An Analysis of Mr. Ratan Tata’s Vision

Ratan Tata, the chairman of the TATA Group of companies took reins of the group in 1981. As a novice Mr. Tata was doubted by many for his capabilities to take the group forward. It was a monumental task to lead a group so vast that not only represented the indegnious industrialization spirit of India but had a flavor of unwavering patriotism. Over the years Mr. Tata have proved all doubters wrong by his master class handling of the groups affairs. What so noteworthy of the success that he has achieved with the TATA group of companies is the scale of operation of these companies and the shear diversity in which the TATA group operates. Ranging from salt, steel, chemicals to automobiles and high tech industries involving software and telecom the companies have flourished under his leadership. It is amazing that a person could have vision and core competencies in so many business areas that pretty much sum up the economic spectrum. As opposed, other successful Indian companies and leaders, such as Infosys, Reliance have operated in one business area and leveraged their core skills.

The TATA group has gone places under the banner of Ratan Tata. Tata has maintained a strong desire to represent not only the group companies but also the name of the nation in markets across the world. His most notable moves include, Tata Tea buying worlds biggest Tea maker, Teatley, Tata Motors buying Daewoo Motors, Jaguar and Land Rover. Tata Consultancy has offices all across Europe and North America. Prior to Ratan Tata, if the group was a dominant national player, Mr. Tata has expanded its horizons beyond the national borders. This has been his vision for the group. Mr Tatas vision played a key part in transforming Tata Motors from a commercial vehicle manufacturer to a passenger car manufacturer and now a owner of worlds most admired luxury car brands in Jaguar and Land Rover. His vision for the Indica car – A car that would have the space of an Ambassador, maneuverability of a Zen and price of Maruti 800 was truly legendary.

I have absolutely no doubt that his thinking has been absolutely pioneering till date but some of his recent guidance has been questionable. Tata’s vision of a 1 lakh rupee ($2200) car has backfired severely. When I heard of it 4 years ago I was totally amazed – this is not possible – was my first reaction. But, the persistence of Mr Tata, the ingenuity of Tata Motors engineers and help from Chinese manufacturing have made it possible. However the endeavor succeeds only till this point – the vision wasn’t to make a 1 lakh car, it was to sell a 1 lakh car. The Tata Nano has failed miserably in the sales department. Supporter of Ratan Tata will say that the quality problems in the car have caused it to loose sales, but I don’t agree. This is a classic part of wrong market research by Tata marketers in order to please Mr. Tata. They should have realized that the demographics and economic classes in India are changing. The salaries are going up and hence the middle class who drive cars are willing to pay more for some comfort. With this changing demographics the ctarget market for the car becomes the lower class. But with Petrol prices in India higher than most places on earth and the inflation in the similar class, the poor can hardly afford petrol.

It is going to be a huge challenge for Tata to turn around the small car project which is based on economies of scale and and needs to sell at least 100,000 cars a year just to breakeven.

Mr Tata is a pioneer, a legend visionary – he should try and employ the genius at his disposal to turn the Nano project around. If it doesn’t happen he should just bury his ego and let the car project go down for the greater good of Tata Motors.