The unprecedented developments at the Tata Group, India’s biggest multinational, resulting in the ouster of its Chairman Cyrus Mistry and allegations as well as counter allegations levelled by both sides is unlikely to have any long term adverse impact on the Tata brand, according to brand experts.
They said the Tata brand transcends these short term hiccups and board room battles which may have caused some short term damage to the its reputation.
“Tata is a well entrenched and respected brand. The ongoing developments will not have any fall out on the brand. There could be some short term volatility,” said Jagdeep Kapoor, Chairman and Managing Director, Samsika Marking Consultants.
“The Tata brand is very strong and resilient. It will not be shaken by these developments because the brand is built in the hearts and minds of consumers who are not bothered as to who is the chairman of the group. The brand loyalty is in place,” Mr. Kapoor said.
‘Rock solid’He said “the brand is rock solid as consumer loyalty does not change with the change in leadership. Tata products and services are known for their quality and as long as the consumer does not lose faith in the brand, the brand will grow and there will be no problem.”
Ajimon Francis, CEO, Brand Finance India, said the Tata brand is far too resilient and will weather the storm of the ongoing change in leadership.
“What we have to consider is that the group is run by senior decision-making teams and individual company leadership teams and not by the chairman alone. In our opinion, the Tata brand is larger than the individuals,” he said.
Short-term speculation:“Yes, in the short term there will be speculations driven by market opportunists driving the stock prices and creating doubts in the mind of analysts,” Mr Francis said.
However, Christof Binder, Managing Partner of Switzerland-based Trademark Comparables AG criticized the brand loyalty fee charged by Tata Sons from its subsidiaries for using the family name as it was against the interest of minority shareholders.
“Often, there is no service in return for such royalty payments; all brand investment is borne by the subsidiaries,” he said.
“This practice would be hard to justify under Western governance standards. Unfortunately, brands are often misused for bad corporate governance, creative accounting and fraud,” he said. Earlier this week Former Tata Sons chairman Cyrus Mistry had alleged violation of corporate governance norms in the Tata Group.
N Chandramouli, CEO, TRA said the ouster of Mr.Mistry would dent Tata Group’s image
“Tata as a brand is synonymous with trust and has gained the trust of Indians and world citizens through its 150 years history. Unfortunately the sudden and unexplained removal of Mr.Mistry is a contrast to trust,” he said.
