Tata Group Business Strategy
TATA steel strategy was to integrate the value chain of steelmaking to aid the growth of Asia’s bubbling construction economy. When presented with the opportunity (financially the government policies made it easier) to gain access to the other markets, they later acquire CORUS which was an established name in Europe, but were not cost effective in their operations (Tarun Khanna, Krishna G. Palepu and Richard J. Bullock, 2009). This acquisition provided them the right synergy by combing the low cost upstream production in India with the high-tech research aspects of Corus and areas like procurement, marketing, back office operations and R&D. This was also required due to the trends in world steel industry whereby there has been a global consolidation (Tarun Khanna, Krishna G. Palepu and Richard J. Bullock, 2009) as key players look to gain economies of scale, accessing new and growing markets and increasing their purchasing power when negotiating with supplier and buyers (Kimberly Freeman, Suresh Gopalan and Jessica Bailey, unknown). TATA Steel therefore had to acquire Corus or risk being acquired and it also provided with them with the added capability of entering the global supply chain business. TCS on a contrary had a global presence and was considered born global (Charles Schell, Axele Giroud, Rudolf Sinkovics and Mo Yamin, 2013) since 91% of their revenue was from outside India. The uniqueness of TCS business was that their service could be delivered from India to any part of the world and TCS leveraged on cheap skilled labour via arbitrage, aggregation and adaptation as they had the economies of scales to deliver cheap solution and later on, they started to adapt according to their customers’ requirements across the different industries (i.e. Financial, Aviation, etc). In order for them to increase their revenue and prevent other competitors challenging their position in the market through arbitrage and aggregations, TCS grew organically via undertaking
References: Charles Schell, Axele Giroud, Rudolf Sinkovics and Mo Yamin (2013) International Business Strategy. McGraw Hill: Manchester Business School Tarun Khanna, Krishna G. Palepu and Richard J. Bullock (2009) House of Tata: Acquiring a Global Footprint. ECCH: Harvard Business School Mohit Chandra (2010) Emerging market acquisitions in developed economies. KPMG LLP Rishikesha T. Krishnan* Srivardhini K. Jha** (2011) Innovation Strategies in Emerging Markets:What Can We Learn from Indian Market Leaders. ASCI Journal of Management 41(1): 21–45 Rafiq Dossani and Martin Kenney (2004) Moving Tata Consultancy Services into the “Global Top 10”. Senate Hall Academic Publishing: Journal of Strategic Management Education Kimberly Freeman, Suresh Gopalan and Jessica Bailey (unknown) Achieving Global Growth through Acquisition: Tata’s Takeover of Corus. Journal of Case Research in Business and Economics