jva jury nivi

National Institute Of Fashion Technology, Gandhinagar

Submitted To-MS AMISHA MEHTA Associate Professor

Joint Venture & Acquisition

Submitted By-Nivedita Kumari(DFT VI)

End Term Jury

QUESTIONS TO BE ANSWER:

What are the key issues that Tata faces as it progresses to becoming a global company?

What international strategic marketing options does it have and what recommendations would you make to the company to enable it to become a global company?

Tata Group

Tata Group is an Indian multinational conglomerate ,holding company headquartered in Mumbai, Maharashtra, India.

It was founded in 1868 by Jamsetji Tata.

In 2014-15, the revenue of Tata companies, taken together, was $108.78 billion.

These companies collectively employ over 600,000 people.

The group comprises of seven sectors: engineering, information and communications technology, materials, services, energy, consumer products and chemicals.

Tata companies with significant scale include Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels Company.

Ratan Tata’s (the chairman of the Tata group since 1991) achievement during his tenure.

• 1998: The Tata Indica, the conglomerate's first passenger car, was launched this year. The car went on to become the No. 1 brand in its segment within two years.

• 2000: Tata Tea, now Tata Global Beverages, acquired the Tetley group, the world's second largest manufacturer and distributor of tea. Tetley is the largest tea company in the UK.

• 2001: Tata AIG, a joint venture between the Tata group and American International Group Inc (AIG), marks the re-entry of the Tata group into the insurance sector. The group's insurance company, New India Assurance, founded by Dorab Tata in 1919, was nationalised in 1956.

• 2002: The group acquires a controlling stake in Videsh Sanchar Nigam Ltd. VSNL was founded in 1986 and was the first Indian PSU to be listed on the New York Stock Exchange.

• 2003: Tata Consultancy Services became the first Indian software company to cross $1 billion in revenue. The company went public a year later.

• 2004: Tata Motors is listed on the New York Stock Exchange. The company also acquires the heavy vehicles unit of Daewoo Motors the same year.

• 2007: Tata Steel acquires Anglo-Dutch company Corus, the second-largest steel maker in Europe.

• 2008: Tata Motors unveils the Nano, the country's cheapest passenger car. It was initially dubbed the Rs. 1 lakh car, though it now costs Rs. 1.5-2 lakh.

• 2008: Tata Motors acquires the Jaguar and Land Rover businesses from Ford, and forms a new company, Jaguar Land Rover.

• 2012: Tata Global Beverages and Starbucks form a joint venture, Tata Starbucks Ltd, and open their first store in Mumbai.

To build a consistent vision while being in many different markets and industries.

To formulate strategies for over 100 companies in more than 80 countries.

how to absorb the struggling Corus mills

For future deciding on which businesses to spin-off and which to pursue,


With its wide diversification of business across six continents, Tata faces several challenges:

Diversification of investments and businesses:• Major problem for Tata Group is its diversification of its investments

and businesses over so many different countries. The group is subjected inevitably to the different market situations and the culture of each individual market.


The continuation of operation of Corus mills:• Another problem for Tata Group was whether they should continue

operating the struggling Corus mills. As the moment Tata Steel took over Corus, it is loaded with a $7.4 billion dues and the high operational cost of Corus weakens the profit margins of Tata Steel.

lack of a central system • There is a lack of a central system in the Tata Group. All its entities

have been working independently and lack a centrally focused objective. All subsidiaries and members of Tata Group will have to learn to adapt to a more central system, in order to better appreciate the entire organizations vision.


challenge of maintaining its ability to fund the society

• Tata group is faced with a challenge of maintaining its ability to fund the society due to the prevailing economic disparities. It has a tighter budget as a result of its business acquisitions and numerous investments.

Problems with the JLR Deal


Tata Motors acquired Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion in June 2008. It raised a bridge loan of US$ 3 billion from a consortium of banks. By the end of January 2009, Tata Motors was yet to pay around US$ 2 billion towards the bridge loan. In the December 2008 quarter, Tata Motors' reported a sales volume at 98,760 vehicles as compared to 144,608 vehicles during the corresponding quarter of the previous year.

Weak demand and decline in global steel prices are the key challenges faced by Tata Steel's European operations. Tata Steel has reduced its capacity utilization marginally in line with weakening demand and may have to resort to production cuts if demand does not improve in Europe. Even in India, the company is up against weaker demand from sectors such as construction and automotive.

Problems with the Tata Steel


Demographic changes and profound shifts in global economic power are causing massive dynamism in demand.

Consumer expectations are changing radically.

Lack of design and innovation in products.

Foreign automobile companies performing way better in all aspects at current stage.

Lack of creative advertising and promotional activities.

Need of balancing the needs and demands of customers, investors, regulators, non-governmental Tough competition from other brands.

Issues faced by TATA Motors

Strategies of success

Joint Venture Acquisition

Product development

in different segments

International marketing strategies ofTATA group

Market strategiesA strategy refers to a plan or a method that is considered to bring out the desired future, such as achieving the organizational goals or providing a solution to a problem. Tata group operates both locally and internationally

•Tata & Fait since 2006•Tata & Starbucks 50/50 JVStarbucks Coffee “A Tata Alliance”.•Tata Motors (SA)Tata Motors' joint venture with Tata Africa Holdings, has an assembly plant in the Gauteng province of SA.•Tata Automobile Corporation SATata Africa Holdings through a joint venture between Accordian Investments and the Imperial Group, to market and distribute Tata vehicles in SA.Singapore Airlines (SIA) (51/49 JV) established a joint venture carrier in India with Indian conglomerate Tata.

JOINT VENTURE

• Tata nano, the cheapest car in the world.• Swach, the cheapest water filter from Tata

Chemicals. less than Rs 1000.• Tata Motors launched the Ace truck in May 2005 for

just above Rs 200,000.• Tetley introduces the first Drawstring Teabag.• Tata Tea offers garden fresh tea in an innovative

polypack format in 1985. Tetley Blend of Both• According to research, while a number of consumers

wanted the benefits of green tea, with the taste of black tea.

• Tata Motors is set to offer utility vehicles at every price point right from Rs. 6.5 lakh to Rs. 15 lakh.

PRODUCT DIFFERENTIATION STRATEGY

http://www.ft.com/cms/s/0/d5a6daf0-780f-11e3-807e-00144feabdc0.html

Today, 60 per cent of the Tata group's business comes from outside India's borders.

Major acquisition by Tata

• In August 2004, Tata Steel agreed to acquire the steel making operations of the Singapore based NatSteel for $486.4 million in cash.

• NatSteel had ended 2003 with turnover of $1.4 billion and a profit before tax of $47 million. The steel businesses of NatSteel would be run by the company through a wholly owned subsidiary called NatSteel Asia Pte Ltd.

• The acquisition was completed in February 2005. At the time of acquisition, NatSteel had a capacity of about 2 million tonnes per annum of finished steel.

NatSteel in

2004:

International marketing strategies ofTATA STEEL

• Tata Steel acquired a majority stake in the Thailand-based steelmaker Millennium Steel for a total cost of $130 million. It paid US$73 million to Siam Cement for a 40% stake and offered to pay $1.13 per share for another 25% of the shares of other shareholders.

• For the year 2004, Millennium Steel had revenues of US$406 million and a profit after tax of US$29 million. At the time of acquisition, Millennium Steel was the largest steel company in Thailand with a capacity of 1.7 million metric tones per annum, producing long products for construction and engineering steel for auto industries. Millennium Steel has now been renamed to Tata Steel Thailand and is headquartered in Bangkok.

Millennium Steel in

2005:


• On 20 October 2006, Tata Steel signed a deal with Anglo-Dutch company, Corus to buy 100% stake at £4.3bn ($8.1 billion) at 455 moneys per share. On 19 November 2006, the Brazilian steel company Companhia Siderúrgica National (CSN) launched a counter offer for Corus at 475 pence per share, valuing it at £4.5 billion. On 11 December 2006, Tata preemptively upped its offer to 500 pence per share, which was within hours trumped by CSN's offer of 515 pence per share, valuing the deal at £4.9 billion.

• The Corus board promptly recommended both the revised offers to its shareholders.

• On 31 January 2007, Tata Steel won their bid for Corus after offering 608 pence per share, valuing Corus at £6.7 billion ($12 billion)

• At the time of acquisition, Corus was four times larger than Tata Steel, in terms of annual steel production. Corus was the world's 9th largest producer of Steel, whereas Tata Steel was at 56th position.

• The acquisition made Tata Steel world's 5th largest producer of Steel.

Corus in

2007:


Tata Motors has been in the process of acquiring foreign brands to increase its global presence, Through acquisition, Tata has operations in the UK, South Korea,

Thailand and Spain.

Among these acquisitions is Jaguar Land Rover, a business comprising two struggling iconic British brands that was acquired from the Ford Motor Company

in 2008.

In 2004, Tata acquired the Daewoo Commercial Vehicles Company, South Korea’s second largest truck maker.

The re- branded Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets. Today two- thirds of heavy commercial vehicle

exports out of South Korea are from Tata Daewoo.

International marketing strategies ofTATA motors

Tata motors is the second largest player in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments.

In 2005, Tata Motors acquired a 21% controlling stake in Hispano Carrocera, a Spanish bus and coach manufacturer.

In May, 2009 Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo Debuting in South Korea, South Africa, the SAARC countries and the Middle-East by the end of 2009.

In 2006, Tata formed a joint venture with the Brazil-based Marcopolo to manufacture fully built buses and coaches for India and other international markets.

Tata Motors has expanded its production and assembly operations to several other countries including South Korea, Thailand, South Africa and Argentina and is planning to set up plants in Turkey, Indonesia and Eastern Europe.

Tata also has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. Tata has dealerships in 26 countries across 4 continents. Though Tata is present in many countries it has only managed to create a large consumer base in the Indian Subcontinent, namely India, Bangladesh, Bhutan, Sri Lanka and Nepal. Tata has a growing consumer base in Italy, Spain and South Africa.

International marketing strategies ofTATA motors

NATIONAL market strategies

Tata group operates within the Indian markets where it operates entities like Indian hotels, Tata power, Tata coffee,

and Tata Communications among others.

It started the strategic management group (TSMG) in 1991 with an aim of advising clients on areas of formulating

strategies, improving performance, strategy deployment and business analytics.

The strategy led to cosmetics business sale to Unilever, the acquisition of a British-owned retail chain (little woods) in south India, and entry of Trent into apparel retail through Westside retail of food and grocery through star Bazaar.

TSMG integrated with Tata Economic Consultancy (TECS) in April 2006. This integration was meant to

come up with strategies such as infrastructure, investment advisory and government sectors. It led to a

pull of a large number of infrastructural projects that facilitated efficient operations of Tata group companies

in India.

Another strategy used by the Tata group under the leadership of Ratan Tata was through creating

technologically exciting and superior products. This was aimed at distinguishing Tata group companies with

other companies through low costs and its innovations.

NATIONAL market strategies

Recommendations1.The Tata group should start a firm of managers who will be alternating among the different sectors. This will minimize the problem of inconsistent management in case of retiring of the current manager. For instance, the whole group has been operating under the system of one chairperson since 1896.

2.The shareholders should plan for in-service training for all employees. The group has about 200,000 employees who should be equipped with the necessary skills. This will facilitate better services and efficient operations within the group.

3.The management should start a central system of leadership incorporating all the companies. The group has more than 100 operating companies within their seven sectors in the world. They should have a unified system rather than each operating independently.

4. The companies should have consolidated financial statements. As the group has a high market capitalization of $96.87 billion, it needs consolidated financial statements for proper accounting and auditing.

5. Tata group should have proper strategies when investing. This has led to a problem of managing economic disparities. They should avoid over diversification problems through investing into manageable projects and have proper debt management.

Recommendations

conclusion

In conclusion, Tata group is a multinational conglomerate company, It promotes the Indian economy through its initiative programs. It offers better services through its distinguished companies. Their company operates independently which creates a problem of effective management and proper accounts auditing.

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%20Study.htm10. http://www.thehindubusinessline.com/companies/tatas-succession-for-cyrus-mistry-the-challenges-ahead/

article2653848.ece11. http://articles.economictimes.indiatimes.com/2015-08-15/news/65525351_1_narendran-steel-industry-steel-

plant12. http://business.rediff.com/slide-show/2010/aug/12/slide-show-1-mumbais-taj-hotel-re-opens-post-terror-

attack.htm13. https://www.theguardian.com/business/2016/feb/04/tata-steel-reports-third-quarter-loss-chinese-imports14. http://centreforaviation.com/analysis/singapore-airlines-tata-joint-venture-proposal-would-be-a-big-boost-for-

sia---and-airasia-129471

1. http://www.tataglobalbeverages.com/company/overview2. http://www.tataglobalbeverages.com/company/innovations/product-

innovation3. http://www.ndtv.com/photos/news/ratan-tata-top-10-achievements-

under-his-leadership-14333#photo-1862704. http://tejas.iimb.ac.in/articles/31.php5. http://www.aabri.com/manuscripts/09198.pdf6. http://www.ehow.com/facts_7621882_swot-analysis-tata-steel.htm7. http://www.wikiswot.com/SWOT/4_/TATA_STEEL.html8. http://hrpolicyofmnc.blogspot.in/2011/08/hr-policy-of-tata-steel.html9. http://automotivehorizon.sulekha.com/tata-nippon-to-jointly-set-up-steel-

plant-at-jamshedpur_10_2010_postedby_jayashankar-menon10. http://www.tatasteel100.com/story-of-steel/index6.asp

BIBLIOGRAPHY contd..

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