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TATA Business Journey – India’s one of Most Successful Company



Tata: the industrial conglomerate that lies at the heart of India’s success on the global business stage. For almost two centuries, the Tata Group has pioneered multiple industries in India and remains a market leader in most of them.

You’ve probably heard of Tata Motors, their car division, but as you’ll soon find out, their reach extends far beyond that one subsidiary.

In this article, we’ll go through three generations of Tata businessmen to see how they built one of India’s most successful companies.

TATA Journey Begins

The story of Tata begins during the reign of the British Empire. India back then was a huge exporter of cotton, but the brutal regime of the British East India Company left little room for local entrepreneurs to develop.

The poor treatment by the British eventually resulted in a rebellion against them, in 1857, which ended the power of the British East India Company and replaced it with the British Raj.

Now, compared to its ruthless predecessor, the Raj was much more focused on keeping the peace. The Raj didn’t exploit the Indian population quite as harshly and it also invested a lot of money in building India’s first railways for example.

Of course, at the end of the day, the British Raj was still an oppressive colonial power, but at least it finally gave the local population the economic opportunity to develop themselves.

Because India was an exporting country, the first Indian entrepreneurs came from exactly that sector and one of them was Jamsetji Tata.

Jamsetji Tata

Jamsetji Tata

He was the son of an exporter in Mumbai and he graduated in 1858, exactly the perfect time to take advantage of the economic reforms of the British Raj. Because his father’s export business was growing, in 1859 Jamsetji went to Hong Kong to develop a subsidiary there and upon seeing the sheer scale of British commerce there, he realized that the Tata export business had truly global potential.

Over the course of the next decade, he would travel to Japan, China, and Great Britain, establishing a network of distribution for his father’s business. He’d eventually create his own exporting company in 1868 and using the money he made, he started building textile mills of his own, effectively creating a vertically-integrated business.

From the very start, Jamsetji’s philosophy was to find the best practices used across the world and to bring them back to India. In his textile mills, he enacted policies that were virtually unknown to most of India, like offering sickness benefits and pensions to his employees.

But Jamsetji wasn’t content with just the textile industry, he saw the wonders the Industrial Revolution had created in Europe and he wanted to recreate them back home. He began working on a steel production plant in 1901, modeled after the ones he had seen in Germany.

Even more ambitious was his hydroelectric project, inspired by his visit to the Niagara Falls power plant in 1903.

Jamsetji realized the incredible power of tourism and so he also created a chain of hotels, starting with the Taj Mahal Palace Hotel, which even today is one of the most recognizable buildings in Mumbai.

Jamsetji was truly a man dedicated to business and to help people through it. He valued education to the point where he donated land and buildings towards the creation of the Indian Institute of Science, the eminent University of India.

He would not, however, live to see most of his projects realized, because he died while on a business trip in Germany in 1904, leaving the already sizable Tata company to his two sons.

Together they consolidated their ownership into a single holding company, which in turn is owned by the charitable trusts they created for future generations.

Jamsetji’s sons fulfilled many of their father’s ambitions, they oversaw the creation of India’s first steelworks in 1907, India’s first cement plant in 1912 and the first indigenous the insurance company in 1919.

By the time the leadership mantle passed onto the next generation in 1938, Tata Sons were comprised of 14 different companies. This time, however, instead of it going to one of Jamsetji’s grandsons, leadership instead went into the hands of a distant cousin with a very interesting background.

Jehangir Tata, better known as JRD, had been in the company since 1925, but he had been raised in France and was a close friend to the man who made the first flight across the English Channel.

Jehangir Tata (JRD)

Jehangir Tata (JRD)

In other words, JRD was a passionate aviator and in 1929 he obtained India’s first pilot license, so unsurprisingly his first big project at Tata was to develop an airline. In 1932 he created the Tata Air Service, which originally only carried mail, but then in 1938 started doing passenger flights as well, even helping out the British in the Second World War.

TATA Air Services- TATA Business Journey @newsbooklet

TATA Air Services

Now, you’d imagine India’s independence in 1947 would’ve been beneficial to the Tatas, but in reality, the socialist policies of the newly-created government were at odds with private business.

India’s first prime minister saw just how successful JRD had been with his airline and in 1953 he unilaterally decided to nationalize it.

He kept JRD as the airline’s chairman until 1977 and as you can imagine, the company only went downhill from there, drowning in ever-increasing debt.

Of course, JRD would not let politics get in the way of business and so he did his best to grow Tata while avoiding the wrath of the socialists.

He created Tata Motors in 1945, originally with the idea of building locomotives, but in 1954 he branched out into commercial vehicles through a partnership with the German car company Daimler.

TATA Motors first Trucks with Daimler @newsbooklet

TATA Motors

Over the course of his 52 years of leadership, JRD expanded the Tata Group from 14 companies to 95, but to do that he had dramatically lower the ownership Tata Sons had in each one in order to appease the socialists.

In 1969 the Indian government introduced the Monopolies and Restrictive Trade Practices Act, which was essentially targeted at Tata even though they were very far from a monopoly by western standards.

But as JRD expanded the group and lowered its ownership in the individual subsidiaries, he started losing control. Some of his companies just weren’t performing and the man he sent to fix them was this guy: Ratan Tata.

Ratan Tata - TATA Business Journey @newsbooklet

Ratan Tata

He is one of Jamsetji’s great-grandchildren and he joined the Tata Group in 1962. His first major project came in 1971 and it was pretty difficult: Ratan was given charge of a struggling Tata company known as NELCO, which in the 1950s was India’s biggest producer of radios, but just twenty years later it had fallen to a 3% market share.

Ratan’s focus was on technology and the future, so instead of trying to salvage the radio, he instead funded the development of new products like satellite communications, which restored NELCO in the 1980s and made Ratan the apparent successor of JRD.

Ratan claimed leadership of the Tata Group in 1991, right as a wave of economic liberalization swept across India.

The Socialists lost power and India finally joined the global capital market, but this presented a big threat to Tata. Up until now, it had operated in a very protected economy, which was suddenly open to competition from foreign companies.

Worse yet, JRD had let Tata become extremely decentralized, so it would be very slow to adapt to new competitors.

Ratan had no choice but to re-establish ownership over all the Tata subsidiaries and that didn’t come cheap. He sold 20% of Tata Sons, the holding company, and used that money to buy shares in the Tata subsidiaries, especially Tata Steel and Tata Motors.

He then reorganized all hundred subsidiaries into seven sectors, establishing a framework along which he could actually control them. But just wielding power isn’t enough to turn around a struggling business and in the 1990s pretty much every Tata company was losing ground to international competitors.

Ratan’s answer, however, was brilliant: he started acquiring foreign competitors and absorbing them into the Tata Group, effectively buying all their talent and supply chains and experience in order to strengthen his business back home in India while also expanding internationally.

Ratan’s buying spree began in the year 2000 when his beverage company, Tata Tea, acquired the Tetley company from Great Britain.

Over the next decade, Ratan ended up acquiring hundreds of companies for pretty much every subsidiary in the Tata Group.

Most notably, he purchased the European steel titan Corus for $12 billion in 2007 and then Jaguar Land Rover for $2 billion in 2008.

Tata Acquired Jaguar - TATA Business Journey @newsbooklet

Tata Acquired Jaguar

As you can imagine, the international buying spree has been paying dividends for Tata and today the majority of their revenues actually come from outside of India.

What’s even more beautiful is that the majority of Tata subsidiaries are actually public companies whose shares you can purchase on the stock market in India.

Stay tuned with us. We keep bringing this kind of content for you.

Source: Business Casual
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Origin of McDonald’s



McDonald’s is a real estate business. That might sound surprising: After all, who hasn’t at least once in their lifetime indulged in the glorious experience that is a Happy Meal? You might know McDonald’s as that fast food chain that sells hamburgers and fries, but trust me, it goes way deeper than that. That’s why we’ll be looking at the world’s second-largest restaurant chain, McDonald’s.
Few things sound as Irish as the name McDonald. It’s an interesting name: the ‘mac’ part means son, while Donald comes from a Gaelic name that means ‘Ruler of the World’. Very ominous, right? The two ‘world-rulers’ that we’re interested in are Richard and Maurice McDonald, two brothers from New Hampshire.
In the 1920s they moved to California, where they started a movie theater and a hotdog stand, but they eventually went bust when the Great Depression came around. Their first big success came in 1940 when they opened a barbecue joint in San Bernardino.
Now at the time, virtually all restaurants were mom-and-pop establishments, with their own unique taste and cooking methods. Drive-ins with roller skating waitresses were all the rage back then, but they weren’t particularly efficient. You had to wait half an hour to get your order, and half of the time they got it wrong. The McDonald’s barbecue was no different, and although it did turn a profit, the brothers knew they could do better.
They realized that most of their income was coming from just three products: hamburgers, french fries, and coke, and after running the place for 8 years, the brothers decided to make a radical makeover. They dropped most of their menu to focus on their best sellers, and then they redesigned the entire kitchen around that.
The cooking process started to look like an assembly line, which allowed the brothers to fill customer orders in as little as 30 seconds. They abandoned the drive-in concept in favor of a walk-up counter, and they stopped using
cutlery and dishes entirely, replacing them with disposable paper packaging. In an instant, their restaurant became a sensation, drawing in attention from across the country.
One of the people they attracted was the guy, Ray Kroc. He was a natural-born hustler, who at the age of 15 had lied his way into serving as a Red Cross ambulance driver during World War 1. Interestingly enough, he served alongside Walt Disney in France, but they didn’t really keep in touch after the war. Like most people from the postwar years Ray had worked dozens of jobs: jazz pianist, radio DJ, paper cup salesman, you name it.
In the early 1950s, he was traveling cross-country trying to sell expensive milkshake machines, but he wasn’t really doing a good job at it. One day in 1954, however, he got an order for 8 of them, and it was from none other
than the McDonald brothers. When Ray made his way to San Bernardino, he fell in love with their restaurant and immediately offered to franchise it.
By that point, the McDonald brothers had already opened over 20 franchise locations, but none of them were doing as well as the original restaurant: The lack of oversight made maintaining quality impossible. The brothers decided to give Ray a shot, and boy did deliver.
He handpicked only the best franchisees and ran his operations like an army drill. In the span of just 6 years, Ray built 100 McDonald’s restaurants, while the McDonald brothers were basically managing their own joint. Ray eventually grew tired of them: they’d reap 0.5% of all sales for doing nothing while roadblocking Ray’s suggestions for improving the franchise.
To cut them out, Ray figured out a brilliant strategy. He’d buy the land where all future restaurants would be built upon, and then he’d lease it to his franchisees. This way Ray got to keep almost all of the profits from the business while leaving the McDonald brothers empty-handed.
Of course, the brothers weren’t very happy at that, but there wasn’t anything they could do, and in 1961 they finally agreed to sell their franchise to Ray for $2.7 million. With the brothers out of the way, Ray stepped on the accelerator, implementing all the changes he had wanted like redoing the logo and creating a mascot.
He also expanded the menu, adding the Filet-O-Fish in 1965 and the Big Mac in 1968. That same year Ray celebrated opening store #1000 and adopted the modern iteration of the golden arches logo. Throughout the next decades, McDonald’s would keep expanding, and not just in the US. They pioneered breakfast fast food with the introduction of the Egg McMuffin in 1972. They also added stuff like Chicken McNuggets and the Happy Meal, which would eventually make them the world’s largest toy distributor.
By 1988 they had 10,000 restaurants, and although Ray was no longer alive, the company kept on growing without him. Thanks to their iconic Hamburger University, the McDonald’s franchise had some of the best-trained managers in the fast food industry.
This allowed them to stay one step ahead of competitors like Burger King and Wendy’s. Since then, McDonald’s have continued expanding their menu into what we know today.
In 2006 the franchise underwent its first major redesign since the 1970s, adopting the so-called “Forever Young” design, which features dining zones with comfortable sofas and armchairs.
Interestingly enough, today McDonald’s isn’t the world’s’ largest restaurant chain: That title goes to Subway, who have almost 45 thousand locations compared to 37 thousand for McDonald’s. The company itself owns only 15% of them, the rest being franchised out.
The restaurants ran by the company account for 2/3rds of its revenue, but that’s not the whole story. In reality, it costs way more to run your own restaurant than it does to sit back and collect rent. In 2014, for example, company-operated stores generated $18.2 billion, but McDonald’s got to keep only 2.9 billion. In comparison, out of the $9.2 billion coming in from franchisees, the company kept 7.6, a stunning 80%.
So even though McDonald’s seems to be flipping burgers, in reality, they’re playing Monopoly instead.
So this was all how the McDonald’s restaurant chain started.
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Why Windows Phone Failed



Why Widows Phone failed
Apple unvield iPhone in 2007

Apple unveiled iPhone in 2007


Microsoft unveiled first Windows phone in 2010 at MWC

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Why is Norway Richer than UK (United Kingdom)?



Great Britain and Norway: the two countries with the biggest reserves of oil in the North Sea. This key strategic resource has been a blessing for Norway, but its impact on the UK has been much more questionable.

In this article, we’re gonna look at how the discovery and exploitation of the same resource resulted in drastically different effects on these two European countries.

Up until the Second World War, digging for oil on the coasts of Western Europe was a futile endeavor. Pretty much every country had tried it, of course, but the numerous wells that had been dug produced less than a hundred barrels per day on average: completely insignificant compared to the vast oil fields of the Middle East.

The North Sea’s oil wasn’t discovered until the 1960s, and unsurprisingly before that Norway wasn’t nearly as wealthy as it is today.

Before the Second World War, the backbone of the Norwegian economy was fishing and shipping, which of course they were very good at having had centuries of experience.

The British, meanwhile, were busy doing their whole empire thing. As the leading naval power in the world, they relied heavily on oil, but one of the major problems with that was the fact that Britain didn’t have a lot of reserves itself.

Instead, it had to rely on imports, which is why it supported the global expansion of Shell and BP, especially in the Middle East.

During the first half of the 20th century, no one thought the North Sea would be a worthwhile place to extract oil. It was a dangerous and difficult task to even try to search for it there, which is why the extent of its reserves was largely unknown.

Why UK lost its oil wealth?1

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In 1958 the Norwegian government itself rejected the possibility of finding oil, but just one year later a monumental discovery changed the outlook of the entire industry.

In the northern part of the Netherlands, Shell had been looking for oil. They didn’t find any, but in one of their wells, they found natural gas at large quantities. Nothing groundbreaking so far, but when they dug a few more wells in the area they discovered more gas at the same depth; in other words, they had stumbled upon a giant gas field.

As it turns out, the one they found was the largest one in Europe, but what made it truly significant was its implication for the North Sea.

You see, the geologies of both areas were very similar so finding gas in the Netherlands meant that there might be oil under the North Sea.

The oil companies scrambled and began their first explorations in 1962.

Norway didn’t start giving out licenses until 1965, but they were in no rush.

The stormy weather and still developing technology meant that whatever oil could be found was going to be very difficult to extract. The drilling rigs had to withstand 15-meter waves and winds of up to 110 km/h, so unsurprisingly it took a few years and several deadly accidents before the oil could start flowing.

The first major oil discovery was made in 1969 on the Norwegian side.

Then, in a mad streak of luck, the British discovered the largest field in the entire sea on their first try just a year later.

In 1975 Queen Elizabeth herself would inaugurate the flow of oil from that field and this gesture symbolized a new opportunity for both Great Britain and Norway to benefit from this new resource.

But the way both countries approached their newfound wealth was radically different. The Norwegians could afford the luxury of being patient. Their political situation was one of stability: their leading Labor party had been the largest one since 1927 and is the one responsible for the welfare state and their high taxes.

In other words, they had no pressure to immediately spend the oil profits to stimulate the economy in the hopes of ensuring their reelection.

Re-elections UK

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On top of that, the government’s attitude towards private companies was aggressive: they only allowed a 50% ownership stake in any given well, with the rest being owned by the state itself.

In 1972 the Norwegians went a step further, creating an oil company (STATOIL) entirely owned by the state, which would then compete directly with foreign companies.

Norway was effectively double dipping: not only did it tax the oil industry excessively, but it also owned a big chunk of it. But what’s really smart is what the Norwegians did with all that money: they not only saved it but also started investing it.

In 1990 they created a special fund for exactly this purpose whose growth rate ever since has been nothing short of exceptional.

They put most of their money in stocks and bonds, with a dash of real estate sprinkled on top, and the results speak for themselves.

The Norwegian fund is the largest sovereign wealth fund in the world and it even passed a trillion dollars in market value in September 2017.

And keep in mind, that’s a trillion dollars spread out over just 5 million people. So by all accounts, the Norwegians handled their oil boom perfectly. But the same cannot be said for the British.

The surge of oil profits for Britain coincided with the rise of Margaret Thatcher.

She came into power in 1979 and instead of setting up a fund to invest these new profits, she used that extra money to make radical reforms to the British economy.

She started a wave of mass privatization of companies that were otherwise profitable and made large cuts to income taxes in order to revitalize an otherwise stagnating economy.

Her policies were successful in that regard and resulted in large economic growth, but these benefits were temporary.

Unsurprisingly, when the revenues from oil started declining, Margaret Thatcher’s house of cards came crumbling down.

In essence, the UK and Norway took opposite approaches to their oil money. The British blew it on tax cuts, while the Norwegians invested it and grew it to the point where this tiny nation of 5 million people is the largest shareholder in Europe.

Norway is a perfect example of why investing is smart and that’s a lesson we can all use.

Norway the Perfect Ex. How to Invest

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Source: Business Casual
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