The Last Rajah: Ratan Tata - Coursework Example

Bus 323 International Management Case study: The last Rajah: Ratan Tata Yan, Liu(Helen) ID: 30886019 Due 04-04 Unit Coordinator: David Zhang Table of Contents Source Problems 2 Reference 9 Source Problems It is important to highlight that the primary source of problems for Tata is a little multidimensional in nature. Talking on this note, it has to be said that the primary problem of the Tata Group comprises of finding an able and highly efficient successor, who will be highly successful in managing and tackling the issues related to the group’s business in the domestic as well as international business forums. Secondary Problems Discussing in regards to the short term problem, the first issue is in regards to the acquisition of Corus by the Tata group, as it has resulted in the process of increasing the debt burden for the entire group. The second vital issue is the case of business challenge coming as a result of bidding for the Jaguar and Land Rover deals. One of the major long term problems is the fact that Ratan Tata has not developed a successor. Hence, the key issue that lingers among the long term problems of the company is the fact of absence of an immediate successor for the India based conglomerate. The second most important factor is the fact that the Tata group has developed a highly diluted focus over the course of handling of business operations in a large number of diversified sectors over the past few years. Also, it is of tremendous importance to highlight that the Tata group, which is currently high on its growth track is globally popular for its highly ethical business practices and corporate social responsibilities handed from time to time. Hence, the factor of retaining the same level of corporate exposure on the lines of ethicality is another long term challenge for the Tata group as well as their new business leader. Analysis For the purpose of entering into new markets, the large organizations, with significant amount of capital should look forward to exploiting opportunities in the lines of exporting, franchising, contract based manufacturing, turnkey operations, management contracts, international joint ventures etc (Deresky, International Management, 254-255). Talking more on the lines of business theories, it is relevant to mention the fact that the process of indulging in strategic global expansion is often guided by the motives of cost leadership as well as differentiation. Porter has identified that the four vital factors that helps in the process of developing international competitive advantages are the factors associated with production, essential support industries, demand factors as well as inter firm rivalry and strategy. It is utterly inline to mention the fact that the companies who focus on sharing and developing their competency in other countries are obviously looking forward to capitalize on the low cost benefits provided by the new country. It can be said that in most of the cases, the large companies with significant amount of financial reserves at their disposal try to garner competitive advantage in regards to its competitors by trying to reduce the manufacturing costs for the products and thereby successfully develop more efficient yet low cost products to capture the market. It is highly important to mention that the companies that are looking forward to developing international territorial expansions for building up efficiency in their business processes should also look forward to retaining its dominance in the home country as it acts as a stronghold while trying to attain international success (Hagele, International Management, 10–11). Talking in regards to this particular case, it has to be mentioned that there are a couple of factors that play a major role in the course of analysis. It is of considerable interest to mention the fact that during the course of developing competitive edge for the entire group, while entering various foreign markets, the Tata Group which is headed by the group supremo Ratan Tata followed a purely textbook and academic theory natured approach. The group, chaired by the bold decision maker and top level corporate player Ratan Tata, focused on building domestic stronghold through companies like Tata Steel, Tata Consultancy Services and Tata Motors. The supreme commander of the India based conglomerate tried to develop significant amount of financial stronghold by developing healthy home based companies. In cumulative evaluation, in regards to financial turnover, it has been found that the above mentioned three companies generates a strong turnover 75% for the entire group. A very interesting point for analysis is the Tata group’s move to acquire Corus, despite its high amount of financial as well as process based liabilities. Linking in reference to academic theory, it can be stated that firms focus on indulging in overseas foreign market expansion for the purpose of expanding its markets as well as enhancing the efficiency of their business processes. Talking in regards to this case, the Tata’s move to acquire Corus, is an example of forward business integration (Aswathappa, International Business,106). Tata, already being possessed with the ability to develop raw steel at a competitive cost in India focused on acquiring on Corus, so that it can utilize its output to various forms of finished products. Another critical point of analysis for this case is the nature of organization structure followed by the group and implemented by its strategic decision making top corporate commanders. It has to be said that the Tata group tries to implement a much decentralized decision making process for each of its companies rather than focusing and promoting a rigid top down management approach. As a result, it can be said that the multiple companies under the Tata Group can capitalize on the various and highly diversified kind of market opportunities while trying to promote maximum transparency, ethicality and profitability. Criteria of Evaluation Hofer and Schendel used three kind of strategy- corporate, business and functional. Each strategy has its own priorities. It also has the application of four components. The priority of corporate level strategy is the business, the profit objectives, its overall growth and survival. This level focusses on the effectiveness requiring attention to the components of deployment of resources and the component of domain or scope. Again, at the business level like in the profit centres, the priority is on attainment of profit, competitiveness and the objectives of growth. it focusses on both efficiency and effectiveness. Its primary components are resource deployments and competitive advantage. It is of significant importance to highlight that while trying to design the criteria of evaluating the probable alternatives, a series of objectives as well as key responsibility areas can be designed. The following can be the desired guideline framework: i. Look for a probable successor who will be able to handle the responsibilities of the Indian conglomerate. ii. Developing strategies for providing solutions to the Jaguar and Land Rover bids. iii. Design a new and strategic focus for the entire group while concentrating on the lines of ethicality. Alternatives Talking about the short term alternatives, it can be said that one very effective solution is to focus on shedding the high debt of Corus by trying to stabilize the process in an urgent manner and starting to garner the projected advantages that are estimated to emerge from the overseas acquisition. Another effective solution to the short term challenges is to evaluate the potential benefits that are supposed to emerge in regards to the Jaguar and Land Rover bids. Talking about the long term alternatives, it can be said that the group should focus on finding an able and expert successor for the company. The other long term alternative is to primarily focus on outlining a strategic focused vision for the entire group which will honour the long line of ethics that is practiced by the company over the last couple of decades. Recommended Strategy It can be said that the most effective recommended strategy will be an effective combination of long and short term solutions. The short term solution will be to focus and concentrate on the process of evaluating the strategic benefits that the group might receive from the Jaguar and Land Rover deals and finally decide whether the company should proceed forward or pull back at this stage. While choosing the most effective long term solution, the focus is integrating both the probable alternatives. In a little detailed manner, it can be said that the company should focus on finding a suitable successor for the group who can be tasked with the need to design a strategic and long term focus for the company, while honouring the company’s code of high ethics. Justification of Recommendation The first alternative which comprised of shedding the huge debt incurred as a result of acquisition of Corus will need considerable amount of time to be implemented. Apart from the highly complicated process associated with financial restructuring for the acquired company Corus, as well as the entire group, the time requirements for spinning of the production process for leveraging strategic benefits of Corus acquisition will be very high. This will delay the process of generating significant competitive edge from the market, which has high tenacity of evolving on a regular basis. On the other hand, focusing on reaching a final decision in regards to the two automobile takeover bids, will help the company to decide on its long standing issues and will help the company to look and design for other possible strategies for its future business operations. While talking about the long term alternatives of the company, it can be said that both the long term alternatives provides significant solution to the company’s existing long term challenges. While discussing the first long term alternative, it can be said that the focus on finding suitable and experienced senior level managers by looking internally within the various companies owned by the Tata group has some significant benefits. It can be said that searching for possible leaders from within the senior tier executives of the group’s multiple companies will help the company to find a leader who is a accustomed with the group’s policies as well as their ethical nature of indulging in business operations. While analyzing the other alternative which comprised of formulating an ethical and long term focus for the company, it can be said that this particular move will help the entire group to have a fixed set of rules and frameworks for propelling the future growth of the company. However, justifying the current approach taken for the addressing the long term issues of the company, it can be said that the recommended approach will help to tackle both the issues through a single solution. By selecting a new successor for the India based highly diversified ethical conglomerate and then empowering him with the task of formatting an ethical strategic focus will help the company to resolve both the long term challenges. Implementation, Control and Follow-up While discussing on the lines of implementing the particular strategy, which is a combination of both long and short term strategies, it can be said that the TATA group should focus on setting up a team of strategic experts who will look after the entire implementation, control and follow up process. It needs to be said that the team of strategic experts should be provided with individual teams so that they can pinpoint, analyze and address the various issues that might emerge in the course of implementation of the strategy. Talking in regards to the decision making power and hierarchy that should exist between the team of strategic experts, it can be said that the team will be making decisions in a collaborative manner. Reference Deresky, Helen. International Management: Managing Across Borders And Cultures, 5/E. India: Dorling Kindersley Pvt. Ltd. 2006. Aswathappa, K. International Business, 4e. New Delhi: Tata McGraw Hill Ed. 2010. Hagele, Kathrin.C. International Management. Germany: Grin Verlag. 2010. Bibliography Sinha, Pradip Kumar and Sinha, Sanchari. International Business Management. New Delhi: Excel Books. 2008. Ahlstrom, David and Bruton, Garry D. International Management: Strategy and Culture in the Emerging World. USA: South Western Cengage Learning. 2010. Mead, Richard. International Management: Cross-Cultural Dimensions. UK: John Wiley & Sons. 2005 Gooderham, Paul and Nordhaug, Odd. International Management: Cross- Boundary Challenges.UK: Wiley. 2003. Gannon, Martin J. and Newman, Karen. The Blackwell Handbook of Cross - Cultural Management. UK: Wiley. 2002. Cole, G., 1997. Strategic Management: Theory and Practice. USA: Thomson Learning. Read More