Friday, November 21, 2008

Why TATA is branded as an Indian company?

It is interesting to note that the biggest Indian conglomerate TATA is seen as a strong Indian brand that a global company. What could be the reason for this?

A close look at the theory gives some thoughts about the concept of international business strategy. Hill (2008) identifies four types of strategies: International Strategy, Global strategy, Multi-domestic strategy and Transnational strategy. Different companies across different sectors follow different types of globalization model and business strategy. ABB is given as a strong example for a company which follows Transnational strategy as it has a diversified personality in its board.

Now looking at the business model of TATA, it is fairly simple to say that they have regionocentric approach. Though off-late TATA went on a purchasing spree across globe does they integrated their purchases into the core business? Also looking at the purchases made by them it make sense that they are interested in diversification market development for selling their existing products.

If Tata Coffee is purchasing a company in kenya, is it a globalization strategy? Kenya is a leading manufacturer of Coffee. From this perspective it becomes a strategic move for long term sustainability as the company now gets access to the raw material for its business. Similar is the reason if Tata Tea signing a JV with Malaysian firm.

Looking at the purchase of Corus made by Tata Steel some years before, it can be identified that a strategic purchase such as Corus is important for the manufacturing of Tata Steel as this gives access for raw materials, technology and EU market for its marketing. But this acquisition does not make any change to the over all mission of the company and the strategy adopted by the company still remains focused in regional than global. But with multi-domestic strategy the firm is able to satisfy the customer need.

According to Adam Smith's absolute advantage in any trade that involves more than one country, it can be seen that one country gains and the other lose. Thus the countries which exports raw materials and basic services and imports high tech service which are costlier than then exports the country does. Thus the company holds the brand identity of India to the world thus acting as a gateway to the country. From my point of view this is the main reason for the company to branded as an Indian company.

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