TITLE OF THE PAPER:

INDIAN GLOBAL BRAND –THE ROLE OF TATA

GROUP.

AUTHOR’S NAME: DR.VINOD N.SAMBRANI

DESIGNATION: ASSISTANT PROFESSOR

ADDRESS: INSTITUTE OF MANAGEMENT STUDIES,

SHIVAGANGOTRI,

DAVANGERE UNIVERSITY,

DAVANGERE 577 002

KARNATAKA STATE, INDIA

EMAIL: vnsambrani@yahoo.com

1

INDIAN GLOBAL BRAND –THE ROLE OF TATA GROUP

ABSTRACT

Business environment, particularly the political and economic, has been changing all over the

world. The economies of different countries are connected through international migration,

creating an international human resource, and the international diffusion of technology.

Technological innovation and trade liberlisation has contributed to globalization. Asian giants

like India and China have been forerunners in the process of globalization. On the other side of

the globe countries like Brazil, Mexico, Central and Eastern Europe are going global. These

countries are known as RDE’s (Rapidly Developing Economies). Many companies based in

RDE’s are going global fast. Companies in these kinds of economies are gaining global market

share, making major acquisitions, and emerging as important customers, business partners, and

competitors for the world’s largest companies. To go global companies must have the right kind

of strategies to take care of different aspects of global market place like regionalism, inequality,

financial flows, migration of labor and work, technological innovations, environmental

sustainability, and cultural dynamics and many more. TATA group has taken advantage of

globalization and have taken their brands global.In this paper an effort is made to understand the

strategy of TATA Group to take their brand global.

Key Words: Globalisation, Strategy, RDE, Tata Group.

INTRODUCTION

Globalization has become the major trend in business since the 1980s and during 1991 in India.

It allows a firm to expand into new markets in order to seek higher profits and lower-cost

resources. Further globalization allows a firm to increase economies of scale and lengthen the

life cycle of its products.Globalization refers to the process of integration across societies and

2

economies. The process encompasses the flow of products, services, labor, finance, information,

and ideas moving across national borders.

Globalization entails both opportunities and threats for creating and sustaining competitive

strategies. Emerging economies offer resources in terms of labor, as well as expanding market

opportunities. However, geopolitical relationships and backlashes from cultural differences

create challenges for business operations. Globalization allows a business firm to expand into

larger and more profitable markets, exploit economies of scale, utilize foreign countries strength

and the strength of an established brand.

Companies in RDE countries have started assuming leadership positions in lucrative developed

markets and have established strong brands in other RDEs. For example Bharat Forge (India) is

now the world’s second largest forging company. BYD Company (China) is the world’s largest

manufacturer of nickel-cadmium batteries and has a 23 percent share of the market for mobile-

hand set batteries. Johnson Electric (China) is the world’s leading manufacturer of small electric

motors. Nemak (Mexico) is one of the world’s premier suppliers of cylinder head and block

castings for the automotive industry. Ranbaxy Pharmaceuticals (India) is among the top ten

generic-pharmaceutical players in the world. Techtronic Industries Company (China) is now the

number-one supplier of power tools to Home Depot in the United States. Wipro (India) has

become the world’s largest third-party engineering-services company.

Organizational strategies for international operations involve two related demand viz. the need

for local orientation and the need for integration. In addition to selecting a strategy for global

competition, managers also need to make decisions regarding the internationalization process.

Two processes are important. First, the development of innovations in a home market. Second,

stages of internationalization with foreign entry modes that involve increasing resource

3

commitment and risks start with exporting to licensing or joint ventures to wholly owned

subsidiaries.

Developing a global strategy is complicated by the fact that there are at least five major

dimensions of globalization such as playing big in major markets, standardizing the core product,

concentrating value- adding activities in a few countries, adopting uniform market positioning

and marketing mix and integrating competitive strategy across countries. The objective of

globalization is to move towards becoming globally competitive and to expand the market. The

globalization strategy itself could be asset-based, capability-based or opportunity-based. It also

includes global employment i.e. employing people with no national barriers, colour, race and

language like Tata Consultancy Services and Infosys

Figure1: Five Dimensions of Globalisation Strategy

On the other side of the globalization coin there are global concerns revolving around terrorism,

rapid transmission of pandemic diseases and viruses like AIDS, the rise of Dragon and

Elephant’s economies, an aging population in wealthier northern countries versus younger

growing populations in the southern hemisphere , and advances in biotechnology ,which are

intricately embedded in globalization processes.

Basically, globalization into the twenty-first century has created a fundamentally different

competitive environment that has shifted from incremental internationalization processes to

4

Globalisation Strategy

Concentrating value- adding activities

Playing big in major markets

Adopting uniform market positioning and marketing mix

Competitive strategy

Standardizing the core product

almost simultaneous deployment of innovations. This internationalization process also shifts the

work of global managers from managing a field of expatriates to collaborating with strategic

partners across national borders and managing global off-shore outsourcing vendors in multiple

geographical locations. TATA’s have taken their brand global either through joint ventures or

buying part of the organisation like in case of Daewoo motors or buying out the company like

Tetley tea.

OBJECTIVE OF THE STUDY

The objective of the study is to understand the role and the strategy of TATA group to take their

brand global.

KNOWING TATA GROUP

Ratan Tata current chairman of the Tata group who succeeded J.R.D. Tata in 1991, will step

down as chairman of US$80 -billion TATA group in December 2012 and Cyrus Pallonji Mistry

will take over as the new chairman of the TATA group. Started in 1868 by Jamsetji Nusserwanji

Tata the group has come a long way. Tata group today constitutes 96 functioning companies in

seven business sectors such as, Information systems and communications (TCS), Engineering

(Tata Motors), Materials (Tata Steel, Tata advance materials), Services (Hotels, Insurance,

Telecom), Energy (Tata electric company), Consumer products, and Chemicals (Tata

Chemicals). Tata Group plays a central role in the Indian economy and is currently at the fore in

the globalization of Indian companies. The group’s operations span 85 countries on six

continents and its companies export products and services to 120 nations. The Group’s core

values - integrity, understanding, excellence, unity and responsibility – inspire and motivate the

Group's operations. Leadership, culture, values and ethics are embodied in the well-recognized

Tata brand.

5

Tata Group firmly believes in giving back to the society what they have earned. Within days of

the 26/11 attack on Mumbai and the landmark Taj, the group set up the Taj Public Service

Welfare Trust to help not only the families of the Taj group’s employees and guests but also

other victims of that fateful attack. The trust wants to make the affected families self- sustainable

at the earliest. It has been offering support in the form of monthly sustenance, medical and

hospitalization support, children’s education and help to pursue a livelihood and for setting up of

micro-enterprises.

TATA AS A GLOBAL CORPORATION

A truly global corporation must have certain key attributes. It must have a global reach; it must

be instantly recognizable in global markets like Coca-Cola, Unilever; it must have global finance

at its disposal and it must be staffed by representatives of a global population. Its products should

have global appeal and it should meet the aspirations of global communities. The stakeholders

must be a global community. Further it is not enough for a few companies in the group to

demonstrate global competitiveness. The whole corporation must display a global presence.

Global companies are differentiated by their strong global position, global assets, capabilities,

brands, and their relative resilience to shocks and even to the business cycle. A company does

not become global by simply participating in a certain number of geographic markets. It is its

ability to become globally competitive, leverage global opportunities and have the required

global capabilities that make it global. Global corporate brands can cut costs to enter new

markets and allow the company to attract good partnerships as well as talent for example

Vodafone.

Tata’s are acquiring such a competitive position and global coordination capabilities, both at the

individual company level, as well as at the group level. The Tata group has been expanding its

6

Tata Motor

82% 18%

National

International

Hotels

80% 20%

National

International

Tea

30%

70%

National

International

brand in sectors where it is increasingly recognized internationally, such as software and hotels,

and to leverage its historical brand presence in various countries, especially those with strong

Indian roots.

Several Tata companies are global. Tata Steel has become global with its steel exports and its

new ferrochrome business and the acquisition of a USD 13 billion buyout of Corus, an Anglo-

Dutch steel firm which is four times bigger than Tata steel. Likewise, Tata Motors with its long

standing initiatives in exports, the acquiring of truck plant of Daewoo Commercial Vehicle

Company in Korea, the buying of premium vehicle brands such as Land Rover and Jaguar. Tata

Chemical’s soda ash business is getting into exports. Tata motors has designed pixel for the

European market. Similar is the case with Indian Hotels and Tata Tea, particularly the Tetley

acquisition. After the acquisition Tata Tea is now the second largest player in the branded tea

segment globally and has a presence in 40 countries. Tata Consultancy Services (TCS) on the

other hand is already global with its international business with a relatively low domestic base.

TCS has scaled up the value chain and is delivering value globally. Today, 18% of Tata Motors’

revenues and 20% of Indian Hotel’s revenues comes from international operations, for Tata Tea,

it’s 70%.

Figure 2: International Revenue Generation

As a group, Tata’s have taken several initiatives to enhance the global aspect in their peoples

approach and thinking. They work along with thought leaders and faculty from top universities

7

such as Harvard Business School, INSEAD, CEDEP and Michigan Business School. With

Michigan, the focus is on figuring out how to manage the challenges of managing a global

business, defining and adopting a common set of principles, approaches and a global

compensation policy when operating in a global way. The group is known for inculcating a

comfort level of working with a multi-ethnic workforce in multi-geography settings. Tata with its

successful operations in every major international market like Africa, Asia Pacific, China,

Europe, Middle East, North America, South America, United Kingdoms has become a global

brand and a global corporation.

Tata Co. Acquired Co. Country Stake Acquired Value Year

Tata Steel Corus UK 100 % Jan 2007NatSteel Asia Singapore 100% S$468.1

millionFeb 2005

Tata Motors Hispano Carrocera SA

Spain Remaining 79 % Oct 2009

Jaguar&Land Rover 

UK $2.3 billion

March 2008

Daewoo CommercialVehicle Company

Korea 100 % $102 million

March 2004

Tata Global Beverages(Formerly Tata Tea Limited)

Eight O' Clock Coffee Co.

US 100 per cent $220 million June 2006

Good Earth Corporation & FMali Herb Inc.

US 100 per cent $31 million Oct 2005

Tetley group UK 100 per cent GBP271 million Feb 2000

Table 1: Tata’s Acquisition of Various Global Companies

TAKING THE TATA BRAND GLOBAL

Tata Steel is India's largest integrated private sector steel company but globally ranked at 56 th

position in terms of steel output. Tata steel has sales in various countries like USA, Srilanka,

Nepal, Shanghai etc. but has lacked global identity or image. The company was aware of the

8

consolidation taking place in the global industry and desperately needed a global brand to

enhance its global competitiveness. Global moves of competitor i.e. Mittal acquiring Arcelor and

market factors pushed for globalization forced Tata steel to go for a global strategy to improve its

presence in International scenario. The opportunity to go global came in the form of Corus, an

Anglo Dutch Company. Corus’s was finding European markets unsustainable given the

increased competition from steelmakers in developing economies especially China. Higher raw

material and energy costs were eating into company’s profitability hence Corus management was

on lookout for a suitable partner outside Western Europe to acquire Corus, and began

negotiations with key players in the steel industry from India, Russia, and Brazil.

Corus presented a fantastic opportunity for Tata Steel to have a low cost manufacturing with

high value added products and customers in developed markets and gain global image. Tata Steel

and Corus were interested in entering into an M&A deal but it was Ratan Tatas idea to takeover

100 percent of Corus. It had a capacity of 20 million tonne and it will add 20 million tonne to

Tata steels capacity. Tata Steel would become 25 million tonne overnight. Tata’s, initial motive

behind the acquisition was not Corus revenue size, but rather its market value.

The buy would instantly catapult Tata Steel to the position of 5th largest steel producer in the

world, and provide access to the latest technology and strategic European markets as Corus had

plants in Britain, Germany, France, the Netherlands and Belgium. Tata also expected to benefit

from reduced production costs due to large volume, combined R&D operations and broader

product range and a move up the value chain, as the former had built a reputation as an

established supplier to the aviation and auto industries.

Tata Steel has a strategy in terms of creating Greenfield capacities in India and one or two places

internationally and also where the raw materials and energy sources are available. Tata steel’s

9

strategy to acquire plants in countries where raw material is not available but there are markets

either developed mature or growing markets. Tata group’s strategy is to get more from steel in

terms of branding and distribution and reduced logistics cost. 

Tata Motors produces vehicles both in the Light Commercial Vehicles (LCV) and the Medium

and Heavy Commercial Vehicles (M and HCV) segments. Globalization forms a key component

of Tata Motor's strategy and it has successfully entered countries having a demand similar to

India like South Africa, Thailand and Argentina, mainly through acquisitions and joint ventures.

Where possible Tata motors have launched their cars, for the European market they have

developed next gen. Nano car and have branded it as ‘Pixel”

As a part of the company's new internationalization strategy, the company has decided to focus

on a narrow base of 15-20 countries where market conditions are similar to that of India and Tata

motors will have a significant presence in terms of volumes and market shares. In these

countries, Tata Motors now has dedicated manufacturing facilities, marketing teams and sales

teams. The idea is to have self sustained operations in this narrow band of countries. The

company evaluates locations on the basis of market opportunities and labour skills.

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. Buying premium vehicle brands

such as Land Rover and Jaguar will bolster Tata Motors’ image as a global company and help it

go upscale, which otherwise would have required Tata motors to invest a lot of time and capital.

The company has had a successful alliance with Italian mass producer Fiat. This has enhanced

the product portfolio for Tata and Fiat in terms of production and knowledge exchange. Two of

the world’s luxury brand has been added to Tata motors portfolio with the buying of Land Rover

and Jaguar brands from Ford Motors for UK £2.3 million, thus helping Tata motors to go global.

10

In the 1990s, Tata Tea made a number of strategic decisions. To increase market share, it used

innovative packaging to position its five brands in India – Tata Tea, Agni, Kanan Devan, Chakra

Gold and Gemini – as ‘garden fresh’ (taazgi is Hindi for freshness). This strategy delivered an

increase in the share from 2 percent to 26 percent of a much larger market.

Tata Tea’s strategy has been the quest for a brand with global appeal. Some tentative efforts

were made in the direction of building the Tata name as a global brand, but realized that it was a

very expensive and risky proposition, which needed large outlays of funds and time. To

overcome the challenge of creating expensive distribution networks, management also preferred

to leverage distribution either created by a partner, a joint venture or an alliance. So it became

clear that the most effective option was growth through the inorganic route.

Tetley had a reputation for extremely good innovation in packaging (the first company to

introduce the tea bag (1953), the first to launch the round tea bag (1989), and the first to sell ‘no

drip, no mess’ drawstring bags (1997)). It also had a very special skill in buying teas worldwide,

blending and packaging them, as well as extremely good logistics management skills. Tetley is a

well-established premium brand in international markets. Tata Tea bought the loss-making

Tetley Tea (Tata’s first major global acquisition) outbidding the American conglomerate Sara

Lee to get global appeal.

Tata Tea is now the second largest player in the branded tea segment globally and has a presence

in 40 countries. The international expansion has all been through Tetley, which is a Tata Tea

subsidiary (see table 1). This gives the company a presence in both the emerging and developed

markets, along with reducing dependency on any one geography. Growth is driven by new

segments and new locations, proving the company’s ability in integrating new brands in new

countries into its portfolio

11

CONCLUSION

Year 1991 Indian economy was opened for LPG and most of the Indian companies were

subjected to global competition. Tata companies looked overseas markets and companies to gain

scale, reduce their exposure to the cyclicality of India’s economy, survive, and achieve a

sustainable competitive position in industries that are globalizing. Expending globally is the

main strategy of Tata’s. Currently the group is acting rapidly and acquiring, going for joint

ventures (ex. Tata Motors and Fiat) buyout other companies in different countries.

Tata Steel gambled on a strategy based on anticipation of global consolidation of the steel

industry. Along with Arcelor- Mittal, it is poised to emerge as one the few global steel producers.

Potential customers like Toyota want to buy steel in different countries in Europe as well as in

India, would give global steel producers (like Tata Steel) a competitive advantage. Tata steel had

the ability to implement globalization because of its rich experience of 100 years of running a

business successfully in India. Hence it had the ability to acquire and manage big steel company

like Corus.

Further to build a premium brand like Jaguar and Land Rover from scratch requires a lot of time

and investment. Mergers and acquisitions as a strategy is perhaps the only quick way to build a

brand. Tata acquired two of the world’s luxury brand Land Rover and Jaguar brands. Tata

motors portfolio now has a premium segment, which gives it the global image and reach.

Tetley is a well-established premium brand in international markets and it would have taken

much more effort and much more money to create the same level of awareness for the Tata Tea

brand overseas. Acquisition is a vital element of Tata growth strategy.

Secondly the most important strategy Tata’s have followed is retaining the people and

management of the acquired company for example Corus Board of Directors was reconstituted to

12

include representatives of Tata Steel. At the same time, in a spirit of partnership, an invitation

was extended to some senior members of Corus to join the Tata Steel board. Tata followed this

strategy in all most all the companies they acquired.

Tata Group has never engaged in any hostile takeover bid so far. Specifically speaking of Tata

Steel Ratan Tata had categorically declared that he would not go in for acquisitions or

partnerships if the value system of the target company or its management grossly differed from

that of the Tata group. Probably this strategy of fair approach (ethical, which is more intangible

in nature, assuring the employees that their jobs are safe) have also helped the Tatas to beat most

of the competitors.

Overall the strategy of the group is to maintain the cost of raw materials as lowest as possible

and to achieve the lowest cost of final products. The group also invested a huge amount in

research and development in order to achieve the highest degree of quality at the lowest price.

13

REFERENCES

1. www.ftpress.com/articles/article.aspx?p=101588 International Markets"

2. hbswk.hbs.edu/item/3773.html

3. www.referenceforbusiness.com/management/Ex-Gov/Globalization.html" Globalization"

4. http://iisb.stanford.edu/evnts/4326/

Organizing_for_Global_Advantage_in_China_India_and_Other_Rapidly_Developing_E

conomies_Mar06.pdf

5. http://iis-db.stanford.edu/evnts/4326/New_Global_Challengers_May06.pdf

6. http://www.tata.com/company/Articles/inside.aspx?artid=Y012M7gb5x0

7. http://www.tata.com/article.aspx?artid=5B6W0B5ZcLo

8. http://www.tata.com/article.aspx?artid=RZMDxjGlK9Y

9. http://www.articlesbase.com/international-business-articles/global-strategy-framework-

an-illustration-of-tata-steels-441441.html

10. http://www.tata.com/company/Articles/inside.aspx?artid=d0Kc/1aftfw

11. http://www.aabri.com/manuscripts/09198.pdf

12. http://organisationalexcellence.files.wordpress.com/2008/03/microsoft-word-tata-

group.pdf

13. http://www.ximb.ac.in/~jcr/tata.pdf

14. http://marketingteacher.com/swot/tata-motors-swot.html

15. http://economictimes.indiatimes.com/tata/Tata-Teas-strategies-for-that-global-cup-of-

tea/articleshow/2673792.cms

16. http://www.moneycontrol.com/news/management/strategies-transformed-tata-steel-

intoglobal-behemoth_300865.html

17. http://www.livemint.com/2007/11/07000733/Land-Rover-Jaguar-bid-fits-in.html

18. http://www.hindustantimes.com/Land-Rover-Jaguar-bid-fits-into-Tata-strategy/Article1-

256884.aspx

14

15