lakhs.
•2008: TATA MOTORS acquires the JAGUAR and LAND ROVER
businesses from ford, and forms a new company, jaguar land rover.
•2012: Tata Global Beverages and STARBUCKS form a joint venture,
Tata Starbucks Ltd, and open their first store in Mumbai.
THE SAGA OF CYRUS MISTRY..
RELATIONSHIP WITH TATA SONS
YEAR TERM DESIGNATION UNIT

1991 to 2006 15 years DIRECTOR TATA ELXSI

2006 to 2012 6 years CHAIRMAN TATA POWER


TATA GLOBAL BEVERAGES
TATA TELESERVICES
TATA INDUSTRIES

December 2012 to 4 years CHAIRMAN TATA GROUP


October 2016

Source: The Indian Express


VISION 2025
It means propelling
Tata companies into
the top 25 globally
by market value within
10 years and making
the products and
services available to
a quarter of the
world’s population.
TCS AS A LEAGUE
 TCS IS RECOGNISED IN THE GLOBAL DOW JONES SUSTAINABILITY
INDEX 2016 FOR THE FOURTH CONSECUTIVE YEAR

 IT IS AMONGST THE ONLY THREE INDIAN COMPANIES TO BE FEATURED


IN THE WORLD INDEX LIST

 TCS HAS BEEN INCLUDED IN BOTH, THE WORLD INDEX AND THE
EMERGING MARKETS INDEX THIS YEAR AND WAS PLACED ON THE 89TH
PERCENTILE.

Source: Tata website


•With overseas business making up 70
% of Tata group’s revenue, Chairman
Cyrus Mistry remained optimistic
about acquisitions — both within and
outside India.

•He wanted his companies to have


speed and agility to adapt to
“turbulent times”.

•He wanted to continue to remain


open to growth opportunities in India
and overseas, through the organic
route.
Source: The financial express
THE INNOVATIVE
TECHNOLOGY DRIVE

•“A BIG AREA OF FOCUS IS SCIENCE- AND TECHNOLOGY-DRIVEN


INNOVATION, SO THAT GROWTH IS NOT DEPENDENT ON
ACQUISITIONS ALONE,”

•“INNOVATION IS A SLOW, INTERNAL PROCESS, ALSO LESS


SPLASHY BUT EXTREMELY IMPORTANT FOR A CONGLOMERATE IF IT
HAS TO GO TO THE NEXT LEVEL OF EXCELLENCE.”

Source: Bloomberg
OTHER APPROACHES
 MR. MISTRY WAS BRINGING IN NEW BLOOD.
 HE WAS TRYING TO MAKE THE GROUP MORE CONSUMER-GOODS FOCUSED AND LESS
EXPOSED TO CYCLICAL SWINGS.
 HE WANTED TO TRY AND BALANCE THE PORTFOLIO TO ENSURE THAT AT AN
AGGREGATE LEVEL THE GROUP WOULD BE MORE INSULATED FROM BUSINESS CYCLES.
 STRATEGY AT THE GROUP LEVEL IS TO GET CLOSER TO CONSUMERS, TO ANTICIPATE
THEIR NEEDS.
SOURCE: The Financial Express

INTRODUCING
NETWORK STRUCTURE
•CYRUS MISTRY RECOGNISED THE DIGITAL WAVE.

•AS A RESULT OF WHICH TATA CLIQ AND TATA DIGITAL HEALTH WAS FORMED IN 2016.

•THIS WAS DONE IN THE WAKE OF EXPLORING NEW STRUCTURES IN THE ORGANISATION.
PROBLEMS FACED BY MISTRY
WHEN HE JOINED
Mistry, who took over the reins in late 2012 from the
legendary Ratan Tata, also spoke about coming to grips
with responsibility of chairmanship, multiple challenges
facing Tata companies, essentials of technology,
innovation and customer centricity, and continuing Tata’s
commitment to societal causes.
WHY HE NEEDED TO FOCUS ON
CASH COWS AND TATA’S DEBT
STATUS?

CLAIM 1:

TATA MOTORS FINANCE EXTENDED CREDIT WITH LAX RISK ASSESSMENT.

Source: bit.ly/2dOCm9o
CLAIM 2:

MANY FOREIGN PROPERTIES OF IHCL AND HOLDINGS IN ORIENT


HOTELS HAVE BEEN SOLD AT A LOSS. THE ONEROUS TERMS OF THE
LEASE FOR PIERRE IN NEW YORK ARE SUCH THAT IT WOULD MAKE
IT A CHALLENGE TO EXIT.

Source: Stock exchange filings, annual report


CLAIM 3:

A) IF WE WERE TO EXIT THIS BUSINESS (TELECOM) VIA FIRE SALE OR SHUT


DOWN, THE COST WOULD BE $4-5 BILLION. THIS IS IN ADDITION TO ANY
PAYOUT TO DO COMO OF AT LEAST A BILLON PLUS DOLLARS.

B) IN LIGHT OF ALL THIS, OUR STRATEGY OVER THE PAST THREE YEARS HAS
BEEN TO INCREASE THE EBITDA FROM RS400 CRORE TO RS2,500 CRORE.

Source: Registrar of Companies filings


CLAIM 4:

(TATA STEEL)EUROPEAN STEEL BUSINESS FACED POTENTIAL


IMPAIRMENTS IN EXCESS OF $10 BILLION, ONLY SOME OF
WHICH HAS BEEN TAKEN AS OF DATE.

Source: Annual reports of Tata Steel


OUTCOMES OF CYRUS MISTRY’S LEADERSHIP
CONCLUSION
• THE STRATEGIC ORIENTATION OF RATAN TATA AND CYRUS MISTRY
WERE QUITE DIFFERENT FROM EACH OTHER AND THE COMPARISON
BETWEEN 4 AND 21 YEARS WOULD BE TOO VAGUE TO BE JUDGED.
REFERENCE
 HTTP://WWW.ICMRINDIA.ORG/CASESTUDIES/CATALOGUE/BUSINESS%20STRATEGY/RATA
N%20TATA-TATA%20GROUP%20BUSINESS%20STRATEGY.HTM
 PROFIT.NDTV.COM
 HTTP://WWW.FINANCIALEXPRESS.COM/INDUSTRY/COMPANIES/TATA-GROUP-CHAIRMAN-
CYRUS-MISTRY-TALKS-OF-SUSTAINABLE-GROWTH-WANTS-COS-TO-BE-AGILE/376277/
 HTTP://WWW.LIVEMINT.COM/COMPANIES/KK0UPQMPSJHVBJBPOOBHIM/WAS-CYRUS-
MISTRY-RIGHT-A-FACT-CHECK-OF-CLAIMS-IN-EMAIL-TO-T.HTML
 HTTP://WWW.FIRSTPOST.COM/BUSINESS/CYRUS-MISTRY-EXITS-FROM-TATA-SONS-BUT-
SEVERAL-GROUP-STOCKS-POSTED-HUMONGOUS-RETURNS-IN-HIS-TENURE-
3069608.HTML
 HTTP://WWW.BLOOMBERG.COM/NEWS/ARTICLES/2015-11-16/TACKLING-HUGE-DEBT-
CHAIRMAN-KEEPS-UP-TATA-S-GROWTH-TRAJECTORY
THANK YOU
DISCLAIMER
OUR TOPIC IS NOT ON THE ON-GOING
TATA-MISTRY FUED......FOR THE SAME,
SUGGESTED: AN OPEN HOUSE
DISCUSSION SESSSION

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