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Ratan Tata,
Chairman, Tata Group
What are the key facets
that differentiate a truly global corporation? How would you
define the Tata Group within this context?
Global companies are
differentiated by their strong global position — global assets,
capabilities, brands — and their relative resilience to shocks
and even to the business cycle. The Tata Group has begun its
journey towards globalisation.
Is the Tata Group global as a whole or do its individual companies make it global?
A company does not
become global by simply participating in a certain number
of geographic markets — in that sense, it is not a sum of
parts. It is its ability to become globally competitive, leverage
global opportunities and have the required global capabilities
that makes it global. We are in the process of acquiring such
a competitive position and global coordination capabilities,
both at the individual company level, as well as at the group
level.
A global company doesn’t allow the
legal and political environments of any country affect its
fortunes. Comment.
Understanding country risk and preparing for it is crucial
for a globalising company. There is a portfolio of opportunities
and related risks that will need rebalancing from time to
time. So legal and political environments do impact the group
fortunes but globalisation also offers new opportunities to
diversify.
How does a global corporate leverage
its brand across the markets it serves?
There is a major task in taking your national brand to
the global stage but branding is surely a strong driver to
globalise. Global corporate brands can cut costs to enter
new markets and allow the company to attract good partnerships
as well as talent. The Tata Group has an opportunity to further
expand its brand in sectors where it is increasingly recognised
internationally, such as software and hotels and to leverage
its historical brand presence in various countries, especially
those with strong Indian roots.
What are the critical elements that
determine a global company’s strategy?
The objective of globalisation is to move towards becoming
globally competitive and to expand your market. The globalisation
strategy itself could be asset-based, capability-based or
opportunity-based. It also includes global employment. It
implies an organisation which employs people with no national
barriers. Different Tata companies are in the process of developing
their strategies with such factors in mind.
Do you think a transnational company’s
ability to leverage its financial strength is crucial for
globalisation?
Financial strength is clearly important in sustaining
entry into new markets abroad especially where strategy dictates
investment in brands. At the same time, due importance should
be given to good management capability that can lower the
cost of succeeding in new markets.
What is the typical risk mitigation
strategy of a global company and what are its key determinants?
Risk mitigation follows from becoming more competitive,
and global companies have more tools that they can use to
increase competitiveness and to protect current markets. As
examples, global companies can attract stronger talent, enable
cross-learning across markets, have greater opportunities
to service and develop capabilities for global customers,
and can invest more in R&D that can be spread over larger
markets. Further, global companies can act in multiple markets
to retaliate against increased competition from other large
companies in any given market.
Other articles on globalisation:
Uploaded on February 18, 2004
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