Strategic Management

Group Assignment 1

TATA MOTORS

Submitted To:
Prof. Amar KJR Nayak

Submitted By (Group 5)
Sourabh Kumar Choudhury 1!" 1!# Subhransu Sekhar $anda% 1!" 11! Su&it Kumar Sahoo 1!" 111 S'arup Kumar Kar 1!" 11( S'eta Sah 1!" 11) *anya Gupta 1!" 11+ *hendra% ,. 1!" 11daya .hanu Satapathy 1!" 11/ 0ibha1 Kumar 1!" 112 0ikrant Krishan $aha&an 1!" 11" 0ineet Agra'a% 1!" 11# 3ubair 1!" 1(!

Contents
INTRODUCTION.................................................................................................................. 4 CORPORATE STRATEGY...................................................................................................4 Corporate Governance......................................................................................................4 Enterprise Process Mode !EPM" # Process Mana$e%ent at Tata Motors ...........................& Operations ' Prod(ction Mana$e%ent.................................................................................) In*o(nd +o$istics.............................................................................................................. ) ............................................................................................................................................. ) ,endor Mana$e%ent ........................................................................................................) Man(-act(rin$................................................................................................................... . Prod(ct deve op%ent......................................................................................................... Cost C(ttin$ Tec/ni0(es.................................................................................................... 1(a it2 Mana$e%ent......................................................................................................... 3 Operations........................................................................................................................ 3 Sa es ' Mar4etin$ at Tata Motors ........................................................................................3 Prod(ct and 5rand Strate$2..............................................................................................3 Pricin$............................................................................................................................. 66 Pro%otion....................................................................................................................... 66 Distri*(tion...................................................................................................................... 66 7inancia Strate$2 o- TATA MOTORS................................................................................62 Cost c(ttin$ and recover2 strate$ies8..............................................................................62 Tata Motors 7inance +td !TM7+".....................................................................................69 :(%an Reso(rce at Tata %otors........................................................................................64 In-or%ation Tec/no o$2 Strate$2........................................................................................6) Enterprise Reso(rce P annin$.........................................................................................6) C(sto%er Re ations/ip Mana$e%ent..............................................................................6)

!TRO"#CT O!
*ata $otors4 %eader in 5ommer5ia% 1ehi5%es4 is ,ndia6s %argest automobi%e 5ompany 'ith re1enue of S7 1+ bi%%ion in (!!"8!#. *ata $otors4 the first 5ompany from ,ndia6s engineering se5tor to be %isted in the Ne' 9ork Sto5k :;5hange and has operations in the K4 South Korea4 *hai%and and Spain. *ata $otors started operations in 1#+- and entered 5ommer5ia% 1ehi5%e se5tor in 1#-+ after forming a &oint 1enture 'ith 7aim%er8.en< that %asted ti%% 1#/#. ,n more than si; de5ades of its operations4 it has gro'n both organi5a%%y and inorgani5a%%y. ,n (!!+4 *ata $otors bought 7ae'oo=s tru5k manufa5turing unit in South Korea fo%%o'ed by the a5>uisition of the ?ispano Carro5era in South Afri5a. ,n (!!"4 it a5>uired prestigious brands Jaguar and @and Ro1er from Aord $otor Company. *his a5>uisition 'as important sin5e before that *ata $otors 'as 5onsidered as a formidab%e g%oba% p%ayer at %o'er market segment on%y.

COR$ORAT% STRAT%G&
*he 5urrent strategy of the *ata $otors 5an best be summari<ed as B7isrupti1e ,nno1ation=4 'herein it has offered %o'er pri5ed produ5ts and surpassed the market e;pe5tations. ,ts t'o %atest offerings ha1e further strengthened the *ata $otors position as a %eading p%ayer. Chi%e A5e has been a rage in the market4 *ata Nano has taken the 'or%d 'ith a'e. $u5h of the pra5ti5es of *ata $otors4 in5%uding its 5ustomer fo5us4 attributes to the %earning and e;perien5e of o1er si; de5ades. *ata $otors that started 'ith a huge su55ess and market demand fa5ed its first produ5t fai%ure in the %aun5h of 1-1/. Cith the foreign p%ayers entering ,ndia4 *ata motors that 'as primari%y fo5using on ?igh 'eight 5ommer5ia% 1ehi5%es4 in5%uded @C0 in its offering and 5ame up 'ith *ata +!2. *ata $otors in the mean'hi%e 'as a%so 1ying to de1e%op end to end in8house te5hni5a% 5ompeten5e and thus 1entured into engine design by partnering 'ith Cummins. *ata motors 5ontinuous%y fa5ed the prob%em of o1er%oading by the users and responded by introdu5ing stronger ma5hines. ?o'e1er4 a ma&or 5hange 5ame after a hea1y %oss of Rs --! 5r in 1### 'here in it re8a%igned its marketing team and be5ame more sensiti<ed to 5ustomer needs. *he re1i1a% strategy of *ata motors had three phased business p%an. Airst%y4 it fo5used on the 5ost redu5tion initiati1es for immediate turnaround. Se5ond%y4 it fo5used on domesti5 and internationa% gro'th through ne' produ5ts and impro1ed sa%es and ser1i5e. Aina%%y4 it %inked %ong term gro'th 'ith in5reased business in @C0s4 ne' produ5t segments and ne' geographies. *he strategy and %earnings ha1e gone a %ong 'ay 'ith *ata $otors earning net profit of more than Rs 1!!! 5r e1en in a %ean A9 (!!"8!#.

Corporate Governance
*ata $otors being part of the *ata 5ong%omerate has its phi%osophy deep%y %inked to the 5ore phi%osophy of the *ata group. ,t has fair4 ethi5a% and transparent go1ernan5e pra5ti5es a%ong 'ith highest standards of professiona%ism4 honesty4 integrity and ethi5a% beha1iour. *he 5ompany gi1es ma;imum importan5e to the 1a%ue 5reation and sustainabi%ity of a%% the other stakeho%ders= 1i<. 5ustomers4 5reditors4 emp%oyees4 1endors4 5ommunity and the Go1ernment. *ata $otors ha1e imp%emented the *ata .usiness :;5e%%en5e mode% 'hi5h is a part of *ata 5ode of 5ondu5t app%i5ab%e to a%% subsidiaries of *ata group. *he 5ompany operates 'ith a strong so5ia% 5ons5ien5e and be%ie1e in bringing benefit to peop%e=s %i1es.

*ata $otors stri5t%y fo%%o's *he Chist%e .%o'er Po%i5y4 an e;tension of the *ata Code of Condu5t4 'hi5h re>uires 1ery emp%oyee to prompt%y report to the management any a5tua% or possib%e 1io%ation of the Code or an e1ent he be5omes a'are of that 5ou%d affe5t the business or reputation of the Company. the :thi5s and Comp%ian5e Committee 'ho monitors the 5omp%ian5e of the B*ata Code of Condu5t for Pre1ention of ,nsider *rading= by 5he5king month%y reports on dea%ings in se5urities and a%so de5ides pena% a5tion4 if ne5essary. *his is more important sin5e in ,ndian market *ata brand is synonymous 'ith *rust. CSR a5ti1ities of *ata $otors 5o1ers ma&or areas %ike en1ironment4 energy and 'ater 5onser1ation4 hea%th4 edu5ation and %i1e%ihood.

SCD* Ana%ysis

*A*A8J@R
*A*A $otors bought the i5oni5 Jaguar and @and Ro1er operations from Aord for 1.1- bi%%ion pounds in $ar8Apr=!". *ata gained the rights to the 7aim%er4 @an5hester4 and Ro1er brand names. ,n addition to the brands4 *ata $otors a%so gained a55ess to ( design 5entres and ) p%ants in K. *he key a5>uisition 'ou%d be of the inte%%e5tua% property rights re%ated to the te5hno%ogies. ?o'e1er there is a 5ha%%enge re%ated to the te5hno%ogy 5hanges in the ne' entity and Aord=s te5hno%ogy 'i%% he%p in the short run and %ooking at the emerging emission standards hybrid and green te5hno%ogy 'i%% be the need of the hour.

.CG $atri; for *ata $otors S. =s

*he $a&or S. =s of *ata $otors in 'hi5h they ha1e di1ided their business areE Commer5ia% 0ehi5%es F@ight 'eight tru5ks to mu%ti8a;%e +! ton 1ehi5%esG Passenger Cars4 e5onomy and %u;ury F,ndi5a4 Nano4 J@RG ti%ity 1ehi5%es4 standard and premium FSumo4 SafariG

Spare parts4 5omponents and a55essories F?0 A;%es and transmission4 ?igh horse po'er engine 1ia *ata CumminsG Ainan5ing for 5ustomers and 5hanne% partners F1ia *ata $otors Ainan5eG

'

%nterprise $rocess Mode( (%$M) ) $rocess Management at Tata Motors

Chen *ata $otors made a huge %oss of -!! 5rores in the year (!!!8!14 ana%ysts had a%% but 'ritten off *ata $otors fortunes. .ut *$@ 'as determined to boun5e ba5k and hen5e started the pro5ess of serious introspe5tion. *hree key reasons 'ere identified for the massi1e %ossHaG @a5k of 5ustomer fo5us bG %a5k of pro5ess management 5G %a5k of ne' produ5ts and 1ariants. *$@ had de5ided the three e%ements in a systemati5 manner4 the ma&or emphasis being pro5ess management. *ata $otors hen5e started to adopt the APIC 1) FAmeri5an Produ5ti1ity and Iua%ity CenterG pro5esses and sub pro5ess and hen5e deri1e the *ata .usiness :;5e%%en5e $ode% F*.:$4 based on the $a%5o%m .a%drige Nationa% Iua%ity A'ard Pro5essG4 thus adopting a pro5ess oriented approa5h than mere%y peop%e oriented approa5h. *his pra5ti5e minimi<ed the Binf%uen5e of indi1idua% emp%oyees= in running the operations. *his a%so entai%ed the do5umentation of the pro5esses4 'hi5h brought about %ot of 5%arity in terms of ro%es and responsibi%ities of pro5ess o'ners4 inputs and outputs of the pro5esses4 in pro5ess and end pro5ess measures4 entities in1o%1ed and its %inkage 'ith the ,SD and *S standard system. *he :nterprise Pro5ess $ode% has been depi5ted in the figure be%o'.

:asa%nis< S(d/ir< ENTERPRISE PROCESS MODEL (EPM) PROCESS MANAGEMENT AT TATA MOTORS LIMITED, 2008

&

AigureE :nterprise Pro5ess $ode%

Operations * $roduction Management Inbound Logistics

Procurement

Vendor Management
,n the 9ear 1##24 *ata $otors promoted a 5ompany 5a%%ed J*ata Auto5ompsystems @imited F*ACDG J. *he main ob&e5ti1e 'as to ser1e form &oint 1entures 'ith internationa% auto 5omponent manufa5turers and stream%ining the 1endor management pro5esses for the 5ompany. ( *ata $otors
2

ICMR case st(d2< Operation Mana$e%ent at Tata Motors< e=cerpts.

9 >>>.scri*d.co%?tata%otors

sour5es from 1endors 'ho fo5us on their o'n R K 7 to redu5e 5ost. $ost of the 1endors de1e%op produ5ts 'ith *ata $otors itse%f and >uite a fe' 'ere gi1en designs by *ata $otors. *$@ a%so he%ped the 1endors find internationa% partners to make produ5ts that 'ou%d meet their re>uirements. Some of the 1endors 'ho supp%y to *ata $otors a%so did 5ompetiti1e buying of materia% from China and *hai%and.)

Manufacturing
,n an automoti1e industry4 the main emphasis on >ua%ity 'ou%d be on the manufa5turing pro5ess. *here 'ou%d be about fifteen thousand a55essories and 5omponent parts to assemb%e and a5ti1ate 'hi%e 'e manufa5ture a 5ar. *ata motors be%ie1es in the indigenous de1e%opment of manufa5turing pro5ess and de1e%opment of te5hno%ogy. n%ess many automobi%e 5ompanies4 the strategy of the firm is not to b%ind%y adopt any ne' su55essfu% te5hno%ogy. ,t be%ie1es in state8of8the8art te5hno%ogy. Cith referen5e to the produ5t market matri; F'ith produ5t de1e%opment4 market de1e%opment4 market penetration and di1ersifi5ationG 'hi5h 5omposes the merging of produ5tion and marketing strategies *ata motors is seen to fo%%o' the di1ersifi5ation strategy 'herein it produ5es ne' produ5ts and gets into ne' market to target 'ith the produ5t.

Product development
Ne' Produ5t 7e1e%opment 'ou%d in1o%1e idea generation4 produ5t s5reening4 5on5ept testing4 .usiness and finan5ia% ana%ysis4 produ5t de1e%opment4 test marketing and 5ommer5ia%i<ation. An automobi%e produ5t de1e%opment 5y5%e is said to be 5onsisting of 5on5ept stage F'here the 5ar startsG4 Ad1an5e engineering F'here the 5ar takes shapeG4 produ5t engineering F'here the detai%s are fi%%ed inG4 produ5tion engineering F'here the 5ar is 'orked outG and the manufa5turing stage F'here a%% 5omes togetherG). *ata $otors :ngineering Resear5h Centre in Jamshedpur fo5uses in upgrading the 5omponents and parts 'ith e1o%ution of te5hno%ogy and a%so is one of the best in determining the needs of a 5ustomer and de1e%oping a ne' produ5t to 5ater to the needs. *ata Nano is one su5h produ5t from the stab%e of *ata motors. .esides this 5entre the Resear5h and de1e%opment of *ata motors has be5ome internationa% 'ith 5entres in Spain4 K and South Korea a%so.

Cost Cutting Techniques

After a rough fis5a% year in (!!14 *ata $otors rea%i<ed that the on%y 'ay to sur1i1e this market 'as to 5ut do'n on 5osts. *hey started pra5ti5ing an entire%y ne' 'ay of pro5uring their supp%ies and hen5e ga1e rise to a uni>ue 'ay of managing supp%ier re%ationship. *he ear%ier traditiona% method that *ata $otors ga1e the te5hni5a% spe5ifi5ations to the supp%ier and the supp%ier 'ho 'as su55essfu% in a5>uiring the bid fi%%ed up the orders. ?o'e1er under the ne' system *ata $otors simp%y pro1ided the output they e;pe5ted4 and a%%o'ed the supp%iers to be as 5reati1e and inno1ati1e 'ith their designs4 materia%s4 and pri5es. ,n other 'ords *ata $otors 'ou%d simp%y des5ribe the goa% that they 'anted to a5hie1e 'ith 5ertain part and the supp%iers 'ou%d supp%y the parts a55ording their o'n 5on1enien5e. Aor e;amp%e instead of gi1ing te5hni5a% spe5ifi5ations for the 'ind shie%d of *ata ,ndi5a4 it 'ou%d &ust des5ribe the goa% of 5%eaning the 'indshie%d4 and %et the supp%iers 5ome up 'ith ideas to meet those goa%s in the most 5ost effe5ti1e manner4 'ithout 5ompromising on >ua%ity. *his pra5ti5e %ed to huge 5ost sa1ings in ra' materia%s and the *atas 5ou%d de%i1er the 5heapest 5ar of the 'or%d at &ust (-!!L. .y %e1eraging %o5a% design 5apabi%ities and a1oiding the dependen5y on high end design systems4 *ata $otors has been ab%e to pro1ide %o' 5ost so%utions in a 5ontinuous and
94

/ttp8??%s 6.%it.ed(?TPP62933?Session@6? ect(re@6../t%

effi5ient manner. A%so *ata $otors tried the inno1ati1e method of 3ero .ased Costing. Aor e;amp%e initia%%y *$@ paid for forged 5omponents on a 5ost p%us basis4 in the ne' system it paid a pri5e depending on the 'eight of the forgings.

Quality Management
*he shifting of fo5us on *I$ F*ota% Iua%ity $anagementG and Si; Sigma prin5ip%es by *ata $otors has been a gradua% one sin5e the year (!!!. Dne >uarter of the 'ork for5e undergo training to maintain and 5reate high >ua%ity produ5ts e1ery year. *he personne% are e1en sent to foreign manufa5turer=s %o5ations4 'hene1er a ne' ma5hine 'ou%d be imported4 to undergo training.

perations

utbound Logistics

Sa(es * Mar+eting at Tata Motors Product and !rand "trategy

*ata $otors fo%%o's a sub brand strategy. A%though there is no separate .rand for *A*A motors as su5h but the *A*A brand is used as a mother brand. A%% produ5ts of benefit from the asso5iation 'ith the *A*A brand4 'hi5h in ,ndia stands for trust and re%iabi%ity. *A*A motors produ5ts 5an be 5ategorised into four ma&or 5ategoriesE Passenger 5ars4 ti%ity 1ehi5%es4 tru5ks and 5ommer5ia% passenger 5arriers. *he fo%%o'ing tab%e sho's the different produ5t %ines of ea5h 5ategory and the %aun5h periods as 'e%%. FSour5eE Company CebsiteG.
TATA Motors $roduct $ort,o(io $roduct and -ariant .aunc/ years

1989 TATA Mo*i e 2@& 9rd +C , 1991 TATA S ierra TAC C rane 1992 TATA E state 1996 S (%o S a-ari 1998 Indica 2000 C NG 5(ses Indica ,2< Indica ,2 P etro < C NG Indica< TATA S a-ari E = 2003 Tata 2@) DI Tata S (%oABA S eries 2@@9 S A7 AR I ran$e Tata Indi$o 69; PSS a-ari !E Ci" petro 2004 Ne> Indica ,2 Tata + PT 3@3E C T(r*o Tr(c4 NO,US 2005 Ace S a-ari Dicor Indica ,2 T(r*o Diese Tata Nov(s tr(c4 Tata T+ 4C4#sports (ti it2 ve/ic e 2006 Indica ,2 D eta Tata AC E A in S ri + an4a Indi$o and Indi$o Marina ran$e 2007 Ma$ic Ein$er FTata AC E G in Nepa 2008 TATA Nano Indica D eta +PG S (per Mi o ran$e o- 5(ses 2009 S (%o G rande MH II P ri%a Eor d Tr(c4 IndiG o ManIa 7 ree ander 2 a(nc/ed in India Tata 4@) Pic4(p Tata S (per Ace Tata Ace E C

*he produ5t strategy in *A*A motors has been dri1en by t'o primary ob&e5ti1es ,dentifying the market need and 5reating ne' market segments. *he su55ess stories in the past t'o de5ades FSumo4 (!24 A5e4 ,ndi5a et5G ha1e been ab%e to fu%fi% these o1era%% ob&e5ti1es. *he strategy adopted behind these produ5ts a%so ref%e5ts the 5ommitment of *A*A $otors to 5ustomer needs and ne' produ5t inno1ation. *he 5ompany has a%so e;ported its 1ehi5%es after 5reating 5ustomised 1ariants 'hi5h ha1e higher pay%oad and engine 5apa5ity. ,t has a%so 5ustomised its domesti5 produ5ts by introdu5ing passenger option4 higher pay%oads4 bigger engines et5. ,n broad terms the fo%%o'ing sums up the *A*A motors marketing phi%osophyE

6@

Pricing
*A*A motors ha1e a pri5ing ad1antage due to its %o' 5ost %eans manufa5turing abi%ities. *he in8 house stee% 5ompany a5ts as a sho5k absorber against stee% pri5e f%u5tuations. *he pri5ing methodo%ogy adopted is that of a per5ei1ed 1a%ue pri5ing. ,t 'as demonstrated by the Rs 1 @akh pri5e of *A*A Nano4 'here the 5ost of produ5ing the 5ar %eft a 1ery sma%% margin for *A*A.

Promotion
*A*A $otors uses e;tensi1e promotion for its passenger 5ar segment. *he ti%ity 1ehi5%e and 5ommer5ia% passenger 5arrier fo%%o' this segment based on Share of 0oi5e.

#istribution
*A*A $otors has a %arge net'ork of dea%ers and Sto5kyards4 a%% a5ross the g%obe and uses the 7$S te5hno%ogy for effi5ient 5ooperation bet'een these dea%ers. ,ts distribution net'ork in5%udes operations in ,ndia4 Nepa%4 .hutan4 Ghana4 ,ta%y4 Po%and4 South Afri5a4 Spain4 Sri @anka and *urkey. *he 5ompany6s dea%ership4 sa%es4 ser1i5es and spare parts net'ork 5omprises o1er )-!! tou5h points. Apart from the 'ide distribution net'ork *ata $otors a%so has 7istributed manufa5turing it has Assemb%y units at South Afri5a4 *hai%and4 .ang%adesh4 .ra<i% apart from ,ndia. *he 5ompany6s manufa5turing base in ,ndia is spread a5ross Jamshedpur FJharkhandG4 Pune F$aharashtraG4 @u5kno' F ttar PradeshG4 Pantnagar F ttarakhandG and 7har'ad FKarnatakaG. *o augment the s5ar5e resour5es4 it has a &oint 1enture 'ith Aiat 'herein Aiat se%%s its 1ehi5%es through *ata dea%erships and in return *ata $otors has a55ess to Aiat=s te5hno%ogy and unuti%i<ed 5apa5ity D1er the years4 one of the ma&or su55ess fa5tors of *ata $otors is their supp%y 5hain e;5e%%en5e. *o keep their distribution 5osts to the minimum they ha1e outsour5ed the %ogisti5s and distribution part of their business to *ata $otors @td. 7istribution Company F*7C@G4 a 'ho%%y o'ned subsidiary of *ata $otors @td. *hrough this arrangement4 *ata $otors is ab%e to redu5e its %ogisti5a% 5osts by at %east 1M and to fo5us more on the 5ore business. *his in turn has pro1ided f%e;ibi%ity to *ata $otors in terms of de%i1ering the right produ5t at the right time at the right p%a5e. *herefore4 today4 *ata $otors is a fu%%y integrated automobi%e manufa5turer 'ith a portfo%io 'hi5h 5o1ers tru5ks4 buses4 uti%ity 1ehi5%es K passenger 1ehi5%esN5ars. *he dea%ers and supp%iers are bound by a Supp%ier Re%ationship $anagement Program and 7ea%er $anagement System. *hese programs are re1ie'ed from time to time. *he effi5ien5y of transa5tions 'ithin the organi<ation and a%so supp%ier 5o1erage are gi1en importan5e. Supp%ier=s day4 0endors meets4 Channe% partner meets are organised 'herein the .oard members 5an intera5t 'ith supp%iers to share ideas and thoughts.

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0inancia( Strategy o, TATA MOTORS Cost cutting and recovery strategies$

*he transformation of *ata $otors into a high%y su55essfu%4 'e%%8di1ersified4 and g%oba%%y ambitious automobi%e giant represents one of ,ndia=s most remarkab%e 5orporate8su55ess stories in re5ent times. ,n (!!1 after a de5ade of strong re1enue and margin gro'th4 *ata $otors p%unged into a finan5ia% 5risis 'hen demand for its tru5ks sudden%y 5o%%apsed. *he %ost sa%es 5ompounded by hea1y in1estment for its entry into the passenger 5ar business4 the 5ost of 5omp%ying 'ith ne' emissions standards4 and an in5reasing threat from o1erseas 5ompetitors 5aused *ata $otors to sho5k the markets 'ith a - bi%%ion rupee FL11! mi%%ionG %oss for the fis5a% year ending $ar5h (!!1. :1en in %ate #!=s *ata $otors 'as predominant%y a manufa5turer of 5ommer5ia% 1ehi5%es4 and that is a 1ery 5y5%i5a% business. At the time it 'as making huge in1estments in 5ar manufa5turing to mo1e a'ay from that 5y5%i5a%ity. .ut 'hi%e it 'as in the midd%e of this di1ersifi5ation4 the 5ommer5ia%8 1ehi5%e market in ,ndia shrank by more than +! per5ent4 'ith massi1e 5onse>uen5es for both the top and4 more parti5u%ar%y4 the bottom %ines of the 5ompany. *he - bi%%ion rupee %oss in (!!1 'as the first time something on this s5a%e had happened in the 5ompany=s history 'hi5h rea%%y shook e1erybody 'ithin the organi<ation. So in (!!1 *ata $otors de5ided on a re5o1ery strategy that had three distin5t phases4 ea5h of 'hi5h 'as intended to %ast for around t'o yearsHsi; years in a%%. Phase one 'as intended to stem the b%eeding. Phase t'o 'as to be about 5onso%idating our position in ,ndia4 and phase three 'as to in1o%1e going outside ,ndia and e;panding our operations internationa%%y. *he key ob&e5ti1es 'ere to mo1e to a system of market pri5ing and to redu5e our break8e1en point4 both of 'hi5h 5a%%ed for ma&or redu5tions in 5ostsH1ariab%e 5osts4 fi;ed 5osts4 and interest 5osts. ,t used many approa5hes to 5ost redu5tion4 in5%uding ben5h8marking its ri1a%s. Aor e;amp%e4 it took apart 1ehi5%es to see 'hat they 5ou%d do to modify their produ5ts and to %o'er 5osts. *hey 'ent in for e8sour5ing4 'hi5h 'as then 1ery ne'4 but today it is the %argest 5ompany doing e8sour5ing in ,ndia and one of the %eading ones in the automobi%e industry 'or%d'ide. ,n t'o and a ha%f years4 it redu5ed our break8e1en from near%y t'o8thirds of 5apa5ity uti%i<ation to around one8third4 'hi5h meant that e1en if the market shrank by 5%ose to /! per5ent4 it 'ou%d sti%% be profitab%e. *he 'ho%e organi<ation rea%%y got together to ensure that the b%eeding stopped. Aor phase t'o4 the 5on5entration 'as on impro1ing produ5t >ua%ity and upgrading produ5t features so as to make the produ5ts more 5ompetiti1e. ,t a%so started 'ork on ne' produ5ts that 'ou%d be re>uired by the market after three to fi1e years and strengthened its position in the marketp%a5e by setting up a ne' sa%es8p%anning pro5ess4 tightening 5redit norms4 impro1ing the %i>uidity and profitabi%ity of the dea%ers4 reorienting to'ard 5ustomer satisfa5tion4 and e;tending the rea5h of its distribution net'ork. Aor phase three4 the 5on5entration 'as on starting 'ork on internationa% markets by identifying key markets and segments and de1e%oping a 5omprehensi1e p%an to impro1e its 5ompetiti1e position so as to get a respe5tab%e market share. ,t a%so started %ooking at opportunities for inorgani5 gro'th.

62

Tata Motors %inance Ltd &TM%L'

*he auto finan5ing arm for *ata $otors 'as estab%ished in 1#-2 in the name of .?PC Fbureau for ?ire Pur5hase and CreditG. *$A@ 5ame into e;isten5e in June (!!). *his 'as a 5ommon front8end4 &oint%y formed by .?PC F.ureau for ?ire Pur5hase and CreditG of *ata $otors and the asset finan5ing arm of erst'hi%e *ata Ainan5e @td. ,t 'as in the market for e;5%usi1e%y finan5ing *ata $otors 1ehi5%es. Subse>uent%y *ata Ainan5e 'as merged 'ith *ata $otors and in Apri% (!!- *$A be5ame a di1ision of *ata $otors. ,t is engaged in finan5ing entire range of passenger 5ars K 5ommer5ia% 1ehi5%es manufa5tured by *ata $otors @td. *$A is the %argest finan5ier of 1ehi5%es manufa5tured by *ata $otors @td. Cith more than ( mi%%ion 5ustomers finan5ed4 *$A rea5hes out K he%ps 5ustomers to rea%i<e their dreams of o'ning a *ata 1ehi5%e easi%y. Corporate Purpose *$A aspires to be a preferred finan5ier by 5hoi5e for *ata $otors 5ustomers K dea%ers a5ross a%% its produ5ts. *ata $otor finan5e 'ou%d be the top8of8the8mind 5hoi5e for a%% stakeho%ders 'hen it 5omes to *ata $otors produ5ts. Cith a 5ore purpose to rea5h out K he%p 5ustomers rea%i<e the dream of o'ning a *A*A 1ehi5%e easi%y4 'e are present a5ross 1-!O %o5ations and at a%% *ata $otors @td authori<ed dea%erships. S5hemes designed to suit e1ery 5ustomer re>uirement4 f%e;ib%e repayment options4 hass%e8free e%igibi%ity 5riteria4 simp%e do5umentation and fast san5tioning pro5ess makes it the preferred 5hoi5e of any 5ustomer desirous of o'ning a *ata Car or Commer5ia% 1ehi5%e. Strategy defined *$A 5ame into e;isten5e for the prime reason of easy finan5ing the *ata Car or Commer5ia% 1ehi5%es. *hrough these ne' initiati1es4 *$A aimed to rea5h sma%% to'ns and 1i%%ages4 'here they 5ou%d find buyers for their produ5ts4 su5h as the A5e and4 going for'ard4 for their sma%% 5ar. ,n the 5ompetiti1e 'or%d4 there is an e;isting demand for 5ars4 and a%ong 'ith it4 it is important to make finan5e a1ai%ab%e to the potentia% buyers to he%p them buy the 1ehi5%es. Cith the %o' a1ai%abi%ity of 5on1entiona% banking ser1i5es in rura% areas4 it 'as ne5essary for them to offer finan5e to their buyers in su5h far8f%ung markets. *ata $otors has dea%ers in near%y e1ery distri5t in ,ndia. *his he%ps them to bui%d a good database of the finan5ia% 5redibi%ity and 'orthiness of their 5ustomers a5ross the 5ountry4 'hi5h 'i%% be 1a%uab%e information for the entire *ata Group. Simi%ar%y4 this perspe5ti1e 'ou%d be dep%oyed in their g%oba% operations H in South Afri5a4 South Asia4 South Korea and the $idd%e :ast 'here they 5an adopt a partnering strategy. *he partnering strategy 5ou%d 'e%% in1o%1e a %o5a% bank in the respe5ti1e 5ountry as the indi1idua% 5ountries ha1e their o'n finan5ia% regu%atory re>uirements. ,n other 5ases 'e 5ou%d partner 'ith ,ndian banks 'hi5h ha1e operations in foreign 5ountries. *he State .ank of ,ndia4 for e;amp%e4 is a%ready present in many Afri5an 5ountries. So it 5an be %ooked upon as a prospe5ti1e partner $AT1Sa(es structure o, TATA Motors ,or t/e (ast 23 years: 69

Sa%es PA* PA*NSa%es n (ast 5 &ears:

'455 ((-1! -+1 (.+!M

'463 ++"(2 12/( ).#)M

'465 #))-) ()1) (.+"M

'443 1#/#1! 1!(-+ -.(1M

'445 -/")1( )1"#-./1M

7333 "#/11+ 21(! !.2#M

7335 (!/+"// 1()/#-.##M

Sa(es $AT $AT1Sa(es

7335 (!/+"// 1()/#-.##M

7338 (+(#!-( 1-(""" /.(#M

7335 )(1(#"" 1#1)+/ -.#/M

7336 ("2/2#1 1/-+12 -.2-M

7334 CAGR (-//!/2 -.-"M #(1-1 82.1!M ).-#M

*he abo1e tab%e sho's the net profit margin for the %ast fi1e years and a%so sho's the 5ompounded annua% gro'th rate o1er the %ast - years. Ce 5an see that there has been a -.-"M gro'th in sa%es 'hereas PA* has gone do'n by 2.1!M. ?o'e1er 'e 5annot b%ame its strategy being 'rong be5ause 'e see that *A*A motors has in1ested hea1i%y in 1arious mergers K a5>uisitions 'hi5h has bought do'n its PA*4 but is in %ine 'ith their ,norgani5 gro'th strategy. Sustainabi(ity and road a/ead: ,n a broad 'ay4 *ata $otors has been si%ent%y transforming itse%f for a %ong time and this 'i%% 5ontinue. *he 5ompany started manufa5turing %o5omoti1es4 and then 5on5entrated on hea1y tru5ks before mo1ing to %ight tru5ks4 mu%ti8uti%ity 1ehi5%es4 passenger 5ars4 and buses. ,t has to 5ontinua%%y rein1ent itse%f. *he important thing is to keep %ooking at e;terna% 5hanges in the marketp%a5e and to respond to these 5hanges appropriate%y 'hi%e 5ontinuing to retain its 1a%ues4 'hi5h ha1e been its bea5on for the past /! years. *ata $otors used to be an engineer=s organi<ation that needed to understand more about profits4 5osts4 and 5ontributions. No' peop%e at a%% %e1e%s rea%i<e it doesn=t make sense to &ust manufa5ture anything4 that produ5ts must se%% to make a hea%thy 5ontribution4 and that market share must 5ontinua%%y be in5reased to sustain gro'th. ,t shou%d gro' and produ5e a hea%thy bottom %ine4 ne5essary for sustained gro'th. .ut in doing so4 it be seen as an inno1ati1e 5ompany breaking ne' ground and going into un5harted territories su55essfu%%y %ike the re5ent J@R dea%.

9uman Resource at Tata motors

Ae' spe5ifi5 e1ents re%ated to do'nsi<ing at *ata $otors 'ou%d he%p us des5ribe the ?R 5u%ture at the 5ompany. Arom 1#2!s to present *ata $otor=s share 1a%ue has in5reased near%y +!!! pp4 turno1er has in5reased from about 1"!!Cr. to 2-!!! Cr. .ut manpo'er figures ha1e not been fo%%o'ing the same trend. Arom a figure of 11!!! emp%oyees it rose to )-!!!4 then 5ame do'n to a%most ha%f F1"!!!G and the number is again on rise. Aor understanding the trend4 'e must be5ome fami%iar 'ith the fa5tors affe5ting manpo'er. Some of these fa5tors are %isted be%o'E

64

0o%ume of businessE a fast gro'ing business %ike *ata $otors needed more hands to 'ork on day by day @o5ationa% de%inkageE *ata $otors started off a ne' unit at Pune Adopting ne' produ5t or te5hno%ogyE ad1ent of passenger 5ars and %ight 5ommer5ia% 1ehi5%es Shift in 5ustomer preferen5esE sty%e and 5omfort be5ame important %ike ne1er before Starting support a5ti1ities o o o o Ainan5eE the need to pro1ide finan5e to peop%e to buy their 1ehi5%es4 *ata $otors started off *ata $otors Ainan5e @ogisti5sE the ?ub Bn= Spoke mode% of the dea%er net'ork 'as introdu5ed ,*E need for information 'as gro'ing day by day and it needed to be addressed soon AutomationE automation in assemb%y 'as introdu5ed

*his has pro1ided us 'ith a fair ba5kground of the 5hanges in the 5ompany. No' %et us try to understand the 5ompany=s ?R po%i5ies and 5u%ture against this ba5kdrop.

$/ase : 7uring 1#2!s4 money and peop%e 'ere a1ai%ab%e in abundan5e 'ith *ata $otors. ,t 5ared
for its emp%oyees %ike a father 5ares for his 5hi%dren. *oday=s bu<< 'ords %ike mentoring and 5oa5hing 'ere a5tua%%y pra5ti5ed near%y three de5ades ba5k in *ata $otors. Senior e;e5uti1es handhe%d ne' emp%oyees and he%ped them b%end 'ith the 5ompany. Co%onies 'ere made for the *:@CD 5ommunity4 'hi5h pro1ided residents4 apart from basi5 amenities4 'ith4 fa5i%ities %ike se5urity4 hea%th 5are4 5%ubs et5. *ata $otors 'anted its emp%oyees to ha1e no reason to %ea1e the organi<ation before their retirement. *hough it a%so set out some basi5 5odes of 5ondu5t4 to 'hi5h4 if one fai%s to 5onform4 he 'ou%d be asked to %ea1e the *ata $otors fami%y 'ithin a stipu%ated time period. *hese in5%uded refraining onese%f from stea%ing Fe1en stea%ing a pen5i% 'as an offen5eG4 and not indu%ging in an undesirab%e re%ationship bet'een a man and a 'oman 'ho %i1ed in the 5o%ony. *he sin5erity of management at *ata $otors in imp%ementing these t'o ru%es 5an be &udged from the in5ident that 'hen 7aim%er=s Chief 'as found gui%ty of getting into an undesirab%e re%ationship he 'as gi1en a return ti5ket to his home%and. A%so emp%oyees 'ere gi1en %oans 'ithout any interest rates being 5harged from them. Cith the ad1ent of ,*4 ,.$ 1+!1 'as introdu5ed in the 5ompany. *he ma5hine re>uired inputs through pun5h 5ards and hundreds of peop%e 'ere re>uired to pun5h these 5ards. *ata $otors again found a 5han5e to 'ork for the so5iety at %arge. ,t emp%oyed se1era% 'ido's to do the &ob in three different shifts and he%ped them earn bread and butter for their fami%ies. A%so there 'as some re5onditioning of motors and the 'inding department had 'ork that 5ou%d again be performed by 'omen4 so again it emp%oyed e1en more 'omen for the &ob. .y 1#"!s4 too mu5h automation had taken p%a5e4 the 'i<ards of the organi<ation 'ho ear%ier e;perien5ed a sense of 1anity about their e;pertise of pre5ise%y identifying the prob%em areas in a ma5hine or assemb%y %ine4 fe%t use%ess. *hey 'ere gradua%%y be5oming te5hno%ogi5a%%y obso%ete. 6;

At that point *ata $otors offered them a s5heme that if they do not 'ish to stay in the 5ompany they may %ea1e but they 'ou%d 5ontinue to get benefits of emp%oyment ti%% /! years of age. Company 'as in good shape at that time and 'as sti%% trying to %ook after them as parents. *he s5heme re5ei1ed an o1er'he%ming response and resu%ted in 1o%untary do'nsi<ing. Ce see here that though there 'as a do'nsi<ing sti%% it 'as not 5rue%P emp%oyees 'eren=t 5hopped 5rue%%y off the muster ro%%s of the 5ompany.

$/ase

: *his 'ou%d sho' the sur1i1a% mode adopted by the 5ompany. Arom the year 1##-

on'ards4 5ompany 'as 5ompe%%ed to share pub%i5%y the >uarter%y resu%ts for the benefit of the shareho%ders. Cost of emp%oyees had a%so risen from about 1!M to near%y )!M. A%so the 5ompany 'as fa5ing stiff 5ompetition. *his %ed to the de1e%opment of the *ata .usiness :;5e%%en5e $ode%. :1ery indi1idua% 'as put under a s5anner. )/! degree appraisa%s4 .a%an5e S5ore Cards started being imp%emented to assess emp%oyee performan5e. .ig 5onsu%tants %ike $5kinsey and the *ata group itse%f &oined the s5anning pro5ess. *he 5ompany 'as b%eeding4 e1eryone 'as fearing that the 5ompany might 5%ose do'n 5omp%ete%y. Aina%%y it 'as de5ided that the bottom 1!M 'ou%d ha1e to %ea1e the organi<ation. A ho5key sti5k syndrome pre1ai%ed throughout the organi<ationP 'ithin a 1ery short period of time there 'as a tremendous mora%e 5rash. *he 5ompany %ost about 2!!! emp%oyees o1er the years due to the pro5ess. ,t had to take 5orre5ti1e a5tions. As a resu%tE Sa%aries of those 'ho stayed 'ere &a5ked up +8/ times ?uge indu5tion from outside 'as done at e1ery %e1e% .ri%%iant peop%e 'ere gi1en promotiona% &umps4 egE *ata Nano 5hief

$/ase

: *ata $otors started in Jamshedpur4 operating in the produ5t range of %o5omoti1es4

5ommer5ia% 1ehi5%es4 e;5a1ators. *hen it started off a ne' unit at Pune that 'as ma&or%y a 5entre for RK7 a%ong 'ith produ5tion of 5ommer5ia% 1ehi5%es. ,t then had to open up a ne' p%ant in @u5kno' 'ithout any agenda4 &ust be5ause of the pressure from the 5entre. ,t in1o%1ed huge 5osts. *he hierar5hy had been be5oming un'ie%dy. Company had to adopt a profit oriented fa5e. ,t re1isited fo%%o'ing areas of impro1ementsP Automation 7e1e%opment emp%oyed near%y )!!! emp%oyees4 so many of them 'ere not rea%%y needed and 'ere a burden on the 5ompany *oday finan5e is a1ai%ab%e in abundan5e4 a 5apti1e finan5e 5ompany %ike *ata $otors Ainan5e 'as not rea%%y needed *he ?ub Bn= Spoke mode% re>uired thousands of dri1ers4 a number of %ogisti5s 5ompanies are a1ai%ab%e today and a%% this 5ou%d be easi%y outsour5ed at a mu5h %o'er 5ost

A%% these %ed to se1era% of integrated organs %ike *ata $otors Ainan5e4 *ata $otors Automation @td.4 *ata :ngineering K Constru5tions4 *ata $otors @ogisti5s et5. to be snapped out and be5ome indi1idua% 5ompanies 'ith independent G$s of 'hom *ata $otors 'ou%d on%y be one of the 5%ients. *oday the 5ore 1a%ues of *ata $otors are s%ight%y ske'ed to'ards business4 but that is be5ause the 5onte;t 5hanges 'ith era. As the time 5hanges one has to 5onstant%y 5hange and adapt 'ith the 5hanging times and as they say4 JNo pres5ription is a permanent pres5riptionQ4 *ata $otors is simp%y e1o%1ing 'ith time4 yet at e1ery step4 taking 5are of 'hat it %ea1es behind. 6&

n,ormation Tec/no(ogy Strategy (nterprise )esource Planning

Prior to the SAP imp%ementation *$@ has a host of %ega5y app%i5ations 'hi5h had been de1e%oped and maintained o1er a period of time. *hus the under%ying te5hno%ogies and p%atforms 'ere di1erse a%ong 'ith di1ersity in fun5tions and %o5ations. *his %ed to redundan5y4 in5onsisten5y and ineffi5ien5y in data management. A unified rea% time database 'ith an ,* infrastru5ture that 'as integrated a5ross the fun5tions4 %o5ations and e1en businesses 'as the need of the hour4 in order to 5ut 5osts and manufa5turing 5y5%e times and a%so ser1e the 5ustomers more effi5ient%y.

:/y SA$;
SAP has a clear superiority in the market. It has a large presence and good support, so we chose the SAP ERP Solution for our company. The results ha e definitely e!ceeded our e!pectations," says Pro#ir $itra, %I&, Tata $otors. SAP 'as the business %eader in :RP so%utions spa5e. SAP offered strategi5 fit to *$@=s *D8.: stage pro5ess mapping. SAP 'as ab%e to integrate 1arious fun5tions a5ross geographies yet maintaining rea% time data updates. *$@=s business pro5esses 'ere rationa%i<ed a5ross a%% manufa5turing units using the po'er of SAP=s :RP infrastru5ture.

*he e;isting en1ironment prior to SAP imp%ementation 'as Dra5%e database so%utions4 ni; as operating system and predominant%y ,.$ for hard'are support. *he imp%ementation of SAP :RP so%ution F0ersion ).1?G started in about 1##" and 'as finished by (!!! for about )-!! users. @ater in (!!) *$@ mo1ed to 1ersion +./C on a sing%e ser1er p%atform. *he ma&or benefits from imp%ementation in5%uded enterprise integration4 redu5tion of in1entories4 better 5ontro% o1er re5ei1ab%es4 easier finan5ia% 5onso%idation4 sing%e unified database4 impro1ed effi5ien5y by redu5ing redundan5y and in5onsisten5y4 redu5ed response time to 5ustomers and redu5tion of operationa% 5osts.

Customer )elationship Management

Cith in5reasing 5ompetition from both ,ndian and foreign automakers in a 5y5%i5a% business en1ironment4 *ata $otors needed strategies to bui%d 5ompetiti1e ad1antage through strong re%ations 'ith 5ustomers and good 5ustomer ser1i5e. .eing a g%oba% p%ayer 'ith a 'ide%y dispersed dea%er net'ork *ata $otors 'as in the need of a 5ommon system to %ink its 5ompany4 dea%ers and 5ustomers. ,n (!!-4 *ata $otors took a de5ision to imp%ement a robust CR$ throughout the organi<ation. Dra5%e=s Siebe% Automoti1e CR$ so%ution 5ustomi<ed for the automoti1e industry 'as 5hosen as the CR$ system for the organi<ation.

Standardi<ing Customer)0acing $rocesses

*ata $otors aimed to standardi<e its 5ustomer8fa5ing business pro5esses 5ompany'ide through reengineering4 thus impro1ing operationa% effi5ien5y and effe5ti1eness4 bui%ding stronger dea%er re%ationships and a better 5ustomer e;perien5e. *his task in1o%1es 'orking 'ith about (-! dea%ers 6)

and more than 1/!! %o5ations staffed by more than 1!4!!! sa%espeop%e a5ross ,ndia. *$@ has a%so dep%oyed a robust te5hno%ogy p%atform 5onsisting of an inno1ati1e dea%er management system to impro1e the information f%o' a5ross the enterprise. *his system he%ps dea%ers in fun5tions su5h as in1entory management4 5redit reporting4 5a%5u%ating 5ommissions et5. Siebe% Automoti1e CR$4 in 5on&un5tion 'ith the dea%er management system4 has stream%ined transa5tions4 ensuring rea% time 5apturing of 5ustomer data. *he so%ution pro1ides a )/!8degree 1ie' of 5ustomers to the e;tended organi<ation4 'ith appropriate 1isibi%ity 5ontro%s to ensure that one dea%er is not pri1y to information from another.

Registering Strong Success =it/ "ea(er

Siebe% Automoti1e has transformed *ata $otors into a tru%y 5ustomer85entri5 organi<ation. ,nformation redundan5y and disparity has been redu5ed and the business pro5esses ha1e been impro1ed. .y 'orking upon rea%8time4 5entra%i<ed 5ustomer and 1ehi5%e data4 the emp%oyees and dea%ers ha1e been empo'ered immense%y.

Re,erences:
httpENN'''.tatamotors.5omNpdfN(!!#NCG8Report8(!!#.pdf httpENN'''.tatamotors.5om httpENN'''.tata.5omNaboutusNarti5%esNinside.asp;RartidSNC3R#&St1b! Corporate Reporting Arame'ork FCRAGE .en5hmarking *ata $otors against A. 0o%1o and :;p%oring Auture Cha%%enges by Subhasis Ray and Subhra&yoti 7as

6.