`Commitment vital for global operations'
Hindustan Times — November 10, 2005

Companies seeking to go global should have strong home market position, bold global aspiration, strong leadership and distinctive capabilities to initiate the process, said a few speakers at a discussion here on Wednesday. However, Ratan Tata, chairman of Tata Sons, begged to differ. "I beg to differ with the earlier views (of Baba Kalyani and Dr Shirish Sankhe).

Commitment of the management comes above all for initiating international operations," said Tata at the "Southern Multinationals: A Rising Force in the World Economy" organised by International Finance Corporation and Financial Times. "When we thought of internationalisation (the group termed it so and not globalisation) of our activities about 20 years ago we have addressed it differently. We have decided to cover all the continents, though we thought of identifying countries where we can take leadership position," Tata added.

Internationalisation of the group was envisaged to avoid relying totally on a single economy. The Tata Group has decided to undertake the initiative through two of its group companies software major TCS and hospitality major Indian Hotels. Instead of claiming to be an Indian company in the host country, the group has decided to adopt a local façade, and employ local people, the Tata group chief said.

Replying to a query from the audience, Tata said, "We could have brought gas to India from Bangladesh. But we did not do so. We have decided to set up power and steel plants there, so that the initiatives contribute to the development of the host country." Like Baba Kalyani CMD of Bharat Forge, the idea of international expansion for Tata's had emerged out of a crisis the group had faced when automobile industry was passing through a slump.

"Crisis does good things for us. The automobile industry crisis in late `90s had pushed us into heavy losses (for the group's Tata Motors). The measures initiated then have helped us to raise our market share," Tata said. Dr Shirish Sankhe, Partner of McKinsey & Company cited surplus money with companies and need to deploy them for proper returns were the other major reasons for companies seeking to go global. Kalyani said that his company had visualised that the auto industry slump will continue for five years against the general in dustry perception of one year.

That had led the company to set up its own units in Europe and take over two companies in Europe and one in the US. The company did not look back since overseas operations contributed more to the bottom line of the company in 2001. Tata also begged to differ with the view of Dr Shirish Shirke, partner of McKinsey & Company, that companies aspiring to go global should gain leadership position in the domestic market. Tata said many Indian companies having international operation now would not have done so if they had to think of domestic leadership and strength, first.

Last but not the least, the Tata group chief also offered a simple solution for the cry that the aspiring company should have several time-tested leaders. "Empower the managers to lead the organisation. Allow them to work and motivate them to come to work everyday," was the advice perhaps to the so called leaders who do not want to keep off their eyes from the activities of their managers.