Tuesday, January 14, 2020
Analysis on TATA group Essay
Introduction Tata Group is an Indian multinational conglomerate company headquartered in Mumbai, India. It encompasses seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. Tata Group was founded in 1868 by Jamsetji Tata as a trading company. It has operations in more than 80 countries across six continents. Tata Group has over 100 operating companies with each of them operating independently. Out of them 32 are publicly listed. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan Industries, Tata Communications and Taj Hotels. The combined market capitalisation of all the 32 listed Tata companies was INR 8.2 Trillion ($ 138 billion) as of July 2014. Tata receives more than 58% of its revenue from outside India. Tata companies and details their business: Chemicals Tata Chemicals Rallis India Tata Pigments Limited General Chemical Industrial Products Brunner Mond Advinus Therapeutics Magadi Soda Company Consumer products Tata Salt I-shakti Casa DÃ ©cor Tata Swach Tata Global Beverages Tata Tea Limited is the worldÃ¢â¬â¢s second largest manufacturer of packaged tea and tea products. Tata Starbucks, is a 50:50 joint venture company, owned by Starbucks Corporation and Tata Global Beverages Eight OÃ¢â¬â¢Clock Coffee Tetley Tata Coffee Himalayan, Mount Everest Mineral WaterÃ¢â¬â¢s natural mineral water brand Tata Ceramics Infiniti Retail (CromÃ ) Tata Industries Titan Industries Trent (Westside) Landmark Bookstores Tata Sky Voltas, consumer electronics company Tata International Ltd. Tanishq Fastrack, Largest & Trendiest Youth Fashion Brand in India Titan Eye+, World class Optical Stores from Titan Industries Tata Refractories Westland Engineering TAL Manufacturing Solutions Tata AutoComp Systems Limited (TACO) Hispano Carrocera Tata Motors, manufacturer of commercial vehicles (largest in India) and passenger cars Jaguar Land Rover (Manager of TataÃ¢â¬â¢s British brands Jaguar cars and Land Rover) Tata Daewoo Commercial Vehicle Tata Projects Tata Technologies Limited Tata Consulting Engineers Limited Tata Cummins Telco Construction Equipment TRF Voltas Global Engineering Centre Tata Advanced Materials Tata Advanced Systems Tata Motors European Technical Centre Tata Petrodyne Tata Precision Industries Telcon Construction Equipment Steel Tata Steel Tata Steel Europe Tata Steel KZN Tata Steel Processing and Distribution JAMIPOL NatSteel Holdings Tata BlueScope Steel Tata Metaliks Tata Sponge Iron Tayo Rolls Literature review What is SWOT analysis A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. Strengths: characteristics of the business or project that give it an advantage over others. Weaknesses: characteristics that place the business or project at a disadvantage relative to others Opportunities: elements that the project could exploit to its advantage Threats: elements in the environment that could cause trouble for the business or project How SWOT affects strategic decisions The main advantages of conducting a SWOT analysis is that it has little or no cost Ã¢â¬â anyone who understands your business can perform a SWOT analysis. You can also use a SWOT analysis when you donÃ¢â¬â¢t have much time to address a complex situation. This means that you can take steps towards improving your business without the expense of an external consultant or business adviser.Another advantage of a SWOT analysis is that it concentrates on the most important factors affecting your business. Using a SWOT, you can: understand your business better address weaknesses deter threats capitalise on opportunities take advantage of your strengths develop business goals and strategies for achieving them. BCG matrix The growthÃ¢â¬âshare matrix (aka the product portfolio, BCG-matrix, Boston matrix, Boston Consulting Group analysis, portfolio diagram) is a chart that was created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations to analyze their business units, that is, their product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis. Analysis of market performance by firms using its principles has recently called its usefulness into question. Cash cows is where a company has high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a Ã¢â¬Å"matureÃ¢â¬ market, yet corporations value owning them due to their cash generating qualities. They are to be Ã¢â¬Å"milkedÃ¢â¬ continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. Dogs, more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically Ã¢â¬Å"break evenÃ¢â¬ , generating barely enough cash to maintain the businessÃ¢â¬â¢s market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable companyÃ¢â¬â¢s return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off. Question marks (also known as problem children) are business operating in a high market growth, but having a low market share. They are a starting point for most businesses. Question marks have a potenti al to gain market share and become stars, and eventually cash cows when market growth slows. If question marks do not succeed in becomingÃ a market leader, then after perhaps years of cash consumption, they will degenerate into dogs when market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. Stars are units with a high market share in a fast-growing industry. They are graduated question marks with a market or niche leading trajectory, for example: amongst market share front-runners in a high-growth sector, and/or having a monopolistic or increasingly dominant USP with burgeoning/fortuitous proposition drive(s) from: novelty (e.g. Last.FM upon CBS InteractiveÃ¢â¬â¢s due diligence), fashion/promotion (e.g. newly prestigious celebrity branded fragrances), customer loyalty (e.g. greenfield or military/gang enforcement backed, and/or innovative, grey-market/illicit retail of addictive drugs, for instance the British East India CompanyÃ¢â¬â¢s, late-1700s opium-based Qianlong Emperor embargo-busting, Canton System), goodwill (e.g. monopsonies) and/or gearing (e.g. oligopolies, for instance Portland cement producers near boomtowns), etc. The hope is that stars become next cash cows. Porter five forces analysis Porter five forces analysis is a framework to analyze level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An Ã¢â¬Å"unattractiveÃ¢â¬ industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching Ã¢â¬Å"pure competitionÃ¢â¬ , in which available profits for all firms are driven to normal profit. This analysis is associated with its principal innovator Michael E. Porter of Harvard University (as of 2014). 1. Threat of new entrants 2. Threat of substitute products or services 3. Bargaining power of customers (buyers) 4. Bargaining power of suppliers 5. Intensity of competitive rivalry Organizational Structure An organizational structure defines how activities such as task allocation, coordination and supervision are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment. Organizations are a variant of clustered entities. An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. Organizational structure affects organizational action in two big ways. First, it provides the foundation on which standard operating procedures and routines rest. Second, it determines which individuals get to participate in which decision-making processes, and thus to w hat extent their views shape the organizationÃ¢â¬â¢s actions. Findings & Analysis: Strengths: The internationalization strategy so far has been to keep local managers in new acquisitions, and to only transplant a couple of senior managers from India into the new market. The benefit is that Tata has been able to exchange expertise. For example after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product Ã¢â¬Ëright first time.Ã¢â¬â¢ The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production and knowledge exchange. For example, the Fiat Palio Style was launched by Tata in 2007, and the companies have an agreement to build a pick-up targeted at Central and South America. Weaknesses: The companyÃ¢â¬â¢s passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a disadvantage with competing car manufacturers. Despite buying the Jaguar and Land Rover brands (see opportunities below); Tata has not got a foothold in the luxury car segment in its domestic, Indian market. One weakness which is often not recognised is that in English the word Ã¢â¬ËtatÃ¢â¬â¢ means rubbish. Would the brand sensitive British consumer ever buy into such a brand? Maybe not. Opportunities: In the summer of 2008 Tata MotorÃ¢â¬â¢s announced that it had successfully purchased the Land Rover and Jaguar brands from Ford Motors forÃ UK Ã £2.3 million. Two of the WorldÃ¢â¬â¢s luxury car brand have been added to its portfolio of brands. Tata Motors Limited acquired Daewoo MotorÃ¢â¬â¢s Commercial vehicle business in 2004 for around USD $16 million. Nano is the cheapest car in the World Ã¢â¬â retailing at little more than a motorbike. Whilst the World is getting ready for greener alternatives to gas-guzzlers, is the Nano the answer in terms of concept or brand? Threats: Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production. Sustainability and environmentalism could mean extra costs for this low-cost producer. Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts. The price of steel and aluminium is increasing putting pressure on the costs of production.