Financial Daily from THE HINDU group of publications
Tuesday, Jan 06, 2004
Tata Group to focus on global biz this year
Mr Ratan Tata
Mumbai , Jan. 5
THE Tata Group plans to expand its business internationally in 2004.
``This year we will also be focusing on expanding our business internationally. This will demand that our products and services are globally competitive and that our enterprises operate to international standards in terms of quality and customer service,'' Mr Ratan Tata, Chairman, Tata Group, says in a New Year message to employees posted on the Tata Web site.
According to him, the group's goals for the year ``will be to achieve significant further turnover growth, with substantial improvements in profits through consistently providing high quality products and services, and a total commitment to serve our customers, while at the same time maintaining the highest ethical standards and values.''
Mr Tata goes on to say, ``We will need to be extremely aggressive in the marketplace and much more proactive than we have been in the past in order to be leaders in our fields of business. We need a change of mindsets that break with past tradition in welcoming rather than resisting change.''
Articles on globalisation strategies available at the Web site outline what is cooking at leading companies like Tata Steel, Tata Motors, Indian Hotels, Tata Tea and Tata Technologies.
Therein, Tata Motors' move to integrate its export thrust into overall sales is cited. ``The company has now embarked on a road where we have made exports an integral part of our business. We do not think of sales outside the country as a separate activity. It is now integrated within the mission of each of its businesses,'' Dr V. Sumantran, Executive Director (Passenger Car Business Unit), Tata Motors, has said.
According to Mr Ravi Kant, Executive Director (Commercial Vehicles Business Unit), ``In a business such as ours, it is important that we hedge against cyclicality. International business offers an opportunity as different countries go through peaks and troughs in demand at different points in time.''
In figures reported on Monday, Tata Motors' export for April-December 2003 was up almost 150 per cent at 15,008 units.
The company's two business units have classified different markets in terms of size, growth opportunities, product segments and target volumes, the article said, adding, it now focuses on 15-20 key countries as opposed to the earlier 70.
The Rs 105-crore Tata Technologies Ltd (TTL), an IT company carved out of Tata Motors, is similarly hoping to grow its overseas business. TTL primarily drives down engineering and design cost through engineering process outsourcing (EPO). Closely associated with Tata Motors' crash test facility, TTL is getting more and more work in occupant safety from global automotive companies.
``We execute large projects offshore and also coordinate with onsite and near-shore project management. One of the major motivations for them (global auto majors) is cost reductions of 50 per cent or more, but they soon discover many other benefits as well. They are looking at what companies like TTL can provide in terms of collapsing development time and improvement in quality,'' Mr Patrick McGoldrick, Managing Director, TTL, says.
In globalisation strategy, there is no one size-fits all. Tata Motors may be wanting to acquire Daewoo's truck plant in South Korea, but its ability to feed cars to Rover is courtesy India's lower manufacturing cost.
Says Mr McGoldrick of the India benefit to TTL, ``It gives us a 30-50 per cent savings stream and access to the largest English-speaking engineering talent pool outside the US.'' In a different way, that shows up in steel too.
``We are planning our business model to become global,'' says, Mr B. Muthuraman, Managing Director, Tata Steel. Over 25 per cent of the world's steel production is globally traded and Tata Steel hopes to take the acquisition route to globalisation.
According to him, ``A truly global company is one where global thinking prevails and decides every aspect of business - where to manufacture, research, what type of people to employ and where and how to market products and services.''
In the process, one may find that manufacturing is best done is one location while the market is in another. Research should be done somewhere else and methods of serving the client are different in each place.
``One may also come to the conclusion that the most value creating opportunity is to be at home. If you have applied the global test for arriving at such a decision, you are a global company,'' he says.
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