Essay – Types of Strategies used for Different Markets

PROBLEMS DEFINITION

Strategic Management approach, companies can choose to either venture their business towards the Global or Regional strategy. The Global Integration strategy looks at production and distribution of products and services of a homogenous type and quality on a worldwide basis. National Responsiveness strategy requires understanding of individual consumer tastes imposed by autonomous governments and agencies. To further understand the Global and National strategies, we look into the two-dimension matrix below. (textbook, pg277)

• Quadrant 1 – Global Strategy, High requirement for integration and low awareness of differentiation. Based on price competition, entry strategy used it often mergers and acquisition.
• Quadrant 2 – International Strategy. Low requirement for centralised quality check and strategic decision making eliminating the need to adapt to individual countries. Mixed strategy combining low demand for integration and responsiveness.
• Quadrant 3 – Transnational Strategy. High requirement for integration and differentiation. Emphasizing both global integration and local responsiveness.
• Quadrant 4 – Multi-domestic Strategy. High requirement for differentiation but low concern for integration. Emphasize on local adaption.

ANALYSIS

Tata Group uses two different strategies locally and internationally when dealing with its businesses. Local businesses under Tata Group’ umbrella uses the Domestic Strategy which requires product differentiation base on the local adaption. Such example is the Tata Nano Car and the Tata Ace Truck (picture below), produced by Tata Motors at an affordable price for the people in India. Ratan Tata wanted to produce a car which is super cheap yet reliable.

Aside from this example, Tata Group has also proven that the goods and services they produced have subsequently benefited the people in India. As such would be the Solar system project which helped villages circulated off the power grid with power. Tata Group made power available to these villages at an affordable price.

International businesses under Tata Group’s umbrella develop its international strategy depending on the nature of the industry, opportunities and competitive dynamics at global stage of each operating company. We look at each of the strategy available and the application of Tata Companies to them. (Tata Group, 2012)

1. Global Strategy – Such example would be Tata Global Beverages, the Good Earth brand specialises in flavoured and herbal teas. The recent re-launch in the US with 12 new organic blends, had the original sweet and spicy flavoured Good Earth still the most popular blend. Good Earth teas have also made a successful UK debut. (Tata Group, 2012)
2. International Strategy – Such example would be The Indian Hotels Company Limited (IHCL) and its subsidiaries the Taj Group. Taj Hotels Resorts and Palaces is one of Asia’s largest and finest group of hotels, comprising 93 hotels across India and 16 international hotels in Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East. Each Taj hotel offers an unrivalled fusion of warm Indian hospitality, world-class service and modern luxury. At the Taj Hotels Resorts and Palaces luxurious living and fine dining find common ground. Whether it is taking exotic world cuisines to India or taking authentic Indian fare to the world, the Taj Group is renowned for the eclectic culinary experiences it brings to its guests. (Tata Group, 2012)
3. Transnational Strategy – Such example would be Titan Industries which provides a range of products Titan Watches, Jewellery and Titan Eye+ (Eyewear). Titan Eye+ offers a variety of differentiated products to the end consumer consisting of frames, lenses, contact lenses and accessories. Frames are available in both international brands (Levis, Esprit, Hugo Boss etc.) and in-house brands – Titan Eye+ and Dash. Customers are offered a unique browse-select-buy format where all products are accessible, using world class equipment for zero-error eye testing by qualified optometrists trained at Sankara Netralaya and style consultants to help buyers make the right choice of frames and lenses. (Tata Group, 2012)
4. Multi-domestic Strategy – Such example would be Tata Motors, vehicles are exported to Europe, Africa, the Middle East, South East Asia, South Asia and South America. The company has joint venture/franchisee assembly operations in Bangladesh, Ukraine and Senegal. Currently about 63% of its revenues is derived from its international business. With the large variety of product line, every customer is sure to find a car that meets their needs and requirements. (Tata Group, 2012)

RECOMMENDED ALTERNATIVE STRATEGIES

From the discussion provided earlier, clear observations were provided that international market ventures should depend on the nature of the industry, opportunities and competitive dynamics at global stage of each operating company. There should not be a definite strategy to use for international ventures.

As for the Domestic Strategy that Tata Group uses for their local market ventures should also be applying similar concept as the international ventures. This refers to all 4 strategies rather than to stick with 1 strategy for all business ventures. There should not be a definite strategy to use so as to reach out to Indian consumers’ requirements and needs accordingly. This way the business is able to define its clear direction and make higher profits for the company.

On the other hand, Tata Group keeping to the similar strategy used Domestic Strategy may also be a good thing as this can help the people in India by increasing their standards of living and continuously strengthen the company’s Corporate Social Responsibility. Do you think Joint Ventures are essential for Tata’s future success? My answer to the question is No. Joint ventures should not be the sole entry mode strategy used for future international corporations. The entry mode strategy to Tata’s future international business ventures should varies according to the nature of the industry, opportunities and competitive dynamics at global stage of each operating company.

Of the different types of entry modes, 5 of which are commonly used by Tata Group:

1. Joint Ventures and Alliances – An agreement under which two or more partners own or control a business. Any type of cooperative relationship among firms. As such example is Tata Steel with several JAs globally namely; Tata NYK, Tata BlueScope Steel Limited, Dhamra Port Company, Odisha, etc. (Tata Group, 2012)
2. Wholly Owned Subsidiaries – Overseas operation that is totally owned and controlled by an MNC. As such example is Tata Motors where they are a 100% subsidiary company with a couple of companies namely; Tata Motors (SA) (PTY) Ltd., TAL Manufacturing Solutions Ltd., etc. (Tata Group, 2012)
3. Mergers and Acquisitions – The cross-border purchase or exchange of equity involving two or more companies. Though not very commonly used in Tata Group, Tata Services Limited apply this strategy for one of their departments Group Legal Department. (Tata Group, 2012)
4. Franchising – A business arrangement under which one party (the franchisor) allows another (the franchisee) to operate an enterprise using its trade mark, logo, product line and methods of operation in return for a fee. As such example is NTT DOCOMO part of Tata Teleservices. (Tata Group, 2012)
5. Export and Import Operations – The process of selling goods and services produced in one country to other countries. As such example is Tata Power where they export the Tata BP Solar Regularly exports products and systems to several countries. (Tata Group, 2012)

From currently research findings, Tata has ventured into almost all the strategies on entry modes. There shouldn’t be a clear distinction between only having to use 1 type of mode of entry for future international business ventures. This should always depend on the nature of the industry, opportunities and competitive dynamics at global stage of each operating company. Individual mode of entry strategies has its pros and cons hence depending on the objectives of the business ventures to set the strategy to use.