BUSINESS

STRATEGY
OF
TATA GROUP
Prop . PUTTU GURU PRASAD
FACULTY MEMBER
INC GUNTUR
pgp4149@gmail.com

September 18, 2008 BUSINESS STRATEGY 1

•Jamsetji Nusserwanji Tata starts a private trading firm, laying the foundation of the
Tata Group in 1868.
•The Central India Spinning, Weaving and Manufacturing Company is set up,
marking the Group's entry into textiles in 1874.
•The Indian Hotels Company is incorporated to set up the Taj Mahal Palace and Tower,
India's first luxury hotel, which opened in 1903
•The Tata Iron and Steel Company (now Tata Steel) is established to set up India's first
iron and steel plant in Jamshedpur. The plant started production in 1907
•The first of the three Tata Electric Companies, The Tata Hydro-Electric Power Supply
Company, (now Tata Power) is set up in 1910.
•The Indian Institute of Science is established in Bangalore to serve
as a centre for advanced learning in 1911.
•The Tatas enter the consumer goods industry, with the Tata Oil Mills Company being
established to make soaps, detergents and cooking oils in 1917.
•Tata Airlines, a division of Tata Sons, is established, opening up the aviation sector in
India in 1932..

September 18, 2008 BUSINESS STRATEGY 2

 •Tata Chemicals, now the largest producer of soda ash in the country, is established in 1939
•Tata Engineering and Locomotive Company (renamed Tata Motors in 2003) is established
in 1945 to manufacture locomotive and engineering products
•Tata Industries is created for the promotion and development of hi-tech industries in 1945
•Jawaharlal Nehru, India's first Prime Minister, requests the Group to manufacture cosmetics in
India, leading to the setting up of Lakme.
•India's major marketing, engineering and manufacturing organization, Voltas, is established in
1954.
•Tata Finlay (now Tata Tea), one of the largest tea producers, is established in 1962
•Tata Exports is established. Today the company, renamed Tata International, is one of the
leading export houses in India in 1962
•Tata Consultancy Services (TCS) in 1968
India's first software services company, is established as a division of Tata Sons 1968.
•Tata McGraw-Hill Publishing Company is created to publish educational and technical books
in 1970
•Tata Economic Consultancy Services is set up to provide services in the field of industrial,
marketing, statistical and techno-economic research and consultancy in 1970
•Titan Industries – a joint venture between the Tata Group and the Tamil Nadu Industrial
Development Corporation (TIDCO) – is set up to manufacture watches 1984
•Tata Teleservices (TTSL) is established to spearhead the Group's foray into the telecom sector
in 1996
•Tata Indica – India's first indigenously designed and manufactured car – is launched by Tata
Motors, spearheading the Group's entry into the passenger car segment 1998.
3
September 18, 2008 BUSINESS STRATEGY
•Tata Tea acquires the Tetley Group, UK. This is the first major acquisition of an
international brand by an Indian business group in 2000
•Tata AIG – a joint venture between the Tata Group and American International Group
Inc (AIG) – marks the Tata
re-entry into insurance In 2001
•The Tata Group acquires a controlling stake in VSNL*, India's leading international
telecommunications service provider 2002
•Tata Motors launches CityRover – Indicas fashioned for the European market. The first
batch of CityRovers rolled out from the Tata Motors stable in Pune on September 16,
2003.
•Tata Motors acquires the heavy vehicles unit of Daewoo Motors, South Korea in 2004
•TCS goes public in July 2004 in the largest private sector initial public offering (IPO) in
the Indian market, raising nearly $1.2 billlion
•Tata Steel acquires Singapore-based steel company NatSteel by subscribing to 100 per
cent equity of its subsidiary, NatSteel Asia in 2005
•Tata Credit Card launched in 2006

September 18, 2008 BUSINESS STRATEGY 4

September 18, 2008 BUSINESS STRATEGY 5
Ratan N Tata, chairman
Noshir A Soonawala
Farrokh K Kavarana
Ishaat Hussain
RK Krishna Kumar
Kishor A Chaukar, managing director
S Ramadorai
Nawshir Mirza
B Muthuraman
Prasad R Menon
Ravi Kant
 

September 18, 2008 BUSINESS STRATEGY 6

 Mr Tata received a Bachelor of Science degree in architecture
from Cornell University in 1962.

He worked briefly with Jones and Emmons in Los Angeles,

California

He completed the Advanced Management Program at Harvard

Business School in 1975

September 18, 2008 BUSINESS STRATEGY 7

 The government of India honored Mr. Tata with one of its
highest civilian awards, the Padma Bhushan, on Republic
Day, January 26, 2000.
An honorary doctorate in business administration by the
Ohio State University, technology by the Asian Institute of
Technology, Bangkok science by the University of Warwick.
Mr Tata joined the Tata Group in December 1962
He was appointed the Director-in-Charge of The National
Radio & Electronics Company Limited (Nelco) in 1971.
In 1981, he was named Chairman of Tata Industries.

September 18, 2008 BUSINESS STRATEGY 8

Ratan N Tata is the Chairman of Tata Sons, holding company of the
Tata Group, and major Group companies including, Tata Motors,
Tata Steel, Tata Consultancy Services, Tata Power, Tata Tea, Tata
Chemicals, Indian Hotels, Tata Teleservices and Tata AutoComp.
He is also Chairman of two of the largest private sector promoted
philanthropic trusts in India. During his tenure, the Group has
further expanded its global reach, with its revenues growing over
sixfold to Rs 97,000 crore ($21.9 billion).

In 1981, he was named Chairman of Tata Industries, the Group's

other holding company, where he was responsible for transforming
it into the Group's strategy think-tank and a promoter of new
ventures in high-technology businesses.

September 18, 2008 BUSINESS STRATEGY 9

•Established in 1945, Tata Motors is India's largest automobile
company that extends across commercial, passenger and utility
vehicles, the company generated revenues of Rs.32,426 crore
(USD 7.2 billion) in 2006-07
•The company began manufacturing commercial vehicles in 1954
with a 15-year collaboration agreement with Daimler Benz of
Germany.
•The company launched the compact Tata Indica in 1998, the
sedan Indigo in 2002 and the station wagon Indigo Marina in 2004.
The next car that was rolled out was Nano, in January 2008. Tata
Motors already distributes Fiat-branded cars in India
•Tata Sumo was launched in 1994 and Tata Safari in 1998.
Variants of these models are also available in the market.
September 18, 2008 BUSINESS STRATEGY 10
 Tata Motors has over 1400 engineers and scientists in
six R&D centers in India, South Korea, Spain and the
UK.
The company's R&D facilities include India's only
certified crash-test facility and a hemi-anechoic chamber
for testing of noise and vibration.
The company draws on the expertise of leading
international design and styling houses such as the
Institute of Development in Automotive Engineering and
Stile Bertoni in Italy.

September 18, 2008 BUSINESS STRATEGY 11

 Mr. Ratan N. Tata said, "I observed families riding on two-wheelers - the
father driving the scooter, his young kid standing in front of him, his wife
seated behind him holding a little baby. It led me to wonder whether one
could conceive of a safe, affordable, all-weather form of transport for such a
family. Tata Motors' engineers and designers gave their all for about four
years to realize this goal.

Stylish, comfortable
Fuel-efficient engine
Meets all safety requirements
Environment-friendly

September 18, 2008 BUSINESS STRATEGY 12

 The Tata Motors has signed the Jaguar and Land Rover (JLR) deal
with Ford last evening, which is estimated to be valued between 2-2.5
billion dollars.

Commerce and Industry Minister Mr.Kamal Nath said “My

congratulations to the Tatas and entire corporate world as they have held
India's private sector flag high. The world is looking at India.”

September 18, 2008 BUSINESS STRATEGY 13

 STRATEGIES
The wave of liberalization has given Indian corporate a new
dimension to ‘Globalization’. Tata Motors, a trendsetter in the
Indian automobile industry, is setting a new direction to the
globalization of the Indian auto industry.
The question that has been in the minds of the senior management
at Tata Motors was — Will we remain exporters of vehicles or do
we venture into the international automobile market as a company
that can match the best in the business?
Answer: The first step was to align the international business to the
two business units — the Passenger Car Business Unit (PCBU) and
the Commercial Vehicle Business Unit (CVBU), to bring greater
focus and increased synergy between the domestic and
international operations.

September 18, 2008 BUSINESS STRATEGY 14

Dr.V. Sumantran, Executive Director, PCBU, says, "The company
has now embarked on a road where we have made exports an
integral part of our business. We do not think of sales outside the
country as a separate activity. It is now integrated within the
mission of each of its businesses.“

Ravi Kant, Executive Director, CVBU, says "In a cyclical business

such as ours, it is important that we hedge against cyclicality.
International business offers an opportunity as different countries
go through peaks and troughs in demand at different points in time.
Our capacity utilization is more effective and risks of downturns
can be mitigated."

September 18, 2008 BUSINESS STRATEGY 15

The Business Units have classified different markets in
terms of size, growth opportunities, product segments and
target volumes. Therefore, from being present as an
exporter in 70 countries, the company today focuses on
15 to 20 key countries, where it will have a significant
presence in terms of volumes and market shares.
As Dr Sumantran says, "With this integration and focus,
we have stepped out in specific areas with specific
products. It will be unrealistic for us to be in all places
and all product segments. We will choose regions very
carefully and base our strategy on well-connected product
strategies. We should be in the right regions with the
right product at the right time."
September 18, 2008 BUSINESS STRATEGY 16
The implementation of the business strategy will be in three stages:
•Product up gradation
•Sales and distribution processes
•Penetration into new markets

Tata Motors has taken a number of initiatives to strengthen both

product reliability and durability and marketing processes.

Enhancing distribution reach and a robust sales process system

have been key elements in consolidating the company’s leadership
position in the domestic market.

September 18, 2008 BUSINESS STRATEGY 17

Mr Kant “said” "What we needed was an integrated approach where
we invest in all the critical elements — product up gradation, sales
processes, distribution and above all, people.“

Sales process system and face-to-face customer meets through road

shows and service workshops has started yielding results.

Recently, a large contingent of dealers from South Africa was invited

to visit the company’s facilities in Pune and experience the new face
of the international business.

September 18, 2008 BUSINESS STRATEGY 18

The second part of the business strategy is to make an entry in new
and yet uncharted markets, such as China and other countries.
Besides the assembly plants that Tata Motors has in Bangladesh
and Malaysia, the company’s recent order for 500 buses from
Senegal will involve providing technical and commercial
assistance to the Senegalese government for setting up a bus body
building plant.

Tata Motors has been short-listed for South Africa’s "Taxi Project"
in which the government will provide an entirely new transport
system in that country. A joint venture project for bus body
building in Ukraine and serious due diligence into the opportunities
available in the Chinese market are other areas where Tata Motors
is looking to create new opportunities.
September 18, 2008 BUSINESS STRATEGY 19
Identified new segments in these regions. The business strategies
will be country specific. The nature of our business will depend on
the country we are working in. In addition, inorganic growth
through acquisitions could also quicken the process of
internationalization.

" The company recently signed a MOU with Daewoo Commercial

Vehicle Company in Korea to acquire its truck plant. The
synergies are significant – a presence in the 250 to 400 HP range
of trucks is what the Korean company brings to the table. This
complements the existing product range of Tata Motors which
delivers vehicles up to 210 HP. In the commercial vehicle
business, says Mr Kant,

September 18, 2008 BUSINESS STRATEGY 20

"One must understand that different markets are in different stages
of evolution, depending on that country’s economic development.
Our competitive edge will be in our ability to offer cost-effective
products and services to each market, suited to the stage of
development of that market. Our capabilities in design, world-
leadership, software skills, technology assimilation capabilities
and labour productivity will ensure that we are not only
benchmarked with world-class companies, but are ourselves
benchmarks in certain areas.“

On the road to globalization, Dr Sumantran points out that the

Rover agreement has been an important step in helping Tata
Motors to gain very quick access to a fairly large market and a
large distribution network. "Working alone in this area would have
taken us much longer to create a distribution network.

September 18, 2008 BUSINESS STRATEGY 21

“The exposure that the company and the products have received
through the agreement validates the belief that we have arrived at a
significant milestone in promoting the Tata brand," elaborates Dr.
Sumantran. "Rover is getting a Tata product. It is a road that many
automakers have tread in the past. It will take us more than three
years to arrive at our goal. But at least we have started the journey
in that direction.“

By remaining connected with the international markets, one’s

learning improves. One is able to draw on experiences in different
markets and create strong synergies. In doing so, the company will
have created world-class products to fight competition in the
domestic market as well, with little extra investment. This assures a
greater degree of stability and, going forward, will strengthen the
company’s ability to manage risk.

September 18, 2008 BUSINESS STRATEGY 22

Clearly, it takes the right mix of people with the right skills to
make this happen. Innovation, knowledge, commitment and pride
have been Tata Motors’ greatest asset. It has amply demonstrated
that it can meet the challenge of change. "The company is now on a
course that will need a new mindset," says Mr Kant.

What drives the Tata Motors

strategy?
With the Nano on one end and the Land Rover-Jaguar deal at the
other, is Tata Motors trying to do too much, in too little time?
Tata told that "a promise is a promise", hinting at the ability of
his company to deliver even in the face of brutal skepticism.

September 18, 2008 BUSINESS STRATEGY 23

Why the world is looking at Tata Motors, the Tata Group's
automobile venture?

The company is associated with American auto maker Ford's

premium brands Land Rover and Jaguar.

Tata is competing with a group of private equity players including

one with Jacques Nasser, former Ford CEO, at the helm. Between
launching the Rs 1-lakh Nano and the Land Rover and Jaguar that are
priced anywhere between 30 and 100 times more, Tata Motors is
aiming for a presence across the spectrum.

September 18, 2008 BUSINESS STRATEGY 24

At one level Tata might well compete with two-wheeler
manufacturers - Ratan Tata has admitted that Nano has been
inspired by the vision of middle-class Indian families, complete
with children, balanced precariously on two-wheelers.

Too much, but too late?

“Smaller automobile companies like Tata Motors or the French
automaker Renault have little option but to develop low-cost cars to
grab global attention," says another analyst.

His rationale: All the bigger car makers are concentrating on

developing bigger, sturdier and more powerful cars, because that is
where the demand is. In most developed car markets, even the small
car (hatchback) is no longer a sub-1,000 cc car, but a more powerful
1-litre (1,000 cc)

September 18, 2008 BUSINESS STRATEGY 25

"No automobile company today can survive with presence in one
single market alone. You have to go global," states Dilip Chenoy,
director general of the Society of Indian Automobile Manufacturers
(SIAM).
Chenoy adds that companies need to grow volumes in other markets,
not just by exporting but by establishing manufacturing facilities in
these countries. For instance, the Tata Group has started production
facilities in Thailand and South Africa for its commercial vehicles (it
also has assembly lines for cars).

One in a billion
The 623-cc Nano targets a market that has been left vacant and
unguarded by most global players. The Nano may meet not just the
requirements of the Indian market, particularly in the smaller, tier-
three and tier-four towns, but could also find a huge export market in
other South Asian, African or Latin American countries.
September 18, 2008 BUSINESS STRATEGY 26
The Nano could also give Tata Motors crucial global-scale volumes
and access to a larger distribution network, besides helping it to churn
its models faster.

Typically, Indian car models roll out of plants for a far longer time
than any global car. For instance, it took Tata's first car, the Indica,
about nine years to roll out million cars. Even that was a record, of
sorts, in India.

Brands or high technology

If the Nano is intended to reach the masses across the globe, much
like the global small cars Model-T, Beetle and Mini did in the 20th
century, what is the strategy behind bidding for the Land Rover and
Jaguar? That's a question others, too, have pondered.
September 18, 2008 BUSINESS STRATEGY 27
Some feel that the Tatas can leverage the benefits of the acquisition
with their existing business, others pooh-pooh the suggestion.

The Jaguar-Land Rover deal is meant to fuel Tata Motors' global

aspirations. This buy-out will establish its global footprint as a
company with premium brands," says Nagporewalla.

The acquisition can give Tata Motors access to a readymade product

pipeline and technology. Developing a car from scratch could
otherwise take the company anywhere between two and five years.
The Nano, for instance, has been talked about for more than four
years.

September 18, 2008 BUSINESS STRATEGY 28

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