Group level strategy: An in-depth analysis of the transformation of the Tata, Birla and Mahindra groups

Abstract

In India, publicly listed companies of just about 11 Indian business houses were reported to have a combined market capitalization of about US $ 300 bn, making up nearly 30% of India’s total market capitalization. This report analyzes three of the largest business groups in India: the Tatas, the Aditya Birlas and the Mahindras – all of which were begun in the preIndependence era, but have followed different growth trajectories to become what they are today. There are certain similarities that these groups share which include value creation through group affiliation. In addition, in the post Liberalization era, the leaders of these groups were forced to restructure their groups to make them competitive. The product and geographic diversification strategies of these groups also throw up several interesting aspects. The Tatas are the current leaders who had an early mover advantage. They rate high on the product and geographic diversification scale with acquisitions to seek out strategic assets. The Aditya Birla group has continued to remain focused primarily on its commodity businesses like cement and aluminium though it is currently trying to move towards knowledge sectors of telecom, IT and retail. The motivation of its internationalization strategy is to access cheap raw materials and play across the value chain. The Mahindras are the most interesting group with the highest growth rates among the 3 business groups. 85% of its revenues come from its top 3 businesses – vehicles, IT and trade. It follows the OLI strategy for internationalization particularly in the auto segment.