Ivan f rodriguez organizational evaluation

Running head: ORGANIZATIONAL EVALUATION 1

Organizational Evaluation

Ivan F Rodriguez

University of Phoenix

ORGANIZATIONAL EVALUATION 2

Organizational Evaluation

There is only one global institution, business, motivated by capitalism and fueled by

profit that can mount a frontal attack to the challenges modern world is facing. Business

alone has the know-how, the skills, and the drive to rise to the defy. Business must enlarge

its horizons, moving beyond its tunnel vision of shareholder value to the target tableau of

stakeholder value, embracing customers, employees, suppliers, and investors, ant on to the

panorama of the ultimate purpose of business, societal value, the “bettermen of mankind,

with profit at the end of the rainbow” (Bhote, 2003, p. 4). The movement to involve business

in tackling socials ills while earning the right to a profit, improving education, food, health,

social infrastructure, and helping the dispossessed to start their own business has started.

Tata represents an extraordinary example of how vision combined with leadership

can create an organization to deliver outstanding results consistently. Tata introduced a new

set of standards to create value, and define an unprecedented framework to support one of

the largest and more diversified industrial conglomerates in the world (course of action to

become a business that improves the world. Tata’s leadership development across levels is

the focus of its employee policies, along with people development and growth. Business

environment is changing swiftly, bringing in its own set of opportunities and challenges; at

the same time, the group is rapidly evolving and expanding its reach strategically,

geographically, and culturally. The new geographies and the shifting environments of the

businesses demand Tata to prepare its leaders (current and future) to resolve successfully

such adversities.

The effectiveness of Tata’s organization design (including its modifications in

structure) is performed in a sequence of three assessments. The company is measured in six


areas (dynamic innovation, fiscal volatility, disruptive workforces, employment, and

economizing of talent, supply disruptions, and rapid growth, and unethical leadership

performance) in three times (1925, 1975, and 2012). Figures 1, 2, and 3 show the results of

this assessment, the area of the polygon is directly proportional to the company readiness,

and maturity, the bigger it is, the more mature. Although this is a subjective evaluation, the

intention is to visualize how Tata’s organizational design evolved to respond to the needs of

its markets.

Tata Evolution

Tata comprises operating companies in seven business sectors: Materials,

Engineering, Information Technology and Communications, Energy, Services, Consumer

Products, and Chemicals. Tata was founded in the last quarter of the 19th century in

India when the country had set out on the road to gaining independence from British

rule. The founders aligned business opportunities with nation building. This approach

remains ingrained into Tata’s ethos today as it spreads its operations to other geographies.

Tata is today India’s largest conglomerate with revenues of $14,714 billion dollars per year –

representing 2.8% of India’s GDP (Kumar, 2013), employing more than 172,000 people in

80 countries, and exporting products, and services to more than 85 countries (Bhat, 2013).

Tata shares a set of five core values derived from Tata’s early beliefs that continue driving

Tata’s business decisions. These values are (1) Integrity, (2) Understanding, (3) Excellence,

(4) Unity, and (5) Responsibility. Tata has been distinctive in their adherence to business

ethics and their commitment to corporate social responsibility. This legacy has earned the

trust of Tata’s stakeholders in a measure few business houses can match.


Tata’s organizational structure is decentralized. Their seven business units are led by

a Chief Executive Officer (CEO) who has typically less than five layers organizational

structure. Decisions are made by employees closest to the situation (gemba). The level of

initiative (and proactiveness) expected from each employee is high, and this is a key

performance indicator (KPI) and employees are consciously motivated to exercise initiative.

Tata’s decentralized structure enables more flexible response to rapid environmental

changes. This has been probably one of the most relevant success factors that has allowed

Tata advancing successfully in a hypercompetitive global market, capitalizing in each

business sector, high dividends, and brand positioning. Tata’s organizational structure

permits to fix better accountability, moving fixed cost to variable. Despite the higher risk

(vs. centralized organizations), Tata’s bad decision-making has not deteriorate or reduce the

speed of Tata’s growth value. The cross unit coordination is mandatory across the company

and at stake for favoritism.

Tata’s business growth has posed a challenge, of a kind never experienced by this

company in the past, resulting in a 45% increase in demand for leadership positions

compared to Fiscal Year 2010. Further, 17% of Tata’s senior leaders are retiring in the next

three years, allowing the next level of the organization to occupy strategic positions. Tata

growth from inside, less than 10% of their executives are from the outside (Kuman, 2013).

This has compounded the challenge of meeting the increased demand in an already

constrained supply situation. The executive committee, headed by the managing director,

owns the development and succession plans for the top positions and reviews availability of

talent across functions during talent reviews and succession planning meetings. Tata’s

organizational design specify the set of organizational tasks, divide these tasks into jobs,


departments, subsidiaries, and divisions to get the work done, and assign authority

relationships to get the work complete in the required time and with required specifications.

Evaluation of Tata’s organizational behavior

Operating across borders and time zones, and integrating diverse management teams

and corporate governance practices do not seem to have modified the Tata imprinting. Of

particular interest is that Tata has not embraced blindly ready-made recipes to resolve the

challenges of multinational management, preferring instead organizational solutions aimed at

fostering mutual recognition and knowledge exchange within the multinational

conglomerate. Another Tata advantage is being run by a very successful minority, the Parsis,

without stirring anger amid the majority of the population, as is tragically common in other

countries (Chua, 2002). This gentle approach may distinguish Tata from counterparts that

produce much noise in their expansion.

Tata’s organization theory follows a global organization theory type, knowledge-

based theory. Tata’s knowledge management research is consistent and cohesive with its

performance and vision. Tata’s knowledge transfer and sharing are becoming increasingly

important to explain dynamic flows of knowledge that enable workflow processes (and

hence organizational performance). According to Nonaka (2004), the knowledge-based

organizational performance model takes into consideration the practical aspects of

knowledge transfer among temporal members, and it has implications on future methods of

transferring knowledge. A good example of the effectiveness of this approach is represented

by the extension of transactive memory theory Tata has included to access members who are

not present in the current team and that can help improve how they manage and train their


knowledge resources. Tata’s knowledge generation and transfer is critical for its continued

success.

Effectiveness of Tata’s organizational structure and design

Tata’s strategy is created to deliver outstanding results. Critical to Tata’s success

include 10 areas: (1) Customer loyalty and long-term retention, (2) Leadership (i.e.,

providing vision, and inspiration, which facilitates employees reaching their full potential,

(3) Organization (i.e. revolutionizing the ways people are hired, trained, evaluated,

compensated, and promoted), (4) Employees (i.e., empowering them on the road to industrial

democracy), (5) Supplier partnership (i.e., improving customer quality, cost and cycle time,

while enhancing supplier’s profits), (6) Powerful new tools (i.e., for achieving quality, cost,

and cycle time breakthroughs), (7) Design (e.g., maximizing customer value and their

“wow” reactions), (8) Manufacturing (i.e., transforming a sunset of obsolescence into a sun-

rise enlightenment), (9) Support services (i.e., converting a black hole of little accountability

in the business white-collar world to service with maximum productivity), (10) Quality of

results (i.e., achieving order of magnitude improvements).

Tata’s organizational design effectiveness can be measured by its ability to adapt and

proactively respond to the ever-changing market. Tata’ has advanced successfully to the

different phases of globalization. Their values remain intact regardless the countries where

Tata does business. Advancing one step farther, Tata’s hard metrics (e.g., On time delivery

(OTD), Defective parts per million (DPPM), Gross Profit Margin (GPM), OSHA Index

(OSH), Operational Profit Before Interest and Taxes (OPBIT), Inventory Turns (IT),

Financial Ratios (FR)), average approximately 2.5 times better than Tata’s competitors’

performance (Bothe, 2003). Despite the level of subjectivism on measuring some of the key


soft metrics, Tata’ is also delivering above-average results. Metrics such as Employees Turn

Over (ETO), Employees Seniority (ES), Number of Training Hours per Year (THY),

Employee Multi-skill Ratio (EMR), etc. represent some of the metrics used by Tata to

monitor the effectiveness of its strategies and culture’ deployment (see Appendix A).

Anticipated effect of changes on organizational leadership and strategies

Because the opening of the Indian economy in 1991, Tata has been subject to global

competition, making it imperative for the group to become competitive in India against the

new entrants. To gain scale, reduce their exposure to the cyclicality of India’s economy,

survive, and achieve a sustainable competitive position in industries globalizing, most Tata

companies looked overseas. Tata’s recent experience is an excellent case for analyzing

‘accelerated internationalization’ (Locke, 2003). As it pertains to a challenger conglomerate

from formerly peripheral areas that goes international to access resources, Tata has been

driven by multiple factors, including the need to access new markets (e.g., in BPO services),

the opportunity to integrate the value chain (e.g., in steel), and the quest for brand control

(e.g., in tea). This strategy proved feasible because Tata possesses strong leadership

combined with vision; can exploit the possibility of leveraging increasingly developed

financial markets in India, a large domestic market, and global liquidity, and reacted fast to

the opening of specific opportunities at given times.

Conclusion

The core values of an organization begin with its leadership, which will evolve to a

leadership style. Subordinates will be led by these values and the behavior of leaders, such

that the behavior of both parties should become increasingly in line. When strong unified

behavior, values, and beliefs have been developed, a strong organizational culture emerges.


Leaders have to appreciate their function in maintaining an organization’s culture. This

would in return ensure consistent behavior between members of the organization, reducing

conflicts, and creating a healthy working environment for employees (Kane-Urrabazo,

2006). Tata’s organization design has allowed this company adapting, and responding

efficiently to its market’ demands. Tata is a global brand, with a decentralized management

who soon realized that growing from inside, developing their own talent, financing with their

own capital sources, and deploying one of the most admirable innovative capacity, has

created a successful and inspiring industrial conglomerate. They have overcome the

challenge of creating expensive distribution networks, management preferred to leverage

distribution centers by a partner, a joint venture, or an alliance. It became clear that the most

effective option was growth through the inorganic route.


References

Bhat, H. (2013). Tata Annual Report. Tata Annual Report, 1, 1-109

Bhote, K. R., (2003). The power of ultimate six sigma. New York: Amacom.

Chua, A. (2002). World on fire: How exporting free market democracy breeds ethnic hatred

and global instability. New York: Doubleday.

Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization

Science, 5 (1): 14-37.

Kumar, N. (2013). Emerging TNCs: trends, patterns and determinants of outward FDI by

Indian enterprises. Transnational Corporations, 16(1), 1-26.

Tripathi, D., & Jumani, J. (2007). The concise Oxford history of Indian business. Oxford: UP

Press .


Figure 1 Tata Organizational Evaluation 1925

Note: Self-assessment performed by I. Rodriguez using Tata’s public reports. Maturity Ratio

38.9%.




58.3%.




80.6%.


Appendix A Tata Group Parametric Overview

Business

Sector

Year of

establishmen

t

Core Activities Annual

Revenuesa

Number of

Employeesb

Steel 1907 Among the top ten global steel

enterprises (Bath, 2013), with a

crude steel capacity of more than

28 million tons per annum. It is

one of the world’s most

geographically diversified steel

producers, with operations in 26

countries and a commercial

presence in 50 countries.

1,329 81,000

Motors 1921 Tata is the world’s fourth-largest

bus and truck manufacturer and

India’s largest automobile

company (Bhat, 2013). It has

manufacturing sites in Europe,

Africa and Asia.

1,657 55,000

Jaguar

Land Rover

1922 Jaguar Land Rover is a business

built around two iconic British

car brands. Jaguar Cars, is one

of the world’s premier

2,170 16,000


Business

Sector

Year of

establishmen

t


Revenuesa

Number of

Employeesb

manufacturers of luxury saloons

and sports cars (Bhat, 2013).

Chemicals 1947 Tata Chemicals is the second-

largest producer of soda ash in

the world (Bhat, 2013). It is

India’s market leader in the

branded and iodized salt

segment as well as urea and

phosphate fertilizers. The

company’s plants are located in

India, the United

States, the United Kingdom and

Kenya.

2,352 5,000

Titan 1946 Titan is the fifth-largest watch

manufacturer in the world and

the largest jewellery retailer

in India, with a product portfolio

that includes watches and

accessories, eye wear, jewellery,

and precision engineering

1,528 6,800


Business

Sector

Year of

establishmen

t


Revenuesa

Number of

Employeesb

products.

Global

Beverages

1957 Tata Global Beverages is a

global beverages company

headquartered in Mumbai. It

owns popular brands such as

Tata Tea, Tetley, Good

Earth, Tata Coffee and

Himalayan mineral water. Tata

Has alliances with PepsiCo and

Starbucks.

1,109 3,000

Power 1912 Tata Power is an integrated,

independent power producer,

with a presence in power

generation, trading, mining,

transmission and distribution.

Headquartered in Mumbai, with

plants in India and a presence in

Indonesia, South Africa, Bhutan

and Singapore (Bhat, 2013).

4,368 4,300

Rallis 1951 Rallis India is the country’s 201 900


Business

Sector

Year of

establishmen

t


Revenuesa

Number of

Employeesb

leading agri-input company,

with pan-India operations, four

factories and a research centre.

Its portfolio has pesticides,

herbicides and insecticides,

along with seeds, plant-growth

nutrients and organic compost,

as well as a range of agri-

services (Bhat, 2013).

Total 14,714 172,000

Note: aRevenues during fiscal year 2011/2012 in billion United States Dollars. bEmployee’s

number is estimated at the end of fiscal year 2011/2012.


Appendix B Tata Diversification Pattern

Industry Indian

Operations

Foreign

Operations

Tata Stake

1992 2007

Textiles 1874-2001

Hospitality 1902 1982 41 28.28

Steel 1907 2005 8 30.52a

Power 1910 16

Cement 1912-1990 n.a.

Soaps and toiletries 1917-1983b

Insurance 1919-1956c 1920

Printing and

publishing

1931-2003

Aviation 1932-1953 2005 30 31.6

Chemicals 1939

Consumer

electronics

1940 22 27.61d

Cosmetics 1952-1998

Air-conditioning 1954 2000 30 32.34e

Pharmaceuticals 1958-1998 2005 81.65

Tea and coffee 1962

Locomotives 1970 47.11


Watches 1984

Financial services 1984

Management

consulting

1991 2005

Auto components 1993 2004 n.a.

Telecom services 1994 n.a. 50.11

Motor vehicles 1998 n.a. 33.43

Retail (general) 1999 n.a.

Car components 2005 n.a. 100 g

Retail (electronics) 2006 n.a. 100

Fresh produce 2007 n.a. 50 h

Real state 2007 n.a.

Note: a Including Tata Sons (24.08) and Tata Motors (4.45). b Tata Cement was sold

to Lafarge in 1999.c Sold to Hindustan Lever. d Nationalized. e Acquisition of Volkart

Brothers (a Swiss trading firm operating in Bombay since 1851). f Including Tata

Sons Ltd. (23.79) and Tata Investment Corporation (2.87). g Including Tata Sons

(19.10), Tata Chemicals (7.31), and Tata Investment Corporation (4.88). h Croma is

owned by Infiniti Retail, a 100% subsidiary of Tata Sons, while Woolworths of

Australia provides technical and sourcing support (Tata Annual Report, 2013).

Ivan f rodriguez organizational evaluation

Business

Transcript of Ivan f rodriguez organizational evaluation