Emerging economies' multinationals: TATA Motors on global platform

Internationalisation is an innate component of Developing Country Multinational Companies'(DMNCs) pervasive development strategies in emerging global landscape. Tata Motors, a significant globally ambitious automobile company with consolidated revenues of 20 billion USD in 2009-10 is also the first company in engineering sector from India to be listed on New York Stock exchange. Tata Group has a combined market capitalization of more than $32 billion and operations in every major international market through companies in businesses as diverse as consumer products, energy, engineering, information systems, communications, services, and materials (Dobbs and Gupta, 2009). Ratan N. Tata, the chairman of Tata group brought a managerial reform in the group by taking aggressive initiatives to restructuring with a clear vision about the group to standout as a quality icon not only in India but on global platform too. Tata companies, products, services and employees had to be aligned under excellence initiatives to achieve this goal. Apart from investing towards leading edge R&D to strengthen core units Tata went for aggressive overseas investments. A series of high profile acquisitions were done by Tata Group such as Tetley Tea, Ritz Carlton in Boston, purchased South Korea’s Daewoo Motors, Corus and several other steel manufacturers in Asia and Europe. Tata Motors’ foray on international platform started through exports in 1961 and hit a milestone in 2004 by exporting 20,000 cars to United Kingdom to be sold under the MG Rover brand (Farrell et al., 2005). In 2008, Tata Motors purchased Land Rover and Jaguar from Ford. The company’s commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia, Senegal and South Africa.

Social Front

Tata Motors’ well thought approach on international platform incorporates the company’s values and contribution towards social responsibility. Mr. Tata’s firm belief on social responsibilities that are associated with corporate, has been evident in the various approach this ethics driven company makes. The company’s venture into South Africa has been one such move. Africa after its long history of brutal suppression is now willing to make a mark on the world platform on its own conditions. There have been efforts towards Indo-African relationship through India’s efforts towards anti apartheid struggle, technical training programmes and various other initiatives. (Seema Sirohi, 2008). Indo-Africa trade touched $25 billion in 2007 and Tata had marked its presence with $1.6 billion investment.(Seema Sirohi, 2008). Tata took its initiatives towards helping the overly exploited poor community with the intention of economic development of the country rather than concentrating only on self interest. Professional schools were started along with training people in trade which further led to Mr. Tata’s involvement with the investment council (Pandit, 2005). Eventually Tata’s cars and trucks were launched in South Africa, followed by telecommunication and financial services.

Internationalisation Strategies

Before entering the highly competitive developed economies, in order to survive in a longer term its important to secure access to raw material as owners of iron ore are goin to rule the related industries (Pandit, 2005). Tata Motors internationalisation strategy exhibits a mix of various approaches depending on the state of economy of the country it enters and the attributes of the company it collaborates. While entering developed country’s, Tata Motors has taken cautious route of Joint Ventures and partial acquisitions. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second largest truck maker. The Tata Daewoo Commercial Vehicles Company has introduces several new products in the Korean market, while also exporting these products to several international markets (tata-motors.com). Daewoo had been exporting to countries like New Zealand, Ireland, Morocco and South Africa (Economic-Times, 2005). The new collaboration followed by establishment of manufacturing Unit based in India could open up export opportunities to Japan, China and Africa (Economic-Times, 2005). Later in 2005, Tata acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008 (tata-motors.com).

Production, Regulatory and Organizational are the prime factors of determining a globalisation strategy for an industry or a company (Farrell, 2004). Tata Motors through its sister soncern Tata Steel, has an acees to cost effective raw material, givind it an edge as one of the world’s most cost-efficient producer. Up-stream, Tata can bring together the expertise and excellence of leading R&D from well-established subsidiaries, suppliers and partners from all over the world. While Downstream, the company platforms the low cost manufacturing hubs of India, Thailand, Korea and processing centres in developed countries like Europe, UK and USA.

Tata Motor’s internationalisation initiatives through exports, acquisitions and joint ventures have given the company an access to raw materials, cost effective production facilities round the globe and a goodwill in highly demanding market of developed and developing countries.