The paper has been developed in a case study of Tata Motors, Ltd, India’s principal multi-holding automobile manufacturer. Tata Motors, Ltd was established in 1945 and since the very beginning of its journey; the organization has made significant business growth through acquisition, joint venture strategies and introducing personal as well as passenger vehicles in the dynamic market. The automobile manufacturing company has made an efficient market breakthrough in commercializing private Indian cars such as Tata Indica and Tata Indigo. In the case of latest development Tata Motors, Ltd has launched world’s cheapest automobile, Tata Nano. Apart from that, Tata Motors acquisition of Land Rover and Jaguar has simply made a massive mark on the global platform.
Question 1
In the past few years, the global motor vehicle industry has made significant changes as high fuel prices have left a massive impression on the industry. Considering the upward price movement of the crude, the global motor vehicle manufacturers have shifted their prime focus to develop cars that can be highly fuel efficient. Most of the automobile manufacturers have tried to concentrate on introducing hybrid cars that can swiftly run by diesel to move the market. On the other hand, some of the leading brands and manufacturers have not bothered about the fuel prices as they have offered more luxury cars hoping for a turnaround in global crude price. In the case of the global financial crisis in 2008, automobile manufacturers had seen the biggest downfall. Since then, many of the automobile manufacturing companies such as Tata Motors, Ltd have made noteworthy market development by introducing cars on the market at the lowest price.
Question 2
In the case of determining the key success factors for a successful firm in the global motor vehicle industry, pricing pressure can be termed as one of the best factors. In markets such as India, Tata Motors has offered the cheapest car to the customers when the economic uncertainties have been looming around. Such pricing strategy has significantly made a positive mark in favor of the company. The company has successfully utilized the purchaser’s perception of value to make the presence in automaker’s market. Secondly, Tata Motors has identified the consumer spending trends efficiently in manufacturing cars for the Indian market. By responding efficiently, the company has purchased essential parts and commodities at the lower price to keep the pricing of the vehicles in check. Last but not least, Tata Motors has modified the cars to become more fuel efficient to take the market share from the prime contenders such as Maruti Suzuki, and Toyota.
Question 3
SWOT analysis is a strategic tool that is used to analyze the strengths, weaknesses, threats and opportunities of a company. A SWOT analysis tool will be used to identify the internal strengths and weaknesses of Tata Motors as well as the opportunities and threats that it faces in the external market. The SWOT analysis of Tata Motors has been presented in the points given below:
Strengths: The major strength of Tata Motors is that they know the best time to introduce a new car in the market according to the market conditions. The company has a great product placement strategy that makes it sell a car at only $2100 and make the product affordable for all class of people. Along with that, Tata Motors has growing brand recognition in all its market segments (Turnipseed and Gamble). The acquisition of the Jaguar and Land Rover, two well-known global brand acts as a strength for the Tata Motors.
Weaknesses: The Company is not properly recognized in the largest car market in the USA. The company mainly has its market in the developing countries that act as a weakness for the global brand. The acquisition of Jaguar and Land Rover acts as a strength as well as a weakness for the company. With the acquisition of the two well-known brands, the company has brought high competition in the global market for itself.
Opportunities: The acquisition of the two well-known brand acts as potential opportunities for the Tata Motors. If the company can continue with the two well-known brands, it can seek success in the developed markets like the USA.
Threats: The major threat for Tata Motors is the strategy of the company. The company is playing a big gamble with the Jaguar and XE brands. Due to the acquisition of the well-known brands, the company will face an immense competition from the market leaders like BMW and others. The world will see the end of the Jaguar brand if Tata Motors fails to occupy a large share of the new market.
Question 4
As far as Tata Motors international business strategy is concerned, I must consider the company’s strategy as transnational strategy. Following the business guideline developed by the organization, Tata Motors business model has been coordinated via cooperation between organizational headquarter and regional operational depart. Apart from that, the company has operated the business through subsidiaries located at the international market. In this way, the management group of the company has operated the business on the international platform but develops efficient market decisions at the regional business level. The effective transnational business strategy has properly ensured about the significant changes made in the operational management without upsetting the other segment of the organization. Such proactive international business strategy has critically ensured how the company can set maximum profitability in the global market (Turnipseed and Gamble). According to the current business model of Tata Motors, the company has identified the most suitable option for the international business operations. The company has developed sufficient decision-making strategy for the global market to impress the distributors and international subsidiaries. The move of maintaining a transnational strategy has clinically worked for the company to make its mark in the international arena.
Question 5
At the international market, there are some major driving forces that can dictate terms to the global motor vehicle industry. One of the major market driving forces is import and export of manufactured vehicles to different countries. Majorly, for organizations dealing with global motor vehicle industry have to identify the same figure has dominated proper import-export methods as most of the revenue flow. Controlling the system of import and export of manufactured goods efficiently can increase the profit margin and revenue of a company. Secondly, governments operate in the different countries can be one of the major forces driving the industry. As different countries have different taxations and legislation regarding product manufacturing and sell, companies must understand the regulations before fixing the strategies. Apart from these specific forces, latest technology has played the biggest role in developing an effective business in the overseas market. The social media presence and public opinion can be suitably overviewed by any organization to make essential changes in business strategies.
Question 6
The major strength of the five competitive forces in the global automotive industry comes from the low threat of new entrants. It can be seen through study that no new brand has entered the automotive market since a decade. It happens because of the huge expenditure or capital that is required to start an automotive company. The new company will require a huge amount of capital to build a production plant and continue its mainstream production. Along with that, the brand loyalty also plays an important role in the consumer behavior. The loyalty towards the brand intends an individual to buy a product of a particular brand. It is difficult for any other industry to match the level of brand loyalty that the companies have built up in the automotive industry. It becomes difficult for any new company to enter the market and try to gain a share of the present market. Hence, it can be said that the brand loyalty of the Tata Motors acts as a major strength of the five competitive forces to grab a good market share in the global business environment.
Question 7
It can be seen from the financial statement of the Tata Motors that the profit for the company has increased between 2011 and 2012, which is a good sign for the organization. The most important financial issue of the company is the increase in its expenses in the same year. No organization operating in a competitive business environment would ever like to have an increase in its expenses. Hence, the company needs to implement new techniques to lower down its costs to increase its profitability (Turnipseed and Gamble). The financial ratios of Tata Motors have been presented in the table given below to analyze the financial position of the company in the global market.
Another important concern for Tata Motors is its current ratio in the year 2012. It was found to have a current ratio of 0.9 in the year 2012. Though the company has a good amount of current assets to meet its current liabilities, it needs to lower down its current liabilities to have a higher current ratio. The company did the same and improved its current ratio to 1.05 in the year 2014 as stated in the table above. Hence, it can be seen that the major factor for the company is its increasing cost that needs to be lower down to seek success in the long run.
Question 8
Most recently, Tata Motors is facing some technical challenges regarding engine mechanism as some of the Tata Nano cars have been reportedly caught in the fire for no reasons. The technical team of the company has investigated the matter on a serious note to make the essential changes in the engines. In addition to that, Tata Motors needs to identify proper methods to enter the new market such as the USA and other prime markets. For new market entrants, the company should follow the steps of Daewoo to make a formidable statement at the global motor vehicle industry. Eventually, considering the current market operations of the organization high-interest rates and depreciating value of Rupee can be termed as one of the biggest challenges in front of the company. The performance of the exchange rate has increased the cost of the raw materials and components of the company. Therefore, the margin of profitability has decreased sincerely. Meanwhile, the company has tried to set up more new manufacturing plants in the country to increase the production.
Question 9
The status of Tata Motors in the domestic market is at its top. Hence, it can be seen that the company is working well in the domestic market and is quite able to maintain its position in the first rank in the domestic market. I would suggest Mr. Tata and the management of the company provide a training facility to educate its employees with the best knowledge and abilities to enhance their performance. Along with that, the company needs to push its research and development team to invent new models that could match the consumer trends to have a good hold on the global market. Tata Motors needs to offer cheaper models with amenities that are available in the expensive brands to get market attention. The company also needs to change its production standards to meet the growing competition in the global market.
Work Cited
Turnipseed, David L., and John E. Gamble. "Case 18 Tata Motors: Can It Become A Global Contender In The Automotive Industry?". Cases in Crafting and Executing strategy 246-255. Print.
