Business Strategy Case Study: The Tata Group's Growth

This case study provides a comprehensive analysis of the Tata Group, examining its transformation into a large industrial conglomerate. It explores the advantages the company utilizes, such as access to capital, strong corporate image, and a competitive cost structure, to thrive in both domestic and foreign markets. The study investigates how Tata leverages these advantages to navigate trade barriers, bureaucracy, and country risk, particularly in emerging markets. It also assesses the impact of decreasing government intervention on Tata's global market success, and identifies target markets based on growth rates and consumer characteristics. Furthermore, the case study delves into Tata's CSR initiatives, including strategies to enhance its corporate social responsibility towards future consumers and minimize its environmental impact. The analysis covers key aspects of Tata's business operations, strategic decisions, and challenges in the context of global business dynamics.

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TATA GROUP CASE STUDY
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Question 1 a
The 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 employs
various 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 strong
corporate image to sustain its strong business connections with numerous high-quality market
partners. 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

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business competitors. The company has similarly developed a strong interdependence
relationship 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 b
The 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.

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Undeniably, Tata has also been able to use its advantages such as low cost labour and
presence of relevant professionals to surpass some of its close global market competitors. For
example, 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 2a
This 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

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commodities. Political influence from the West Bengal Politicos have resulted into
widespread labour unrests further paralysing Tata’s operations in certain parts of India.
Question 2 b
This question aim at examining the specific role of decreasing government
intervention in Tata’s global market success especially in India and the ability of the
company to sustain its internalization efforts.
According to Madhok and Keyhani (2012), every corporation wishes for a market
system where most of the operations in the marketplace are conducted freely and the
respective governments rarely intervenes resulting into reasonably balanced market
conditions. A market with decreased government intervention stresses on the existence of
minimal externalities, and that related external costs are adequately controlled. According to
Goldstein (2009), decreasing government control implies that the forces of demand and
supply are allowed to control market conditions.
Indeed, the Indian government has for a very long time been discouraging
international trade and imposing repressive trade restrictions and unnecessary bureaucracy.
For example, the Indian government and state-owned enterprises for e very long time
influenced various procurement activities among corporations operating in the country.
However, some of these high trade barriers were loosened in the 1990s enabling Tata to
increase its international trade operations in India. For instance, Tata started producing cars in
joint ventures with various companies around the world such as Fiat and Daimler-Benze. The
company also acquired a 30% stake in an Indonesian Coal mining company to sustain its
power plant in India.
Correspondingly, the company is taking advantage of its family conglomerate
business networks to strengthen its market position as a major government supplier. In
general, decreased government intervention rejuvenated Tata’s global market operational

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successes particularly in India. The company has been able to sustain its internalization
efforts majorly through joint ventures and diversification of its production processes.
Question 3 a
This question seeks to scrutinise the growth rates and other specific features of
emerging markets, and such markets that Tata should target to sell its products and why.
Ideally, Tata should target markets comprising of comparatively large sectors of low-
income consumers to sell their products. According to Shrader (2011), emerging markets are
majorly characterised by larger populations and stabilizing economies. Also, income levels in
such countries are increasing steadily, and this implies that an increase in disposable income
and purchasing powers.
Some of the emerging markets that Tata Company should target include Thailand,
Vietnam and Indonesia markets that have a rising population of middle income earners.
These countries also have expanding per-capita incomes, and this implies an increase in
purchasing powers which is good for a company like Tata. The increased purchasing powers
can be attributed to the increase in income level among many households in these emerging
markets. Thus, due to enhanced disposable incomes, many families in these emerging
markets can manage to comfortably purchase cheap Tata Cars. This is because most of Tata’s
products are charged moderately low compared to other related merchandises. Another
reason why Tata should target the aforementioned countries is that there is a large population
of motorcycle-driving customers that could really make use of cheaper Tata cars.
For example, in Indonesia, there is an increase need for alternative transportation
system aside from the famous motorcycles that are generally family-oriented. Therefore, Tata
should offer these consumers in the mentioned emerging markets cheaper Nano cars to
further facilitate their movements. Tata should also take advantage of increased brand
recognition especially after its acquisition of Jaguar and Land Rover to venture into these

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emerging markets. Therefore, Tata Company should feel more confident investing in these
identified emerging markets to capitalize on their massive economic growth among other
potentials.
Question 3 b
The question is asking about such country-level issues that Tata should take under
consideration to evaluate the prospective of different emerging markets, and how such factors
can possibly affect its operations.
Some of the country-level factors that the company should consider in its evaluation
of the prospective of various emerging markets include per-capita income and the population
of the middle class. Also, the company should comprehensively evaluate the market size of
the emerging markets to ascertain whether such markets are feasible for international
operations. Besides, the company should determine the intensity of the market operations and
the rate of market growth.
Other factors include market consumption capacity, commercial infrastructural
developments, economic liberty, market receptivity and country risk. For instance, violent
protests from the surrounding communities can significantly affect the production activities
of a particular company. Therefore, before investing in a particular country, Tata should
closely scrutinize these country-level issues that can seriously influence its operations if not
properly mitigated.
Question 4 a
This question seeks to establish how Tata can advance its CSR initiatives towards
future consumers in emerging markets as it prepares to expand its international operations.
According to McWilliams and Siegel (2011), CSR is increasingly being perceived by
many companies as a creative opportunity to increase their competitive advantage and
implementation of organizational objectives. Research by Slack (2012) further stipulate that

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CSR is a company’s direct involvement in the welfare and interest of consumers and other
stakeholders. As such, to enhance its corporate social responsibility (CSR) towards its future
consumers particularly in emerging markets, Tata should direct immense investments
towards raising educational standards, health promotion and various grass root agricultural
development projects.
For instance, Tata Steel should increase its investments on irrigation schemes to allow
farmers in emerging markets to increase their agricultural productive capacities. The
company should also build schools and hospitals among other projects in emerging markets
as part of their CSR initiatives. These charitable activities among others will help Tata to
capture and sustain large consumer bases in the emerging markets. For instance, through its
affiliate company Miljo Grenland, the company is currently producing electric cars called
Indica that are environmentally friendly. These production of these eco-friendly cars should
also be extended in the emerging markets to further plummet the company’s position in
international operations.
Question 4 b
This question aim at determining some of the actions that Tata should undertake to
minimize the impact of its operations on nature in Asia and in other parts of the world.
According to Kolk and Van Tulder (2010), a comprehensive CSR can significantly
improve the effectiveness of an organization especially when dealing with external conflicts
such as environmental protection. Some of the common CSR initiatives that Tata can apply
include improving it organizational operations and creating self-protection awareness among
its consumer bases (McWilliams and Siegel, 2011).
Specifically, from the case study, to minimize the possible impact of Tata’s operations
on the natural environment in Asia and in other parts of the world, the company should
consider applying various eco-friendly energy such as a reduction in the use of wood-burning

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stove by introducing solar lanterns. The company should also introduce more low-cost solar-
powered electronics such as refrigerators and water pumps to further minimize the impacts of
its operation on the natural environment. Overall, such initiatives will enable Tata to reduce
its carbon dioxide emissions and operate in a relatively clean environment.

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References
Alfaro, L. and Chen, M. X. (2014) ‘The global agglomeration of multinational firms,’
Journal of International Economics, 94(2), 263-276.
Buckley, P. J. and Ghauri, P. N. (2004) ‘Globalisation, economic geography and the strategy
of multinational enterprises,’ Journal of International Business Studies, 35(2), 81-98.
Dunning, J. H. and Lundan, S. M. (2008) Multinational enterprises and the global economy.
Edward Elgar Publishing.
Goldstein, A. (2009) ‘Multinational companies from emerging economies composition,
conceptualization & direction in the global economy,’ Indian Journal of Industrial Relations,
137-147.
Goldstein, A. (2009). Multinational companies from emerging economies composition,
conceptualization & direction in the global economy. Indian Journal of Industrial Relations,
137-147.
Keller, W. and Yeaple, S. R. (2009) ‘Multinational enterprises, international trade, and
productivity growth: firm-level evidence from the United States,’ The Review of Economics
and Statistics, 91(4), 821-831.
Kim, H., Hoskisson, R. E. and Lee, S. H. (2015). ‘Why strategic factor markets matter:“New”
multinationals' geographic diversification and firm profitability,’ Strategic Management
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Kolk, A. and Van Tulder, R. (2010) ‘International business, corporate social responsibility
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Madhok, A. and Keyhani, M. (2012). ‘Acquisitions as entrepreneurship: asymmetries,
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Global Strategy Journal, 2(1), 26-40.

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McWilliams, A. and Siegel, D.S. (2011) ‘Creating and capturing value: Strategic corporate
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of Management, 37(5), pp.1480-1495.
Shrader, R.C. (2011) ‘Collaboration and Performance in Foreign Markets: The Case of
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Slack, K. (2012) ‘Mission impossible?: Adopting a CSR-based business model for extractive
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