How Tata expanded?

    Tata is the industrial conglomerate that lies at the heart of India's success on the global business stage. For almost two centuries the Tata Group has pioneered multiple industries in India and remains a market leader in most of them. You have probably of Tata Motors and thier car division, but as you will soon find out thier reach extends far beyond that one subsidiary. We will look about three generations of Tata business to see how they built on of India's most successful companies. 

        The story of Tata begins during the regin of the British Empire where India back then was a huge exporter of cotton, but the brutal regmi of the British East India Company which left little room for local entrepreneurs to develop. The poor treatment by the British eventually resulted in a rebelion against them in 1857, which ended the power of the British East India Company and replaced it with the British Raj. Now, compared to it's ruthless predecessor, the Raj was much more focused on keeping the peace. The British Raj didn't exploit the Indian population quite as harshly and it also invested a lot of money in building India's first railways for example. Of course, at the end of the day, the British Raj was still on Opressive colonial power, but at least it finally gave the local population and the economic opportunity to develop themselves because India was an exporting country. 

                   Jamsetji Nusserwanji Tata

      The first Indian entrepreneurs came from exactly that sector and one of them was Jamsetji Nusserwanji Tata. He was the son of Nusserwanji Tata who was an exporter in Mumbai and he was graduated in Elphinstone College in 1858, exactly the perfect time to take advantage of the economic reforms of the British Raj, because his father's export business was growing a lot. In 1859 Jamsetji went to Hong Kong to develop a subsidiary there and upon seeing the sheer scale of British commerce there, he realized that the Tata export business had truly global potential. Over the course of the next decade he would travel to Japan, China and Great Britain to establish a network of distribution for his father's business. He had eventually created his own exporting company in 1868 and used the money which he made to build textile mills of his own, effectively creating a vertically-integrated business. From the very start Jamsetji philosophy was to find the best practices used across the world and to bring them back to India. In his textile miles he enacted policies that were virtually unknown to most of India, like offering sickness benefits and pensions to his employees. But Jamsetji wasn't content with just the textile industry, he saw the wonders of the Industrial Revolution had created in Europe and then he wanted to recreate them back home. He began working on a street production plant in 1901, modeled after the ones he had seen in Germany. Even more ambitious was his hydroelectric project, inspired by his visit to the Niagara Falls power plant in 1902. Jamsetji realized the incredible power of tourism and so he also created a chain of hotels, starting with the TAJ Mahal Palace Hotel, which even today is one of the most recognizable buildings in Mumbai. Jamsetji was truly a man dedicated to business and to help people through it, he valued education to the point where he donated land and buildings towards the creation of the Indian Institute of Science, the eminent university of India. He would not however live to see most of his projects realized because he died while on a business trip in Germany in 1904, leaving the already sizable Tata company to his two sons. Together they consolidated thier ownership into a single holding Company which in turns is owned by the charitable Trusts they created for future generations. Jamsetji,s sons fulfilled many of thier father's ambitions, which they oversaw the creation of India's first steel works in 1907, and India's first cement plant in 1912 and the first indigenous insurance company in 1919. By the time the leadership mantle passed into the next generation in 1938, Tata sons was comprised of 14 different companies. This time, however, instead of it going to one of Jamsetji grandsons, leadership went into the hands of a distant cousin with a very interesting background.

                                  J. R. D Tata

     Jehangir Tata also better known as J.R.D , had been in the company since 1925, but he had been raised in France and was a close friend to the man who made the first flight across the English Channel. In other words, JRD was a passionate avaitor and in 1929 he obtained India's first pilot license and unsurprisingly his first big project at Tata was to develop an airline. In 1932 he created the Tata Air Service, which originally only carried mail, but then in 1938 also started doing passenger flight as well, even helping out British in the Second World War. Now you would have been beneficial to the Tata,s but in reality the socialist policies of the newly-created government were at odd with private business. So India's first prime Minister Jawaharlal Nehru saw that just how successful JRD had been with his airline and in 1953 he unilaterally decided to nationalize it. So he kept JRD as the airlines chairman until 1977 and as you can imagine, the company only went downhill from there, drawing in ever-increasing debt. Of course, JRD would not let politics get in the way of business and so he did his best to grow Tata while avoiding the wrath of the socialists. He created Tata Motors in 1945, originally with the idea of building locomotives, but in 1954 he branched out into commercial vehicles through a partnership with the German car Company Dailmer. Over the course of his 52 years of leadership, JRD expanded the Tata Group from 14 companies to 95, but to do that he had in each one in order to appease the socialists. In 1969 the Indian government introduced the monopolies and Restrictive Trade Practices Act, which was essentially targeted at Tata even though they were very far from a Monopoly by western standards. But as JRD expanded the group and lowered it's ownership in the individual subsidiaries, he started losing control. Some of his companies just weren't performing and the man he sent to fix them was none other than Ratan Tata. 

                               Ratan Tata

       Ratan Tata is one of Jamsetji,s great grandchildren and he joined the Tata Group in 1962. His first major project came in 1971 and it was pretty difficult because Ratan Tata was given the charge of a struggling Tata company known as NELCO (National Radio & Electronics Company) which in the 1950s was India's biggest producer of radios, but just twenty years later it had fallen to a 3% market share. Ratan's focus was on technology and the future, so instead of trying to salvage the radio, he instead funded the development of new products like satellite communications, which restored NELCO in the 1980s and made Ratan the apparent Successor of JRD. Ratan Tata Group in 1991, right as a wave of economic liberalization swept across India. The socialist lost power and India finally joined the global capital market, but this presented  a  big threat to Tata. Up unit now it had operated in a very protected economy, which was suddenly open to competition from foreign companies. Worse yet, JRD had let Tata become extremely decentralized, so it would be very slow to adopt to new competitors. Ratan had no choice but to re-established ownership over all the Tata subsidiaries and that didn't come cheap. He sold 20% of Tata subsidiaries especially Tata Steel and Tata Motors. He then reorganized all hundred subsidiaries into seven sectors, establishing a framework along which he could actually control them. But just wielding power isn't enough to turn around a struggling business and in the 1990s pretty much every Tata company was losing ground to international competitors. Ratan's answer, however was brilliant, he started acquiring foreign competitors and absorbing them into the Tata Group, effectively buying all their talent and supply chains and experience in order to strengthen his business back home in India while also expanding it internationally. 

     

       Ratan's buying spree began in the year 2000 when his beverage company, Tata Tea, acquired the Tetley company from Great Britain. Over the next decade Ratan ended up acquiring hundreds of companies for pretty much every subsidiary in the Tata Group. Most notably, he purchased the European steel Titan Corus for 12 billion dollars in 2007 and then Jaguar and Land Rover for 2 billion dollar in 2008. As you can imagine, the international buying spree has been paying dividends for Tata and today the majority of their revenues actually come from outside of India. What's even more beautiful is that the majority of Tata subsidiaries are actually public companies whose shares you can purchase on the stock market in India.