Strategic Management

Tata Sons, led by N Chandrasekaran-led, has restructured the conglomerate into 10 different
verticals, such as consumer, commerce, IT and investments. The representatives of the
company from different areas will lead the verticals and will make sure that they run in sync
with the businesses of the others. This is important since the company has diversified a lot and
the operations of each company fail to achieve the common goal of the children of Tata.
This move will help the 100 companies operating under Tata Sons coordinate their operations
and also help reduce costs. The management of Tata's vertical consumer and retail markets is
a challenge due to the various units listed below, such as Tata Global Beverages, Titan, Voltas
and Croma.
There is a vertical "travel and tourism" that has included the Indian hotels of Tata with their
joint aviation companies: Vistara and AirAsia. The vertical of Information Technology will
have Tata Consultancy Services and Tata Elxsi. The vertical of financial services will have
Tata Capital, Tata AIA Life, Tata Asset Management and Tata AIG.
According to Tatas, the vertical head may not be a member of the Tata Sons board, however,
the person who will be in charge will have a lot of knowledge of that particular industry along
with the experience. This move will help raise the morale and work skills of the senior members
of the organization who are not members of the board of directors, but their contribution to the
company is unquestionable.
It is expected that this rejection will increase the efficiency of the group, according to fund
managers. Verticalization should provide operational efficiency by helping similar companies
capitalize on the collective wisdom and synergies of a vertical. Consolidation and focus on this
scale must ensure that it does not affect the operational freedom of individual companies under
the verticals. Although the measure seems good, there are some concerns about the
independence of companies. Tata aims to improve the collective image and returns of its
companies, while some may argue that this step could generate differences between company
leaders and the board of directors if their authority and operation are questioned.
It is a "work in progress" and will take a few months to be put into practice, but now companies
have a clear sense of direction. Tata Sons has spent approximately Rs 70,000 million in 2018
in this restructuring exercise. Tata Group has 100 operating companies, of which 30 are listed
and has more than 1,000 subsidiaries.
A diverse business like this one is not easy to manage and locating all of its major listed
companies and subsidiaries in only 10 verticals shows that Tata has taken serious steps for
companies in the process of ongoing loss. Companies acquired as Jaguar Landover, etc. They
are inculcating huge losses and the losses are affecting the income of shareholders. The
diversification has been made through the retained results over the years and the returns of the
shareholders were invested in acquiring companies. The vertical integration of several
companies into 10 will give a clear idea of whether the strategy is successful or not. In my
opinion, it will be a good strategy and the children of TATA should have adopted it much
earlier. The reason for the success of this type of integration is the reduction of costs, better
administration, regular controls and the elimination of companies that generate losses, which
will be good in the long term.