Diversification Strategy: A Case Study on Tata Group

Shrikant Darne Mcom Part I Roll No. 12

Introduction
Increases profitability Applicable to all levels of business Also known as survival strategy Builds reputation Different from market penetration, market development and product development

Types of diversification
Concentric diversification Focus on internal development Mutually reinforced business Becoming competitive and harder to imitate Ensures efficient management Conglomerate diversification Acquisitions over internal development Attempts to beat the market

Cost of diversification
cost of ignorance

cost of neglect cost of co-operation oCost of communication o cost of compromise oCost of accountability

Diversification of Tata group

Founded in 1868 Founded by jamsetji Tata chairman Cyrus pallonji mistry 6th chairman of tata sons Works in the field of : airlines, automotives, steel, IT, electricity, retail, consumer goods, construction, financial services 100 operating companies 7 business sectors 100 countries across 6 continents Exports to 150 countries 62.7% of revenue from business outside india The most respected brand in india for more than 140 years

Diversification of Tata group

Foundation (1868-1931)
Firm Hotels Steel company Hydro electric power Consumer goods

Consolidation

(1932-1990)

Airlines Chemicals Cosmetics Manufacturing Consultancy Electric

Diversification of Tata group

Expansion (1990 onwards)
Teleservices Acquisition of Tetley group Joint venture with AIG Controlling stake at VSNL Tata Indicom mobile service Introduces Indione-smart basic hotels Acquires NatSteel of Singapore Takes over the Pierre NY Acquires hotel Starwood Sydney Tata-sky satellite television services launched Acquires Ritz-Carlton, Boston Launched Croma, multi brand consumer electronics outlet Tata steel acquires anglo-dutch company Corus Developed the fastest supercomputer EKA Acquires Campton place hotel in san Francisco Tata capital established Tata motors acquires land rover and jaguar Acquires general chemical industries Acquires Dutch Lankan trailer manufacturer Tata housing launched Joint venture with Pepsico for health drinks Joint venture with Starbucks opens cafes all over Mumbai

Reasons for diversification

Ambition of growth Flexible portfolio More opportunities Taking over environmental uncertainty Higher profitability Surplus resources Synergy and emerging opportunity Recasting of mission