Strategy analysis is deemed to be a process of maintaining a shared vision for organization’s future and it serves as the major phases and requirements in developing strategic plan for the company (Ahuja, 2015). The objective of this report is to conduct strategic analysis for Tata Group of Companies and to evaluate the ways in which it can modify its strategic direction in order to attain considerable competitive advantages. Tata Group of Companies is a renowned global enterprise situated in India with having more than 100 operating organizations in different business sectors. These sectors encompass information technology, communications, materials, engineering, customer products, services as well as chemicals (Areal, McIntosh & Sheppy, 2016). Justification for the strategies will also be provided in terms of attaing competitive advantages through adopting the triple and quadruple bottom line approach. Increased need for mandatory reporting and advantages of voluntary reporting with the likely risks related with it will also be analyzed through considering the case study of Tata Group of Companies.
Tata Group of Companies has a “sustainability group” that is determined by the objective to direct, support and offer guidance to the company in ensuring sustainability within their business strategies (Balakrishnan, Malhotra & Falkenberg,2017). The company has also made great contribution towards indicating responsibility towards the environment and the society. The sustainability policy of Tata Companies is to integrate the considerations of sustainability within the decisions along with the major work processes, decreasing upcoming risks along with increased opportunities (Goffin & Mitchell, 2016). “Dow Jones Sustainability Index” is widely renowned as global benchmark for suitability and corporate responsibility of the companies. As per the report published by this index Tata Group has been declared as the global industry leaders within the steel industry as it had been offering disclosures for over three years (Banerjee & Homroy, 2018). Moreover, the company is also ranked first all over Asia in the year 2016 by “Sustainability Leaders Survey” for all its efforts in the direction of advancing the agenda of sustainable development.
Business of Tata Group serves as major aspects of the society and the company employs several strategiesrelated to its business in solving social and environmental issues. Tata companies are associated with a broad range of community development strategies along with environment preservation projects (Barkemeyer, Preuss & Lee, 2015). The social activities of the company are associated with primary education, health, entrepreneurship, skills training, primary education and women empowerment.
Another CSR initiative taken by the company in empowering people is through helping them to develop their skills they require to succeed in the global economy through a CSR program named “Tata Strive” (Daidj, 2016). This program supports communities with necessary information, technology along with ability to attain improved growth, education and livelihood results.
Another CSR strategy that is implemented by Tata Group of Companies ensures that the group implements necessary strategies that can support the communities through government partnerships, important stakeholders and civil society. Tata employees are highly trained n experienced in serving communities and at the group level “Tata Engagement Programmer” is positioned among the top ten CSR programs worldwide (Govindarajan, 2017).
Through maintaining the sustainability philosophy, Tata Group of Companies have ensured that its major suppliers and the supply chain partners incorporate environmentally and socially responsible practices within their busineses sectors. The company also makes great attempts in integrating sustainability considerations within its selection of vendors along with their engagement process (Grant, 2016).
Compliance with the legal needs is deemed to be the minimum necessity and along with that additional sustainability aspects include necessary sign-offs on the company’s “Supplier Code of Conduct and Contractor HSE” needs. For enhancing sustainability all its supply chain Tata Group has also considered carrying out regular audits and assessments intended for high-risk vendors. Integration of sustainability metrics within the vendor reviews along with training and capacity building is also included in its supply chain sustainability strategy (Holmes Jr, Hoskisson, Kim, Wan & Holcomb, 2016). Process or site audits are also carried out for high-risk vendors with high impact on the group and along with that desktop evaluation are also carried out for those impact on the group of companies is indirect.
The business model of Tata Group of Companies is focused on maintaining strong cash generation, decreased capital requirements and working capital needs, decreased debt along with attaining better return on equity (Lahiri & Purkayastha, 2017). The group has positioned itself among the most financially sustainable organization as it has implemented a strategy of maintaining a “zero-debt company” in which growth is funded totally by internal accruals. The pricing and the operating margins of the group is highly stable that evidences its business model resilience along with value offered to consumers through its services. Moreover, the structural aspects of its business model are sustainable as it regular scans business surrounding for likely threats by means of its effective risk management structure (Liu & Atuahene-Gima, 2018).
Despite of maintaining a sustainable position internationally, Tata Group of Companies are dealing with regulatory challenges those are further affecting its performance in the global marketplace. Tata Motors stated that there is a requirement to deal with challenges present in the ecosystem that is accentuated through intermittent regulatory uncetainities of “Indian Automobile Industry” in understanding its real potential. Certain regulatory issues are faced by the Tata Group at the time of transition from BS- III to BS- IV along with implementation of GST regulations (Mithas & Arora, 2015). The group highlighted that there is a need for well-structured and collaborative approach from the government. Regulatory uncetainitieshasalso caused disruption to the business of Tata Group in the market for which a proper policy structure is needed from the government that can support and ensure suitable growth.
Tata Group is also facing regulatory issues in its automobile business segment as India is lagging behind on the safety norms and emission in comparison to other nations of the world. Moreover, some of the major operating markets of Tata Group is dealing with challenges from diverse market dynamics that needs particular interventions in ensuring profitable sustainable growth (Mithas & Arora, 2015). Uncertainty because of the market cyclicality, regulatory restrictions on diesel and taxation is increasing issues for the Group to maintain its sustainableposition through addressing consumer evolving preferences, geopolitical uncertainty and regulatory overhauls.
Tata Group also faced the challenges of legacy products along with quality issues and service responsiveness that is having adverse effect on the brand. Moreover, the sustainable position of the group is facing threat from entry of certain international brands Volvo, Navistar and Mercedes Benz in India (Mukherjee, Makarius& Stevens, 2018). Due to such fierce marketcondition, Tata Group is dealing with huge competition for attaining profit from its passenger cars. In such scenario, the profitable position of Tata Group is hampered and the old philosophy of the group to offer society with certain shared advantages is presenting strict challenges for the group of companies (Patel& Rayner,2015). This is for the reason that projects undertaken for its CSR activities requires huge investments that is persuading it to rethink them in case cash is needed for such expansions. The challenge will exist in sustaining brand value that the group of companies stand for along with ensuring that the business swiftly and profitably expands.
It has been evidenced that the annual spending on the initiatives of corporate social responsibility by Tata Group of Companies has increased by Rupees 600 crores. The “Tata Sustainability Group” encourages the employees of the Tata Group in implementing “SMART (Sustainable Meaningful Actions for a Responsible Tata)” actions within the business decisions (Puranam& Vanneste, 2016). Considering the same, Tata Companies focuses on maintaining a sustainability policy that commits the companies to integrate social, environmental along with ethical principles within the businesses. In the recent years, around 40 Tata Companies have implemented sustainability reporting that is aligned with “global reporting frameworks”. This sustainability framework includes “United Nations Global Compact” and “Global Reporting Initiative (GRI)”. Along with maintaining these standards, Tata Steel is also evidenced to maintain sustainable reporting under “International Integrated Reporting Council (IIRC)” framework (Ramaswamy, Purkayastha & Petitt, 2017). “Tata Steel”, Chemicals and Power has increased its association with Natural Capital Coalition along with policing the currently published draft “Natural Capita Protocol (NCP)” in maintaining increased corporate sustainability. New guidelines for sustainability evaluation are being imported within Tata Group of Companies in-house “business excellence tool” that is more commonly termed as “Tata Excellence Model” (Goffin & Mitchell, 2016).
Sustainability reporting issues are likely to be faced by Tata Group that necessitates the group to strengthen its compliance management framework. The digital platform of the Tata Consultancyservices offers an enterprise wide view focused on compliance all across its international locations (Rasche, Morsing & Moon, 2017). In such scenario, major risks related with such regulatorycompliance must be regularly recognized and addressed in a systematic manner through implementation of risk mitigating actions. Tata Group is likely to face risks related with data privacy, anti-bribery, IT security and anti-corruptionregulations. In such situation wherethe company is dealing with reporting issues business sustainability needs consistency in the managementvision along with decreasing the effect in case of leadership change.
The “Chief Financial Officer (CFO)” is dealing with the reporting challenge of making financial reporting as well as analysis highlytransparentand efficient (Rothaermel, 2015). Die to such pressure points in ensuring quality sustainability reporting, Tata Group of Companies feel the need for implementing expensive technologies along with resources for their teams. Moreover, Tata Group CFO’s also feel that they deal with the reporting challenge of burdensome regulatory needs and deadlines of compliance. The current update to the reporting laws focused on finance encompass updates to “Financial Accounting Standards Board (FASB)” GAAP reporting standards along with strict 10-K and 10-Q deadlines. Such reporting standards have resulted in increased challenge for the Tata Group n streamlinesustainability reports. Complex reporting environments and technology is making sustainability reporting process challenging for Tata Group of Companies (Sako & Zylberberg, 2015).
External sustainability reporting is considered as an aspect of corporate reporting in Tata Group of Companies. One of the major challenges that is faced by the group in sustainability reporting is deciding the target audience. This is for the reason that sustainability reporting is focused on exlaaining approachand performance on concerns related with social, governance, environmental significance to its stakeholders (Tata companies., 2018). As the group follows “Global Reporting Initiative (GRI)” along with assurance sustainability standards, the final result of compliance with such standards might result in inaccessible reports. With this, lack of compliance with such standards of “best practice” is imposing a challenge for the company in getting associated with claims of “green washing”. The G4 guidelines along with development of the integrated reporting can lead to further changes focused on reporting on the ways in which the sustainability business model of the company generates value that consider things other than reporting on impacts (Yadava& Sinha, 2016).
The GRI standards followed by Tata Group is observed to dealwith several challenges for the group of companies as these standards comes with several clarifications to several concepts that the businesses of the group found tricky. For instance, there exist a fine line between recommendations, requirements and guidance related with sustainabilityrequirements. Moreover, Tata Group is dealing with external reporting challenges in realizing which sustainability metrics are important and useful for taking important decisions for the investors as well asits other stakeholders. This is because the company is facing issues of evolving stakeholder expectations to attain totally embraced sustainabilityconsiderations.
Based on the sustainability challenges faced by Tata Group, certain mandatory financial reportingstandards and voluntary disclosure with implementation of IFRS by the Tata Group is deemed to be necessary (Areal, McIntosh & Sheppy,2016). Based on the challenges faced by Tata Group of Companies as discussed above, it is deemed necessary that the group realized increasedrequirements for voluntary and mandatory reporting along with the related guidelines available to deal with such challenges. It has been observed that the investors of Tata Group are demanding elaboratedinformation regarding the ways in which environmental, social, governance as well as other non-financialsustainabilitymeasures affects the Group’ strategy, operations and prospects over long term (Areal, McIntosh & Sheppy,2016). This is necessitated the Group to implement voluntary sustainability reporting as well as disclosure. Tata Group of Companies must adopt a highlytransparentstrategy in addressing demands of investors and indicating responsibility.
Moreover, sustainabilitystrategy focused on sharing viewpoints n the beliefs as well as costs of sustainability reporting through offering responses on important business proposals can facilitate Tata Group of Companies on actively participating along with shaping the transformation direction (Areal, McIntosh & Sheppy,2016). Certain benefits can be attained by Tata Group by means of maintaining increased global harmonization of frameworks along with standardsas means of improving consistency and sustainability reporting comparability. Voluntarysustainability reporting must be considered by Tata Group in the process of evolving in which they might attain the opportunity to consider that non-financialsustainability reporting is vital for its stakeholders in developing high-quality data (Areal, McIntosh & Sheppy,2016).
Mandatory sustainability strategy standards must be developed by Tata Group of Companies that can make sure Tata Companies grow and establish themselves internationally and attain competitive advantages in business. For maintaining better sustainability “Tata Code of Conduct” must be considered as a mandatory sustainability plan as the companies’ policy explains the way in which their employees are expected to manage their conduct in sustainability reporting (Balakrishnan, Malhotra & Falkenberg,2017). The mandatory sustainablefinancial reporting strategies of Tata Group must focus on necessitating that the audit processes of the Group must accurately and fairly indicate all its business transactions. Mandatory reporting of the Tata Group is focused on making sure that the company must maintain important laws and regulations through activelyassisting in the quality of people’s lives.
Tata Groupmustimplement corporate sustainabilitystrategiesincluding triple bottom line aspects such as “Planet, people and profit”. If the group of companies expandsits radius of business responsibility beyond immediate profit to maintaining long-term good, this can ensure business sustainability of Tata Group (Balakrishnan, Malhotra & Falkenberg,2017). The Group must consider developing a sustainability strategy that can develop a surrounding of increased consciousness in sustainability reporting by means of collaborating suppliers, employees, communities and consumers.
Focused on the triple bottom line sustainability strategy it will be easier for the Tata Group to implement corporate governance frameworks and regulations effectively. Moreover, it can also serveas the best way in dealing with sustainability reporting issues of receiving the targetaudiences. Through segmenting stakeholder’s inti different target audience groups Tata Group will be able to offer sustainability information on the social and the environmental issues dealt by them (Balakrishnan, Malhotra & Falkenberg,2017). Th triple bottom linesustainablestrategyframework if followed by Tata Group effectively in all its business segments, it can facilitate the Group in mapping its stakeholders. It can also support the Group in realizing the changing expectations of stakeholders with respect to social, environmentaland financial performance for better implementation of sustainability strategy globally. This sustainability approach is also deemed to streamline its sustainability strategies in streamlining its social, financial and environmentalperformance.
Conclusion
The objective of this report was to conduct strategic analysis for Tata Group of Companies and to evaluate the ways in which it can modify its strategic direction in order to attain considerable competitive advantages. It has been gathered from completion of the report that the sustainability policy of Tata Companies is to integrate considerations of sustainability within decisions along with vital work processes, decreasing likely risks along with maximizing opportunities. Moreover, Tata Group is also facing regulatory issues in its automobile business segment as India is lagging behind on the safety norms and emission in comparison to other nations of the world. Based on the challenges faced by Tata Group in maintaining effective sustainability reporting certain effective strategy implementation recommendations are offered to the company. It has gathered that voluntarysustainability reporting must be considered by Tata Group in the process of evolving in which they might attain the opportunity to consider that non-financial sustainability reporting is vital for its stakeholders in developing high-quality data.
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