Company overview of Tata Motors Limited

Comp whatsoever all oerview of Tata Motors LimitedTata Motors Limited was founded in 1945 and it is the most fortunate gondola manufacturing corporation in India. With Tata Group as its pargonnt association and rattan Tata as its CEO, Tata Motors has sold almost 6 one(a) million million million vehicles nationally since their world-class launch in 1954 (Tata Motors, 2010). In expanding their ancestry internationally, Tata Motors has proven that they are certified as a nonher competitor in political machine industry. Their crossways are commercial message vehicles the likes of buses and trucks, and withal passenger automobiles like Tata Sierra, Tata Estate, Tata India, Tata Nano, Tata Xenon, etc. The ships company taxation was Rs. 27, 055.57 crores in June 2010 (Tata Motors, 2010). In India, Tata has operations in Jamshedpur, Pune, Luc populate, Patnagar, and Dharwad. Tata Motors was listed in refreshing York cable Exchange in 2004, followed by open their operations in UK, southwesterly Korea, and Spain (Tata Motors, 2010).In 2004, Tata Motors joystick venture with Daewoo mercantile Vehicles federation from randomness Korea and form Tata Daewoo. Continue one year later they bought Hispano Carrocera, a Spain company and in any case in 2008, they bought puma and prop bird of passage from Ford, a UK based automobile company (Tata Motors, 2010).Macro Environment psycho digest of the confederationIn analyzing macro milieu of Tata Motors, it is crucial to know the main factor outs that influence the company when move into business to a nonher realm. Political, Economic, Social, and scientific (PEST) analysis is use to dig deeper rough external factors which affect business in macro environment. With 4 perspectives in PEST analysis, it lead ease us to know the host food merchandiseplace circumstance, possible issue, opportunities, decision making, and crucial measuring rods ( policeson, 2006).III.1. Political-LegalPolitical is about the look into of politic and security in the home(prenominal) grocery which influence chance(a) activity, including business. Legal is about the bureaucracy or pattern that should be fulfill when we trust to open a business. This is alike an important factor because without obeying laws, rules, and regulation in the country, it is almost impossible to establish commercialise there. Tata Motors was realised in India, so Tata Motors has to allude on laws, rules, regulation, and political stability in India. unless since Tata Motors has many subsidiaries in many countries, Tata Motors has to obey the host countrys laws excessively. In 2008, Tata Motors bought over background wanderer and panther from Ford Motor. Since then, Tata also has to reverence on the UK laws and regulation (Carty, 2008). Moreover, as the counter relaxation company to be listed in unseasoned York transmission line Exchange, Tata Motors also has to line of work on US politics..Generall y, the political factor in the companys macro environment such as tax policy, government regulations, and laws. It is famous that India is one of the countries which stimulate a complicated bureaucracy, this is one of the obstacles if establishing business there (Sastry, 2005). Political unstable such as wars or conflicts also cause inflation and may affect rock oil bell in one country. High inflation cause the government has to rise up prices, and oil price is the common price to get raised. And it is automatically the elevateder(prenominal) price of oil lead affect the sales of cars (Wardell, et al., 2008).There were whatsoever political conflicts which were faced by Tata Motors youngly. In their official website, stated that rattan palm Tata (Tata Motors CEO) faced difficulties when he wanted to lauch Tata Nano. They receive to deal with about sacking norms and regulations in order to grow the cars (Tata Motors, 2010).As been reported on Bloomberg Businessweek in 20 08, there was conflicts happened between two political parties when Tata Motors wanted to established their manufactory in Singur (India) and some protests from the local farmer. The conflict was about the agricultural domain of a function which Tata used to build the factory. Finally, Tata Motors had to relocate their factory and lost $ coulomb million for relocation make up and over $ 300 million for investment (Banerjee and Guha, 2010). This occupation is to prove that how stable the political situation of the country rooks an important persona in the companys macro environment.III.2. EconomicalThe condition of economic system in recent snip or in the in store(predicate) groundwork influence the evolution and st sendgy of the company. This is very important because Tata Motors is a multinational company. Tata Motors has to guess the skip of economic growth in all atomic number 53 country that they do business with. This factor tells about the economical factor that surrounding the company such as providence fluctuation, monetary and fiscal policy, government spending, unemployment level, pastime rate, supersede rate, Gross Domestic ware (GDP) per capita, etc.In the house servant market, Tata Motors has to pay attention to the economic condition of India. India is a softening country with GDP per capita = $ 3,200 and $ 3.68 trillion national purchasing agent (CIA, 2009). As been touched by the depression of global economic, Indias automobile industry also has to substantiate the consequences. The increase of material price forced Tata Motors to increase its truck price of 3.5% which lead to come drink down in necessitate (Mapso square offia, 2010).In the international market, Tata Motors aims much(prenominal) than to developing countries and middle-class family (Peacock, 2008). Each and every country has their own exchange rate or currency and it keep on changing every time. So for being a multinational company, Tata Motors has to concern in any changing of countries currency, especially US Dollar because Tata Motors also listed in New York Stock Exchange (NYSE, 2010). Inflation is also one of the factors, because it affects the hobby rate for doing investment in a country (Russell, 2006). The increase or decrease of Inflation, leaveing lead to a trim down or higher interest rate. Looking deep to the economical macro environment may dish out Tata Motors in price setting, demand, cost, and decisional making in the company.III.3. Socio-CulturalSocio-cultural is focus on the office of consumer and employee which also affect the strategy. Strategy planning essential(prenominal) follow the outgrowth of educational level and social assessment in order to foresee the influence toward the strategy. nigh of the factors are income distri scarceion, attitude, education, health and wellness, changing life sentence style, and demography.Tata Motors must realize the type of customers in India as its domestic market. The attitude and life style of those customers affect the demand for Tata Motors which also influence its decisional making (Tata Motors, 2009). Indian spate are measured with their spending. They do not want to deprave thing which is not worth it (Sharma, 2010). They are also ordinarily amend and easy access to information. So, Tata Motors has to look at local perspective to market their harvest-festival (Deoras, n. d.).Besides that, in doing business in 26 countries with 26 different cultures in each country, Tata Motors has to under stalling and apply different strategy. For moral Tata Motors usher outnot apply Indian culture to coupled ground when they purchased push down Rover and Jaguar from Ford (a UK based company), because each place has their unique demographic. other example would be When marketing their harvest-home, Tata Motors must know the local demand. India for example, they direct pretty low GDP per capita and most of the people prefer weeny car (Alvares, 2010). So, Tata Nano (one of Tata Motors ingathering, a small car with $2500 price and the world cheapest car) seems blend in into the market (Nussbaum, 2008). In 2009, Tata Motors faced culture difficulty in United States whereby affected the sales of their Jaguar. galore(postnominal) American did not want to steal a famous brand like Jaguar if it is owned by Indian company (Kamath, 2009).In focusing their socio-cultural environment, Tata Motors has Corporate Social office (CSR) team which does social activities, donation, charity and caring the environment (Tata Motors, 2008).III.4. TechnologicalTechnological environment could affect raw material, operation, ingathering, and company serve. The development of technology can accomplish huge opportunity to increase the reaping output in the company. Government intervention through tax policy and laws also play important role in the development of technology. The willingness to do innovation and fetching risk seems to be the important component in this factor. Technological environment such as The impact of changes in technology, radical invention and development, cost and use of technology, and information technology development. This factor could go against a warring advantage to the company.As one of the giant automobile company, Tata Motors has to adapt and develop their intersection point to the technology. The adaptation is not only in the factory machines just now also in the car parts. Tata Motors allocate 2% of their Sales to query Development Department (Tata Motors, 2010). Now, they are working to make environmental matey buses such as hydrogen score notice cell buses and hybrid cars (Doggett, 2010).not only in the real world, but Tata Motors also expand their services through internet. Tata Motors has on Online Booking Services which allow customers who has problem with their car to book date to send their car to their workshop. Now, customer also can purchase Tata Nano through internet, Tata Motors expand their business to e-commerce marketing (Marathe, 2009).III.5. SWOT Analysis of Tata MotorsSWOT Analysis is a tool to analyze situation and condition of a business. It interprets the Strengths, Weaknesses, Opportunities, and Threats of the business. It is jockful to support the decisional making in the company because this analysis shows the current performance of the company and the possible challenges in the future time (Kern, 2001). And these are the SWOT Analysis of Tata Motors which been described from their official websiteIII.5.1. Strength conceptive brand image Good management Done many advanced innovationsIII.5.2. Weaknesses The market design mostly is lower level citizen Advertisement and procession hushed below other companiesIII.5.3. Opportunities The acquisition of Jaguar-Land Rover will give more(prenominal) opportunities to mystify different fruit innovation and aim to opulence market segment. The new Tata Nano as t he world cheapest car will re prove spiles of demands.III.5.4. Threats The tight conflict in automobile industry The high oil price The high price of raw materialsThe International preconditionAs being the largest automobile company in India, Tata Motors knew that they could gain more attain by expanding their market globally. Opening business in some other countries outside their domestic market in India will stimulate benefit to them to be closer to their customers and reach worldwide market.IV.1. Worldwide BranchesTata Motors was established in 1945 however Tata Motors started expanding their business internationally since 1961, they are doing merchandise with over 80 countries in 5 continents. In 1992 Tata Motors reached Europe market by export (Ibef, 2010). They have operations in Venezuela, Senegal, Ghana, Nigeria, Zaire, Tanzania, sulfur Africa, Spain, Italy, United Kingdom, Ukraine, Russia, Chile, Australia, Poland, jokester, Syria, South Arabia, India, Sri Lanka, B hutan, Thailand, Malaysia, and Bangladesh (Tata Motors, 2008).With 23,000 employees worldwide, Tata Motors is the first automobile company to be listed in New York Stock Exchange (NYSE) in 2004. In the comparable year also they bought Daewoo Commercial Vehicles Company, a South Korea truck manufacture. Again Tata Motors expand its wings by purchaseing 21% shares of Hispano Carrocera in 2005, a bus maker from Spain. A year later, they peg venture with Thonburi Automotive Assembly Plant Company from Thailand. Moreover, they also cooperate with Marcopolo, a Brazilian company. Furthermore, in 2008 Tata Motors acquired Jaguar and Land Rover from a UK company, Ford (Tata Motors, 2010).IV.2. Tata Motors Concern toward International BusinessAs one of the crowing player in automobile business, Tata Motors must concern on many important things such as environment, politics, and cultures. There is a big issue right now in Tata Motors which is related to their concern toward environment. A big demand for their low cost car Tata Nano will vex even more pollution because it is affordable and every people will secure it (Shivani, 2010). It is a dependable sign for the company but a bad sign to the earth.To focus into Tata Motors international business, United Kingdom is taken as an example. UK market is favourable for Tata Motors. Some of the advantage that they legitimate by doing business in the UK are Language because India used incline as their official language and so does UK, Tata Motors sees UK market is potential, UK is more hypnotic than another country also because they have lower ledger entry barriers and they have a impregnable network for principal sum which is very important for Tata Motors (Purcell, 2009). Tata Motors has to concern on UK economic condition too, because it is a main market for Jaguar and Land Rover (Subbu, 2003 David, 2008). It is saver for Tata Motors for doing business in UK because the stability of jam Sterling and UK is a goo d place to make Foreign bear Investment (Invest in the UK, 2010).But overall, Tata Motors has to concern on the tight competitiveness in automobile industry in the UK. Huge brands such as Toyota, BMW, Honda, Mercedes-Benz, etc, are also big players in the market. Therefore, Tata Motors must keep the rigid performance by keep developing new product to drag customers. Also keep good relationship with customers to leaven their allegiance (Nemo, 2010).IV.3. internationalisation MethodTata Motors ways to international business such as joint-venture, adjuvant, exporting, franchise, and dealer distribution. Tata Motors used Joint-venture or associate companies to touch Europe market (Ibef, 2010). They associated with Hispano Carrocera in Spain and let Tata Hispano. Tata Hispano produces coach, big buses, large cars, and regional transport (Auto, 2009). In 2009 Tata Motors bought 100% stake of this company (Indian Info Tech, 2010).Subsidiary or acquisition agent when a company is ow ned and controlled by its parent company by and by has been acquired (Lennon, 1999). Tata Motors has 30 subsidiaries and 20 of them are outside of India. They gained almost Rs. 6500 crore revenue from the subsidiaries in 2006 which contributed almost 20% of the group revenue (Tata Sons Ltd, 2007). The most profitable subsidiary is Tata Daewoo Commercial Vehicle (TDCV) in South Korea and Telco Construction Equipment Company (Telcon), cooperate with Hitachi in India (Tata Sons Ltd, 2007).Besides doing joint-venture and subsidiary, Tata Motors also exports some of their products. In 2008, Tata Motors exported more than 33,000 units (Tata Motors, 2009). The exported country is spread in 5 continents and more than 70 countries. In the year 2006, Tata Motors exports reached 11% of its total sales (Onkvisit and Shaw, 2004) they focused in South Africa market in that year and exported almost 33% of the total export (Economic Times, 2006).Tata Motors has franchisees in some countries such a s Kenya, Bangladesh, Senegal, Russia, and Ukraine (Tata Motors, 2010). In addition, they have dealers to mobilise their cars to their customers in Venezuela (Tata Sons Ltd, 2010).IV.4. Problem Faced by Tata MotorsEven though the subject of international business seems fertile, but it has so many obstacles and problems. Tata Motors has to be careful to overcome all the problems. Some of the problems would be Joint venture problem, diminish of stock, economic downturn in America and Europe, and last but not least is the tight global competitiveness of automobile company (Menezes, 2005).First, joint venture problem. When Tata Motors took over Jaguar and Land Rover in 2008, both them was doing badly (The Economist, 2009). Jaguar sales dropped to less than 65,000 cars in 2007 while Land Rover turned form favourable to unfavourable because they world demand is changing to environmental friendly cars while Land Rover hush up producing its spendthrift fuel cars. To overcome these proble ms, Tata Motors made a careful trample by making new car design. Tata Motors came with Jaguar X-type which is better in design and also cheaper. They had a warm response from the market. To entertain it, Tata Motors asked help from Jaguar-Land Rover management to take part in the company. In Land Rover case, Tata built Land Rover LRX which is better in fuel consumption and low emission (Kamath, 2009).Another problem would be the fall stock of Tata Motors in 2008. This problem rose because of the $ 3 billion debt that Tata Motors loaned to buy Jaguar-Land Rover which could cause higher interest cost and lower down earnings (Kamath, 2009). This problem also compounded by the global economy crisis. Many Investors afraid that Tata Motorss stock would fall down. The best declaration to this problem is to increase sales by making lower cost cars which will tempt the customers, also support from Tata Group (its parent company) to help Tata Motors to settee their financial problem fir st (Krishnamoorthy and Koenig, 2008 Moinansari, 2009).Can be said that Tata Motors enter the global market was not in a right time. When it acquired Jaguar-Land Rover from Ford, American and European markets were in a weak point. The best solution in this condition is to keep the good management between Tata Motors and Jaguar-Land Rover, and also good investment in their product line like the in style(p) Tata Nano which is the world cheapest car to reach every corner market (MBA, 2010).Although Tata Motors is a largest automobile company in India, but it only ranked as the 19th largest manufacture in the world (OICA, 2009). So, to face the competitiveness among the companies, Tata Motors must find a way to attract the market, for example New product line, Make a low price car with a good shade, maintain their safety level, etc (Horner, 2009).The Future Growth of BusinessTata Motors performance is also countable in automobile industry. With Tata Group as its parent company, and ra tan Tata as its CEO, Tata Motors is keep growing and expanding their market. In their official website, stated that the company revenue jumped 30.5% from last year and they got Rs. 2,571 crores of profit (Tata Motors, 2010). It is a positive growth from the company.Ansoff Product-Market Matrix was founded by H. Igor Ansoff in 1957. This marketing tool is used to help company to find the best strategy that should they choose to reach the objectives (Harris, 2000 Botten, 2008). outset Ansoff 1957 cited in Campbell and Craig, 2005Output from this Ansoff Matrix is a growing strategies which are detach for every part of business. Igor Ansoff stated that there are 4 strategies in Ansoff Matrix, they are 1). Market perceptivity, 2). Product Development, 3). Market Development, and 4). Diversification (Graham and Allan, 2008).V.1. Market PenetrationThe company is trying to reach the existing market with product that has existed too. This is the safest step because it has lesser risk than any other strategies. Usually, companies use this strategy to attract their competitors customers. Tata Motors used this strategy when they reached UK market by take over Jaguar-Land Rover, Tata Motors did not just concentrate on the new products line that they can produce from the two companies above but instead, Tata Motors still producing Tata Indica in the market (Tata Motors, 2003).V.2. Product DevelopmentThe company offer new product to the present market. This is an important strategy to give fresh breath to the market. The new product will attract more customers from the existing market. The first product development of Tata Motors was Tata Sierra, their first passanger vehicle. Tata Sierra was marketed in 1991. And that was the first step of Tata Motors to develop their product and future strategy (Tata Motors, 2010).Tata Motors also did product development when they started to produce Tata Nano in 2008, rattan cane Tata thought about making the world cheapest car and prod uced it in the domestic market first, India (Tata Motors, 2009). The strategy was to sell affordable car to the people in the same time, expanding their market.Before that, Tata Motors authentic the first mini-truck in India called Tata champion. Tata Ace came to the market in 2005 and in 2 years time, they have sold 96,000 units of Tata Ace (Tata Motors, 2007). By marketing this product, Tata Motors expand their market to mini-truck segment and become market leader (Thakkar, 2010).As been stated in Businessworld website (2010), Tata Motors is planning to put Rs. 10,000 crore for product development. The investment will be used to cover their debt when purchasing Jaguar-Land Rover, to buy new technologies, and any other improvement.V.3. Market DevelopmentUse the present product that belong to the company and offer it to a new market. Many MNE usually use this strategy to reach wider market domestically and internationally. Some examples of market development are expanding to anoth er country, selling the product to a different market segment, and using the product for different function (Graham and Allan, 2008). Tata Motors has developed their market overseas they reached South Korea market in 2004, Spain market in 2005, Thailand market in 2006, UK market in 2008, and many more. Tata Motors sells their existing product like buses, trucks, and cars in those markets. Tata Motors is planning to make their market even wider by opening new companies in developing countries such as Indonesia, Philippines, and Turkey (Tata Motors, 2010).V.4. DiversificationThis is a strategy whereby the company makes a new product and offers it to the new market. Diversification has higher risk than another strategies because the market and the product is new, but in the other side it could bring more profit to the company as it will bring new customers (Graham and Allan, 2008).Tata Motors diversified their product when they entered UK market and took over Jaguar-Land Rover in 2008 (Rao, 2009). It allowed Tata Motors to produced new products line, for example Jaguar X-Type and Land Rover LRX (Kamath, 2009).New VentureTata Motors main target market mostly is developing countries because developing countries seem to have fewer barriers to entry and the market is growing (Wentz, 2007). Tata Motors currently is famous with their Tata Nano, a one-lakh-car which is cheap in price this car is only cost Rs. 100,000 or $ 2,500 (Tata Motors, 2010), this car really fits for developing countries which have lower GDP per capita, and also Tata Motors produces buses and trucks which is suitable for industrial country. It is proven by how they operate business with Thailand, in 2008, they managed to sell 600 big trucks (HT Media, 2009).To expand Tata Motors market, Indonesia will be chosen. Dilip Chenoy, director of Society of Indian elevator car Manufacturers (SIAM) says that Indonesia has a very good market and it is showing an optimistic economy (Reuters, 2009).VI.1. Meth od of Business EntryThe method of business entry that should Tata Motors do is Foreign Direct Investment (FDI). They did the same when they entry Thailand market Tata Motors joint venture with Thornburi Automotive Assembly. And since Indonesia and Thailand has similar market, it will be good if they find a partner in Indonesia and joint venture with them (Bhattacharya, 2010). FDI has a lot of benefits to both sides. It gives advantage to the host country to develop their economy, enhance the technology, more capital and investment, and new product. To the original firm, it gives opportunity to expand the market, easier marketing process, and sure as shooting will bring more profit to the company (Graham and Spaulding, 2005).Indonesia has become target for FDI to so many companies in many countries. Lots of Multi National first step (MNE) planted their business there (Afrida, 2010). Foreign Capital Investment Law No. 1 of 1967, amended by Law No. 11 of 1970 regulates FDI (Expat Ass ociation Jakarta, 2010).VI.2. hall porters Five Forces AnalysisThis theory was found by Michael Porter. It is used to analyze competition between industries. It says that a company should not be only competitor oriented but also has a constitute market vision, Porter explains that our potential competitors are those infant industries, suppliers, customers and buyers, and successor product producers. Therefore we have to know 5 forces that determine the character of one industry, they are The threat of new entrants, Rivalry among existing competitors, The threat of substitute products or services, The bargaining power of buyers, The bargaining power of suppliers (Porter, 1979).Source Porter 1979 cited in Harvard Business Review, 2008This theory will help us to understand the Indonesia market for Tata Motors, by using its 5 factors it will be easier to know the market strength and opportunity. First is The threat of new entrants. This force is usually influenced by barriers to entr y. For example laws and regulation, access to materials, tariff, investment cost, etc. The more barriers to entry, the lower the threat of new entrants. Tata Motors must be aware for this threat if they want to come to Indonesia. Indonesias market for Tata Nano seems good because most of the cities in Indonesia are herd and often jammed so the small and cheap car like Tata Nano will be on demand (Chaudhary, 2009). The new entrants which can give threat for Tata Motors such as Intelligent Geely, a 1,500 car by China Geely Automobile (The Economist, 2008) and also Maruti Ritz by Maruti Suzuki (Autocar, 2010). So, Tata Motors must maintain the loyalty of its customers by always giving the best services and always produce not only cheap but also good quality cars.Second is Rivalry among existing competitors. It is the most common thing in business world. If the business has many competitors, it could give disadvantages to the company because they share the same amount of customers (Roye r, 2005). Tata Motors will have many competitors in Indonesia, such as Honda, Toyota, Mitsubishi, Daihatsu, and many more. Each brand has their own competitive advantage, so Tata Motors have to make sure that they are strong enough to enter the market by keep innovate their cars, keep the low price, and promote more (Landge, 2010).Third is The threat of substitute products or services. This theory investigates how many substitutes that the product has in the market. The existence of substitute product will block up the producer freedom for price setting (Morrison, 2008). The high price of oil sometimes lower down the demand for car, especially nowadays when the oil price has reached $87/barrel (OPEC, 2010). People might substitute it with bicycle, motorcycle, or hybrid car which is popular recently. The strategies that Tata Motors should do are produce good quality cars, innovative products, and keep update with latest technology (Humad, 2005). after part is The bargaining power of buyers. The more products that the company has will bring a more choices to the buyers which will make their position become stronger. Buyers or customers are the main key for company, because they bring sales and profit (Miles, 1995). The target customer for Tata Nano is moderate to low level because it is affordable. The cheap price will bring positive respond from Indonesia market (OConnor, 2008).And the last one is The bargaining power of suppliers. This explains how important a supplier to a company. If lets say there are only a few suppliers in the market, the material will become rare and the bargaining power for the suppliers will be higher (Peng, 2008). Tata Motors Indonesia will still depend on their suppliers in India, so they need to maintain close relationship to the suppliers especially when the demand increases (Sachin, 2010).ConclusionTata Motors, India largest automobile company has proven that they are countable in automobile industry. They are successful to reach domestic market and global market. Now, Tata Motors has reached market in 26 countries worldwide, from South America, Africa, Europe, and some part of Asia. This condition forces them to know every single countrys political, economical, socio-cultural and technological issues and operates the business according to that. The headquarters in Mumbai (India) is responsible to balance and to control how the subsidiaries in many countries operate their production because political changing and conflicts always exists.Tata Motors might face many competitors from the whole world, but to stand still and conquer the competitors is by developing products and keep innovating, this will give competitive advantage to Tata Motors. In these 2-3 years time, Tata Motors will invest to enhance their technology and cover their debts. This is a very good action from Tata Motors to show how integrated and strong they are. However, Tata Motorss step is not over yet, they are still expanding the business t hrough many strategies. Developing new products and covering new market will always be their main purpose. Their vision is outflank in the manner in which we operate, best in the products we deliver, and best in our value system and ethics Ratan Tata.Word Count 4677 linguistic process