BCG MATRIX FOR TATA GROUP

INTRODUCTION:-

Various Indian companies are trying to prove their know-how at the international level. But the
true face of Indian industrialization from a long time is presented by the TATA group. TATA
group was established in 1868 and from that time till know this group never seen back. With the
progress of time it will expand himself in various industries. Right know TATA is present in 7
different industries, with 95 operating companies which provide employment to 310,000
employees. This makes the TATA group as the largest private group in India. The operation
of the group is spread in nearly 85 countries and exports his product and services to 80 nations.
This will helps TATA group to gain the reputation in the international market. In terms of
market capitalization and revenue the TATA rank 1st in India. The revenue for TATA in
financial year 2008-09 is $62.5 bn with a profit of $5.4 bn.

The industries in which TATA group is present are steel, automobiles, information technology,
communication, power, tea and hospitality. These industries are divided into various SBU’s like
Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, Tata Communications,
Tata Chemicals, Tata Tea, Tata Teleservices, Tata Auto Components Systems, Voltas, Indian
Hotels, Titan, etc.
 BCG MATRIX FOR TATA GROUP:-
Hig
h
BUSINESS GROWTH

Lo
w Hi Lo
gh w

RELATIVE MARKET

Justification for BCG SHARE

matrix:-

Star:-

• Market Leader:-

o Tata Motors generate a business of $14 bn in 2008-09. It is the leader in

commercial vehicles in each segment, and among the top three in passenger
vehicles with winning products in the compact, midsize car and utility vehicle
segments. The company is the world's fourth largest truck manufacturer, and the
world's second largest bus manufacturer.

o The company has five major brands in the Indian market - Tata Tea, Tetley,
Kanan Devan, Chakra Gold and Gemini -- catering to all major consumer
segments for tea. The Tata Tea brand leads market share in terms of value and
volume in India and the Tata Tea brand is accorded "Super Brand"
recognition in the country.
 o Tata Chemicals Limited, a leading manufacturer of chemicals, fertilizers and food
additives. The Company is the second largest manufacturer of soda ash and the
third largest producer of sodium bicarbonate in the world, apart from being the
leader in the Indian market. Tata Chemicals also enjoys leadership in the Indian
edible salt market and is the most efficient manufacturer of urea fertilizer in the
country.
• Growth of industry and Investment:-
o Growth in all the 3 industry is above 12%. To maintain the growth and revenue
industries have to invest large amount of money in their respective sector. Like,
Tata Motor invests in various takeovers, Nano project, etc. Also Tata tea invest
lot of money in maintaining it image by investing in jaago re campaign. Similarly
Tata chemical also invest in various options to expand in ludhiyana, etc.
• All the industries are having low profit contribution for TATA group. Like chemical is
having 5% contribution, tea is having 9% contribution, etc.

Cash Cow:-

• Market share:-

o TATA steel is having a highest market share in steel production in India and
also he is having the 6th rank worldwide. Market capitalization is $2.7bn. This
company comes under fortune 500 list.

o TATA power was pioneered the hydro power generation in India. The generation
capacity is greater than 2300 MV, which is highest in private sector. TATA
power is present in other mode also like thermal, solar and wind. This is also
doing the transmission and distribution of energy. The market capitalization is
$3.4bn.

• Growth Rate:-
 o Growth rate for both the industry is under 6%. This is a low growth rate for any
industry. The growth rate for steel industry is nearly 5% and for power is 6%.

• Contribution in Profit:-

o The contribution in the profit of TATA group is 60% if we combine both the
industries. These two companies are not facing any competition from its
competitor so they don’t have to invest much on itself. Due to these
characteristics, these two companies are placed in cash cows.

Question Mark:-

• TATA is the largest exporter in the electro-mechanical project and services. With this he
is also the leading central air conditioning company in India. They are also present in
various other fields like textile, material handling, mining and construction equipment,
etc. But the problem is that they are just present and growing but the growth rate is not
matching with the industry growth rate.

• The growth rate in this sector is high because this sector is basically related to the
science. And we all know the growth in the sector of technology is like anything. So we
can say the growth rate is high.

• Dogs:- TATA indicom we put into this category because the relative market share is too
low for it. And if we see the market, it is mostly captured by other players, so there is no
space for tata indicom. Also if we see the performance of tata Indicom, its shows a
gradually downfall.(PAT in year 05 is -529cr,year 06 is -541cr, year 07 is -310cr, year 08
-125cr, year 09 is -159cr). This sector shows continuously losses so it is in dog.

STRATEGIES FOR THE SBUS IN EACH OF THE QUADRANTS

1.According to Porter’s generic strategies, the following strategies are followed in different
quadrants are given below:-
BROA
D
TARG
ET

NARRO
W
TARGE
T

• Cost Leadership: - In the star segment the growth of market is high, so it attracts lot of
competitor’s attention. To counter this company has to become the low cost producer
because he has to save his position. With decrease in cost company has to manage the
quality of product also. The cost leadership strategy usually targets a broad market.

• Differentiation:- In the question mark region, the market growth is high but the market
share is low so to increase the market share company has to go for the development of
product or service that offer a unique attributes that are valued by customer.

• Differentiation Focus: - In the dog region, the market share and growth both are low so
the company has to go for differentiation focus. In this company is offering the
customised service to its customers. So that they can gain the loyalty of customer. As
they are offering the customised service so they can pass the surplus amount to customer,
which indirectly increase the profit of the company.

• Cost Focus: - In the cash cow region the company is the market leader but the market
growth rate is very low. In such kind of scenario, problem faced by company is basically
related with the retention of customer. For that company can provide the product or
service at low rate so that they can gain the loyalty of customer.
 2.Normal strategies followed in various quadrant are given below:-

There are few strategies which are followed by each quadrant companies to do better
are given below:-

QUESTION MARK STAR CASH COW DOG

Market penetration Integration Product Retrenchment
development
Market Joint venture Concentric Liquidation
Development diversification
Product Market penetration Divestment
development
Market
Development
Product
development
The first
strategy is
Strategies
All are the First two implemented
help to
intensive strategies are if it is believed
maintain the
strategies or giving the cost that the
strong
divestment. advantages to product can
position in
Indirectly all company. The be revitalized.
the market
these remaining The last
as long as
strategies help strategies are strategy is
possible.
the company also helps to followed if
to increase its attain the cost when
market share advantages to someone is
because all company. ready to buy
the above the firm
strategies are because you
related to ALTERNATIVE MODEL are not
differentiation. making any
Yes for the purpose of allocation of resources we can follow the better model, called GE
profit.
(General Electric) matrix model. This is better because the GEBS includes much more input
than simply industry growth rate and relative market share to assess the attractiveness of the
ATTRACTIVENEESS

industry and the competitive position of the business unit.

MARKET

MEDI
LO
HI COMPETITIVE POSITION
 HIGH
ATTRACTIVENEESS

MEDIU
M
MARKET

LOW

STRON MEDIU LOW

Invest and
Grow
Earn Selectively

Harvest and Divest