Business Strategy at Tata

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NOVOZYMES: Cracking the Emerging Markets Code CASE ANALYSIS II Max Brodin International Business Strategy MGMT 460 Professor Daniel F. Spulber, Section 81 November 10, 2014 INTRODUCTION Tata Communications (TCL) is a telecom service provider and a subsidiary of the Tata group, an Indian conglomerate. The company has been growing at a healthy rate, but realizes below average profits due to its limited scale, scope, and variety. The primary reason for this is that the company predominantly plays at home in a relatively small market by global standards. The company is considering a second home strategy and specifically entry into Russia. Therefore, it must evaluate the potential opportunity based on increases in scale, scope, variety and the country competitiveness of Russia as well as other emerging markets. HOME MARKET: INDIA Tata Communications is heavily affected by its home market of India. Tata Communications had a minimal presence outside of India, making it extremely dependent on the Indian market. In 2012 the size of the enterprise segment of the telecom market in which Tata is strategically focusing, is estimated to be about US$650 billion. Tata Communication’s revenues of US$0.55 billion account for only 0.08% of the market share in this segment. The primary reason for this is the relatively small size of the Indian enterprise telecom market compared to the home markets of TCL’s primary competitors such as AT&T, Verizon, BT, Orange Business Services, etc. The largest player, Verizon, has six times the revenue of Tata Communications. The telecom industry is burdened by high fixed costs of building and operating global networks, and therefore increases in scale lead to lower average costs. These high fixed costs can be spread amongst multiple global networks and products, thereby decreasing average total costs. The effect of

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