Strategy Used By Tata In Market Expansion
Tata Group strategy has been responsible for the company’s transformations since its establishment in the first half of the 19th century. The strategy is based on visions, missions, and objectives. The group vision was tallying with the nationalist goals of making India a self-reliant country. The group operated in such a way that even the successive leaders could enhance the same visions and structure goals and objectives that are in line with the company’s vision. The company operates under fixed goals which are always with whatever the company needs to achieve within a given time frame. The company strategy has been to become competitive within the India market and in the foreign markets. To succeed, the company has to produce unique products. This can be seen by its efforts to start the first textile company with a goal of competing with the British industries. The textile industry was one of its kinds in India. This textile company was started with the aim of fighting against imports of clothes from western countries. Swadeshi Mills was started in the attempt to promote the purchase of local textiles and discourage the reliance on foreign textiles. Some of the group’s strategic plans were based on posing competition to the already existing firms especially the foreign companies. In such a case, the group started a luxurious hotel to compete with the British luxurious hotels in India. To make India a self-sufficient nation, Tata group started a steel manufacturing company, which was the first iron and steel company in the country. The local market seemed small and inadequate to operate in and Tata Group saw the importance of expanding globally as part of its strategy. The group took this chance after India opened its way to foreign trade. Foreign investors and companies entered the Indian market making it even more difficult for Tata Group, which had to adjust its strategic plans. This trend of welcoming foreign investors overtook the Indian market resulting to significant competition to Tata Group (John, Nightingale, & Krishnan, 2008). The only way Tata had to survive in the new market dominated by foreign firms and companies was to sell some of its factories to foreigners, jettison almost half of its workers, and form partnership with some of the top foreign companies. This was the only way Tata Group could return to profitability. The only company belonging to Tata Group, which was hard to compete against was the Tata Steel Company. This happened due to the company’s world position as one of the most efficient companies in steel production in the world. The Group strategized on remaining private and has remained to be the largest private company in the country. To increase its profits, the group strategized on investing on interest in other companies and sectors such as steel, automobiles, communication, information technology, hotels, tea, and powder. Finally, intensive research is a part of the group’s strategic plans. It sets funds for both market and production processes (John, Nightingale, & Krishnan, 2008).
The strategy for the Tata Group has been able to respond to most of the new realities that the company encounter. Most of the goals and new strategic plans are set by the company to create new competing grounds and evade some realized challenges. The establishment of the company was itself done to fight a given problem. The challenge was that Indians suffered a lot from their reliance on western products. The reality in this case was uncertainties that the plan would work. In contrast to such reality, the local textile company by Tata Group became successful. Another challenge was the discrimination against Indians by the Europeans. Tata took this problem as a basis for starting the first luxurious hotel in India purely owned by the Indians. The major challenge or reality was whether the Hotel could pose the intended competition and operate successfully within the Indian market. Its strategic plans ensured that the group business avoided this new reality. By this time, India relied on western countries for almost all manufacturing machineries including steel and iron as raw materials for most of Indian companies dealing with such materials. When Tata Group was forming the Tata Steel Company, the realities facing this establishment was the prevailing competition in the industry especially from foreign companies. New companies were entering the market but through the group’s strategic plans, Tata Steel remained strong. When other companies belonging to Tata Group were facing stiff competition from foreign firms after India decided to open up for foreign investors, Tata Steel remained unturned. Through the same strategy, it had to face the other realities that were quickly emerging. New foreign firms were being established in India. Indian companies could not compete adequately against western companies. Tata Group decided to strategize on forming partnerships with some of the foreign firms, especially those posing threat to the group. It also jettisoned about 50 per cent of its employees and sold some of its factories. This way, the group overcame the new realities created by the sudden change in competition. The group has been able to overcome most of the challenges making it difficult to face a downfall given any further new realities. The strategy seems to be structured in a way that the company has a way of evading from the effects of new realities (John, Nightingale, & Krishnan, 2008).
Tata Group has been able to fight through a number of challenges with some of its companies growing to be among the top companies in the world. Tata Group however has some key weaknesses. Among its weaknesses, the group’s companies are hardly strong enough to compete effectively with foreign companies especially the western companies. Only the steel company has been in a good position to take a meaningful position in the global market. The new realities at this time lie in the advancement of technology. Companies are now focusing on trends in technology especially the use of more efficient ways of production. The company investment in the automobile industry is faced with significant realities in which unless the group adjusts its strategies, it may not cause a significant influence on the global market. The Tata Nano, a newly established vehicle brand is meant to ease public transport in India but new realities in new automobile advancements could make this product unprofitable. The company’s strategies are mainly based on getting rid of certain problems with less concentration on creativity and innovation. The group may thus face significant problems in its attempt to deal with the current and future new realities. Again Tata Steel is facing market challenges especially in the European market due to a decline in its position as well as some issue within the company’s management system (John, Nightingale, & Krishnan, 2008).