International Management For Management Of Tata Group: Challenges, Analysis And Strategies

Source of problem

Discuss about the International Management for Management of Tata Group.

In this study, the discussion is made on the international business management of Tata Group. The study starts with the discussion on the source due to which the Tata Group is facing problems in its international business management. After that the discussion of the study moves forward to the secondary source of the problems of Tata Group. After identifying the sources of problem, the study analyzes the problems of Tata Group and then provides some alternative strategies that can help the company to solve the problem and operate its international business properly.

Tata Group is one of the well-known multinational companies in the global business world (Chatterji & Palakshappa, 2016). Currently, the company is operating its business in several countries like, UK, US and other 148 companies throughout the world (Tata group, 2016). The company has a wide product range and the company is operating its business in several sectors including automotive, chemicals, engineering services, consumer goods, electrical distribution, financial sector, telecommunication, real estate and many more. The company has a plan to be one of the top most companies in the international market (Kerai & Sharma, 2015). However, the company is facing several challenges in taking proper marketing strategies and in identifying the proper talents.

If the current business problems of Tata Group are evaluated, then it can be identified that there are mainly three secondary sources for which the business of the company is facing trouble in the international market. These three secondary sources of problems are stated below:

Decreased sales in Nano car – Tata Motors or Tata Group introduced world’s one of the cheapest car Nano in the year 2008 (Tata group, 2016). The company thought that by introducing Nano, it can grab mare market share in the international market because this particular car is within the affordable range of middle class people, who are not able to invest high amount of money to purchase a car. However, the strategy of the company worked for the initial years but after 2011-2012, the sales of the car declined (Mukherjee & Mukerjee, 2016). The declining trend of Nano sales can be identified in the below diagram:

 

Figure 1: Declining trend in Nano sales

(Source: Tata group, 2016)

In several journals, it has been found out that the main reason behind the decreased sales in Nano cars was the weak customer handling and safety management of the cars (Crawford, 2016). This decline in Nano sales affected the financial health of the company.

Secondary source of problem

Limited skilled and talented employees – The success of a company in the international market depends on the skills and experience of the employees. The multinational companies take several HR policies to improve the quality of its workforce (Singh & Joshi, 2015). However, in case of Tata Group, the HR policies are not effective because it failed to attract new skilled employees. The company does not immediately terminate the unskilled employees and due to that the scope of recruiting new talent is reduced. At the same time, the HR policies of the company are not innovative and the company mostly prefers to utilize the traditional HR techniques, which are not that much effective in today’s context (Cappelli et al. 2015).

High competition in hotel business – Tata Group is also facing trouble in its hotel business because of high competition within the industry. The management of the company took the strategy to invest in the hotels, which are less costly and affordable to all people (Kale & Singh, 2016). However, this strategy of the company did not work out because of more facilities provided by the other hotels. Tata Group is not able to provide many facilities because the rent of the hotel rooms is less but on the other side, the other hotels provide more facilities, which attract the tourists more (Shah, 2016).

Analysis of the decreased Nano sales – In the above discussion, it has been identified that the Nano sales has declined at a high speed after 2011-12. It was much unexpected that though the price of the car was much less, the company could not increase the sales volume of Nano (Thite et al. 2016). In the analysis of the decreased sales of Nano, it has been identified that the sales of the car has decreased because of the negative publicity. Moreover, it has also been identified that the company lost 30% of the new customers because of negative brand image. The quality was the main issue behind this negative brand image of Nano (Moon, Lee & Yin, 2015). There were manufacturing defect in some of the cars (Nano), which created negative perceptions in the minds of the customers.

On the other side, the workers, who were appointed in the production and distribution sections of Nano, were much casual. Apart from that the management in the Nano division was also not effective (Morschett, Schramm-Klein & Zentes, 2015). As per the available data, it has been understood that the management of Nano division did not sale the car to the target market. The target market of the company was the middle class families and low income groups but the company sold near about 1 million cars to the higher income group of people. It indicates that the management of Nano division of Tata Group failed to create interests in its target market, for which the sales of the company declined so fast.

Analysis

Analysis of the workforce related issue – In the above discussion, it has been identified that the company (Tata Group) is facing a huge trouble in using the talented workforce in its business activities (Crawford, 2016). The HR policies of the company are much weak and it does not permit to eliminate or terminate the unskilled laborer. Due to this, the working standard of the workforce is decreasing. On the other side, the HR policy like, recruitment through employees’ reference has also affected the quality of workforce. Many employees in the company have been recruited without proper testing of their skills and knowledge and many employees are working for many generations (Mukherjee & Mukerjee, 2016).

In the previous surveys on Tata Group it has been disclosed that there are many unskilled employees, who are working at Tata Group for many years. These unskilled employees affected the overall performance of the company because in maximum time, the unskilled employees are underperforming also. Due to the unskilled or less knowledgeable employees in the marketing department, the company faces problem in handling the customers properly (Singh & Joshi, 2015). On the other side, many of the employees in the company are working for generation to generation and for this the scope of recruiting more talented people from other sources has reduced. Apart from these, at Tata Group, many people of different religion work together and so the cultural differences also affected the performance level of the employees.

Analysis of the issue related to the hotel business – The Company is also facing issues in its hotel business. The competition in the industry is much high and the strategy taken by the company to survive in the hotel industry was not effective to compete in the market (Kerai & Sharma, 2015). The management of the company emphasized on the price level; however, in reality, the customers mostly emphasized on the facilities. The competitors charged bit high price than the Tata Group and provided more facilities to the customers and so the customers were more attracted towards the hotels, which provides more facilities. This indicates that the management of the company failed to analyze the mentality of the customers properly (Morschett, Schramm-Klein & Zentes, 2015). Due to low price, the standard of the services in the hotels of Tata Group was low, which affected the goodwill of the company.

Therefore, from the above analysis, it can be said that the company (Tata Group) is facing several issues due to wrong policies and strategies taken by the management of Tata Group.

Tata Group’s Criteria Evaluation
Attributes	Indices	Present performance	Target performance
2015	2016	2015	2016	Difference between Current performance and target
Efficiency level	Net profit	(4738.95)	234.23	1134.17	537.77	(3604.78)	303.54
Growth rate	Revenue	38183.04	44502.74	39104.03	46121.03	920.99	1618.29
Contribution to performance of the employees	Expenses of employees’ benefit	3091.46	3026.75	2900	3000	191.46	26.75
Contribution to branding	Marketing expenses	437.47	424.61	400	400	37.47	24.61

Criteria of Evaluation

Table 1: Criteria of evaluation

(Source: Tata group, 2016)

In the above table it can be identified that the company that is Tata Group Could not achieve the target in the year of 2015. The efficiency level of the company was much below the targeted level of performance. The same thing happened in case of the growth rate of the company also. However, in case of the year 2016, the company has improved its level of efficiency; still it was unable to meet the target (Tata group, 2016). In case of growth rate of Tata Group, in 2016, the performance level was much lower than that of the targeted amount. The expense level in marketing and employees’ benefits was also higher than the targeted amount. This shows that the strategies taken by the company was effective in the last year as well as in the current year.

There are several alternative strategies that Tata Group can take to improve its performance level in the future. The alternative strategies as under:

Reformulation of the existing strategies – The Company can reformulate its pricing strategy in case of its hotel business. The company can provide or include more facilities by increasing the price level of the hotel rooms by a small percentage. This will help the company to attract the national as well as international tourists (Singh & Joshi, 2015).

More emphasize in the advertisement strategy – The Company should focus more on its advertisement strategies. However, as the marketing expenses of the company are already high, the company must keep eye on the expense level. The company must use its marketing fund properly and can improve the advertisement and other promotional activities (Cappelli et al. 2015).

Proper work distribution – The higher management must take care of distribution of work in the organization. The work must be distributed as per the as per the efficiency level of the employees.

In the above segment, several alternative strategies for Tata Group have been stated. However, the best possible strategies for Tata Group are as follows:

Implementation of JIT – Tata Group can implement the Just-in-Time strategy in its overall business operations. The above-mentioned table has shown that the efficiency level of the company was much lower in the year 2015 as well as in 2016. Therefore, if the company implement the JIT strategy properly, then it will be possible for the company to reduce its waste level and improve the resource utilization. It will ultimately improve the efficiency level.

Market penetration pricing strategy – Tata Group can take the market penetration pricing strategy as the new pricing strategy of the company. This pricing strategy will help the company to compete with the competitors in the hotel industry.

Improve HR policy – The human resource department of the company must include improved strategies to motivate the employees and improve their performance level. These policies are rewarding policy, monthly competition policy and attractive incentive schemes.

In order to implement the above-mentioned policies, the company must build a separate team, which will take care of the new strategies. The higher management of the company must conduct a meeting to inform the employees about the change and then must ask for their opinion. At the same time, the company must improve its control system (Shah, 2016). In order to implement a strong control system, the company must emphasize on the monitoring system. The supervisors and team leaders must play a proper role in this case.

Conclusion

In this study, it has been identified that the Tata Group is facing trouble in its international business management. The problems have started few years back. The problems are related to its Nano car section, HR policies and the hotel business. The efficiency level of the company is not up to the standard. The management of the company has different alternative strategies among which the JIT strategies, market penetration pricing strategy are the most preferable.

Reference list:

Cappelli, P., Singh, H., Singh, J., & Useem, M. (2015). Indian business leadership: Broad mission and creative value. The Leadership Quarterly,26(1), 7-12.

Chatterji, M., & Palakshappa, N. (2016). Going Beyond Profit: A Case Study of the CSR Initiative of Titan, Tata Group. In Ethical Leadership (pp. 215-238). Palgrave Macmillan UK.

Crawford, M. J. (2016). An Analysis of Operating Environment & Strategy: A Case Study of Tata Motor.

Kale, P., & Singh, H. (2016). Management of Overseas Acquisitions by Developing Country Multinationals and Its Performance Implications: The Indian Example. Thunderbird International Business Review.

Kerai, A., & Sharma, S. (2015). Innovation in Business Group Firms: Influence of Network Diversity (No. WP2015-03-26). Indian Institute of Management Ahmedabad, Research and Publication Department.

Moon, H. C., Lee, Y. W., & Yin, W. (2015). A New Approach to Analysing the Growth Strategy of Business Groups in Developing Countries: The Case Study of India’s Tata Group. International Journal of Global Business and Competitiveness, 10(1), 1-15.

Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management. Springer.

Mukherjee, S., & Mukerjee, A. (2016). Sustainable Business Development by Responding to Climate Change: A Case of the Tata Group. In Strategic Management of Sustainable Manufacturing Operations (pp. 176-191). IGI Global.

Shah, S. (2016). Integrating Stakeholders’ Welfare and Corporate Success: In an Indian Family-Owned Organization (Interview with Chairperson and CEO of Tractors and Farm Equipment Ltd., Mallika Srinivasan). The Journal of Values-Based Leadership, 9(2), 5.

Singh, S., & Joshi, M. (2015). New Market Creation via Innovation: A Study on Tata Nano. Available at SSRN 2597482.

Tata group. (2016). Tata.com. Retrieved 27 September 2016, from https://www.tata.com/

Thite, M., Wilkinson, A., Budhwar, P., & Mathews, J. A. (2016). Internationalization of emerging Indian multinationals: Linkage, leverage and learning (LLL) perspective. International Business Review, 25(1), 435-443.