By : Alapati Bhaskar, Senior Consultant, McKinsey & Company
Source : http://www.tata.com
Activity: 2 comments 4156 views last activity : 06 29 2012 01:45:05 +0000
Tata Group Case Study - The Tata Titans
The Tata Group,Founded by Jamsetji Tata in 1868, the Tata group’s early years were inspired by the spirit of nationalism. The group pioneered several industries of national importance in India: steel, power, hospitality and airlines. In more recent times, the Tata group’s pioneering spirit has been showcased by companies like Tata Consultancy Services, India’s first software company, which pioneered the international delivery model, and Tata Motors, which made India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the Tata Nano, for commercial launch by end of 2008.
The Tata group has always believed in returning wealth to the society it serves. Two-thirds of the equity of Tata Sons, the Tata group’s promoter company, is held by philanthropic trusts which have created national institutions in science and technology, medical research, social studies and the performing arts. The trusts also provide aid and assistance to NGOs in the areas of education, healthcare and livelihoods. Tata companies also extend social welfare activities to communities around their industrial units. The combined development-related expenditure of the Trusts and the companies amounts to around 4 per cent of the group’s net profits.
Going forward, the group is focusing on new technologies and innovation to drive its business in India and internationally. The Nano car is one example, as is the Eka supercomputer (developed by another Tata company), which in 2008 is ranked the world’s fourth fastest. The group aims to build a series of world class, world scale businesses in select sectors. Anchored in India and wedded to its traditional values and strong ethics, the group is building a multinational business which will achieve growth through excellence and innovation, while balancing the interests of its shareholders, its employees and wider society.
The House of Tatas is one of the oldest business groups in India. Not many Indians would need an introduction to the House of Tatas. The group is largely operated through a holding company, namely, Tata Sons. We provide a brief historical overview and then proceed with describing the recent restructuring exercise and other changes made.Established by Jamsetji Tata in the second half of the 19th century, the Group has grown into one of India's biggest and most respected business organizations, largely due to the entrepreneur’s vision, their commitment, and its fortitude in the face of adversity (Lala, 2004). Of the ventures that did bear fruit while Jamsetji was alive, the Taj Mahal Hotel in Bombay has to rank highest.
JRD Tata’s was born in Paris in 1904, the year Jamshetji died. JRD’s education was constantly interrupted and at twenty-one when he came to settle in India, his father, a director of Tatas, took his son to the room of John Peterson, who was then director in-charge of Tata Steel. Thus began JRD’s training and his tryst with business. At the age of thirty four, he was made chairman of Tata Sons. Right from the beginning JRD stamped his style of working on the organization. He started the process of devolution of power for the democratization of the Tatas. JRD hand picked many of the Tata company chairmen. He was also at the helm during the nationalization of many Indian businesses like Tata Airlines (1953) and the insurance arm of the Tatas, the New India Assurance Company (1971). Even as the Tata companies became legally independent under the dismantling of the managing agency system in 1970, a resemblance of unity was maintained by a network of intercorporate shareholdings, weekly cross-company directors’ meetings and JRDs dynamic personality and moral force.
Leading the Tata Group into the 21st Century, Ratan Tata was born in Mumbai (then Bombay) on December 28, 1937, to Soonoo and Naval Hormusji Tata, both Gujarati -speaking Parsis . He was the grandson of Jamsetji Tata, founder of the Tata Group. Ratan Tata had a troubled childhood as his parents separated when he was only seven... When Ratan Tata took over as chairman, the Tata Group seemed on its way to disintegration, with powerful CEOs running some of the Group companies like their personal fiefdoms and challenging the core structure of the Group... Ratan Tata was instrumental in changing the Tata Group's attitude toward risk. Earlier, the Group had been risk averse, and had had very few ambitious projects. By the mid-2000s, the Group companies had become more aggressive, with most of them entering new markets and developing new products... Ratan Tata believed that the biggest challenge for the Group was finding the right talent and retaining the Group's value systems as it grew bigger and more diverse.He believed that the Group had to expand the managerial perspective while retaining the same ethical and moral standards. That made his failure to designate a successor all the more disconcerting. Some criticized the move to extend his tenure as the chairman till 2012.
In tandem with the increasing international footprint of its companies,
the group is also gaining international recognition. Brand Finance, a
UK-based consultancy firm, recently valued the Tata brand at $11.4
billion and ranked it 57th amongst the Top 100 brands in the world.
Businessweek ranked the group sixth amongst the ‘World’s Most
Innovative Companies’ and the Reputation Institute, USA, recently rated
it as the ‘World’s Sixth Most Reputed Firm.Leadership with trust
Tata is a rapidly growing business group based in India with significant international operations. Revenues in 2007-08 are estimated at $62.5 billion (around Rs251,543 crore), of which 61 per cent is from business outside India. The group employs around 350,000 people worldwide. The Tata name has been respected in India for 140 years for its adherence to strong values and business ethics.
The business operations of the Tata group currently encompass seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The group's 27 publicly listed enterprises have a combined market capitalisation of some $60 billion, among the highest among Indian business houses, and a shareholder base of 3.2 million. The major companies operates in the group include Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and Tata Communications.
The group’s major companies are beginning to be counted globally. Tata Steel became the sixth largest steel maker in the world after it acquired Corus. Tata Motors is among the top five commercial vehicle manufacturers in the world and has recently acquired Jaguar and Land Rover. TCS is a leading global software company, with delivery centres in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Tea is the second largest branded tea company in the world, through its UK-based subsidiary Tetley. Tata Chemicals is the world’s second largest manufacturer of soda ash. Tata Communications is one of the world’s largest wholesale voice carriers.
Key Values and purpose
The Tata group has always been a values-driven organisation. These values continue to direct the group's growth and businesses. The five core Tata values underpinning the way we do business are:
* Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.
* Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.
* Excellence: We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.
* Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.
* Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.
At the Tata group our purpose is to improve the quality of life of the communities we serve. We do this through leadership in sectors of economic significance, to which the group brings a unique set of capabilities. This requires us to grow aggressively in focused areas of business.
Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. This heritage is being continuously enriched by the fomalisation of the high standards of behaviour expected from our employees and companies.
The Tata name is a unique asset representing leadership with trust. Leveraging this asset to enhance group synergy and becoming globally competitive is our chosen route to sustained growth and long-term success.
What is that you are trying to ask here..you have given a good description, but in the end what is the debate all about.
Problems are every where and this problem solving is a process where one needs to check the loopholes first and then anzlyze them and rectifying it as early as possible and finally verification is also important at the end of the day and learning from...
Today the word is more Agile and being more and more lean, as the supply chain intelligence where more number of process are aligned to cut cost and predict forecast on the demand..nice information...thanks for sharing...