Tata's old pillars suffer erosion in brand value, need to emulate TCS, Titan
MUMBAI: Tata Group watchers say new chairman Cyrus Mistry may seek insights from Tata Log, a book by Harish Bhat, Tata Global Beverages BSE 0.54 %MD and former Titan BSE -1.87 % COO, about the strategic and operational challenges that Tata companies faced during Ratan Tata's tenure.
Brand experts believe Mistry, who took charge of the group in December, needs to rejuvenate India's best-known brand, too, because it is facing some challenging times both in domestic and international markets and is at a crossroads today.
Brand Finance's Most Valuable Brands 2013 study shows a significant improvement in the brand value of some group companies such as TCS BSE 0.84 % and Titan, while old pillars Tata Power, Tata Motors BSE -1.75 % and Indian Hotels have suffered erosion in their brand value since 2010 .
"I think incumbent leaders such as Tata Motors, Indian Hotels and Tata Steel BSE -0.30 % should be humble enough to seek learnings from smaller Tata companies," Unni Krishnan, MD of Brand Finance, says. "They face serious challenges in their ability to transform themselves in line with the changes taking place in the market," he adds.
Experts say the speed of transformation of companies such as TCS and Titan exceed that of market trends, creating exponential brand value. Other sub-brands, such as Tanishq and Croma, too, are ahead of the market curve in their respective categories. The Tata Group did not respond to a mail from ET on the subject. With 98 operating companies and 350,000 employees, Tata Group has operations in 80 countries and derives 60% of its revenues from abroad. Its international brands include Jaguar, Land Rover, Tetley and Corus.
Industry insiders say the group is currently identifying categories and markets where they need to invest sizeable resources to build a global brand that also delivers financial value. Right now, some of its big firms are struggling.
Tata Power BSE 0.46 % reported a loss in the quarter ended December for the first time in over two decades while Tata Motors' domestic business is struggling in the face of an slowdown and the firm's inability to consolidate innovative offerings, leading to `458-crore loss in the third quarter.
Krishnan says Indian companies, such as the Tatas and Godrej, seem to be following the wealth creation models based on shareholder value maximisation and near-term goals that have destroyed several MNCs. "Indian companies need to be beacons for creating brand value by letting the consciousness of the brand become advertisers of the brand. Aping multinational practices will break the spinal cord of Indian entrepreneurial energy," he says.
But there are positives too, like TCS. While its peers struggle, the top software firm has built momentum in its long-term strategy, customer delivery and non-linear growth platform. It is poised to break into the top three IT global players list, the report states.