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Tata Group- Case Study

   

Added on  2020-02-24

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Tata Group Case Study Analysis 1TATA GROUP CASE STUDYby (Name): Course:Tutor: College: City/State: Date:

Tata Group Case Study Analysis 2Question 1 aThe question seeks an explicit description of numerous advantages that companies such as Tata apply to transform into large industrial conglomerates. According to Alfaro and Chen (2014), a conglomerate company is a term used to define a highly differentiated field company. Typically, a conglomerate company operates two or more different business lines under a single and unified corporate structure. Initially, Tata was established as a textile company, but later expanded to include various business operations such as schools and steel production among other operations. Tata has gradually been increasing its dominance of the Indian market since 1990s enabling it to develop an extensive business network that include expanded production resources and large capital among others. According to Buckley and Ghauri (2004), big companies such as Tata employsvarious advantages to remain large industrial conglomerates. Some of these advantages include increased access to capital under favourable terms from financial institutions (Buckley and Ghauri, 2004). This has allowed Tata to expand its operations and transform into a massive industrial conglomerate. Tata also banks on its strongcorporate image to sustain its strong business connections with numerous high-quality marketpartners. As a result of this positive corporate image, Tata has been able to develop and maintain its good relationships with both national and state governments in the country (India). Besides, Tata has a very competitive cost structure that is generally attributed to India’s low cost labour. The company has also been able to achieve this low cost structure through using its subsidiary companies such as Tata steel to provide necessary raw materials for its manufacturing processes. Moreover, Tata banks on India’s high tech talent and large mineral resource bases that have increase its competitive advantage among other international business competitors. The company has similarly developed a strong interdependence

Tata Group Case Study Analysis 3relationship with the Indian Government, a cooperation that is instrumental in a socialist economic system like India’s. This, among other advantages discussed have helped Tata to transform into a large industrial conglomerate. Question 1 bThe question is asking about how Tata can uses the above stipulated advantages to flourish especially in foreign markets. Since Tata has vast access to both financial and human resources, and on relatively favourable terms, the company can use such advantages to attain pertinent data and information in the market. Moreover, according to Dunning and Lundan (2008), large and quality capital requirement for entry into the automobile industry in emerging markets implies that Tata has an upper hand given its massive financial resources. Such advantages will enable Tata to better understand the operations and need of the foreign markets by tailoring their products and strategies to heighten their market success. Moreover, Tata could also use its past rich market experiences and vast operational knowledge to increase its chances of success in foreign markets. The company’s various business sectors such as Tata steel could also be used to facilitate the production of high-quality products to enable Tata to reduce its operational costs in its foreign market activities. Besides, given the company’s well-established business connection with high-quality market partners, it can easily reduce associated risks and capital requirements in foreign markets. Tata could also use such connections to develop and sustain good relationships with governments and other important market players. This could enable them to successfully overcome infrastructural-related challenges among other associated problems especially in foreign markets. Tata has used these advantages and many others to grow its reputation and to further expand its access in other established markets such as the U.S and Europe. Undeniably, Tata has also been able to use its advantages such as low cost labour and

Tata Group Case Study Analysis 4presence of relevant professionals to surpass some of its close global market competitors. Forexample, the company can use the low-cost labour structure in Indonesia to manufacture more cheap cars. The company aim at cementing its already strong production capacity in emerging markets. Moreover, Tata, together with its long years of market experience, aim at remaining a global business leader. Question 2aThis question seeks to explore the relationship between trade barriers, bureaucracy, country risk and the advent of Tata as an important player in global trade. Irrefutably, according to location theory of internalization, the location of production is based on factors such as trade barriers, high tariffs and related costs of operations among others (Keller and Yeaple, 2009). For example, most multinational companies fear operating in countries that do practice repressive bureaucracy such as India. Similarly, authoritarian trade restrictions and unnecessary political influences could significantly affect operations of a multinational company. According to Kim et al. (2015), a bureaucratic system of governance may occasionally introduce certain trade barriers that may increase the risk of doing business in a particular country. Throughout its operations, Tata has always followed strict government legislations and laid-down standards of operations. These government legislations and issues include various trade barriers, government interferences and the associated risks in the respective countries of operations. The inherent ability of Tata to remain efficient in India, a market that is crammed with numerous trade barriers, business regulations and various government interventions is commendable. In India, importation has to receive special government approval given the numerous import tariffs on vehicle parts and components among other commodities. Political influence from the West Bengal Politicos have resulted into widespread labour unrests further paralysing Tata’s operations in certain parts of India.

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