CASE STUDY : TATA, ‘STEELING’ ITSELF FOR THE FUTURE

Anas ARHBAL

Mohamed EL KAMALI

Azzeddine OULAHRIR

Youness HRA

Moha ER-RICH

MBA16B GROUP 1

Module: Mergers, Acquisitions and Alliances By : Professor Duncan ANGWIN

Program: ENPC-EHTP MBA 16/01/2015

TATA COMPANY

96 operating companies

Revenues of USD 28.8bn

2.9% of India’s GDP

Employees: 330,000 people

Active in 54 countries

A SHORT HISTORY OF TATA

KEY MARKET SECTORS

Chemicals

PESTEL ANALYSIS

Politics

•Government infrastructure investment in India

•Regulation: Import and export rates and tariffs.

•Foreign equity investment up to 75%

Economics

•2007 World recession but good GDP growth in India.

•Lack of investments

•Unemployment

Technology

•R&D (Nano cars)

•Boom of e market

Ecology

•Power of the green political parties

•Awareness of reduction of CO2 emission and pollution (Steel and car industries / Eco cars...)

Social

•Global corporate social responsibility policies

Legal

•Due to political climate, laws are able to change (Labor rates, forex...)

ANSOFF MATRIX

PROS & CONS OF SINGLE & DIVERSIFIED BUSINESSES

Single Business: + Expert

+ Clear identity

- Risk

Diversified Business: + Spreading risk

+ Increased opportunity

- Complexity / management

WHY TATA CONTINUE WITH DIVERSIFICATION STRATEGY TODAY?

Risk reduction and/or spreading Escape from business crisis Stability of profit flows

To make use of surplus cash flows Large cash balances attract corporate raiders

To build shareholder value Create synergy among the businesses of a firm Make 2 + 2 = 5: The whole should be greater than the sum of the parts

TATA Leaders Believe “The group can survive on the world stage only by being both too big to beat and too good to fail”

TATA PARENTING ADVANTAGE

Culture Organization

Operations

TATA PARENTING ADVANTAGE

1. Culture The parenting is done in a «Partnering Mode».

TATA has made a lot of efforts to understand the local culture of the subsidaries.

2. Operations Limit the changes in the operations as maximum possible.

Benefit the subsidaries from the strong logistic power

Sharing best practices

Manifacturing excellence.

Cross fertilization of R&D.

TATA PARENTING ADVANTAGE

3. Organizationnal level: SIC – Strategic Integration Committee.

Facilitate the integration.

Create a virtual organization across combined business.

Parent Company

Subsidiary

The both teams are working in perfect synergy in order to identify the area of changes.

What types of acquisition are in TATA?

Market Relation

Same Different

Same

Horizontal

M&A

Market extension

(Concentric Technology)

M&A

Production

Relationship

Long-linked Vertical backward*

M&A

Vertical forward*

M&A

Unrelated Product extension

(Concentric Marketing)

M&A

Conglomerate

(M&A)

TATA

TATA MOTORS: BCG MATRIX

High

Low

Gro

wth

rat

e

High Low

Relative Market share

NANO LUXURIOUS

BRANDS

TATA MOTORS: PARENTING MATRIX

JAGUAR LAND

ROVER

NANO

References

• http://conceptdraw.com/samples/marketing-sale-diagrams-matrices

• http://www.tata.com/company/articlesinside/HCy!$$$!RNqd0vk=/TLYVr3YPkMU=