BUSINESS STRATEGY ASSIGNMENT

ON

SUCCESSION PLANNING FOR TATA

Submitted to:

PROF. S.V.BIDWAI

Submitted By:

Md. Akheel

09BS0001291

Date: 7th September, 2010

TATA – A BREIF HISTORY:

The Tata Group is a multinational conglomerate company headquartered in Mumbai, India. In

terms of market capitalization and revenues, Tata Group is the largest private corporate group
in India and has been recognized as one of the most respected companies in the world. It has
interests in steel, automobiles, information technology, communication, power, tea and
hospitality. The Tata Group has operations in more than 85 countries across six continents
and its companies export products and services to 80 nations. The Tata Group comprises 114
companies and subsidiaries in seven business sectors, 27 of which are publicly listed. 65.8%
of the ownership of Tata Group is held in charitable trusts. Companies which form a major
part of the group include Tata Steel, Corus Steel, Tata Motors, Tata Consultancy Services,
Tata Technologies, Tata Tea, Titan Industries, Tata Power, Tata Communications, Tata
Teleservices and the Taj Hotels.

The group takes the name of its founder, Jamsedji Tata, a member of whose family has
almost invariably been the chairman of the group. The current chairman of the Tata group is
Ratan Tata, who took over from J. R. D. Tata in 1991 and is currently one of the major
international business figures in the age of globalism. The company is currently in its fifth
generation of family stewardship. Family tree for this great family is shown as figure:

The Tata Group set another milestone; it became the first Indian family-run business to look
beyond the family for a successor to Tata, who is due to retire by the end of 2012.

Tata has no apparent successor, leaving the business founded by his great-grandfather
potentially vulnerable.

But his decision to look within the company, as well as abroad, will go some way in
dispelling some of the negative notions of family firms in India, highlighted by the bitter five-
year feud between the Ambani brothers.

The Ambani feud has been held as an example of how blood ties can affect business— lack
of succession planning, opacity, and erosion of shareholder value. These are perceptions that
India’s top family firms, which have dominated the country’s corporate landscape for over a
century, are trying to shake off as they face more competition, tighter regulations, and a new
generation of leaders takes the reins.
TATA’s SUCCESSOR PLANNING & NEED
A succession plan is about getting the right person in place for the position you leave behind.
Tata’s succession planning is refreshingly professional. Years after his wild-card takeover
from J.R.D. Tata, Ratan Tata’s stint as chairman of Tata Sons — the holding company of the
highly diversified Tata Group — has been acknowledged as wildly successful. Taking a $4
billion group into the $70 billion bracket, he spun yarn into gold — converted an essentially
Indian brand into a name that the world has to reckon with. Whether it was overhauling
internal management at Tata, or packing a punch into the world’s cheapest car or buying up
luxury brands like Jaguar & Land Rover, Ratan Tata has steered the Tata Group with
admirable confidence and panache. The person who takes over from him must possess at least
a part of that drive.

The succession strategy at Tata Sons looks heartening — begun a good two years before
Ratan Tata retires, it appears impeccably professional with a five-member search committee
(with board representation, but not Ratan Tata himself) that includes members from two key
Tata family trusts and an outsider. Apart from Ratan Tata and Krishna Kumar, other members
on the board of Tata Sons include Farrokh K Kavarana, Jamshed J Irani, R Gopalakrishnan,
Ishaat Hussain, Arunkumar Gandhi and Cyrus Pallonji Mistry, brother-in-law of Noel Tata.

In India, it is taken for granted that the top seat in many businesses will be filled by the next
member of the promoter’s family. But succession planning is a delicate affair. Tata Sons
could become India’s own case study of how to do the handover right. Most of its substantial
shareholders are not even part of the family (Ratan Tata himself owns about 1 % in stake).
More than 66 per cent of the equity is held by philanthropic trusts endowed by different
members of the Tata family. This dilution of ownership by the promoter family ensures that
they are less invested in transition decisions, allowing it to be managed professionally. Given
Tata’s symbolic and real importance to Indian business, the search should be interesting.
 CONCLUSION

The successor should have presence and stature. A requisite since the
CEO would have to interact with corporate leaders globally and
heads of state in India, the United Kingdom, etc. Thus by findings
and study, there were different questions which were raised while
selecting for a successor. These are as follows:

 Should the Group CEO be a specialist?

The TATA’s have specialists to manage individual

companies so the CEO should be a generalist with excellent
people management skills. These would be put to test in
dealings with senior colleagues, politicians, world leaders and diverse employees
worldwide.

 Should the CEO be an Indian?

The group needs to hire the best available talent. If a non-Indian heads the group, the CEO
would need to understand the Indian way of working.

And the qualities which are required in desired successor should be as follows:

• Impeccable public integrity and image. You can trust the media to investigate the
CEO's background from the moment he was born.

• A track record that inspires respect.

• Be able to spot opportunities and the next big idea, strategize accordingly and ensure
execution.

• Run global organisations and managed a set of business portfolios.

• An understanding of how decisions are taken in the TATA Group and accept it as it is
rather than try to create a different culture which is bound to result in friction.

• The ability to realise that the Tata Group and its people could be pretty set in their
ways. Instead of trying to change them the CEO should find ways to enhance
performance.
 • The ability to believe that people are assets who have to be nurtured and developed
not retrenched at the hint of a downturn.

• The ability to acknowledge that one of the group's focus area is the climate change
crisis.

• The ability to accept that the group is deeply committed to philanthropy.

• The ability to export the group's innovation worldwide.

• The ability to convince the board to induct younger and outside talent in the group
corporate office.

• The ability to be unemotional and be able to hive off businesses that are not the focus
areas for the TATA’s.

• An understanding of state politics to avoid another Singur-like fiasco.

• The ability to effectively communicate with the media, especially in India where he
would be under intense scrutiny.

• A network of contacts with world leaders in defence products and energy.

• An understanding of the African market that would assist the TATA’s in capitalizing
opportunities there.

• The ability to internalize and promote the five core values of the Tata Group.

Also a non-Indian CEO needs to:

• Know that heads of businesses in India are as much concerned about financial results
as they are about social issues and national well being.

• Know that improvisation and adaptability are at the core of what is called the Indian
way of doing things.

• Realise that Indians are relationship-oriented more than transaction-oriented.

• Realise that Indians are forever looking out for 'value for money' buys. \
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