LOYOLA INSTITUTE OF BUSINESS ADMINISTRATION

TATA MOTORS
STRATEGIC MANAGEMENT
Submitted by Ajoy Infant Raj A
(F14004)
Submitted to U Srinivasa

Introduction -Automobile Market in India

The automobile industry in India, the tenth largest in the world with an annual
production of approximately 2 million units, is expected to become one of the
major global automotive industries in the coming years. A number of domestic
companies produce automobiles in India and the growing presence of
multinational investment, too, has led to an increase in overall growth.
Following the economic reforms of 1991 the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and
relaxed restrictions
In 1953, the government of India and the Indian private sector initiated
manufacturing processes to help develop the automobile industry, which had
emerged by the 1940s in a nascent form. Between 1970 to the economic
liberalization of 1991, the automobile industry continued to grow at a slow pace
due to the many government restrictions. A number of Indian manufactures
appeared between 1970-1980.Japanese manufacturers entered the Indian market
ultimately leading to the establishment of Maruti Udyog. A number of foreign
firms initiated joint ventures with Indian companies.
Following the economic reforms of 1991, the automobile section underwent
delicensing and opened up for 100 percent Foreign Direct Investment. A surge
in economic growth rate and purchasing power led to growth in the Indian
automobile industry, which grew at a rate of 17% on an average since the
economic reforms of 1991. The industry provided employment to a total of 13.1
million people as of 2006-07, which includes direct and indirect employment.
The export sector grew at a rate of 30% per year during early 21st century.
However, the overall contribution of automobile industry in India to the world
remains low as of 2007. Increased presence of multiple automobile
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manufacturers has led to market competitiveness and availability of options at

competitive costs
Indias car market has emerged as one of the fastest growing in the world. The
number of cars sold domestically is projected to double by 2010, and domestic
production is skyrocketing as foreign makers are setting up their own
production plants in India. The governments 10-year plan aims to create a $145
billion auto industry by 2016.
According to McKinsey, the auto sectors drive to lower costs will push
outsourcing. The auto sector could be worth $375 billion by 2015, up from $65
billion in 2002. McKinsey thinks India could capture $25 billion of this amount.
Out of 400 Indian suppliers, 80 percent have the ISO 9000 certificatethe
international standard for quality management.
Tata Motors
Introduction

Tata Motors Limited, formerly known as TELCO (TATA Engineering and

Locomotive Company), was formed in 1954. It is the only fully integrated
automobile manufacturer that now stands as India's largest and the worlds 5 th
largest passenger automobile and commercial vehicle manufacturing company
with a product range designed to meet national and international transportation
needs.
Tata Motors has a wide portfolio ranging from a Tata Mercedez Benz truck to
diversifying into passenger cars like Tata Sierra,Tata Estate,Tata Indigo and
Indica, concept vehicles like Aria Roadster and Tata Elegante, commercial
vehicles like Tata heavy trucks and military vehicles.

Tata Motors was first listed on the NYSE in 2004. It created wealth of Rs.
320bn during 2001-2006 and stood among top 10 wealth creators in India. It has
its manufacturing bases in Jamshedpur, Lucknow and Pune. Tata Motors has
recently had a couple of important mergers and acquisitions like with JLR in
UK, Daewoo in South Korea, Hispanso and a JV with Fiat.

SWOT Analysis

STRENGTHS

Post liberalization, in order to expand rapidly, the company adopted the route
to joint ventures (JV):
21% stake in Hispano Carrocera, a Spanish bus manufacturing company
and introducing its high-end inter-city buses in the country.
Acquisition of Jaguar and Land Rover of UK, help complete its portfolio
in the premium segment
A 70% JV with Thailands Thonburi (auto assembler) which will set up a
plant to manufacture pick-ups and will sell them in Thailand.
The 25MT GVW Tata Novus launched from Daewoos platform (TDCV
Tata Daewoo Commercial Vehicle Company).
51:49 JV with Brazilian based Marcopolo (bus building). This JV is to
manufacture and assemble fully-built buses and coaches targeted at
developing mass rapid transportation systems.
In 1993, it started manufacture of high horsepower and emission friendly
diesel engines in an effort to reduce the pollution in the existing Tata
engines and to produce more environmentally friendly engines.
In 2000, it launched CNG buses and filled the product line gap through
the introduction of the 1109 vehicle which is an intermediate commercial
vehicle and is useful for medium tonnage loads.
Its Ex- series vehicles have high tonnage capacity and high pick up and
the LCV (207 DI) with direct ignition technology caters to the customers'
requiring one and same vehicle for commercial as well as personal use.

 Tata Motors has a high domestic exposure of ~94% in the MHCV

(Medium & Heavy Commercial Vehicles) segment and ~84% in the LCV
segment.
The latest hit of Tata Motors is its mini truck Ace which is India's first
indigenously developed sub-one ton mini-truck. Ace has rapidly emerged
as the first choice for transporters and single truck owners for city and
rural transport.
The only major engine manufacturer in the world to express any formal
interest in the turbulence-boosting cylinder head grooves
There is definite cost advantage as labor cost is 8-9 per cent of sales as
against 30-35 per cent of sales in developed economies.
Tata motors have extensive backward and forward linkages and it is
strongly interwoven with machine tools and metals sectors. Also, India is
an excellent source for IT based engineering solution for products &
process Integration.
WEAKNESSES
Tata Motors' range of passenger cars is still not comprehensive by
industry standards. It has a limited product portfolio which has given its
key competitors (Hyundai motors, Maruti Suzuki) an extra edge.
Even after being in the passenger cars market for quite some time,
somewhere in the minds of consumers Tata motors is still synonymous
with heavy and commercial vehicle makers and not passenger car makers.
Also because of this consumers may think the passenger cars can lack
aesthetics and are more built for robustness.

 According to auto experts, low cost is a stronger motive at Tata Motors

that sometimes makes quality take a backseat.
The company is overstaffed and hence human resource utilization is sub
optimal.
Also decision making gets a hard hit due to extensive hierarchy prevalent
at Tata Motors.
They do not have a presence in high volume markets like America and
most parts of Europe.
Not very high car sales volume which hampers their future plans like
increasing their production and expansion.
OPPORTUNITIES
Tata plans to leverage on the strong presence of TDCV in the heavytonnage range and introduce products in India at an appropriate time.
The JV with Marcopolo will be beneficial to both companies since the
latter will absorb technology and expertise in chassis and aggregates from
Tata Motors, and Marcopolo will provide know-how in processes and
systems for bodybuilding and bus body design.
JV with Fiat, it is likely to gain access to Fiats diesel technology and to
the latters strong overseas distribution network for its passenger cars.
Tata Motors may extend this relationship to other segments like pick-ups
and MHCVs.

 Launch of the global truck will mark the entry of the company into
developed markets like Europe and the USA. Working with Iveco means
that the designs will be in sync with the needs of sophisticated European
customers.
GOI policy for modernizing of vehicles to arrest degradation of air
quality and move toward international taxing policies linked to age of
vehicles, are steps which will lead to increased sales for TATA motors
Commercial vehicle division.
The cut in excise duty that enabled manufacturers like TATA Motors to
reduce prices
The need to transport higher volumes of agricultural and industrial goods.
The cut in tariff on petroleum and diesel from 8 per cent to 6 per cent will
make commercial vehicles more competitive in the export market.
Development of the national highway development program will increase
TATA sales in the long run.
Tata has developed a car it aims to sell for about $2,500 USD, which
would be considered the cheapest vehicle ever made in real terms.
There is huge demand in domestic markets due to infrastructure
developments and Tata Motors is able to leverage its knowledge of Indian
market. There are favorable Government polices and regulations to boost
the auto industry i.e. Incentive for R&D.
THREATS WITHIN THE INDUSTRY

There are a lot of new competitions coming up in the commercial vehicles

segment which threaten the huge market share which Tata Motors has garnered.
Some of the new Joint Ventures and competitions have been listed below:
M&M has formed a 51:49 JV called Mahindra International with ITEC,
USA, (parent NAVISTAR), to manufacture commercial vehicles. ITEC is
the leader in medium and heavy trucks and buses in North America, and
is the world's largest manufacturer of medium-duty diesel engines.
Force Motors: JV with MAN for manufacturing high-tonnage vehicles
Force Motors has paired up with MAN in a 70:30 JV to manufacture
high-tonnage and specialty vehicles. Further, the two companies have
formed another JV to manufacture buses in India from end-2007.
Ashok Leyland: Acquisition of Czech Republic-based Avia Ashok
Leyland (ALL) recently acquired the truck unit of Czech Republic-based
Avia.
Volvo, a leading manufacturer of trucks, buses, cars, construction
equipment, and aero engines has a main focus in the area of fully built
buses. In India, it has focused on providing economical transport
solutions in consonance with its values of safety, quality, and
environmental care. Its trucks are reputed for their performance and
economy and are the flag bearers in their production activities in India.
THREATS OUTSIDE THE INDUSTRY
Farmers are agitating against the land acquired by the firm in Singur for
its ambitious Rs 1, 00,000 car project. The protest is being lead by Mamta
Banerjee of the Trinamool Congress. Farmers are protesting that the land
is fertile land and the government acquired the land without their consent.
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Presently this matter is lying in the court of law and is still a contentious
issue.
An Indian cabinet panel will soon consider a new automobile policy that
aims to set fresh investment guidelines for foreign firms wishing to
manufacture vehicles in the country. The policies adopted by Government
will increase competition in domestic market, motivate many foreign CV
manufactures to set up shops in India.
Increased interest rates have a potential to hit the sales. Auto loans have
become costly causing customers to defer their purchase which has
impacted the sales of Tata Motors.
The strengthening of the rupee against the dollar has made their cars less
attractive in the foreign market.

PEST Analysis

POLITICAL
Since Tata Motors operates in multiple countries across Europe, Africa, Asia,
the Middle East, and Australia, it needs to pay close attention to the political
climate but also laws and regulations in all the countries it operates in while also
paying attention to regional governing bodies. Laws governing commerce,
trade, growth, and investment are dependent on the local government as well as
how successful local markets and economies will be due to regional, national
and local influence. In accordance, Tatas headquarters in Mumbai, India,
strictly controls and regulates operations in all dealerships and subsidiaries, in

addition to knowing and abiding by all labor laws in the multiple countries
where they have manufacturing plants it has to watch political change.
ECONOMIC
Operating in numerous countries across the world, Tata Motors functions with a
global economic perspective while focusing on each individual market. Because
Tata is in a rapid growth period, expanding or forming a joint venture in over
five countries world-wide since 2004, a global approach enables Tata Motors to
adapt and learn from the many different regions within the whole automotive
industry. They have experience and resources from five continents across the
globe, thus when any variable changes in the market they can gather
information and resources from all over the world to address any issues. For
instance, if the price of the aluminum required to make engine blocks goes up in
Kenya, Tata has the option to get the aluminum from other suppliers in Europe
or Asia who they would normally get from for production in Ukraine or Russia.
Tata Motors also has to pay close attention to shifts in currency rates throughout
the world. Currency fluctuations can equate to higher or lower demands for Tata
vehicles which in turn affect profitability. It can also mean a rise in costs or a
drop in returns. But they also have to pay attention to not just the domestic
currency, the rupee, but also to the dollar, euro, bhat, won, and pound, to just
name a few. Just because the rupee is strong against the dollar does not mean it
is strong against all the other currencies. Attention to currency is important
because it influences where capital investment will develop and prosper.
SOCIAL
Undoubtedly, the beliefs, opinions, and general attitude of all the stakeholders in
a company will affect how well a company performs. This includes every
stakeholder from the CEO and President, down to the line workers who screw
the door panel into place, from the investor to the customer, the culture and
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attitude of all these people will ultimately determine the future of a company
and whether they will be profitable or not. For this reason, Tata Motors tends to
use an integration and rarely separation technique with foreign companies they
acquire. In 2004, Tata Motors acquired Daewoo Commercial Vehicles
Company, which was at the time Koreas second largest truck maker. Rather
than using de-culturation or assimilating Daewoo, Tata took an integrated
approach, and continued building and marketing Daewoos current models as
well as introducing a few new models globally just as it had been done under
Korean management
TECHNOLOGY
Tata Motors and its parent company, the Tata Group, are ahead of the game in
the technology field. The foundation of the companys growth 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
(Tata). Employing 1,400 scientists and engineers, Tata Motors Research and
Development team is ahead of the pack in Indias market and right with the rest
of the field internationally. Among Tatas firsts are the first indigenously
developed Light Commercial Vehicle, India's first Sports Utility Vehicle and, in
1998, the Tata Indica, India's first fully indigenous passenger car, as well as the
increasingly famous Tata Nano, which is projected to be the worlds cheapest
production car (Tata). In the automotive industry, it is becoming increasingly
crucial for manufacturers to stay on top of the technology curve with new
problems always rising such as escalating gas prices and pollution problems.
Tata recognizes this and dedicates lots of resources and time into research and
development to be even with or preferably ahead of other competitors, global
trends, and changing economies. In all, an automobile manufacturer must
change, adapt, and evolve to stay competitive in the automotive game, and this

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is exactly what Tata is doing with their rapid growth, and extensive research and
development.
THREE YEARS FINANCIAL ANALYSIS OF THE TATA MOTORS

IFE Matrix

INTERNAL FACTOR EVALUATION (IFE) MATRIX

STRENGTHS
KEY INTERNAL FACTORS

GLOBAL PRESSENCE
NEW VISION & STRATEGY
LARGEST MANUFACTURER IN INDIAN
MKT
STRONG BRAND MANAGEMENT
RESEARCH AND DEVELOPMENT
LARGE SCALE OF EMPLOYEES &

WEIGHED
WEIGHT RATING SCORE
0.06
3
0.18
0.07
3
0.21
0.08
0.07
0.08
0.07

4
4
4
3

0.32
0.28
0.32
0.21
12

QUALIFIED ENGINEERS
WIDE RANGE OF AUTOMOBILES
FLEXIBLE PRICE RANGE AS PER
VEHICLE TRAITS

0.07

0.21

0.06

0.18

WEAKNESSES
KEY INTERNAL FACTORS

SENSITIVENESS TO FUEL PRICES

CUSTOMERS PREFERENCE CHANGE
COUNTRY POLITICAL SITUATION
GREEN CAR DEMANDS AND
DEVELOPMENT
TECHNICAL PROBLEMS
RAW MATERIAL PRICE INCREASE &
INFLATION

WEIGHT
0.07
0.07
0.06

WEIGHED
RATING SCORE
3
0.21
3
0.21
4
0.24

0.07
0.09

4
4

0.28
0.36

0.08

0.32

1.00

3.53

EFE Matrix

EXTERNAL FACTOR EVALUATION (IFE) MATRIX

OPPORTUNITIES
KEY EXTERNAL FACTORS

LOW PRICE BUT PROFITABLE

LARGEST MARKET SHARE
DIVERSIFICATION IN VEHICLES
COULD PENETRATE IN RURAL MARKET
NEW ACQUISATION CAN BOOST IN UK,
CHINA AND OTHER COUNTRIES SALES
VERTICAL INTEGRATED INTEGRATION FOR

RATIN WEIGHED
WEIGHT G
SCORE
0.07
3
0.21
0.08
4
0.32
0.08
3
0.24
0.07
3
0.21
0.09
0.08

4
3

0.36
0.24
13

BETTER CONTROL

THREATS
KEY EXTERNAL FACTORS
RATIN
WEIGHT G
GLOBAL RECESSION AND POOR ECONOMIC
CONDITION
LONG TERM FINANCING PROBLEM
HIGH FUEL PRICES
NEW ENTRANTS WITH BETTER
TECHNOLOGY
POLITICAL PRESSURE
GOVERNMENT POLICIES
FAILURE OF NEW TECHNOLOGY

WEIGHED
SCORE

0.08
0.07
0.08

4
3
4

0.32
0.21
0.32

0.07
0.08
0.08
0.07
1.00

4
4
3
3

0.28
0.32
0.24
0.21
3.48

14

TOWS MATRIX

SPACE MATRIX

15

Porter's 5 Forces Model

16

Competitive Profile Matrix (CPM)

Critical Success Factors

Market Share
Product Quality
Management
Financial Position
Global Expansion
Price Competitiveness
Customer Service
Product portfolio
Promotion Strategies
Sales Distribution
Production Capacities
Total

Weight
0.12
0.12
0.08
0.08
0.07
0.12
0.08
0.10
0.10
0.08
0.05
1.00

Tata Motors
Rating Score
1
0.12
3
0.36
4
0.32
4
0.32
4
0.28
4
0.48
2
0.16
1
0.1
1
0.1
2
0.16
4
0.2
2.60

Maruti Suzuki
Rating Score
4
0.48
4
0.48
3
0.24
3
0.24
3
0.21
3
0.36
4
0.32
4
0.4
4
0.4
3
0.24
2
0.1
3.47

Current Strategies

MARKETING
Focus on customer retention in order to continue their good marketing
strategy.
Their strategy should be in merging and acquisition.
They need collaboration to withstand against global players and to
stabilize their organization during economic recession.
FINANCIAL
Frame a financial strategy that can avoid them from failures in future
business.
They framed an approach which involves cost reduction methods by
efficient manufacturing, being a strong domestic player to strengthen
their market share and expansion with acquisition to form global network
in order to face the competition
RESEARCH & DEVELOPMENT
First class R&D support enables TATA Motors in producing high quality
products.
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 It has 3000 employees and research scientist who work for R&D
department with centers almost all over India along with Spain, UK and
South Korea internationally.
They introduced very recently in 2008 the people's car Tata Nano which
created huge market domestically and attracted the world's attention.
HOW EFFECTIVE IS THE STRATEGY

Tata Motors Group had a successful fiscal year 2012 with net revenues
increasing by 36% and profit after tax increasing by 46%.
Market share now captured 62.2%
19% domestic sales increased with commercial vehicles and dominating
increase of market share in light vehicles up to 60% well.
Domestic passenger car grew about 4 % according to industry growth
rate.
Domestic passenger car prices increased about 3.3%.
Acquired of Jaguar/Land Rover increased growth in this segment about
29%.
STRATEGIES which they can implement

Cost cutting strategy would be the first and foremost option Tata motors
should possess in order to compete with global leaders.
They already have Goodwill over their products and it will be an added
advantage if they could reduce the manufacturing and raw material costs
through efficient commodity chain development.
The next important factor to be considered would be the sustainability
risks each and every product developed by Tata motors must be
multifunctional, so that customers may have their options to utilize and
explore their product much more than normal.
Major strategy of Tata motors is its ability to exploit information
technology. For e.g. In case of Tata nano it was an early adopter of CAD
and CAM systems to speed design of Tata nano.
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 Strategy of outsourcing noncore activities, it has outsourced its IT

technology to Tata tech. ltd. And its IT infrastructure to IBM.

In TATA SAFARI 4*4 DICOR it has installed reversed guide system

i.e. weather proof camera is fixed to rear car to help driver while
reversing car.
PRICING STRATEGY- giving discount every month & special
promotion technology.
GRAND STRATEGY
PRODUCT DIFFERENTIATION STRATEGY

Tata Motors new launches like Aria and the new 2011 Safari to regain its
lost market share.
Tata is looking at doubling SUV annual volumes to over 70,000 units in
the next 12-18 months, including exports.

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Tata Motors is set to offer utility vehicles at every price point right from
Rs. 6.5 lakh to Rs. 15 lakh.

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