Case study: Tata

The story.
Tata is India’s oldest and largest private sector business entity. Founded in 1868, the group now consists of more than 100 companies, with a turnover of more than $70bn. It has a wide range of interests, with companies trading in fields as diverse as steel, cars and trucks, chemicals, IT consultancy, retailing and hotels.

The Tata group is highly decentralised, and member companies have great aut­onomy in terms of strategy and operations. The main instrument for unifying the group is the Tata corporate brand, which embodies values that are shared by all companies in the group.

However, not all the companies use the corporate brand in the same way. Many, such as Tata Beverages and Tata Motors, use the name and logo explicitly. However, even in India some companies in the group, such as Trent and Taj Hotels, do not use the Tata name. Taj Hotels also has its own brand mark.

This inconsistency is seen by the Tata group as less important than adherence to the group’s values. It was originally founded for the purpose of creating and spreading wealth in order to strengthen the Indian nation and economy.

The challenge.
Before 1991 the Tata group had few interests in the world outside India. Its brand identity was very strongly Indian, rooted in India’s culture and history. However, Ratan Tata, the group’s leader, believed this had to change. He felt that Tata’s future lay outside India, and that it should aspire to become a global company.

But could a company with such a strong Indian identity succeed in establishing a global brand? And if so, what would be the disadvantages? There were – and still are – many in India who believed that the process of globalisation would change Tata and damage its values, turning it into just another big company that would be concerned only with profit. Others outside India wondered – and some still do – if western consumers in particular would really ac­cept the Tata brand.

Stepping out of India.
Individual Tata companies began making small acquisitions outside India in the late 1990s. The first big acquisition was that of Tetley Tea, one of Britain’s leading tea brands, by Tata Tea (now Tata Beverages) in 2000. This acquisition went almost unnoticed. Later acquisitions, such as those of steelmaker Corus by Tata Steel in 2007 and Jaguar Land Rover by Tata Motors in 2008, were much more high-profile. Since 2005, there has been a steady stream of acquisitions in Europe, Asia and North America.

The pragmatic approach.
Tata’s approach to handling the new acquisitions has been pragmatic. Conventional corporate branding theory suggests that all acquisitions should be branded with the corporate brand name and mark. GE, for example, applies the GE brand across the board to all new ventures and all new acquisitions.

But Tata faced different pressures, and had to respond in a different way. The group had simultaneously to reassure its stakeholders in India that it was not about to abandon its traditional values in favour of global growth, and to reassure stakeholders in the companies it was acquiring outside India that their favourite brands would not be spoilt.

Varied responses.
In some sectors, Tata follows conventional wisdom. In 2010, after some hesitation, Tata Steel finally rebranded Corus as Tata Steel Europe. By common consent, Corus was not a particularly strong brand, and few mourned its passing.

Even so, there was some worry at Tata Steel as to what impact this rebranding might have on Corus’s reputation – and on that of Tata Steel in India, where there was concern over events such as the mothballing of the Corus plant at Redcar in the north-east of England, with some observers questioning whether Tata Steel was still a caring employer. Only after long thought did the move go ahead.

In contrast, Tetley has been part of the Tata group for 10 years, yet the Tetley brand remains independent in terms of its identity. A single discreet line on the packaging reminds consumers they are buying a Tata product. It might be thought that tea, being Indian in origin, could benefit from association with a celebrated Indian brand. But Tetley’s customers resolutely see it as British, and rebranding might compromise its image and reputation in their eyes.

The same is even more strongly the case with Jaguar and Land Rover, where Tata Motors has bluntly rejected the suggestion of rebranding either with the Tata name. These are old and famous brands, and Tata Motors thinks rebranding would des­troy value.

Conclusions.
Tata only re­brands its acquisitions when it is clear that such a rebranding will add value. This is not what conventional wisdom suggests. But a look at the group’s performance, even through a deep recession, suggests the pragmatic approach has worked in this case.
-Financial Times, 29 Dec 2010