Case 5.2 Organizational Transformation at the Tata Group
Q1.
In the beginning, Tata Group’s initial organizational approach was to develop location bounded FSA’s and expansion in diversified SBUs in home country which build the capacity of TATA as centralized exporter. Restructuring of Tata was the basic step towards approach shift and development of internationally transferable FSAs like technical expertise, novel management practices and human capital. To take advantage from the FSAs which Tata developed, it used many expansion strategies like outsourcing, joint ventures and wholly owned subsidiaries which assist TATA to recombine its resources and gained competitive position in IT and communication industry which is evident from the establishment of TCS.
Diversification strategy proved very beneficial for development of internationally transferable FSAs which enabled TATA to change its approach from centralized exporter to international coordinator.
Q2
. Bartlett and Ghoshal’s views about multinational network is that many MNEs do not let their subsidiaries to develop unique strengths in their own right and these centralized MNEs, strategic decision making and control just in home country headquarters, which will lead enormous bounded rationality and bounded reliability challenges. So they argue that companies can develop and exploit their present FSAs and support the development of new FSAs in their multinational subsidiary network by selectively decentralizing elements of strategic decision making and control. An organizational model of differentiate rather than homogenous subsidiary roles and of dispersed rathe than concentrated responsibilities. In this case,Tata Group manage its internal network which is also based on Bartlett and Ghoshal’s views about multinational network and each operating company is responsible for its own international strategy forming. It is also depending on the nature of the industry,opportunities of global stage. For example, Tata Sons established Tata industries
In the beginning, Tata Group’s initial organizational approach was to develop location bounded FSA’s and expansion in diversified SBUs in home country which build the capacity of TATA as centralized exporter. Restructuring of Tata was the basic step towards approach shift and development of internationally transferable FSAs like technical expertise, novel management practices and human capital. To take advantage from the FSAs which Tata developed, it used many expansion strategies like outsourcing, joint ventures and wholly owned subsidiaries which assist TATA to recombine its resources and gained competitive position in IT and communication industry which is evident from the establishment of TCS.
Diversification strategy proved very beneficial for development of internationally transferable FSAs which enabled TATA to change its approach from centralized exporter to international coordinator.
Q2
. Bartlett and Ghoshal’s views about multinational network is that many MNEs do not let their subsidiaries to develop unique strengths in their own right and these centralized MNEs, strategic decision making and control just in home country headquarters, which will lead enormous bounded rationality and bounded reliability challenges. So they argue that companies can develop and exploit their present FSAs and support the development of new FSAs in their multinational subsidiary network by selectively decentralizing elements of strategic decision making and control. An organizational model of differentiate rather than homogenous subsidiary roles and of dispersed rathe than concentrated responsibilities. In this case,Tata Group manage its internal network which is also based on Bartlett and Ghoshal’s views about multinational network and each operating company is responsible for its own international strategy forming. It is also depending on the nature of the industry,opportunities of global stage. For example, Tata Sons established Tata industries