CASE STUDY RATAN TATA

Ratan Tata was born in Mumbai (then Bombay) on December 28, 1937, to Soonoo and
Naval Hormusji Tata, both Gujarati -speaking Parsis. He was the grandson of Jamsetji
Tata, founder of the Tata Group. Ratan Tata had a troubled childhood as his parents
separated when he was only seven... When Ratan Tata took over as chairman, the Tata
Group seemed on its way to disintegration, with powerful CEOs running some of the
Group companies like their personal fiefdoms and challenging the core structure of the
Group... Ratan Tata was instrumental in changing the Tata Group's attitude toward risk.
Earlier, the Group had been risk averse, and had had very few ambitious projects. By
the mid-2000s, the Group companies had become more aggressive, with most of them
entering new markets and developing new products... Ratan Tata believed that the
biggest challenge for the Group was finding the right talent and retaining the Group's
value systems as it grew bigger and more diverse. He believed that the Group had to
expand the managerial perspective while retaining the same ethical and moral
standards.

EARLY LIFE AND EDUCATION:

After his parents separated in 1944, he was brought up by his grandmother Lady
Navajbai and did his schooling in Mumbai from Campion School. Later, he enrolled
in Cornell University, where he earned a B.S in architecture with structural
engineering in 1962, and has also completed the Advanced Management Program
at Harvard Business School.

CAREER:

In 1971, Ratan Tata was appointed the director in-charge of the nation radio and
electronics company Ltd. (Nelco), a company that was in dire financial difficulty. Ratan
Tata suggested that company should invest in developing high technology products,
rather than in consumer electronics. J.R.D. was reluctant due to the historical financial
performance of Nelco which had never even paid regular dividends. Further Nelco had
2% market share in consumer electronics market and a loss margin of 40% of sales
when Ratan Tata took over. Nonetheless J.R.D. followed Ratans suggestions.

In 1981 Ratan Tata was named director of Tata industries; the groups other holding
company, where he became responsible for transforming it into the groups strategy
think-tank and a promoter of new ventures in high technology businesses. In 1991 he
took over as group chairman from J.R.D. Tata, pushing out the old guard and ushering
in younger managers. Since then, he has been instrumental in reshaping the fortunes of
the Tata groups, which today has the largest market capitalization of any business
house on the Indian stock market.

First 3 to 4 yrs, He was engaged in struggles with the satraps. Every one aware of how
he tamed most vociferous satrap of TISCO Mr.Rusy Modi. What kind of bad blood that
had flown and he has to use all his patience and perseverance to get rid of the old
Guard who become untoward themselves. He has to easy out few more regional
satraps at the same time he has to concentrate on various changes what have been
taking place in corporate horizon. In addition to that he has to get a new talent if the
TATAs want to keep their flag high and should move in high trajectory of growth. Thrust
was equally on technology driven leadership, global competitiveness and being among
the top three domestically, regardless of the line of business.

ACQUISITIONS:

Under Ratan Tatas guidance, Tata Consultancy services (TCS) went public
and a Tata motor was listed on the New York stock exchange.
 Tata motors introduced his brain child, the Tata Indica. On January 31, 2007,
under chairmanship of Ratan Tata,

Tata sons successfully acquired Corus , an anglo-dutch steel and aluminum

producer. With the acquisition, Ratan Tata became a celebrated personality in
Indian business culture. The merger created the fifth largest steel producing
entity in the world.

On March 26, 2008, Tata motors under Ratan Tata, bought Jaguar and land
Rover from Ford motor company for $2.3 billion.

The Game Changer: DoCoMo : Tata's recent joint venture with the Japanese
firm DoCoMo Inc has created a revolution of sorts in the telecom sector, what
with call tariffs of 1 paisa per second charged for calls anywhere in India. The
new network forced other players, right from Airtel down, to reduce their call-
charge rates.

I observed families riding on two-wheelersthe father driving the scooter, his

young child standing in front of him, his wife seated behind him holding a little
baby. It led me to wonder whether one could conceive of a safe, affordable, all-
weather form of transport for such a family Ratan Tata

TATA NANO CAR 2008 was born out the concern for the other human beings and
Ratan Tatas dream was to manufacture a car costing Rs. 1 lacs (US $2000). He
realized his dream by launching Nano in New Delhi auto expo on January 10, 2008.
three models of the Tata Nano were announced and Ratan Tata delivered on his
commitment to developing a car costing only Rs. 1 Lac, adding that a promise is a
promise referring to his earlier promise to deliver this car at the said cost.

The business operations of the Tata group currently encompass seven business
sectors: communications and information technology, engineering, materials, services,
energy, consumer products and chemicals. The group's 27 publicly listed enterprises
have a combined market capitalization of some $60 billion, among the highest among
Indian business houses, and a shareholder base of 3.2 million.

The major companies operates in the group include

Tata Steel,
 Tata Motors,
Tata Consultancy Services (TCS),
Tata Power,
Tata Chemicals,
Tata Tea,
Indian Hotels
Tata Communication

The groups major companies are beginning to be counted globally. Tata Steel became
the sixth largest steel maker in the world after it acquired Corus. Tata Motors is among
the top five commercial vehicle manufacturers in the world and has recently acquired
Jaguar and Land Rover. TCS is a leading global software company, with delivery
centers in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Tea is
the second largest branded tea company in the world, through its UK-based subsidiary
Tetley. Tata Chemicals is the worlds second largest manufacturer of soda ash. Tata
Communications is one of the worlds largest wholesale voice carriers.

TATA BUSINESS EXCELLENCE MODEL:

The true objective of setting these criteria was never meant to be merely to use them
as an assessment for an award, but more importantly, to utilize them for an
institutionalized approach to derive performance and attain higher levels of efficiency in
everything that a corporate entity does. Mr. Ratan Tata

The Mind Of A Leader

There are many facets to Ratan Tatas global game planhis thought leadership in
identifying the need to go global very early on; his wisdom in waiting to make the group
more competitive before going in for the international push; his skill as a leader in
making this theme resonate all over the group; the aggression with which he has won
some of these cross-border deals; and his unshakable resolve never to compromise on
the ethics and values that the group has cherished for over 100 years now. ( See the
Exhibit 1 for TATA Values and Ethics.)

The earliest evidence of Tatas thought leadership could be found in a document

unofficially called the Tata Plan that he authored way back in 1983. Under the
leadership of JRD Tata, the group got Ratan Tata (then Tata Industries Chairman) to
draw up a blueprint for the future. In it Tata recommended that the group `seek
substantial growth in international operations. He also suggested restructuring the
group to address the global opportunity better.

"Tata identified the theme of going global very early on, but his initial judgment was
that the group was not yet ready to move on to this agenda," says Tata has been
Alan Rosling, Executive Director of Tata Sons. Rosling was hired trying to increase
personally by Tata in 2003 to lead the groups drive to the "dare quotient"
internationalize. "To begin with, Tata focused on competitiveness. of his group. He
We have to earn the right to survive, he would say. Only when he has been nudging
judged that the group had moved to this position did he decide to his managers to be
stand up in 2003 to spell out the international agenda," Rosling bold in their
adds. planning

A Man Of Ideas

Managers who have worked with Tata closely say that he has identified many such
themes. Internationalization was one. The push to hire young mangers at significant,
decision-making levels across the group is another. The entire focus on the bottom of
the pyramidbe it the one-lakh car, budget hotels or low-end watchesis his idea. So
is the focus on research and development. "No doubt, he has been a big influence on
the group in the last three-four years," says R Gopalakrishnan, Executive Director of
Tata Sons. Rosling says, "he is a deep thinker, extremely strategic and long term. He is
always two-three moves ahead."

And once he has identified a theme, he often leads

by communication. He employs a very consultative
style in seeding these ideas or themes into group
companies. He encourages people to open their
eyes to look at an opportunity and gets them to
think differently about issues. But he will never tell
them what to do. Often, he communicates by
asking questions. "Why cant you" or "have you
thought about this"those are common phrases he
employs. He will ask you questions that will lead to
In driver's seat: Indica, Indias first the theme. Rosling calls this the Tata way of
indigenous car, was launched in "socializing ideas." Tata never imposes and never
1998 demands that people fall in line with his beliefs.
Rather, he floats an idea, discusses and debates it
and then allows managers to come up with what they would like to do about it. "He has
had significant personal impact on the way the group has changed and
internationalized, but he has done it through colleagues. That is what leadership is all
about," says Rosling.

Be Bold

Admittedly, Tata has also been trying to increase the "dare quotient" of the group. He
has been nudging his managers to be bold in their planning. This relatively new facet is
perhaps best summed by the mindset with which Tata walked into the Corus auction.
"Tata went into the auction with the intention to win," says Gopalakrishnan. "You are
now beginning to see that attitude being reflected in group companies," he adds.

Tata encourages aggression among group mangers in many ways. To begin with, he is
always encouraging companies to think big and be bold enough to attempt the
impossible. When such thinking leads a company to a cross-border deal, he makes
himself available 24x7 to the CEO doing the acquisition. "When you come to him for a
critical decisionwhich will always be in some negotiationshe will give you a very
quick answer," says Rosling. His responses would be crisp, leaving no room for doubt.
The answers would be something along these lines: "Yes, I agree that we should offer
this price" or "yes I agree we should withdraw" (the group has done that on occasions.)
"His involvement in cross-border deals could be quite significant," says Rosling. And
thats precisely what gives the CEOs the confidence to move ahead
without doubts.

Hands Off

Yet, in all this Tata never comes in the way of a manager functioning. Yes, he might
step in to make a broad strategic adjustment, but he does not interfere in operational
issues. Only if his help or input is sought in something specific does he come into the
picture.

That can be said of his involvement in the global

acquisitions as well. He is present
"He has a very
as a member of the leadership team; he is not positive global
there in managing the process. He is available to stature. That does
CEOs as a sounding board, or to give advice. help the group
"That was precisely his role in the Corus companies"-
acquisition," says Rosling. B Muthuraman, Tata
Steel Managing Director was running the process, R Gopalakrishnan
Arunkumar Gandhi, Executive Director, Tata Sons ED, Tata Sons
was in the negotiation and the bidding, Tata was
there only to help with key decisions based on Muthuramans recommendations.

Tata extends a similar philosophy into the way global acquisitions are managed and
integrated into the group. Cultural compatibility is one big area in which due diligence is
done before starting work on any cross-border deal. "This ensures that they are, in a
manner of speaking, inclined to be in the Tata groove more readily," says Tata. He
prefers a non-prescriptive approach. "We do not take a William the conqueror approach
to cross-border acquisitions," says Gopalakrishnan. "I have signed the cheque. So I am
here to tell you how to handle things in the futurethats not what Tata believes in," he
adds.

How he steered the Tata Group can be seen from the Revenue increase year after year
which is shown in Exhibit 3
Man Of Integrity

A key issue that ensures cultural competency is ethics. This is where Tata has never
diluted his value system. "I saw him stand by his principles, even though it cost him
entry into the lucrative airline business," recalls a senior official of the group, referring to
the jinxed Tata Airlines-Singapore Airlines proposal of the late 90s.

"Tata has shown that there is no other way he will do business other than do it
ethically," says Gopalakrishnan. He points to the Tata Finance episode (financial
irregularities by senior company officials had led to the loss of few hundreds of crore) as
an example. At that time, when the loss was yet to be ascertained (estimates ranged
from Rs 500 crore to Rs 1,000 crore), Tata announced that the holding company would
pump in the required money to prevent Tata Finance deposit holders or shareholders
from suffering any loss. "By that one action, he gave a message that is far beyond all
the speeches he could give in the next 10 years," he adds.

Tata lives by these high standards in the international arena, too. Before
a meeting with the Prime Minister of a significant country, a senior group
official suggested Tata lobby for a specific proposal that could help the
group in that country. "Tata declined," recalls the official who made the
request. "Unlike global CEOs, who never hesitate to lobby with
"He is a deep governments, Tata seldom asks governments for specific favours," he
thinker and adds. This despite the fact that Tata is growing in global statureamong
extremely other things, he is an advisor to South African President Thabo Mbeki,
strategic. He
the British government and Singapores Economic Development Board
is always 2-3
steps on international investment related issues and he is on the board of
ahead"- Mitsubishi Corporation, American International Group and JP Morgan
Alan Rosling Chase. "He has a very positive global stature," says Gopalakrishnan.
ED, Tata "That does help group companies." Many believe that Ratan Tatas
sons global leadership is now reaching iconic proportion. You can see the
full details of the different honours received by Ratan TATA in Exhibit 2.

Tata is set to retire in December 2012 to be succeeded by Cyrus Mistry, the 42-
year-old son of Pallonji Mistry and managing director of Shapoorji Pallonji Group.

Note: This case is prepared with the purpose of discussion in the class and this should
not be quoted or used or circulated without the express permission of Prof.
Subramanyam Degala, International school of Business & Media Nande, Pune
Please examine the case from Leadership view point and how Ratan Tata strategized
to make this group into formidable conglomerate and perhaps number one in
market capitalization in India?

Also examine what kind Leader is he ?

Examine this not only from overall perspective but also from initial stages when he
took over chairman of TATA GROUP.

What kind of leadership theories has relevance in this case study?

Exhibit 1:
TATA GROUP Key Values and purpose:

Core values:

The Tata group has always been a values-driven organization. These values continue
to direct the group's growth and businesses. The five core Tata values underpinning the
way we do business are:

Integrity: We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.

Understanding: We must be caring, show respect, compassion and humanity for

our colleagues and customers around the world, and always work for the benefit
of the communities we serve.

Excellence: We must constantly strive to achieve the highest possible standards

in our day-to-day work and in the quality of the goods and services we provide.

Unity: We must work cohesively with our colleagues across the group and with
our customers and partners around the world, building strong relationships based
on tolerance, understanding and mutual cooperation.

Responsibility: We must continue to be responsible, sensitive to the countries,

communities and environments in which we work, always ensuring that what
comes from the people goes back to the people many times over.

Purpose:

At the Tata group our purpose is to improve the quality of life of the communities
we serve. We do this through leadership in sectors of economic significance, to
which the group brings a unique set of capabilities. This requires us to grow
aggressively in focused areas of business.

Our heritage of returning to society what we earn evokes trust among

Consumers, employees, shareholders and the community. This heritage is being
continuously enriched by the formalization of the high standards of behavior
expected from our employees and companies.
 The Tata name is a unique asset representing leadership with trust. Leveraging
this asset to enhance group synergy and becoming globally competitive is our
chosen route to sustained growth and long-term success.

Exhibit 2:

Honours, awards and international recognition:

The Government of India conferred him with the Padma Vibhushan in 2008 and
the Padma Bhushan in 2000
The Ohio State University honoured Ratan Tata with the doctorate degree in
business administration
Honorary fellowship by the London School of Economics
Listed among the 25 most powerful people in business by Fortune magazine in
2007
Listed in the Time magazines 2008 list of the Worlds most influential people
Business week ranked the group sixth amongst the Worlds Most Innovative
Companies
The Reputation Institute, USA, recently rated it as the Worlds Sixth Most
Reputed Firm. Leadership with trust

Exhibit 3:
Revenues $ bn

YEAR GROUP INTERNATIONAL % OF

 BUSINESS INTERNATIONAL
BUSINESS
1999-2000 8.91 NA NA
2000-01 9.04 NA NA
2001-02 10.37 NA NA
2002-03 11.21 2.54 22.67
2003-04 14.24 3.19 22.41
2004-05 17.79 4.72 26.54
2005-06 21.88 6.76 30.89
2006-07 28.81 10.73 37.25
2007-08 NA NA NA
2008-09 NA NA NA
2009-10 67.4 NA NA
2010-11 83.3 NA NA

Nearly 20 years later, Ratan Tata has achieved almost everything on his 1991 agenda.
At Rs 3.46 lakh crore (Rs 3.46 trillion), Tata Group revenue is 40 times the 1991 level,
while net profit has gone up four times.