Jaipuria Institute of Management, Lucknow

SMGT IIASSIGNMENT

TATA – DAEWOO Cisco systems

SUBMITTED TO:

Prof. V.V. RatnaFaculty JIML

SUBMITTED BY:

Prashant SaxenaCft08_102

PGDM 2008-2010

Write a note on the implementation of integration strategy of TATA & Daewoo.

Tata Daewoo Commercial Vehicle Company

The Tata Daewoo Commercial Vehicle Company (TDCV) is South Korea's second largest manufacturer of medium and heavy-duty trucks. Formerly part of the Daewoo Group, the company was acquired by Tata Motors in 2004. With the acquisition of TDCV, Tata Motors has grown to become the world's fifth largest manufacturer of heavy commercial vehicles. Established in 1983 as the Daewoo Motor Company, the business was spun off as Daewoo Commercial Vehicle Company in 2002. TDCV trucks are distributed locally through Daewoo Motor Sales Company and are exported to over 60 countries worldwide, including South Africa and China and countries in the Middle East, Southeast Asia and Eastern Europe.Areas of business TDCV has a product portfolio of over 75 types of trucks in the commercial vehicles segment. Its product range includes flat beds, dumpers, mixers, tractors, arm-roll trucks, refrigeration trucks and special-purpose trucks.Location The company’s headquarters and plant are in Gunsan, South Korea. It has an office in Incheon and sales offices across the country

TATA MOTORS:

The Tata Group's history can be traced back to 1868 when Jamsetji Tata, established a textile mill at Nagpur in Maharashtra. The Group set up the first steel mill in the country, as also the first luxury hotel and the first airlines service in India. By 2004, Tata Group's turnover was $14.25 billion, contributing 2.6% of the country's gross domestic product. The Group has 91 companies under its fold with operations spanning varied sectors like Engineering, Materials, Energy, Chemicals, Consumer Products & Services to Communications and Information Systems. Tata Motors is the biggest company of the group and ranks as the fifth largest commercial vehicle manufacturer in the world.The history of Tata Motors, earlier Tata Engineering & Locomotive Company Ltd. (Telco), can be traced back to the early 1920s. The Telco plant at Jamshedpur, originally belonged to Peninsular Locomotive Company (Peninsular), which was established in 1923.In 1927, Peninsular was taken over by East India Railway to manufacture passenger carriage underframes for the Indian Railways.In 1945, Tata Sons purchased the plant from the Government of India and used it to manufacture steam locomotive boilers and other engineering products, under the name Telco. The company also entered into collaborations with Marshal Sons (UK) to manufacture steam road rollers, and with Krauss Maffei (West Germany) to manufacture steam locomotives.In 1954, the company entered into a technical collaboration with Daimler-Benz to manufacture automotive vehicles.The association with Daimler-Benz helped the company build up a strong in-house R&D center (Engineering Research Center-ERC) at Pune, Maharashtra. By 1961, it was manufacturing construction equipment. Over the years, the company acquired up-to-date technology from several collaborations and co-operation agreements with international companies. In 1961, Telco produced its first crane in collaboration with M/s Pawling & Harnischfeger (P&H), USA. In 1966, it acquired Investa Machine Tools Co and set up a machine tools division at Pune. In the same year, it started its Press Tool Division and vehicle manufacture facilities at Pimpri and Chinchwad (pune).

Cultural due diligence

The matching of the core values is an important aspect of the post-acquisition due diligence. The Tatas do something called a cultural due diligence, which is nothing but a lot of applied common sense. The idea is to ensure that the chemistry is right between the company that is sought to be acquired and the company acquiring it. For example, when Tata Steel acquired NatSteel in Singapore, the code of conduct of the Tatas and NatSteel were put together and several sessions held to communicate what was acceptable behaviour. "As you go into emerging markets, the world ceases to be black and white. And in those shades of grey, acquisition principles can be lost," Mr Gopalakrishnan said.

TATA Group on BCG Matrix-

Acquisition challenges

The Tata group with revenues in 2005-06 of Rs 97,000 crore has operations in over 40 countries. The group companies have been acquiring firms overseas — in fields as diverse as automobiles to steel to information technology to hotels. Each overseas venture, be it an acquisition or a greenfield plant, brings with it challenges — that of integrating the operations with the parent company's goals, communicating the vision to the employees of the acquired company, making the local population comfortable with the intentions of the company doing the acquisition and getting the employees to become part of the society they are in.

The challenges are not just managerial, but cultural too. That is why a group like the Tatas conducts what it calls a cultural due diligence — different from the financial due diligence that precedes any acquisition — to ensure that the company to be acquired fits in with the group's overall goal.

This was the thrust of Mr Gopalakrishnan's speech at the "Captains of Industry" conference at the Global Entrepolis at Singapore recently. Dealing with the theme "Entering new markets and becoming international — the Tata experience," he summed up the lessons the Tata group had learned from its overseas operations into five. They are: The connection between the domestic core business and the overseas expansion should be clear, defined and pursued with persistence; the post-merger integration and processes must be consistent with the strategic intent of the acquisition; the absolute core and non-negotiable values of the acquiring company should be made explicit to the acquired company; the positioning of the business of the host country, positioning into society, the economy and with decision makers should be harmonious with the actual action on the ground; and, it is important to engage with the society in which the business is located, irrespective of whether it is a rich country or a poor nation.

Tata Motors, a group company, acquired Daewoo Commercial Vehicles Company, Korea's second largest truck manufacturer, in 2004. Any acquisition must look for an equation beyond the obvious. The fit between the two companies seemed perfect. India was a market for low horsepower trucks because of the way its highways had

developed. Korea, on the other hand, was a market that demanded high horsepower trucks due to the built-up infrastructure. "One of the advantages was we could give something to the acquired company and take something from it as well," pointed out Mr Gopalakrishnan. Heavy commercial vehicles designed by Tata Daewoo Commercial Vehicles Company, as the Korean company has been renamed, have been introduced in India while medium commercial vehicles — a segment in which Daewoo did not have any product on its own — designed by Tata Motors have been launched by the Korean subsidiary. "It is the self-evident things that one tends to miss while doing cross-border acquisitions."

There are two broad models of acquisition — the prescriptive and the adaptive. In the former, more an Anglo-Saxon way of dealing with acquisitions, the acquiring company takes all the decisions — where to have outlets and how many to have, for example. The latter model - the adaptive approach — is not one that the Western world is used to. "In an adaptive model, you have entered the market with an idea and you have to develop that idea and figure out how is that you can make the idea deliver economic value."

For example, Tata Chemicals took over a British company Brunner Mond. The two companies sat together and discussed how the best practices could be shared. Among other things, this resulted in cost savings for the two companies, which, more or less, paid for the acquisition itself — a bonus as far as the original intent of the acquisition was concerned.

Levels of engagement

There are four levels of engagement when a company enters a foreign country — explore, pioneer, settle down and cultivate, and harvest. In some instances, a company can jump stages depending on the kind of entry, especially if it is an acquisition. The positioning of the business in the host country should be harmonious with the actions of the company on the ground.

The Tata group has gone through these four stages in its international operations, which started more than four decades back. But, it has also been able to avoid the pioneer stage completely, thanks to acquisitions. Again, when Tata Chemicals acquired Brunner Mond, the acquisition gave it a company that had a 60 per cent market share and access to customers, something that would have taken Tata Chemicals a long time to acquire. Tata Chemicals, therefore, had to behave simultaneously in different modes in different countries, which is complicated and difficult, but the right thing to do.

Engaging with society — the last of the lessons that Mr Gopalakrishnan cited as the Tatas' learning experience — is something that the Tata group companies have been quite used to. The involvement can be at different levels — interacting with society on specific issues or a much deeper engagement. Tata Consultancy Services, the information technology company in the Tata group, has several hundred employees working in the US. When Hurricane Katrina struck the US, the TCS employees working in and around the Louisiana area collected about $100,000 which the company matched.

Strategy implementation:

1. Building trust and credibility2. Integration via use of

the BEBP compliance plan, the balanced scorecard (BSC) and the Tata Business Excellence Model (TBEM). IT related processes such as the enterprise resource planning system SAP, computer-aided design (CAD) and product lifecycle management (PLM)

3. Tata Code of Conduct acceptance at Daewoo

It was in 2004 that Tata Motors achieved a coup with the acquisition of Daewoo, a behemoth brand in its own right. The wheels were set in motion when investment consultant KPMG approached Tata Motors with a proposal; an international company was up for sale. Intrigued, Tata Motors set out to learn more, and discovered that the company's work culture, products and processes were admirable. Ravi Kant, managing director, Tata Motors, says, "We were keen on the acquisition, as it would give us an opportunity to get into a fairly advanced market. There were also tremendous synergies between the two companies."

Equally enthused, R. S. Thakur, VP, finance, Tata Motors, says, "Daewoo had contemporary manufacturing facilities and products, which fitted into our portfolio for expansion". What was most inspiring was that the company had a market share of 30 per cent against rivals like Hyundai and Volvo, in spite of being under court receivership.

The Enterprise Process Model

Seung-Won Lee, GM, production, says, "Initially our people were afraid of joining the Tata Group. Now, thanks to their international business, our export volumes have increased. Our members feel that if we had not joined the Tatas, our future would have been unclear." Sang-Joon Lee, deputy GM, business planning team, agrees. "This is the first time since 2002," he says, "that we have made a profit."Fears of being short-changed regarding the latest technology also came to naught. Today the Koreans willingly admit the fallacy of their belief that an American or European company would have been better. The increase in TDCV's exports, following the takeover, is also seen as a good sign. Woung-Jung Choi, manager, business planning team, says, "The Tatas have a good reputation among the people in India. In Korea, we have big companies, but the Korean people do not like them. I am also impressed with the family history of the Tatas and the fact that Jamsetji Tata is the father of India's economic development."The parent company also gained from the transaction. Thanks to the merger, Tata Motors was able to fast-forward its plans. Says Mr Kant, "Tata Motors has been working on a large truck for global markets, to be launched in 2008-09. The merger has given us the opportunity to introduce the Daewoo truck by the end of this financial year. We also now have a base to build our own world truck, instead of building from ground zero."The merger also meant "the opening up of markets that we had no presence in," says Mr Singh, adding, "we succeeded in reducing our development cycle time as well as widening our product base." The merger has also enhanced the image of Tata Motors worldwide, opening up new avenues for business.

Process Approach – EPM (derived from APQC processes and TBEM model).

17

100

Value Chain & Value System

What type of organizational structure is visible in CISCO? What are the advantages and pitfalls of such a structure?

CISCO Systems

Cisco Systems, Inc. is an American multinational corporation that designs and sells consumer electronics, networking and communications technology and services. Headquartered in San Jose, California, USA, Cisco has more than 65,000 employees and annual revenue of US$36.11 billion as of 2009.Cisco's stock was added to the Dow Jones Industrial Average on June 8, 2009. It replaced General Motors which had filed for Chapter 11 bankruptcy.In fiscal year 2009, Cisco realized $13.50 billion in network services sales (mostly from “SMARTnet”), of which $7 billion was revenue for 2009 and the remaining $6.50 billion is documented as deferred revenue for multi-year SMARTnet service contracts. Network maintenance services now accounts for 20% of Cisco's annual revenue—an all-time high.

Corporate history

Len Bosack and Sandy Lerner, a married couple who worked as computer operations staff at Stanford University, later joined by Richard Troiano, founded Cisco Systems in 1984. Lerner moved on to direct computer services at Schlumberger, moving full time to Cisco in 1987. The name "Cisco" was derived from the city name, San Francisco, which is why the company's engineers insisted on using the lower case "cisco" in the early days. For Cisco's first product, Bosack adapted multiple-protocol router software originally written some years before by William Yeager, another Stanford employee who later joined Sun Microsystems.While Cisco was not the first company to develop and sell a router,[4] it was one of the first to sell commercially successful routers supporting multiple network protocols.[5] As the Internet Protocol (IP) became widely adopted, the importance of multi-protocol routing declined. Today, Cisco's largest routers are primarily used to deliver IP packets and MPLS frames.In 1990, the company was listed on the Nasdaq stock exchange. Lerner was fired; as a result Bosack quit after receiving $200 million. Most of those profits were given to charities and the two later divorced.Cisco acquired a variety of companies to bring in products and talent into the company. Several acquisitions, such as Stratacom, were the biggest deals in the industry when they occurred. During the Internet boom in 1999, the company acquired Cerent Corporation, a start-up company located in Petaluma, California, for about US$7 billion. It was the most expensive acquisition made by Cisco to date, and only the acquisition of Scientific-Atlanta has been larger. Although not every acquisition is successful, Cisco has succeeded more frequently than its competitors in integrating and growing the revenue of its acquisitions.[citation needed] Several acquired companies have grown into $1Bn+ business units for Cisco, including LAN switching, Enterprise Voice over Internet Protocol (VOIP), and home networking.In late March 2000, at the height of the dot-com boom, Cisco was the most valuable company in the world, with a market capitalization of more than US$500 billion.[6][7] In July 2009, with a market cap of about US$108.03 billion[8], it is still one of the most valuable companies.[9] CSCO was voted stock of the decade on NASDAQ. The company's 7500 Series router was voted 3rd in the product of the decade 1990-2000 behind the Mosaic web browser and the Novell LAN manager.Cisco has made inroads into many network equipment markets outside routing, including Ethernet switching, remote access, branch office routers, ATM networking, security, IP telephony, and others. In 2003, Cisco acquired Linksys, a popular manufacturer of computer networking hardware and positioned it as a leading brand for the home and end user networking market (SOHO).The company's first CEO was Bill Graves, who held the position from 1987 to 1988.[10] In 1988, John Morgridge was appointed CEO, and was succeeded in 1995 by John Chambers. The Corporate Headquarters is on East Tasman Drive in San Jose, California, between Zanker Road and Cisco Way.The company was a 2002-03 recipient of the Ron Brown Award.Cisco's vision is "Changing the Way We Work, Live, Play and Learn." Cisco's current tagline is "Welcome to the human network."

Networked organisation:

It is mentioned in case Cisco Systems is shown to be a very agile organisation with its focus on product development and customer relationships as its two core activities.They have ;

semi-permeable boundaries: for continuous flow of information across SBU, corporate HQ and resource suppliers.

Focus on core process and technology and indulge into outsourcing the value drainers. Alliances and partnerships.

Characteristics:As organizations restructure to respond to their environment, there has been a growing recognition of the need for new kinds of organizational structure. The Networked Organization is one such response. It has been defined by Lipnack and Stamps as one:"where independent people and groups act as independent nodes, link across boundaries, to work together for a common purpose; it has multiple leaders, lots of voluntary links and interacting levels."

Other types of organization have been described, such as the lattice organization, the spider's web, the holonic enterprise and the virtual corporation. All describe new ways of organizing which:

gain authority not from a hierarchy but from individual's recognized knowledge and skill link people and teams across conventional boundaries (e.g. departments and geographies) have members and structures that adapt to changing circumstances where management is a sense of mutual responsibility vs. following orders explore ways to work effectively vs. following pre-defined processes readjust or disband teams as needed and therefore exhibit characteristics of innovation, resilience, and self-

management.

The notion of a network implies nodes and links. The nodes can be people, teams or even organizations - networks operate at many levels. Common examples are distributed geographic teams in large organizations, or small organizations operating as networks to compete against large corporations. The links are the various coordination and "agreement" mechanisms. In a network, high degrees of informal communications (both face-to-face and over electronic networks) achieve success where formal authority and communications in hierarchical organizations often fail. Two way links and reciprocity across the links are what makes networks work.

Network organizations are defined by elements of structure, process, and purpose. Structurally, a network organization combines co-specialized, possibly intangible, assets under shared control. Joint ownership is essential but it must also produce an integration of assets, communication, and command in an efficient and flexible manner. Procedurally, a network organization constrains participating agents' actions via their roles and positions within the organization while allowing agents' influence to emerge or fade with the development or dissolution of ties to others. As decision-making members, agents intervene and extend their influence through association; they alter the resource landscape for themselves, their networks, and their competitors and in the process can change the structure of the network itself. Then, a network as an organization presupposes a unifying purpose and thus the need for a sense of identity useful in bounding and marshaling the resources, agents, and actions necessary for concluding the strategy and goals of purpose. Without common purpose, agents cannot discern either the efficacy or desirability of association or know whether actions are directed towards cooperative gains. These three design elements -- co-specialized assets, joint control, and collective purpose -- distinguish network organizations from centralized organizations, inflexible hierarchies, casual associations, haphazard societies, and mass markets

Benefits of the Networked Organization Being closer to the customer - there is rapid communication between those at the sharp-end and those who

support them. Maximizing the knowledge potential of an enterprise; network members tap into expertise wherever it may

reside.

Minimizing disruption; a network has resilience to operate even if some parts fail (e.g. in a natural disaster).

Responsiveness and adaptiveness. Like an amoeba, a network is sensitive to stimuli and adjusts accordingly.

How to become a Networked Organization

Despite all the BPR (Business Process Reengineering) and management change programmes taking place, shifting a bureaucracy to a network is no easy task. Our experience indicates a number of key principles to follow, particularly for the growing number of organizations who employ knowledge workers:

1. Teams are the organization units that create focus and allow work to proceed.

2. The most productive work teams for many kinds of work, especially knowledge work are small multi-disciplinary groups, e.g. 5-8 people with a variety of backgrounds.

3. Many 'meetings' are not productive for knowledge work - they are really assemblies, gatherings, committees which may be used to pass information (often ineffectively), motivate (or demotivate), provide a sense of importance. Their most valuable use is creating and maintaining a sense of belonging, cohesion and reinforcing values.

4. Every knowledge worker should belong to at least two separate teams. This helps the organization achieve cross functional co-operation; it helps the individual gain a broader perspective.

5. Every team must have a clear purpose if it is to act as a team and not as a collection of individuals. Its must have its own vision, mission and goals which reinforce those of its partners.

6. Every team should develop a strong set of cultural norms and values. Hence regular team meetings should take place.

7. Each team should identify other teams carrying out related or dependent activities. It should draw a network diagram showing- itself (with its mission) at the centre- an inner ring of teams (nodes) where interdependencies are high (formal relationships)- an outer ring of collaborative teams (mostly information sharing)Where possible major activity sequencing should be shown (who provides what to whom)

8. Individual members of teams should be encouraged to maintain their personal and professional networks, even beyond the identifiable needs of the current team.

9. Some 'slack' should be built into the network. A certain amount of duplication/overlap should not be viewed as bad. This slackness permits a higher quality of output, plus a resilience to cope with the unexpected.

10. Just as in electronic networks a set of protocols needs to be defined and agreed. These may be implicit (common standards set by cultural values or 'like minded people'). Often it needs to be made explicit what the various signals mean eg trial balloon, idea, request for action, demand, vote, decision etc.Appreciating the LEVEL of network dialogue is important. Is this communication within defined system boundaries or at a new meta-level?MISCOMMUNICATION is probably the worst obstacle any organization needs to overcome.

11. Frequent communication throughout the network (including outer ring) must be encouraged. This is particularly valuable for half-baked ideas, tentative positions. A small group developing its own 'final communique' does not foster the network spirit.

12. Also as in electronic communication NAK and 'NODE NOT RESPONDING' are important signals. If something has not registered, or some work is falling behind then a signal to ripple round the network so the repercussions can be analysed.

13. Enabling technology is the most effective means of enhancing the quality of network communication. Good use of email distribution lists and groupware such as First Class, Net Meeting or Lotus Notes characterises the truly effective network from the merely efficient.

14. Formal relationships (eg inner ring) are best cemented by having agreed written processes (hand-offs) and/or common members on both teams. Critical linkages need higher trust and openness rather than higher formality.In a sequenced set of tasks this can be provided by a device known as cascading teams.

15. Recognize the unpredictability of the process for making decisions. Who makes decision will often be ambiguous. In general, decisions should be made when and where they need to be made, by whoever is appropriate. Types of decision which are fundamental should be agreed up front, and simple formal processes developed for these only.

16. In a network flexibility is key.