Term Paper - Tata

TERM PAPER

TATA

PREPARED BY:-

(GROUP ‘A’)

VAIBHAV SWAROOP

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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

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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

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Chapter-4: Strategic Analysis 66

SWOT Analysis 66

BCG Matrix Portfolio 69

Chapter-5: Conclusion 70

Conclusion 70

Findings 71

Suggestions 72

Bibliography 73

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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

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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

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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

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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

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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

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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

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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

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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.

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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.

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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.

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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

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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)

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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

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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.

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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

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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

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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):

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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 

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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

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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.

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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

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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.

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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

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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

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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

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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.

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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.

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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:

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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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