17-01-2012, 02:32 PM
THE INTERNATIONALIZATION OF INDIAN COMPANIES: THE CASE OF TATA
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INTRODUCTION
As OECD, UNCTAD and other international organizations have highlighted in their recent analyses,1 the international expansion of large companies from emerging markets (commonly referred to as emerging economies’ multinational enterprises, or EMNEs) is a new and dynamic feature of the global investment landscape. The Indian corporate sector has been an active participant in this “game.” The total value of outbound FDI (OFDI) deals, which were valued at US$4.3 billion in 2005, crossed the US$15 billion-mark in the following year and could well breach the US$35-billion level this year and even exceed inbound flows (Ramamurti and Singh 2007). Among Indian companies expecting to do a deal in the next three years, a resounding 94 percent expect this to be a cross-border acquisition (Grant Thornton 2006).
A SHORT HISTORY OF TATA
The Tata Group is almost 150 years old (Unless otherwise noted, this section builds on the Tata Group websites, accessed in July and September 2007. In fact, Tata must be praised for providing an unusually large amount of information on its site, also including independent media reports which are not necessarily favourable to management.).
CONGLOMERATE
Tata Sons and Tata Industries (TIL) are the two promoter companies. Tata Sons was established as a trading enterprise in 1868 and continued to promote and manage all major Tata companies until 1970 when the managing agency system was abolished. Although the group is no longer a legal construct, it still holds the bulk of shareholding in these companies. The chairman of Tata Sons has traditionally been the chairman of the Tata Group.
CONCLUSION
Since the opening of the Indian economy in 1991, Tata has been subject to global competition, making it imperative for the group to become competitive in India against the new entrants. To gain scale, reduce their exposure to the cyclicality of India’s economy, survive, and achieve a sustainable competitive position in industries that are globalizing, most Tata companies then looked overseas. Tata’s recent experience is an excellent case for analyzing ‘accelerated internationalization’ (Matthews 2002).
