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Tata Motor Company

Essay by   •  November 27, 2010  •  6,476 Words (26 Pages)  •  1,878 Views

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Tata Group of Industries

The story of Tata begins in 1868 when a young boy named Jamsetji Tata joined his father's small trading company. Thirty-five years later, that same boy was the owner of India's largest textile company, Tata Textile. Over the last century, Tata has excelled in many different business sectors including Materials (Steel and Mining), Agriculture, Energy, Consumer Products, Information Technology, Consultancy, Finance, Automobiles, Chemicals, Engineering and Hospitality. Tata Group of Industries reported $17.6 billion in revenues in 2005, which is equivalent to 2.8 percent of India's GDP. In 2006, it is projecting its annual revenue to be around $24 billion. Figure 1 shows the breakdown of Tata's revenues for the fiscal year 2004-05 between the separate business sectors and how much it contributed to Tata as a whole. Tata is one of the world's largest employers, and is the largest private employer in India with about 222,000 employees. India is known to many as a very diverse country; there are 26 states in India and the culture of each is extremely different from the others in language and lifestyle. This diverse culture within India makes Tata's human resources department work to lead major changes across the vastly different cultures of the employees that exist within Tata as a whole group. Tata's management training center located in Pune serves as a corporate school to help Tata's managers learn how to lead such a diverse workforce.

National Culture of India

There are several issues that need to be addressed before entering a new country expecting to maximize profits. One such issue is the culture of the country where the firm wants to enter, as there are many differences in the culture of business practices and the way things are generally done. Doing business internationally is affected by the way a society functions on the macro level with factors including the size of economy, wealth of the citizens, religion, race, etc. There has to be a detailed analysis that addresses the differences between the two different cultures of the host country and parent company. For example, a US company operating in the Middle East will have to allow regular breaks for praying during work hours as according its employees' religion. Tata is the largest Indian employer and has to accommodate a variety of employees who come from different backgrounds. These accommodations are only provided because Tata has a deep understanding of the culture and customs of its employees giving it a competitive edge over others.

In India, the culture is based on a mixed ideology of collectivism and individualism. The career of an employee is their life and how they earn a living usually dictates what kind of personality and lifestyle they will have in their social class system. This view is applied in many other cultures in the saying, "money, power, and respect." These three levels of success come from how well one is living and what type of career the employee has. A multinational enterprise conducting business internationally must understand how the social class system works in the host country and what do's and don'ts exist there.

In India, the level of education and productivity are the two most important factors that determine the success of a person in their career. "When one considers that India is a hierarchical society, the encouragement of workers as teachers provides an opportunity for increased status." Indian culture requires that employees go above and beyond what is asked of them because they can be replaced at anytime by a large surplus of available workers.

Tata's Corporate Culture

For Tata as a whole conglomerate, it has a unique corporate culture unlike any other business in India. Tata has a very strict and bribe free culture and have always valued its employees in the highest regard. Tata has a very different state of labor relations as Tata steel, one of the oldest industries of Tata, has gone seventy-five years without a strike. This fact is extremely impressive in a country like India, where workers go on strike quite frequently. Also, in order to cut down heavy losses, Tata steel had to lay off more than half of its work force over the last 15 years. This strategic decision made Tata competitive in one of the most brutal industries. However, it didn't damage the laid off workforce as Tata promised to pay them full salary until retirement and there after, pension benefits. "When an organization functions as a global citizen through its corporate social responsibility initiatives, this often boosts its reputation externally." (Pio, 2005) Tata has been built on a strong reputation not only within the home country, but in different locations around the globe.

For over 130 years, Tata's mission has always been to develop India as a great industrial power. Tata truly believes the development of a nation lies in the hands of the business owners. Tata has done a great deal in developing the infrastructure of India, especially in Jamshedpur, the city where Tata originated. Jamsetji Tata turned Jamshedpur from a jungle to the one of the largest industrial sectors of India. There he opened factories, schools, churches, parks and hospitals for Tata employees that showed his commitment to all the stakeholders that would be a part of Tata. Tata was the first one to introduce an eight hour work day concept in India and offered medical benefits to employees, which even today is unknown to many employers in India. After the death of Jamsetji Tata in 1991, his son Ratan Tata took over as the new leader. Tata steel industries were facing heavy losses at the time and Ratan Tata was advised by many experts to exit the dying steel business. However, Jamshedpur followed his father's beliefs of building Indian industry and continued the steel business.

Indian Business Environment

Deregulation is the process in which governments remove selected regulations off of businesses in order to encourage the efficient operation of markets. The theory of this subject believes that fewer regulations will lead to a raised level of competitiveness, therefore higher productivity, more efficiency and lower prices for the overall economy. Conducting business internationally can have major impacts depending on what type of process the country follows, whether or not there are many government-imposed regulations. The United States has been a strong success story for economic deregulation, which has had a great effect on the economy. Another country that has seen the enormous benefits from economic deregulation on its economy is India. This country has had extensive

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