Tata Group: The Corporate Juggernaut of the Developing World

27 Feb, 2012

In a 50-50 joint venture with Starbucks Corp. announced last month, Tata Group, India’s forerunning conglomerate, promises to further expand into the rapidly burgeoning Indian consumer market, and eventually around the world. The deal between Starbucks Corp. and Tata Global Beverages would also allow Starbucks to expand its brand into India while serving Tata Tea in Starbucks coffee shops.

Tata Group, founded by Jamsedji Tata in 1868, employs over 400,000 employees worldwide and has 114 subsidiaries, 27 of which are publicly listed companies. The group operates in eight business and industrial sectors including the automotive, steel, and telecommunications industries. Tata Group also owns the worldwide hotel chain Taj Hotels and Palaces.

Tata Motors, originally a locomotive company, is now well on its way to being one of the world’s leading automobile manufacturers. With the acquisition of the Korean company Daewoo and the 2008 acquisition of Jaguar and Land Rover from Ford, Tata Motors has cemented its reach outside the Indian Subcontinent. Boosted by growing sales in China and the release of Land Rover’s new model, the Evoque, Tata Motors saw its quarterly profit increase by 41% to 34 billion rupees ($690 million). Tata Motors’ stock price increased by 60% in India over the past year thanks largely to its investments in Jaguar and Land Rover.

Tata’s largest subsidiary, Tata Consultancy Services, generates 20% of India’s information technology exports. Best known for its business process outsourcing, TCS contracts for dozens of worldwide corporations including Sony, HP, and Chrysler. TCS accounts for half of Tata Group’s employees and is the second largest private employer in India.

Another subsidiary, Tata Global Beverages, producer of products such as Tetley Tea, will likely see a significant expansion of its brand thanks to the Starbucks-Tata deal. According to the agreement, Starbucks will open up outlets in Taj Hotels as well as in Tata’s many corporate centers. With Starbucks setting up shop in the major Indian cities, Tata’s Tea and Coffee will be consumed by a greater portion of the Indian population and perhaps allow Starbucks to offer Tata beverage products worldwide.

Though Starbucks is hoping its joint venture with Tata will help propel its brand into the Indian market, Tata also stands to gain by partnering with the multinational coffee giant. In Tata’s quest to make its goods available in the worldwide marketplace, Starbucks will likely prove to be the perfect vehicle for Tata to achieve its goal.

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