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HOUSE OF TATA:

ACQUIRING A GLOBAL
FOOTPRINT

TATA GROUP PROFILE


Founded by Jamsetji Tata in 1868, the Tata group is a global
enterprise, headquartered in India
Comprises over 100 independent operating companies
Operates in more than 100 countries across six continents

MISSION

To improve the quality of life of the communities we serve


globally, through long-term stakeholder value creation based
on Leadership with Trust'
TATA GROUP OPERATING COMPANIES

Information
Technology
and
Communicatio
ns

Manufacturing

Realty &
Infrastructure

Consumer &
Retail

Services

Financial
Services

TCS

Tata Motors

Tata Power

Titan
Company

Indian
Hotels

Tata AIG
General
Insurance

Tata
Teleservice
s

Tata Steel

Voltas

Infiniti
Retail

Taj Air

Tata Asset
Manageme
nt

QUESTION #1
What is your assessment of the globalization strategies
of the Tata Group operating companies, particularly
Indian Hotels,STRATEGIES
Tata Tea?
GLOBALIZATION
INDIAN
HOTELS

Earliest among all other group companies to being


globalizing its business
Purchased properties in London, NY, Chicago,
Washington DC; Divested some in the '90s to focus on
higher end properties.
The strategy then they used is to focus on higher end
properties
Globalization strategy shifted to management
contracts with small equity positions in properties
instead of outright ownership
Built their presence in gateway cities in advanced
markets with its management contract.
In 2005-07, IHC acquired Sidneys W Hotel, Ritz Carlton
at Boston and Campton Palace at San Francisco.
Objective of global acquisition to build seamless
connectivity to global customer

TATA TEA

Tata tea was facing slow growth of the tea


industry in India so they moved to international
markets to pursue growth and profit
Targeted UK based Tetley. With its focus on value
added, branded tea, branded tea and sales
presence, Tetleys business complimented Tatas.
GLOBALIZATION STRATEGIES
Acquired based Tetley in 2000, one of the largest
overseas acquisition by any Indian company at
that time
Decided to transform itself into a branded
company and to seek new growth and
globalization selected M&A as the best route.
In 2004-05 it also acquired other companies like
US based Czech tea & Good earth that sold herbal
fruit flavoured tea to venture into the flavoured
and herbal tea market
Retained the management of acquired companies
to maintain synergy.

STRATEGY IN
BOTH CASES

MARKET EXTENSION MERGER

QUESTION #2
What is your assessment of the role of the Tata Group
Centre in globalization?

Alan Rosling was appointed as executive director in January 2004 to


Role of the Tata Group centre in Globalization
coordinate Tata Groups globalization process by establishing some
umbrella operations.
Established offices in US, UK, South Africa, Bangladesh and China to
coordinate government and media relations, Tata brand promotion and
procurement
Coordinated business development methods in less developed markets.
Brought together representatives of different operating companies in
same country in order to identify mutually beneficial initiatives.
Internationalized common business processes like, human resources,
finance & M&A.
Provided financial support to Tata Group Companies during large
acquisitions.
Established Project Prune in 2003-04 to look at procurement
cost
across
Provide
the
group companies
and negotiate with providers to supply the best deals
Increase
the
financial
Smoothen the
to
all
Tata
companies.
visibility of
muscle power
Mergers and
Tata Group
during
Acquisition
as a whole
acquisition of a
larger firm.

QUESTION #3
ould Tata Motors bid for Fords Land Rover and Jaguar units as part of
its globalizationefforts? What are the pros andcons?

PRO
S

CON
S

Strategic Opportunity of becoming one of the major players in the


Automobile industry
Diversification across markets and Product segment
Access to new technology and advanced distribution channels
and world class engineering capabilities
Ease of entry: US market
The acquisition would bring in a global footprint for Tata Motors
Ability to track competition and product development in advanced
markets
Objective of internationalization-Mitigate risks in its business.
Acquiring JLR-potential risks: (1) Jaguar was the biggest contributor to
losses under Fords ownership.(2) Poor might lead to long pay back
periods
Difficult conditions for acquiring (1)Ford would maintain a
minority stake after the sale(2)Common factory and business
processes for both the brands
Increasing leverage: Tata Motors to raise Rs 120 billion for
capacity expansion and new product development over the next 3-4
years. JLR was expected to be priced at around $ 2billion. Acquisition
would increase the debt of the company.
Suggests Conflict : Unlike Tatas focus on medium they are
premium brands.

CONCLUSION
Decision to compete in both high end and low end economy
is a big audacious task Acquiring JLR is a challenge and
more or less a risk venture
Tata lacks expertise in Premium segment should focus more
on existing car segment
If proven successful the strategy would provide the company
with high margin(JLR) as well as high volume revenues
(medium car segment). The revenue streams if compatible
could mitigate each others risks
Automobile industry was going for a downturn. In that
environment, it does not make sense to do business

Tata Motors should not acquire JLR at this point

THANK YOU