The Transformation of Tata Group to the Biggest Conglomerate in South East Asia - Research Paper Example

 Contents Introduction 2 Answer 1 2 Answer 2 3 Answer 3 5 Conclusion 5 References 7 Introduction The Tata group, one of the biggest conglomerates in South East Asia has seen growth by leaps and bounds in last two decades. This transformation is a result of important strategic decision making and a slew of acquisitions. Such a move has helped the company gain a foothold in new markets of the world. It has been under the direction of the group’s chairman Ratan Tata who not only managed to streamline the organisation but also went for diversifying the business. This study will explore the journey of Tata Group to becoming one of the best run conglomerates in the world. Answer 1 A change agent is an individual or group who undertakes the process of creating and managing change in an organization. Change agents can be internal, such as employees or managers or it can be people appointed to oversee the change process. In many large organisations and companies driven by innovation, both employees and managers are trained to build up the skills needed for managing the process of change (Tschirky, 2011). Change agents also can be external, such as consultants from outside the firm. The most important contributions that a change agent can make are by sustaining the firm’s present performance and assuring its future growth and performance. A change agent works by enabling employees and other staff members to work effectively according the plan implement and experience the change strategically. The change agent also aims to increase the ability and efficiency of people and resources to produce a change that is sustainable and growth oriented. For an organisation to sustain and show continuous growth, the senior management must establish themselves as leaders and help in reinforcing and establishing the cultures of the company (Carson, 1999). Continuous monitoring and assessment from the senior leaders is very important for the steady growth of the company. The transformation of Tata Group can be greatly credited to the vision and execution of the chairman, which was extraordinary. He is credited for the excellent transformation because he could see his vision for the company and transform it into a reality. After he took over the Tata group, he started introducing strategic changes in the company. The first was by regulating a compulsory policy for retirement age. This step removed a large number of employees from top management. This was done to remove those departments and companies of the group which were not growing and making loss. By replacing these individuals, he cleared the entry for young and fresh talent which will bring new ideas to the company. In addition he also created a Group Executive Office whose members were representatives of the strategic group, on the boards of the Tata companies. The Tata Business Excellence Model (TBEM) was introduced as the Tata Group’s largest change initiative. Excellence Model of the Tata Business (TBEM) was maintained and implemented through specific procedures and quality services. Ratan Tata showed a democratic style of leadership that encouraged openness and creativity among groups. With this approach of leadership he induced openness and creativity among young members of the organisation. He also acted as a supportive leader by helping and encouraging these young professionals in their ideas and plans and implementing them wherever it fitted. Answer 2 Business Streamlining becomes very importance during economic instability (Sixsigmaonline, 2013). Smaller businesses survive this crisis more easily than large businesses. Large companies are left with no choice but to cut down on their production operations, work force, open offices and any other area of their operations which are too costly for them to run in turbulent times. As a business owner, the leaders of an organisation need to focus on cutting down those businesses and operations that are less profitable than others. One of the biggest benefits of business streamline is saving a lot of capital (Sixsigmaonline, 2013). Even if it is a well established department, if the business is running in loss for a long time, then the viability and the sustainability of the business becomes a question. Saving capital means reducing unnecessary costs. Cutting costs means evaluating your business expenses and figuring out which ones you absolutely need and which ones you can do without. It also means utilizing your resources to the fullest in order to be less wasteful. Business streamlining can also be useful when an organisation is planning to increase their overall profits. Business streamlining can not only save capital, but it is also a means to make more capital. The more capital an organisation saves, the more it will have in reserve, and it extends to provide a sustainable business environment (Sixsigmaonline, 2013). After Ratan Tata took over the group, he launched an initiative known as the Tata business excellence model (TBEM). The objective of this framework was to help the group companies of Tata achieve the objectives of the business through specific processes. Using this framework, rattan Tata was able to change the large group into a much leaner and more profitable organisation. In the early 1990’s TISCO had obsolete blast furnaces and equipments, unprofitable factories and surplus manpower. Rattan Tata initiated many measures such as shutting down factories, disposing of obsolete equipments and replacing them with more advanced and efficient machines. He also reduced the workforce at Tata Steel. All these measures resulted in a greater productivity in the group company. Similarly Tata introduced rigorous quality assurance programmes in another company TELCO. To reduce the number of employees, he introduced a voluntary retirement scheme and the suppliers for the group were reduced to half. Growth stagnated in the company after 1997, because of the detiorating economic environment. To recover from this, rattan Tata introduced many restricting and cost-cutting measures. When Ratan Tata took over, the group was involved into a number of businesses like tea, steel, oil mills, chemicals, power, cosmetics and automobiles. By that time the group had 84 companies but only a few significant companies contributed to majority of the revenues. To manage this, Tata started cutting off the businesses which, according to him did not fit the vision for the group. Even though these strategic initiated lead to issues such as downsizing of employees and reducing the employment opportunities in areas of shut down, most of the employees and workers of these companies were fully compensated. Thus it can be easily said that under the leadership of Ratan Tata, the company prospered to great extent Presently, the group comprises of 96 operating companies and is active in seven major business lines. Though the number of companies is large to handle, most of its businesses are profit making. Those businesses which are new are equipped with sustainable resources and strategies which will make them profitable in the coming years. Answer 3 The outlook of the conglomerate has always been outward from the very starting. In 1907, Tata Limited was established in London as the representative of Tata Group in Europe. During World war-II, a light armoured car or tank, the Tatanagar was used by the British Army, extensively (Tripathi and Jumani 2007). After World War II, the company established Tata Incorporated in New York as the representative office of the Tata Group in the Americas. During 1990, globalization led to new innovation in the company. A wholly-owned subsidiary of Tata International, Tata Africa Holdings was established in Johannesburg in 1994. In 2000, Tetley was acquired by the company in a 271 million Euros or 432 million dollars leveraged buyout that became the largest takeover of a foreign company by an Indian one to that date. After that, in early 2007 Tata Steel took over an Anglo-Dutch firm Corus for 11 billion US dollars which became the largest deal out of India and the fourth-largest ever in the steel industry. Most of the deals acquisitions done by the group took place in US and the UK, and few others it Germany, Australia etc, apart from India. One of the biggest reasons behind these acquisitions was risk mitigation. Risk mitigation can be essentially describes as a method of developing options and other actions to reduce threats and enhancing opportunities for the business. The strategy which Ratan Tata followed was to diversify its business into different economies so that the business will not go down if one of the economies shuts down. For this reason the companies acquired by the Tata Group were from diverse sectors such as steel, automobiles, communications etc. the biggest advantage of the acquisitions was that these acquisitions were strategically made to fill any product or service gap in the Tata group. Conclusion Tata Group started as a risk averse small company under the leadership of Jamsetji Tata. It was however the strategic vision of Ratan Tata who took over the reins of the company as Chairman in the year 1991 that transformed the company to a global giant. Ratan Tata has been a change agent and a visionary leader who has got the company to the zenith of success. He always believed in creating technologically superior and sophisticated products, global operations for diversifying the business and enjoying the opportunities of a free economy. Such forward thinking has got the Tata Group to the position that it holds today. References Carson, Terry. (1999). Organizational change and strategies for turbulent environments. The Journal of Modern Business, 1(1). Sixsigmaonline, (2013). Business Streamlining: Importance during Economic Instability. Sixsigmaonline. Retrieved from http://www.sixsigmaonline.org/six-sigma-training-certification-information/business-streamlining-importance-during-economic-instability.html. Sixsigmaonline, (2013). Business Streamlining: Reasons to Implement Business Streamlining. Sixsigmaonline. Retrieved from http://www.sixsigmaonline.org/six-sigma-training-certification-information/business-streamlining-importance-during-economic-instability.html. Sixsigmaonline, (2013). Business Streamlining: When Business Streamlining Leads to Success. Sixsigmaonline. Retrieved from http://www.sixsigmaonline.org/six-sigma-training-certification-information/business-streamlining-importance-during-economic-instability.html. Tripathi, Dwijendra and Jyoti Jumani (2007). The Concise History of Indian Business, Oxford: Oxford UP. Tschirky, H. (2011). Managing innovation-driven companies: Approaches in practice. New York, NY: Palgrave Macmillan. Read More