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TERM PAPER
TATA
PREPARED BY:-
(GROUP ‘A’)
VAIBHAV SWAROOP
1
TABLE OF CONTENTS
Chapter-1: Company Profile 5
About Tata Group 5
Tata Motors 8
Objectives 14
Management 15
Mission of Tata Motors 17
Vision of Tata Motors 18
Joint Venture Companies 19
Manufacturing 20
Worldwide Business Countries 20
Research 22
Central Tool Room 23
Tata Motors procurement Process 23
Product Profile of Tata Motors 26
Chapter-2: Marketing Strategies 29
Strategic Framework of Tata Motors 29
Michael Porter’s Five Forces Model of Tata Motors 33
2
Ansoff Analysis of Tata Motors 35
Ansoff Product Marketing Strategy 36
Balanced Score Card Analysis 38
Financial Analysis 40
Firm Strategy & Rivalry 42
Michael Porter Diamond Model 42
Demand Conditions 45
Chapter-3: Market Growth 46
Growth of Tata Motors 46
Growth in Indian Market 49
Organization Structure 50
Key Challenges 51
Three Wheeler Auto Industry 52
Three Wheeler Market Survey 53
Market Drivers 55
Passenger Vehicle Production 56
Indian Passenger Vehicle Market 57
Commercial Vehicle Production 60
3
Chapter-4: Strategic Analysis 66
SWOT Analysis 66
BCG Matrix Portfolio 69
Chapter-5: Conclusion 70
Conclusion 70
Findings 71
Suggestions 72
Bibliography 73
4
CHAPTER - I
COMPANY PROFILE
ABOUT TATA GROUP
The Tata group comprises over 90 operating companies in seven business
sectors: communications and information technology, engineering, materials,
services, energy, consumer products and chemicals. The group has operations in
more than 80 countries across six continents, and its companies export products
and services to 85 countries.
The total revenue of Tata companies, taken together, was $67.4 billion
(around Rs319,534 crore) in 2009-10, with 57 per cent of this coming from
business outside India. Tata companies employ around 395,000 people worldwide.
The Tata name has been respected in India for 140 years for its adherence to strong
values and business ethics.
Every Tata company or enterprise operates independently. Each of these
companies has its own board of directors and shareholders, to whom it is
answerable. There are 28 publicly listed Tata enterprises and they have a combined
market capitalization of about $102.41 billion (as on December 16, 2010), and a
shareholder base of 3.5 million. The major Tata companies are Tata Steel, Tata
5
Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata
Global Beverages, Indian Hotels and Tata Communications.
Tata Steel became the tenth-largest steel maker in the world after it acquired
Corus, later renamed Tata Steel Europe. Tata Motors is among the top five
commercial vehicle manufacturers in the world and has recently acquired Jaguar
and Land Rover. TCS is a leading global software company, with delivery centres
in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Global
Beverages is the second-largest player in tea in the world. Tata Chemicals is the
world’s second largest manufacturer of soda ash and Tata Communications is one
of the world’s largest wholesale voice carriers.
In tandem with the increasing international footprint of Tata companies, the
Tata brand is also gaining international recognition. Brand Finance, a UK-based
consultancy firm, recently valued the Tata brand at $11.22 billion and ranked it
65th among the world's Top 100 brands. Business Week magazine ranked Tata
17th among the '50 Most Innovative Companies' list and the Reputation Institute,
USA, in 2009 rated it 11th on its list of world's most reputable companies.
Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the
spirit of nationalism. It pioneered several industries of national importance in
6
India: steel, power, hospitality and airlines. In more recent times, its pioneering
spirit has been showcased by companies such as TCS, India’s first software
company, and Tata Motors, which made India’s first indigenously developed car,
the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the Tata
Nano.
Tata companies have always believed in returning wealth to the society they
serve. Two-thirds of the equity of Tata Sons, the Tata promoter company, is held
by philanthropic trusts that have created national institutions for science and
technology, medical research, social studies and the performing arts. The trusts
also provide aid and assistance to non-government organisations working in the
areas of education, healthcare and livelihoods. Tata companies also extend social
welfare activities to communities around their industrial units. The combined
development-related expenditure of the trusts and the companies amounts to
around 4 per cent of the net profits of all the Tata companies taken together.
Going forward, Tata is focusing on new technologies and innovation to drive
its business in India and internationally. The Nano car is one example, as is the Eka
supercomputer (developed by another Tata company), which in 2008 was ranked
the world’s fourth fastest. Anchored in India and wedded to traditional values and
strong ethics, Tata companies are building multinational businesses that will
7
achieve growth through excellence and innovation, while balancing the interests of
shareholders, employees and civil society.
TATA MOTORS
Tata Motors Limited is India's largest automobile company, with
consolidated revenues of Rs. 92,519 crores (USD 20 billion) in 2009-10. It is the
leader in commercial vehicles in each segment, and among the top three in
passenger vehicles with winning products in the compact, midsize car and utility
vehicle segments. The company is the world's fourth largest truck manufacturer,
and the world's second largest bus manufacturer.
The company's 24,000 employees are guided by the vision to be "best in the
manner in which we operate, best in the products we deliver, and best in our value
system and ethics."
Established in 1945, Tata Motors' presence indeed cuts across the length and
breadth of India. Over 5.9 million Tata vehicles ply on Indian roads, since the first
rolled out in 1954. The company's manufacturing base in India is spread across
Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar
(Uttarakhand) and Dharwad (Karnataka). Following a strategic alliance with Fiat in
8
2005, it has set up an industrial joint venture with Fiat Group Automobiles at
Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains.
The company is establishing a new plant at Sanand (Gujarat). The company's
dealership, sales, services and spare parts network comprises over 3500 touch
points; Tata Motors also distributes and markets Fiat branded cars in India.
Tata Motors, the first company from India's engineering sector to be listed in
the New York Stock Exchange (September 2004), has also emerged as an
international automobile company. Through subsidiaries and associate companies,
Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among
them is Jaguar Land Rover, a business comprising the two iconic British brands
that was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles
Company, South Korea's second largest truck maker. The rechristened Tata
Daewoo Commercial Vehicles Company has launched several new products in the
Korean market, while also exporting these products to several international
markets. Today two-thirds of heavy commercial vehicle exports out of South
Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in
Hispano Carrocera, a reputed Spanish bus and coach manufacturer, and
subsequently the remaining stake in 2009. Hispano's presence is being expanded in
other markets. In 2006, Tata Motors formed a joint venture with the Brazil-based
9
Marcopolo, a global leader in body-building for buses and coaches to manufacture
fully-built buses and coaches for India and select international markets. In 2006,
Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant
Company of Thailand to manufacture and market the company's pickup vehicles in
Thailand. The new plant of Tata Motors (Thailand) has begun production of the
Xenon pickup truck, with the Xenon having been launched in Thailand in 2008.
Tata Motors is also expanding its international footprint, established through
exports since 1961. The company's commercial and passenger vehicles are already
being marketed in several countries in Europe, Africa, the Middle East, South East
Asia, South Asia and South America. It has franchisee/joint venture assembly
operations in Kenya, Bangladesh, Ukraine, Russia, Senegal and South Africa.
The foundation of the company's growth over the last 50 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. With over 3,000
engineers and scientists, the company's Engineering Research Centre, established
in 1966, has enabled pioneering technologies and products. The company today
has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South
Korea, Spain, and the UK. It was Tata Motors, which developed the first
indigenously developed Light Commercial Vehicle, India's first Sports Utility
10
Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger car.
Within two years of launch, Tata Indica became India's largest selling car in its
segment. In 2005, Tata Motors created a new segment by launching the Tata Ace,
India's first indigenously developed mini-truck.
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano,
which India and the world have been looking forward to. The Tata Nano has been
subsequently launched, as planned, in India in March 2009. A development, which
signifies a first for the global automobile industry, the Nano brings the comfort and
safety of a car within the reach of thousands of families. The standard version has
been priced at Rs.100,000 (excluding VAT and transportation cost).
Designed with a family in mind, it has a roomy passenger compartment with
generous leg space and head room. It can comfortably seat four persons. Its mono-
volume design will set a new benchmark among small cars. Its safety performance
exceeds regulatory requirements in India. Its tailpipe emission performance too
exceeds regulatory requirements. In terms of overall pollutants, it has a lower
pollution level than two-wheelers being manufactured in India today. The lean
design strategy has helped minimise weight, which helps maximise performance
per unit of energy consumed and delivers high fuel efficiency. The high fuel
efficiency also ensures that the car has low carbon dioxide emissions, thereby
11
providing the twin benefits of an affordable transportation solution with a low
carbon footprint.
In May 2009, Tata Motors introduced ushered in a new era in the Indian
automobile industry, in keeping with its pioneering tradition, by unveiling its new
range of world standard trucks called Prima. In their power, speed, carrying
capacity, operating economy and trims, they will introduce new benchmarks in
India and match the best in the world in performance at a lower life-cycle cost.
Tata Motors is equally focussed on environment-friendly technologies in
emissions and alternative fuels. . It has developed electric and hybrid vehicles both
for personal and public transportation. It has also been implementing several
environment-friendly technologies in manufacturing processes, significantly
enhancing resource conservation
Through its subsidiaries, the company is engaged in engineering and
automotive solutions, construction equipment manufacturing, automotive vehicle
components manufacturing and supply chain activities, machine tools and factory
automation solutions, high-precision tooling and plastic and electronic components
for automotive and computer applications, and automotive retailing and service
operations.
12
Tata Motors is committed to improving the quality of life of communities by
working on four thrust areas – employability, education, health and environment.
The activities touch the lives of more than a million citizens. The company's
support on education and employability is focused on youth and women. They
range from schools to technical education institutes to actual facilitation of income
generation. In health, our intervention is in both preventive and curative health
care. The goal of environment protection is achieved through tree plantation,
conserving water and creating new water bodies and, last but not the least, by
introducing appropriate technologies in our vehicles and operations for constantly
enhancing environment care.
With the foundation of its rich heritage, Tata Motors today is etching a
refulgent future.
13
OBJECTIVES
National
Tata company nano car has a four passenger city car built by Tata motors
aimed primarily at India market.
International
Tata motors nano car is ready to start its journey on the global road as it
display version of the hatchback of the worldwide market place. This new
version was introduced in at 79 geneva motors show.
International version is more powerful and stronger than its Indian
counterpart. It is 0.19 meters longer in length and 0.808 wider in the
comparison of its Indian part. The company aimed towards selling the nano
car in Europe far 5000 Euros.
14
Ethical Objective
Tata group had never compromised in ethics; it last year edited whistle
blower policy for the benefits of the company and society.
The Company believes in the conduct of affairs of its constituents in a fair
transparent manner by adopting highest standard of professionalism,
honesty, integrity, ethical and behavior.
MANAGEMENT
Board of Directors
Mr. Ratan
N Tata
(Chairman)
Mr. Ravi Kant
Dr. J J Irani
Mr. Nusli N Wadia
Mr. S M Palia
Dr. R A Mashelkar
Mr. Nasser Munjee
Mr. Subodh Bhargava
Mr. V K Jairath
Mr. Ranendra Sen
15
Dr. Ralf Speth
Mr. Carl-Peter Forster
Mr. P M Telang
Senior Management
Mr. Carl-Peter Forster
Chief Executive Officer & Managing Director
Mr. P M Telang Managing Director-India Operations
Mr. C Ramakrishnan
Chief Financial Officer
Mr. R Pisharody President (Commercial Vehicles Business Unit)
Mr. T Leverton Head, Advanced and Product Engineering
Mr. S B Borwankar Sr. Vice President (Manufacturing Operations-CVBU)
Mr. S Krishnan Sr. Vice President (Latin America-Operations)
Mr. P Y GuravSr. Vice President (Corp. Finance-Accounts and Taxation)
Mr. Prabir Jha Sr. Vice President, Human Resources
Mr P K Chobe Head (Jamshedpur - Plant)
Mr. Vikram Sinha Head (Car Plant - PCBU)
Mr. B B Parekh Chief (Strategic Sourcing)
Mr. U K Mishra Vice President (ADD and Materials - CVBU)
Mr. A A Gajendragadkar
Vice President (Corp. Finance-Business Planning)
Mr. N Pinge Chief Internal Auditor
Mr. R Bagga Vice President (Legal)
Mr. R Ramakrishnan
Vice President - Sales & Marketing(CVBU)
Mr. S Ravishankar Vice President (Engg. Systems, ERC)
16
Mr. Girish Wagh Head (Small Car Project)
Mr. Atul Renavikar Head (Pantnagar Plant)
Company Secretary
Mr. H K Sethna
Corporate Communications
Mr. Debasis Ray Head - Corporate Communications
MISSION OF TATA MOTORS
It was this very conviction of Ratan Tata that led to the birth of Indica - the
car that put India on the automobile world map. Developing an indigenous Indian
car was a daunting task. One that Tata Motors took head-on, encouraged by the
faith and confidence Chairman Ratan Tata had in the Company’s engineering
skills. Conceived within a time frame of 31 months - from concept to
commercialization - at a total cost of $ 400 million, the Indica is a small step
towards fulfilling Ratan Tata’s vision of Tata Motors as a has steered the Company
in challenging times, emerging victorious under even adverse conditions. Under
his leadership , Tata Motors is charting for itself a global path in the automotive
world. The agreement with MG Rover, UK to manufacture and sell Rover branded
Indicas in UK and Western Europe is a step in that direction.
Ratan Tata’s global ambitions for Tata Motors have taken wing with the
recent acquisition of Daewoo great car manufacturer. 17
On the Tata Motors board since 1981, Ratan Tata continues the traditions of
Jamsetji Tata and JRD Tata, instilling ethics and credibility in the Company. He
Commercial vehicle Co., South Korea and Tata Motors’ entry in the South African
market. The Daewoo acquisition will give Tata Motors a substantial presence in
the Korean market in addition to synergies in manufacturing, marketing and
research. According to Ratan Tata, the acquisition is a historic occasion for Tata
Motors and the Tata Group as this is the largest acquisition by any Indian company
in Korea. He believes that the South Africa could be a possible stepping stone for
other countries in Africa.
Among the many firsts Tata Motors has achieved under Ratan Tata’s
leadership is the listing of the Company on the New York Stock Exchange (NYSE)
- the first company in the Indian engineering sector to list its securities on the
NYSE.
His next mission for Tata Motors is the development of the Rs 1 lakh car -
the people’s car. As he says, “India is capable of doing anything it wishes to do if
you do not constrain the people...”
VISION OF TATA MOTORS
Vision, implementation, risk taking, and meeting the needs of a changing
economy are all apparent in Tata's pet project: the creation of Indica. "I believed in
18
the product. In fact I was very much involved in conceiving its initial fundamentals
and design parameters. Yes, it's like seeing a child being born, almost limb-by-
limb. Today we have in excess of 50,000 Indicas on the road and I feel a sense of
great exhilaration every time I come up next to one.
JOINT VENTURE, SUBSIDIARY AND ASSOCIATE COMPANIES
Tata Motors has several joint venture, subsidiary and associate companies:
Jaguar Land Rover
Tata Technologies Ltd. (TTL) and its subsidiaries
Telco Construction Equipment Co. Ltd. (Telcon)
HV Axles Ltd. (HVAL)
HV Transmissions Ltd. (HVTL)
TAL Manufacturing Solutions Ltd. (TAL)
Sheba Properties Ltd. (Sheba)
Concorde Motors (India) Ltd. (Concorde)
Tata Daewoo Commercial Vehicle Company Ltd. (TDCV)
Tata Hispano Motors Carrocera S. A.
Tata Motors Insurance Broking & Advisory Services Ltd. (TMIBASL)
Tata Motors European Technical Centre plc. (TMETC)
Tata Motors Finance Limited
Tata Motors (Thailand) Limited (TMTL)
Tata Marcopolo Motors Ltd (TMML)
Tata Motors(SA) Proprietary Ltd (TMSA)
TML Distribution Company Ltd (TDCL)
TML Holdings Pte. Ltd.
19
WORLDWIDE BUSINESS COUNTRIES
Africa
Asia Pacific
China
Europe
Middle East
North America
South America
United Kingdom
MANUFACTURING
Tata Motors owes its leading position in the Indian automobile industry to
its strong focus on indigenisation. This focus has driven the Company to set up
world-class manufacturing units with state-of-the-art technology. Every stage of
product evolution-design, development, manufacturing, assembly and quality
20
control, is carried out meticulously. Our manufacturing plants are situated at
Jamshedpur in the East, Pune in the West and Lucknow in the North.
Jamshedpur:
Established in 1945, the Jamshedpur unit was the company's first unit and is
spread over an area of 822 acres. It consists of 4 major divisions - Truck Factory,
Engine Factory, Cab & Cowl Factories.
Pune:
The Pune unit is spread over 2 geographical regions- Pimpri (800 acres) and
Chinchwad (130 acres). It was established in 1966 and has a Production
Engineering Division, which has one of the most versatile tool making facilities in
the Indian sub-continent.
Lucknow:
Tata Motors Lucknow is one of the youngest production facilities among all
the Tata Motors locations and was established in 1992 to meet the demand for
Commercial Vehicles in the Indian market.
Uttarakhand
21
The company has set up a plant for its mini-truck Ace and the passenger
carrier Magic (based on the Ace platform) at Pantnagar in Uttarakhand. The plant
began.
Sanand
Tata Motors’ plant for the Tata Nano at Sanand, in Ahmedabad district of
Gujarat, marks the culmination of the company’s goal of making the Tata Nano
available to hundreds of thousands of families, desirous of the car a safe,
affordable and environmental friendly mode of transport. The capacity of the plant,
to begin with, will be 250,000 cars per year to be achieved in phases, and with
some balancing is expandable up to 350,000 cars per year. Provision for further
capacity expansion has also been incorporated in this location.
RESEARCH
Research&Development:
Research provides the much-needed inspiration for the birth of new ideas, which in
turn breathes new life into products. World-class automotive research and
development are key factors that contribute to the leadership of the Company.
Engineering Research Centre (ERC):
22
The Research Centre at Jamshedpur regularly upgrades components and
aggregates. A well-equipped torture track enables rigorous and exhaustive testing
of modifications before they are used as regular fitments.
The Engineering Research Centre in Pune was setup in 1966 and is among
the finest in the country. It has been honoured with two prestigious awards - 'The
DSIR National Award for R&D Effort in Industry - 1999' and 'National Award for
Successful Commercialization of Indigenous Technology by an Industrial Concern
- 2000.'
CENTRAL TOOL ROOM, JAMSHEDPUR
The Central Tool Room at Tata Motors, Jamshedpur is one of the most modern tool rooms in India.
Equipped with the latest CNC Machines, Tryout Presses and Inspection facilities, this tool room has the proven capability of developing tooling solutions for all applications.
TATA MOTORS PROCUREMENT PROCESS
23
Sourcing is very important and critical function for Tata Motors.
Different agencies participate during the entire product life cycle. It
starts as early as early vendor introduction when the product is in
concept stage. Strategically important sources with a potential of
developing relationship into strategic alliances are finalised during
this step. Quantum of outsourcing work and nature of technology to be
developed decides the corresponding development agency. After which
specific nodal agency is responsible for development of parts and
aggregates till the product is brought to the level of regular
procurement. Further, on the nature parts/aggregate, either central
materials agency or the sourcing group attached to the respective
factory (where the part will be consumed) will initiate the process for
regular procurement.
Quality assurance plays an important role of establishing quality
of new parts developed. It also keeps vigilance for maintaining
consistency in regular suppliers. Cost is an important parameter of our
business model. In recent past, Macro level parameters such as
commodity prices, oil prices, fluctuations in foreign exchange rates
24
and slacking domestic demand has resulted into tremendous pressure
on product costing as it is very difficult to TML to pass it to end
customer. The matter of cost increase or decrease is addressed by a
separate agency that initiate and settle cost saving activities. E
sourcing tool is effectively used to reduce cost of procurement.
Tooling division provides necessary tooling as per the policy and
planning done by project planning team. Sourcing team co-ordinates
with these different internal agencies to smoothly execute the project
and meet the project time lines. If insisted by suppliers, productivity
improvement cell plays an important role of helping vendors for
improving productivity by special task force, which works at
supplier’s locations.
At appropriate phase, respective sourcing agency co-ordinates for
fulfilling on field spare part requirements, both local and overseas.
Similarly a centralised import cell co ordinate all import related
activates.
25
PRODUCT PROFILE TATA MOTORS
Passengers Cars:
INDICA VISTA INDICA V2 XETA
INDICA V2
INDICO MANZA
INDICO CS
INDICO MARINA
INDICO XL
NANO26
FIAT CARS
Utility Vehicles:
ARIA SAFARI DICOR
SUMO
XENON XT
SUMO GRAND MK II
Trucks:
MEDIUM AND HEAVY COMMERCIAL VEHICLES PRIMA
CONSTRUCK
INTERMEDIATE COMMERCIAL VEHICLES
LIGHT COMMERCIAL VEHICLES
SMALLL COMMERCIAL VEHICLES
TL 4x4
Commercial Passenger Carriers:
BUSES WINGER
MAGIC
27
28
CHAPTER-2
MARKETING STRATEGIES OF TATA MOTORS
Strategic Framework of Tata Motors:-
Tata Motors is certified as ISO 9001:2000 compliant in Quality Management System
and as ISO 14001:1996 compliant in Environmental Management System. Hence, they
possess global recognition in best practices that strengthens their branding at a global level.
They are known to be very much customer focused and are very conscious about the
fitment of their products for customer needs. They believe in continuous innovations as they
keep on releasing new innovations in their existing models. Although the indigenous cars of
Tata Motors do not compare with the engineering excellence of a global player like Ford
Motor Company, they are well suited for Asian conditions where the comfort factor is more
important than cruising at high speeds.
Reviews by Indian Motor sites reveal that the Tata Motors Indica & Indigo models
possess sluggish performance of engine in terms of speed and performance but are good in
terms of fuel efficiency, maintainability, internal space that are more important factors given
the road and traffic conditions in India.
29
This reveals that Tata Motors have focused on the local conditions of the country and
have designed cars that are more suitable for customer needs rather than imposing additional
but useless engineering on them. Example, there is no point designing a car that can run at
100 miles per hour if the maximum speeds that can be achieved even at best roads is 70
miles an hour.
One of the major success factors of Tata Motors are their supply chain excellence.
The entire world is surprised by the launch of Tata Nano that shall be priced at $2500
approximately. An analysis by Fogarty, Justin (2009) reveals that Tata Motors could commit
this price to the industry due to their excellent backend supply chain network.
Tata Motors worked very early with their suppliers in arriving at the cost estimate of
the car – to the extent that even the functional specifications of the parts were completed
much before even talking about the car to the markets.
Tata Motors uses Ariba spend management solution as reported by Business Wire in
2005. Ariba is a software based platform that helps in reducing bottom line costs
considerably. Tata Motors is a modest company when it comes to spending because one of
their primary objectives has been achieving highest operational efficiencies at lowest costs.
Tata Motors extensively uses Information Technology to support their business
objectives. They possess Computer Aided Design and Computer Aided Modeling
technologies, Siebel for Customer network management, SAP for supplier relationships and
30
supply chain management, business logistics management, customer relationship
management, human resources management and Finance management.
They also use BMC Software for business services management under the ITIL and
ISO 20000:2005 framework. The IT systems of Tata Motors limited are outsourced to their
group company named Tata Technologies Limited. The BMC tools help them to manage IT
services management, IT change management and also to comply with critical statutory laws
and best practices like Sarbanes Oxley Act, ITIL, and ISO 20000:2005.
Tata Motors do have the fundamentals to play the role of change agent for some of
the major changes in the global automobile industry. Historically, Tata Motors have not done
well in entering the motor markets in western countries and hence this acquisition presents
an excellent opportunity for Tata Motors to establish their presence in UK and European car
markets.
Jaguar and Land Rover may not have done well in the recent past but they have
remained the pride and heritage of Great Britain and are very close to heart of the native
British citizens.
Tata Motors may just have to apply some technical innovations in these cars and re-
price them according to the modern economics and these models for sure will again do
wonders in the UK markets. One good thing about this acquisition is that the heritages of
31
India and Britain have many common links including the very establishment of Tata Group
that was done during the British rule in India.
The fundamentals of Tata Motors possess many best practices of the British
industries and hence the employees of Jaguar and Land Rover will be able to easily correlate
the culture of Tata Motors with the original British heritage although these organizations
have remained under American influence for so long.
The biggest gamble that Tata Motors is currently playing is the Tata Nano targeted at
urban middle class that are yet to afford a car and have been moving on Motorcycles. Tata
Motors have priced this car at $2500 approximately which itself is a challenge for them to
fulfill. They have already made a loss of more than 300 Million Dollars because they had to
shift their entire plant for Tata Nano manufacturing from a location called “Singur” in the
eastern part of India amidst local disturbances and security problems.
The current manufacturing capacity of Tata Nano is 50,000 cars per year whereas
Brown, Robin (2009) of motortorque.com expects a booking of 500,000 units in the first lot
itself. This means that in the current capacity Tata Motors will take 10 years to fulfill the
orders of first lot itself.
After the Singur crisis, they are in the process of setting up a new factory such that the
combined output of Tata Motors can be 250000 cars per year which again will take two
years to fulfill the bookings of the first lot itself. Hence, Tata Nano is going to be a major
32
challenge for Tata Motors whereby they would need to aggressively deploy new plants
although they are reeling under cash crunch due to their acquisition of Jaguar and Land
Rover in 2008.
Hence, overall it is a “do or die” situation for Tata Motors – if they succeed they will
attain the status of no. 1 small car manufacturer of the world; but if they fail they would lose
reputation in the global markets permanently.
Analysis of Tata Motors as per Michael Porter’s Five Forces Model that shape Industry Competition.
In 1980, Michael Porter presented the five forces that shape competition in the
industry for any business organization as – Rivalry among existing competitors, threats of
new entrants, bargaining power of suppliers, bargaining power of buyers, and threat of
substitute products or services. These forces determine the competitive position of
organizations in the markets of their operations. We hereby introduce a brief introduction
about this model and then determine the competitive positioning of Tata Motors with the
help of this model.
33
One important observation that Michael E Porter made about these forces is that if
these forces are intense then almost no company gains distinct competitive advantages and
earns attractive returns on investments. The threats of new entrants and substitute products
and services are prevalent in industries where major innovations are underway that can
potentially cause creative destruction of the existing products and services. New entrants
always enter the markets with a desire to capture market shares quickly and hence tend to put
lot of pressure on product pricing thus capping the profit potential of the market.
34
Ansoff Analysis of Tata Motors-
Ansoff, H I (1958) developed a matrix to analyze the product marketing strategy of
an organization when designing a model for diversification. Following is the image of
original sketch of the matrix drawn by Ansoff himself:
35
A simpler form of Ansoff product marketing strategy is presented below:
Each of these quadrants describes a specific product marketing strategy as detailed below:
Existing products to be marketed in existing markets – market penetration strategy
New products to be marketed in existing markets – product development strategy
Existing products to be marketed in new markets – market development strategy
New products to be marketed in new markets – diversification strategy
In order of risks, the strategy based on existing value chains of organizations
possesses lowest risks while the strategy requiring deployment of altogether new value
chains by organizations possesses highest risk. 36
Thus market penetration strategies possess lowest risks associated with the
implementation but diversification possesses highest risks associated with the
implementation. If we take a closer look at the strategies of Tata Motors and map with
Ansoff matrix, we can easily conclude that Tata Motors is applying strategies with highest
risks and hence is in a make or break mode. We present the following analysis for justifying
this conclusion:
Tata Motors is currently implementing high risk strategies given that they have
attempted to enter two new markets where they do not possess any expertise – UK and
European premium car markets with the help of Jaguar and Land Rover and the $2500 Nano
car that may altogether develop a new car market globally. If things favor them, they have
the potential to become the next Ford of the world but if the happenings do not favor them
(like the Singur crisis witnessed by them), then they can suffer losses that will take decades
for them to repair.
Balanced Score Card Analysis of Tata Motors
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Kaplan and Norton (1996) developed the balanced score card strategy to assess the
performance of businesses by virtue of their internal competencies measured through key.
performance indicators (KPIs). The balanced scorecard is presented in the figure below:
The strategy is based on four primary factors that balance each other in a strategic
framework – Customer, Financial, Internal Business Process and Learning and Growth. The
Customer and Financial perspective is the way the company appears to the customers and
the Stake Holders whereas the Internal Business Processes and Learning and Growth
perspective is the way the company appears to the internal employees and managers.
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This dissertation will result in detailed financial perspective of Financials and
Customers and hence we will revisit the Balanced Score Card later in the dissertation.
The internal business processes and learning and growth perspective has been quite
sound in Tata Motors but the perspectives have been entirely different.
This has resulted in they able to deliver different variants of cars as per the
requirements of different countries using the same spares supplied by their centralized supply
chain vendor.
Tata Motors appear to be far behind this strategy as compared to Ford Motors but
they appear to be taking the same path towards globalization. They have developed Nano as
per Indian conditions to start with but are ready to match the localized conditions required at
the global level – like the stringent emission norms of Europe.
They already have their small trucks (Tata Sierra) operating in UK which must have
developed their knowledge on UK and European market requirements. Moreover, after the
acquisition of Jaguar and Land Rover their knowledge will be strengthened further. They
already have the basics in place to apply the knowledge in Nano and it may be just a matter
of time that they will be able to achieve compliance for Nano against the regulations of
Europe and other countries that they are targeting.
FINANCIAL ANALYSIS OF TATA MOTORS
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The figures presented here of Tata Motor company have not been matched with their
annual statements because the US Dollars to Indian Rupees fluctuations of all the five years
may have to be taken into account which may impact the accuracy. Therefore, the figures
published by New York Stock Exchange have been incorporated here for analysis:
Table: Earnings per Share and Dividend per share of Tata Motors
The above analysis shows dismal performance of Tata Motors in the last five years.
Investors have been losing money considerably in Tata Motors has been consistently
ensuring returns to investors although the magnitude not growing.
In the table below, we present the key ratios of Tata Motors:-
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Stock Chart of Tata Motors:-
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FIRM STRATEGY AND RIVALRY OF TATA MOTORS
Tata Motors strategy has been different compared to Ford Motors. They defeated
their rivals by capturing the opportunities much ahead of competition even before they are
prepared to deliver against orders. Their strategy has been to reserve customers by charging
booking amounts such that they first secure the customer base and then start manufacturing.
They are very cost conscious about overheads or extra inventory and hence manufacture
strictly against orders. Their strategy in the launch of Tata Nano is the same whereby they
first intend to secure the customers by charging nominal booking amounts and then deliver
the cars gradually as and when they are launched. Given that their Nano concept is not yet
challenged by any competition, it would be easier for them to reserve the bookings such that
even if they face a competition, their customers of first lot will remain untouched.
Michael Porter Diamond Model of Competitive Advantages of Tata Motors:-
Michael E Porter developed the Diamond Model to analyze the competitive
advantages of nations to analyze how some countries gain competitive advantages in certain
industrial sectors by developing their respective indigenous industries. This model and the
five forces model of firm competitiveness have become empirical generalizations in strategic
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analysis of companies. We hereby present the analysis of Tata Motors using these models.
The Michael Porter’s Diamond Model is presented in the following figure:
Organizations that have achieved competitive advantages across the world have
carried out innovations in their product offerings, in the services, in the way they do business
and in the way they compete in the marketplace. The innovations of all companies appear to
be their own but are actually based on some strong fundamentals of factors that interact with
each other considerably (Porter, Michael E. 1990. pp75). The diamond model presents a
strong correlation of the four underlying influencing factors governing the success of an
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organization at National as well as International level with the help of the controls of the
local Government on these influencing factors acting as the Catalyst.
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DEMAND CONDITIONS OF TATA MOTORS
Tata Motors have not developed the competency of localization of products and
services as per local demands. In India, they have decades of experience in developing
products against local demands and hence are very successful. The government machinery
of India has already helped them to stretch their legs beyond the country limits (like the legal
and statutory framework of India has allowed them to acquire British companies and launch
Nano worldwide through Geneva). But they have not mastered the art of localization of
products as per the regional demands in countries of their operations. Example, they failed in
City Rover miserably because they tried to push cars fit for Indian conditions into Europe
which is considered as a blunder today. Hence, overall it will take a long time for them to
establish global branding.
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CHAPTER-3
MARKET GROWTH
GROWTH OF TATA MOTORS
Tata Motors is in cloud nine, so to say as the largest automotive player in the
country, with its Jaguar Land Rover division creating history of sorts by posting a
hundered folf increase in net profit and all other vehicles also reporting a healthy
growth. The firm's net profit increased to Rs 2,222.99 crore for the the second
quarter ending September 30, 2010 as against the mere Rs 21.78 crore in the year
ago period. The second quarter profit was tagged at Rs 1,448 crore by the
Bloomberg News poll by analysts. While the total income sizzled by 33.99 percent
to Rs 28,801.54 crore, in comparison with Rs 21,495.17 crore for the same time
last year.
Tata Motors has registered a stand alone basis a net profit of Rs 432.70 crore
during the period under review as against the Rs 729.14 crore in the previous
fiscal, which is actually down by 40.65 percent. When we look at the one time
income from the sale of investments last year same quarter, then the firm's local
profits had increased by 20.6 percent.
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According to Ralf Speth, Chief Executive Officer of JLR due to supply
constraints there was certainly a bearing on the production of vehicles, otherwise
the sales would have been pretty much more. The firm is possitive about its sales
growth in the coming months, but what actually worries it is the fact that the
fluctuating exchange rate would take a hit in its profit margin.
C Ramakrishnan, Chief Financial Officer of Tata Motors did not hide his
apprehension and added that the exchange rates might as well have a negative
impact on the profit margin in the coming days, as almost half of JLR's turnover is
in terms of USD and one-fifth is related to euro, apparently with the Indian ruppees
gaining strength against these two currencies this year, this would defenitely have a
bearing on its profit margin. As early as January this year, the INR has gained
strength by 4.9 perccent against the USD, at the same time 7.7 percent against the
euro.
China focus
JLR is eying China, as it is the world's largest car market for consolidating
in that market, while it is also contemplating on establishing an assembly unit in
India. While expressing the anxiety of spiralling raw material costs, Prakash M
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Telang, Managing Director (India Operations), Tata Motors says that there are a
good measure of concernes as far as the commodity prices are concerned and adds
that firm had initiated various methodologies to tide over the crisis and to reduce
the impact into a manegable level. Though the officials say there is no such thing
called capacity constraint in Tata Motors but admit that there certainly is
constraints on parts supply.
As Europe and US markets are on the recovery mode from the economic
slowdown, JLR has had a positive side of story to say. What is more, the UK
subsidiary has increased its business to that region by 43 percent to Rs 16,170
crore. The increase in sales is partly due to the fact that the firm had rolled out new
models including the XJ, which obviously was commanding a premium of a
minimum of ten percent over its existing brands that had helped the firm to
enhance its business growth by one percentage point to 16.5 percent. A slew of
new products means, JLR can sustain the momentum of upward tick in this
fortune, though again it all depends on the currency fluctuations, the industry
pundits estimate, though they have their share of skepticism as to whether the firm
could repeat its first half performance yet again in the second half.
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GROWTH IN INDIAN MARKET
India growth story
Tata Motors India growth story is on a sound note as it had posted a sales of Rs
1,15,04 crore, meaning 44.2 percent higher than the previous fiscal, thanks to the
strong showing of its bus and trucks business. What with new products like Tata
Aria being rolled out in the Indian market, there is no second thought that Tata
Motors would continue to grow in the Indian market.
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Organization Structure – TATA MotorsSenior Management Team
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KEY CHALLENGES OF TATA MOTORS
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THREE WHEELERS AUTO INDUSTRY
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INDIAN THREE WHEELER MARKET SURVEY
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MARKET DRIVERS & KEY TRENDS OF TATA MOTORS
PASSNEGER VEHICLE PRODUCTION
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INDIAN PASSENGER VEHICLE MARKET
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COMMERCIAL VEHICLE PRODUCTION
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CHAPTER-4
STRATEGIC ANALYSIS
SWOT ANALYSIS OF TATA MOTORS
Strengths
The Nano is Tata’s iPod. Great engineering and design in a rules-breaking
product that has generated global awareness and admiration
The brand is very well established in the economy segment
Tata’s management is strengthened by the collective experience of its
partners and acquired companies – this includes general management,
marketing, sales and operations
Tata’s buying power is enhanced and leveraged through its size
Tata is making smart acquisition and partnering decisions so far. Local
management teams remain in place vs. installing Tata leaders from afar. 1+1
= 3 seems to be working so far.
Weaknesses
Tata Motors is not well positioned in the luxury segment. This is not a
problem during recessionary times but a lack of diversification can hurt
during better times.
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Most of the automobiles Tata manufactures are based on older platforms.
The Company’s manufacturing practices trail competitors.
Opportunities
The Nano could sell well in other geographic markets. Expanding markets
such as China may find the Nano.
Jaguar and Land Rover provide Tata with an opportunity to establish itself in
the luxury segment.
Threats
Powerful competitors for the luxury market including Honda, Toyota, Ford
and Mercedes-Benz are beginning to push into the Indian market.
Tata’s competitive price advantage will be under pressure as environmental
regulations are tightened.
Rising material costs will create pressure to increase prices
There is a trending rise in diesel fuel costs which will hurt Tata’s line of
products.
One of the conclusions I’ve reached in my SWOT analysis of Tata Motors is
that the company has done of a very good job in the past five years of
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strengthening its position in the market. It appears to have an excellent opportunity
for future success but like all businesses, faces significant challenges.
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BCG PRODUCT PORTFOLIO MATRIX OF TATA
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CHAPTER-5
CONCLUSION
TATA motor vehicles have a great brand image as a quality brand in the
market for motor vehicles in Mangalore as well as in the country. The company is
continuously thriving to ensure Total Quality service (TQS) and which can be
compared to the best in the world, produce power and economy cars for the people
of India and worldwide.
TATA Motors i s commit ted to maximizing cus tomer
sa t i s fac t ion and strives to achieve the goals of excellence by
continuous improvement through ongoing design and development,
manufacture and sale of reliable, safe
costef fec t ive , qual i ty products and services of in ternat ional s tanda
rds by us ingenvironmentally sustainable technologies for improving levels
of efficiency and productivity within its plants and ancillaries. This project
has given me firsthand knowledge of one of the leading automobi le
d is t r ibut ion company in India.
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FINDINGS & SUGGESTIONS
Findings:-
Tata Motors is a number three in passenger car market after Maruti-
Suzuki & Hyundai.
Majority of the customers see Tata Motors with savings.
Most of the customer spend large sum of money.
Out of the samples, people are highly convinced that Tata Motors will
yield them better results.
As the sales of Maruti grows as well as Hyundai Santro is still doing
well in mid size and small size segment so the Indica may be a good
options for the company in this terms for sustaining sales in long run
as well as in the current situations.
Product will have a gradual progress because most industries will wait
for the response about the product from other company.
Customers were educated by me about fuel efficient cars by Tata
Motors.
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Suggestions:-
Based on the findings from the analysis, the following suggestions could be
made:
Demo of the product should be made available to customers, since
most of the purchase decisions based on it.
Technical details should be made available to the customers in the
most accurate numerical form.
The Indica has remained a best seller throughout in the industry
figuring in the top 3 selling list of cars for most of the years.
The distribution channel should be more efficient to cater the demand
during peak sessions like during dushera, diwali etc.
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BIBLIOGRAPHY
Websites:-
www.tata.com
www.tatamotors.com
www.google.com
www.scribd.com
www.slideshare.net
www.wikipedia.org
docs.google.com
www.moneycontrol.com
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