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Case Study

Creating a Corporate Advantage: The Case of the Tata Group

Raveendra Chittoor ,Arohini Narain ,Richa Vyas , Chetan Tolia
Corporate strategy , Conglomerates , Diversification , Diversified companies, Horizontal diversification , Unrelated diversification

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Abstract

The Tata group is among the largest diversified business groups in India. The group generated about US$100 billion in revenues in 2011-12 from 90 companies operating in diverse businesses in seven broad industry categories. The case describes in detail the various mechanisms by which the Tata group attempts to create a corporate or parenting advantage.


The case first highlights the important difference in the way a business group like Tata is structured when compared to a typical conglomerate in the West. The case then describes in detail the various services offered to group companies by the corporate centre, such as access to the Tata brand, quality management services, common procurement, centralized HR, legal, finance, public affairs (lobbying), training and consulting services.


The case also discusses the perspective of some of the group companies. Companies often found the group affiliation and services to be of value as it provided them with lower transactional costs, less friction and better contract enforcement within the group, superior access to the political power structure and significant financial backing. With the Tata group preparing to welcome its new chairman in December 2012, the case ends with questions on the sustainability of the prevalent structure, practices, group philosophy and culture.

Learning Objective 

There appear to be some important differences between the way corporate (parenting) advantage is created by a business group (BG) and the way it is created by a typical multi-business corporation in the West. This case aims to bring out this learning through a detailed description of the ways by which the parent organization at the Tata group attempts to add value. The case can be used effectively in a course on corporate strategy in a module on managing diversification at MBA or EMBA levels. 

  • Pub Date:
    15 Feb 2013
  • Source:
    ISB
  • Discipline:
    Strategic Management
  • Product#:
    1348
  • Keywords:
    Corporate strategy , Conglomerates , Diversification , Diversified companies, Horizontal diversification , Unrelated diversification
  • Length:
    Pdf : 19 page(s) ,

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