International Business - Right vs. Wrong WayCase Study

Pages: 6 (2082 words)  |  Style: Harvard  |  Sources: 0

Custom Writing



Tata & Jaguar

In short, Tata probably should not have bought the Jaguar/Land Rover consortium. However, they have ended up doing so and they have made it work. The situation was entirely too complex and the conditions of the acquisition were entirely against what Tata could or should be trying to take on. For example, Tata is a big player in India and other areas that rely on vehicles that are rugged, at least somewhat sturdy and reliable and that conform to the standards of the areas they operate in. There is a huge difference between making a car that meets the standards of the Koreas or India and those that meet the standards of people that buy Jaguars and Land Rovers. The case study talks about the amount of debt present, the demands from the unions regarding what can or will happen as part of any takeover and the cultural divide between East and West are just a couple of the concerns mentioned in the case study at one point or another. In looking at the synergy/M&A PowerPoint for this class, they entered a geographical market in a way that allowed them to share resources and increase their sales volume by encompassing a wider geographic area. Obviously, they were largely outside the Western market before the acquisition. However, they have entered it and they are doing quite well. Also per the PowerPoint, there has to be a defined period of combining unlike companies together and then there has to be a progression past that point and Tata apparently did that. Speaking from the position of not knowing what Tata actually did, it is clear that Tata would have to go through an adjustment period with the acquisition as the cultural differences, the business factors and so forth all have to be melded and shaped together in the right way. Doing otherwise would lead to what OBI went through in China (Bajaj, 2015).

As for the other Tata question, it asks about the globalization efforts and outcomes for Tata Group and their subsidiaries other than Tata Motors. The part of the company that will be focused on will be Tata Tea. There are clearly some potential missteps or at least blind steps being made given that there would be a "euphoria" when an acquisition was made but then a "what now" or "what's in it for us" situation about two years later. This runs counter to the combination/post-combination pathway mentioned in the PowerPoint for this assignment. This smacks of a situation where not enough forethought and prior analysis are taking place. Indeed, acquiring a company goes against the usually preferable route of organic growth. However, a company in India that wishes to establish a foothold in the United States or in other parts of the world will have to do so using the acquisition of a company rather than starting from scratch. Of course, this leads to the reasons why Tata probably did what they did including entering a market via an established player and then making it their own. However, if this does not involve profits in the not-so-distant future (if not right away), there should be a pause whereby it is asked what the desired endgame shall be and how long it shall take. It is clear that Tata Tea's targets and acquisitions, which included Tetley, were chosen in a pre-defined and measured way. Indeed, Tetley was the only "major player" that had not already been absorbed by a global conglomerate. In other words, Tata was doing the same thing as the other conglomerates had done prior but they were "late to the party," so to speak. However, there was at least still some merger and acquisition room for them to get into the market and they did so (BBC, 2000).

OBI Questions

As far as OBI goes, the opportunities and threats that exist for OBI in China are fairly easy to see. As noted in the case study, the way in which materials and such are bought, sold and otherwise dispensed with in China is quite different than it is for other parts of the world. Namely, the way it is done in Germany (OBI's home country) is quite different than it would be in China. Home Depot and Lowe's, the home improvement mainstays of the United States, would encounter much the same issue and for much the same reason. One major difference between the East and the West in terms of home improvement is that a staggering 90% of home improvement materials in China were sold through supermarkets. When comparing to, let us say, the American companies just mentioned, that would mean that most materials would be bought at stores like Wal-Mart and Target. While those stores do sell some home improvement goods, it is a mere fraction of what Lowe's and Home Depot would offer. As such, the market structure of China as compared to Germany was a risk. Home Depot learned this lesson in 2012. A major opportunity is the fact that much of Europe is contracting or stalling due to high tax rates and other issues. On the other hand, China is growing economically and fiscally at a very fast rate. This means that the opportunity to get revenue and sales is extremely pronounced in China as compared to much of Europe right now. This is huge opportunity but a threat is doing it in a way that is not profitable or lasting. For example, if OBI entered the market like the aforementioned Tata and acquired a supermarket that sold a lot of home improvement goods, the chances that they would do well are quite high. However, OBI seemed to be doing a different path and starting up stores like seen in Europe and the United States. This misstep seemed to have been proven by the fact that people who shopped the store were there as tourists rather than consumers. The required integration during the combination phases mentioned in the PowerPoint clearly did not happen properly nor were they properly planned in advance (Biesada, 2012).

As for the reason why Li suddenly disappeared and resigned, it is probably because Li realized he was in over his head and had taken a huge misstep. As noted above, the marketplace is entirely different between Europe (OBI's home) and China. It also appears that OBI seemed to try the European approach in China and it seemed to have failed miserably. Of course, OBI needs people to buy their wares and not just window shop. Best Buy, as an example, is experiencing much the same thing in the United States. Best Buy is the only national chain left since Circuit City went down. There are regional electronics retailers like Micro Center, HH Gregg and Fry's. However, Best Buy is the only national presence left. However, they are getting eaten alive by Amazon and other online retailers. In many ways, Best Buy is being treated like OBI in that people are looking and shopping but they are not actually buying anything at the store. People will scope out a television at Best Buy but buy it online at Amazon. While that is probably not what is going on with OBI China in terms or why the customers are or are not there. However, they have to be selling good to get revenues and make profits. OBI seemed to see the writing on the wall and started to hire local managers rather than people from other countries. However, it would seem that it was not enough to cancel out the massive cultural, economic and other conditions that existed in the area. What perhaps made things worse is that Maus came in after Li left and promptly undid the changes made to ingratiate the firm to the Chinese standards and commonalities in the area. The blowback from the local Chinese workers was swift and vicious, as made clear by the case study. This is a perfect example of "significant resistance" and "possible value destruction" as mentioned on the synergy PowerPoint (LaMonica, 2014).


As for general feelings and reflections, the team that I worked with has done quite well. Everyone has been allowed to contribute their own part and piece to the overall project and this thus allows the overall product and subject of discussion to be improved and added to incrementally. Many people that work in groups get snippy or combative about people with differing ideas and so forth. However, when there are consequences involved that impact the group such as a grade or the failure of a business project (if not the business itself), then this matters greatly. The group that I worked within seems to get that idea and we reacted accordingly.

There is not a lot of conflict and there does not seem to be an issue with people taking credit for ideas and outcomes because people often do not remember who had what idea and when. Indeed, this is an indication that people… [END OF PREVIEW]

Download Full Paper (6 pages; perfectly formatted; Microsoft Word file) Microsoft Word File

Global Business Current Business Events and Their

Ethical Challenges in International Business

Business There Are a Number of Different

International Cultural Adjustments: Business in China and

Business - Case Studies -- Exxon Strategic

View 998 other related papers  >>

Cite This Paper:

APA Format

International Business - Right Vs. Wrong Way.  (2015, March 13).  Retrieved September 23, 2017, from

MLA Format

"International Business - Right Vs. Wrong Way."  13 March 2015.  Web.  23 September 2017. <>.

Chicago Format

"International Business - Right Vs. Wrong Way."  March 13, 2015.  Accessed September 23, 2017.