Tata Motors: Diversification Strategy

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Diversification strategies are used to expand firms' operations by adding markets, products, services, or stages of production to the existing business. The purpose of diversification is to allow the company to enter lines of business that are different from current operations.
When the new venture is strategically related to the existing lines of business, it is called concentric diversification. Conglomerate diversification occurs when there is no common thread of strategic fit or relationship between the new and old lines of business; the new and old businesses are unrelated.
Companies adopt either related or unrelated or both the diversifications according to their capability and need of growth. But on taking such decision on diversification,
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Two firms which adopted related diversification and two firms adopted unrelated diversification are taken and their performance in the sense of market share and reputation is compared and inference is made on it.

2.1 Tata Motors:
The foundation of the company’s growth over the last 68 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D. Tata Motors’ total sales (including exports) of Tata commercial and passenger vehicles in June 2014 were 38,557 vehicles, a decline of 27% over 52,712 vehicles sold in June 2013. The company’s domestic sales of Tata commercial and passenger vehicles for June 2014 were 34,743 nos., 29% decline over 48,716 nos., sold in June last year.

2.2 Expansion strategy:
Tata group of companies have followed the “unrelated or conglomerate” diversification strategy of expansion which can be clearly known from the above picture. They are into almost all the industries that one can name and is still on process of development and innovation. Their purpose is improving the quality of life of the communities they serve, by striving for leadership and global competitiveness in the business sectors in which they
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Chender K. Balajee is still heading the organization and striving hard with a spearhead plans for expansion of the company. Renowned for attention to detail and design, Royal Orchid hotels offers myriad options of business hotels ranging from luxurious 5-star hotels to economy business hotels. In 2013, the group made its first international foray with the Royal Orchid Malaika Beach resort at Mwanza. There are two more hotels in the pipeline foreseen at Nairobi and Dar-Es-Salaam in Tanzania. They operate 28 business and leisure hotels in 20 popular destination. Presently, Royal Orchid Hotels is among India's fastest growing hospitality chains.
3.4 Strategy of expansion:
Royal Orchid has followed “related or concentric diversification” strategy for their growth. They have expanded their presence in the same hotel segment and not in any other unrelated business. They are present in all the major cities in India and have started their track outstation too in the same industry in order to achieve their vision.

3.5 Inference:
In this comparison, though Royal Orchid hotels have followed related diversification strategy, they are not as famous as ITC are at present. ITC started their hotel segment 2 years later than Royal Orchid which should hold the first mover advantage. But ITC with their investments earned from other businesses, made their entry a premium and luxury one to attract customers domestically and globally. It should be noted that, unrelated
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