Tata Consultancy Services Limited: The Joint Venture with Mitsubishi Corporation in Japan

In June 2019, Tata Consultancy Services Limited (TCS), a leading Indian global information technology (IT) services, consulting, and business solutions provider, announced that it would increase its shareholding in Tata Consultancy Services Japan Limited (TCS Japan) from 51 per cent to 66 per cent. Established in July 2014, TCS Japan was a joint venture between TCS and Mitsubishi Corporation (MC), one of Japan’s largest integrated business enterprises. This collaboration was not TCS’s first foray into Japan’s IT industry; the company had entered the Japanese market in 1987, but with a wholly owned subsidiary. Why did TCS give up a part of its full ownership and control to MC in 2014? Was such an alliance a merger of equals or more a sale of the Japanese branch to a stronger local suitor? Why did the company reclaim its ownership in 2019 through an increase in equity holding? To penetrate the Japanese IT services market and compete with local giants, should TCS have acquired another medium-sized Japanese company instead of joint venturing with MC? Or, should it have continued operating in the Japanese market alone through the wholly owned subsidiary?

The case is intended for senior undergraduate- and graduate-level courses on international market entry strategies, competitive strategies of emerging market enterprises, cross-border mergers and acquisitions, international strategic alliances, and operating a business in Japan. After working through the case and assignment questions, students will be able to<ul><li> analyze competitive situations and advantages of emerging market firms in developed markets;</li><li>analyze dimensions of distances in international market entries;</li><li> identify factors that drive the evolution and dynamics of market entry mode;</li><li>identify effective market entry modes for the internationalization of service industries; and</li><li>recommend effective competitive strategies of emerging market firms in developed markets.</li></ul>

• merger and acquisition
• joint venture
• wholly owned subsidiary
• entry mode dynamics
• foreign market entry
• cultural distance
• emerging market firm
• service firm