Tata Group Subsidiaries

Q1. In the beginning, Tata Group’s initial organizational approach was to develop location bounded FSA’s and expansion in diversified SBUs in home country which build the capacity of TATA as centralized exporter. Restructuring of Tata was the basic step towards approach shift and development of internationally transferable FSAs like technical expertise, novel management practices and human capital.

To take advantage from the FSAs which Tata developed, it used many expansion strategies like outsourcing, joint ventures and wholly owned subsidiaries which assist TATA to recombine its resources and gained competitive position in IT and communication industry which is evident from the establishment of TCS.

Diversification strategy proved very beneficial for development of internationally transferable FSAs which enabled TATA to change its approach from centralized exporter to international coordinator.

Q2 . Bartlett and Ghoshal’s views about multinational network is that many MNEs do not let their subsidiaries to develop unique strengths in their own right and these centralized MNEs, strategic decision making and control just in home country headquarters, which will lead enormous bounded rationality and bounded reliability challenges.

So they argue that companies can develop and exploit their present FSAs and support the development of new FSAs in their multinational subsidiary network by selectively decentralizing elements of strategic decision making and control. An organizational model of differentiate rather than homogenous subsidiary roles and of dispersed rathe than concentrated responsibilities.

In this case,Tata Group manage its internal network which is also based on Bartlett and Ghoshal’s views about multinational network and each operating company is responsible for its own international strategy forming. It is also depending on the nature of the industry,opportunities of global stage. For example, Tata Sons established Tata industries responsible for the group’s expansion and establish Tata consultancy Services because of internal demand for information related systems.

Q3. In the high level management, there is a model that can help to indicate different subsidiary roles called a simple subsidiary classification system. It categorises into four subsidiary types including Black hole, Implementer, Strategic leader and Contributor. Strategic leader is a highly component local subsidiary in a potential market.

The action can support corporate with headquarters in determining industry and marketing trends, as well as improving new FSAs, in the case the home country location-bound is counted from development of domestic market (they also combine the knowledge for the new international FSAs subsidiary), in order to outweigh opportunities and threats.

Tata group’s subsidiaries and affiliates were managed separately with their own strategic forms for expanding the company globally which suit with the specific nature of each area. However, as a strategic leader process, they still focus on the domestic market. The Tata Consultancy Services (TCS) is the main key for this management.

The system gives Tata the effective local operations that would advance product line and emerge into international plan. For example, according to the case, in 1979 TCS was established outside for first time at New York, United States, discussing the knowledge and information about new technologies and skills.

Those useful advises were sent back to the headquarter in India to enhance local market. They are very concern on strategic importance of the market and resources. Later on, in 2005, they make new subsidiary by transferring knowledge from strategic leader affiliate. They combine resources from TCS to create strong platform to serve market. Finally, yes, Tata has transfer its knowledge.

Q4. To mitigate such practises and business risks, there is a strong need for shared organizational culture within the organization and ethical business practices could also prove beneficial to overcome such practices. at the same time there should be proper check and balance system for those who violate the ethical code of conduct. Due to resource limitation and strategic importance of subsidiaries, we can classify subsidiaries into four different categories.

Each category have its relative portion of resources to operate in the industry, however senior manager of TATA group can use organizational resource i.e. (Funds) for personal use which is serious business risk. To reduce such business risks, there could be clear classification of subsidies according to the classification system and resource allocation should be accordingly. TATA should implement procedural justice which can reduce bounded rationality and bounded reliability.

TATA administrative heritage can play crucial role in Integration of all such novel practices. If three levels of management (Corporate, Business and Operation) would practice it, definitely employees will follow it. If top management of the organization set examples and lead the business with motivation, passion and integrity then employees will follow it. Implementation of Due Process would also prove beneficial for the integration. ..