Tata Case

1233 Words Nov 10th, 2012 5 Pages
1. Which, if any, of the following initiatives undertaken by Ratan Tata do you think were good ideas?
a) Creation of a Group Brand
b) Building of equity interlocks among the Tata companies
c) Sale of a part of Tata Industries Limited to the Hong Kong-based Jardine Matheson group
d) Revitalisation of Tata Administrative Services

2. What do you think of some critics’ opinion that Ratan Tata was moving the group of companies in exactly the opposite direction from where it should be going?
The Indian economy following the 1991 crisis swiftly moved away from central planning economy towards market-based economy with the government having less intervention and control. As a result, companies were operating in what is called emerging
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 Benefiting from advertising the group identity and brand image rather than products/services of each group.
 Attracting foreign capital (Indian government encouraged foreign investment) for new ventures. Foreign investors feel more comfortable working with a reputable party. Appendix 7 provides evidence of this (e.g. ventures with IBM, AT&T, Bell Canada).
 Establishing a code of conduct to ensure quality and ethical business practices.
 Reducing chances of internal competition (e.g. ACC, Tisco and Tata Chemicals).
There were certain competitive threats due to opening up the Indian economy. One brand, instead of many, will create a strong equity that will benefit all Tata companies to fight competitors entering Indian market.

1. b) Having equity interlocks among the Tata companies have a number of potential benefits including:
 Creating common identity and aligning companies with the group’s objectives
 Tata Sons having better control across the whole group
 Having ability to use resources across more effectively (transfer of human capital, utilising group’s plants, facilities and services) that would lead to creating various synergies and benefit from economies of scope.
 Ability to raise capital internally. This is important in case of a hostile takeover. Many promoters have been increasing company holdings. Investors with at least 26%

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