COMPETETIVE POSITIONING ASSIGNMENT

INDUSTRY: AUTOMOTIVE/AUTOMOBILE
NAME OF THE ORGANISATION: TATA MOTORS

INDUSTRY OVERVIEW:

The automotive industry encompasses a diverse range of companies and organizations

involved in the design, development, manufacturing, marketing, and selling of motor
vehicles. It is one of the world's largest economic sectors by revenue. Around the world, there
were about 806 million cars and light trucks on the road in 2007, consuming over 980 billion
litres (980,000,000 m3) of gasoline and diesel fuel yearly.
The automobile is a primary mode of transportation for many developed economies. The
Detroit branch of Boston Consulting Group predicted that, by 2014, one-third of world
demand would be in the four BRIC markets (Brazil, Russia, India and China). Meanwhile, in
the developed countries, the automotive industry has slowed down. It is also expected that
this trend will continue, in highly urbanised countries as the younger generations of people no
longer want to own a car anymore, and prefer other modes of transport. Other potentially
powerful automotive markets are Iran and Indonesia. Emerging auto markets already buy
more cars than established markets. According to a J.D. Power study, emerging markets
accounted for 51 percent of the global light-vehicle sales in 2010. The study, performed in
2010 expected this trend to accelerate. However, more recent reports (2012) confirmed the
opposite; namely that the automotive industry was slowing down even in BRIC countries. In
the United States, vehicle sales flourished in 2000, at 17.8 million units.

ABOUT THE ORGANISATION:

TATA Motors limited, formerly known as Tata motors engineering and locomotive company
is an Indian multinational conglomerate headquartered in Mumbai, Maharashtra, India. It was
established in 1945. It is a division of Tata Group and its products mainly includes passenger
cars, trucks, vans, coaches, buses, sports cars, construction equipment and military vehicles.
The company has its research and development facilities along with the manufacturing and
assembly plants globally in locations like Great Britain, Argentina, Spain and South Korea.
The company manufactured its first commercial vehicle in 1954 in collaboration
with Daimler-Benz AG, which ended in 1969. Tata Motors entered the passenger vehicle
market in 1988 with the launch of the Tata Mobile followed by the Tata Sierra in 1991,
becoming the first Indian manufacturer to achieve the capability of developing a competitive

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indigenous automobile. In 1998, Tata launched the first fully indigenous Indian passenger
car, the Indica, and in 2008 launched the Tata Nano, the world's cheapest car. Tata Motors
acquired the South Korean truck manufacturer Daewoo Commercial Vehicles Company in
2004 and purchased Jaguar Land Rover from Ford in 2008.

Michael Porter’s 5 forces of Analysis:

One of the most prevalent and eminent frameworks created by Michael Porter. It is one of the
widely used strategic tools by the companies and organisations around the world to ascertain
and analyse an industry’s attractiveness and profitability. As we have learnt from our course,
that an important aspect of business strategy is to understand the dynamics and the structure
of an industry or market segment, and specifically how that make up of an industry can
impact the future profitability potential of firms who operate in that industry. Based on this
premise, there are 5 competitive forces that all work against or threaten the profitability
potential of an industry or a market segment.

The 5 forces are:

• Intensity of Rivalry
• Threat of New Entrants
• Threat of Substitutes
• Bargaining power of sellers
• Bargaining power of buyers

PORTER’S ANALYSIS ON TATA MOTORS LIMITED:

Threat of New Entrants:
For an established and highly reputed automotive company like tata motors with numerous
manufacturing plants and R&D facilities around the world along with an extensive share in
the automobile market, it significantly reduces the opportunity of possible rents or profits for
the new entrants or firms and thereby discouraging the new players from entering the industry
on a very large scale. Moreover, on considering the fact that an MNC’s like Tata motors have
already reached high scales of production which in turn would be very expensive for new
entrants to match. An additional advantage of time and experience in the industry also
contributes as an impediment to such new entrants. (johnson, 2008). Henceforth, due to
heavy and extensive capital investment, the threat of new entrants to this industry is quite low
as the barriers or impediments are excessively high.

Threat of Substitutes:
In the case of an automobile industry in a country like India, the threat of substitutes is
slightly on a higher range because most people in India prefer two wheelers to cars due to the

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need of mobility and feasibility. In India, the two- wheeler segment commands 80% owing to
the middle class and young population. 15.7 million units of two wheelers where sold in India
while 16.8 million units were sold in China, this is affecting the sales of car manufacturers
like Tata Motors since two wheelers are cheaper than Cars. Moreover, on considering the
rural and poor population, the railway transport coupled with two-wheeler is arguably the
cheapest mode of transport for traveling. Henceforth, the threat of substitute for a product or
service is substantially high if it offers a value proposition that is uniquely different from
present offerings of the industry.

Intensity of Rivalry:
A high intensity of rivalry or competition could cause a drastic decline in the overall market
share of an organisation. In the case of TATA motors, the intensity of rivalry is fierce in the
domestic market as there are other established automotive players like Hyundai and Maruti
Suzuki dominating the significant amount of market share especially in the sedan segment
and sports utility vehicle. Moreover, the company also faces intense competition in its
commercial vehicle segment from players like Mahindra &Mahindra and Ashok Leyland in
the domestic market, since they are also the leading manufacturers of trucks and buses.
Henceforth, the intensity of rivalry continues to be high for Tata motors. In such a scenario,
A collaboration with the existing competitors could increase the market size rather than
competing for a small market. Sustainable differentiation and building a competitive scale
could rather benefit the company to some extent from the intensity of competition in the
market.

Bargaining power of Suppliers:

The Indian market for OEM (Original equipment manufacturing) is at a strong position and is
constantly acquiring significant share in the automotive market. Due to this fact, the
negotiating power of suppliers is substantially increasing with the major automotive players
like Tata motors, which is thereby consequently affecting its margin and profitability.
However, there are certain suppliers who are not big enough to negotiate with an established
company like tata but since the market share is on a rise of such suppliers, their bargaining
power is also increasing. To prevent such a scenario, TATA motors can work on developing
dedicated suppliers whose business solely depends upon that firm, as it could lead to less
bargaining power. Moreover, building efficient supply chain with multiple suppliers could
prevent the company from facing such a scenario to an extent.

Bargaining power of buyers:

The competition in the Indian automotive market is drastically high. The bargaining power of
the buyer is high because the switching costs are very low. TATA motors have been facing
intense rivalry from established automotive players like Maruti Suzuki and Mahindra, and as
a result due to a variety of options and diverse products and services at different prices being

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made available and accessible to buyers, consumers and customers, the bargaining power
tends to increase rapidly.
However, due to the differentiation strategies and innovativeness of Tata motors, the
company has managed to compete and thrive sustainably in the industry despite such
impediments. (Thoppil, 2017). By building a broader and larger customer base and serving to
their diverse needs and requirements the company to some extent can get control over the
negotiating or bargaining power of the buyers.

PORTER’S 5 FORCES OF ANALYSIS:

THE FORCES How much does it Impact?

(High/low/Medium)
THREAT OF NEW ENTRANTS
Numerous manufacturing plants and R&D
facilities around the world along with an
extensive share in the automobile market POSSIBLY VERY LOW

Significantly reduces the opportunity of

possible rents or profits for the new entrants
or firms and thereby discouraging the new
players from entering the industry on a very
large scale.

Significant amount of experience and

relevant knowledge(know-how) of the field.

High exit costs and sunk costs

THREAT OF SUBSTITUTES
Slightly high in the consumer 4-wheeler
vehicle segment, as Indian population is a
middle- class market owing substantially to
the two-wheeler vehicle segment which are
cheaper than 4- wheeler.

It is also low in terms of switching costs, as

for the new entrants the switching costs Medium
would be really high therefore, low threat of
substitutes.

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However, as per my research currently the
market is dominated as tata motors has also
introduced nano for middle class segment
along with the increase in income of the
population and low cross price elasticity of
demand, the threat of substitute is
marginally low.

INTENSITY OF RIVALRY

The intensity of rivalry is fierce in the HIGH

domestic market as there are other
established automotive players like Hyundai
and Maruti Suzuki dominating the
significant amount of market share
especially in the sedan segment and sports
utility vehicle.

It also faces fierce competition in the

commercial vehicle segment like trucks and
buses from companies like Mahindra and
Ashok Leyland in the domestic market.

BARGAINING POWER OF SUPPLIERS

The Indian market for OEM (Original

equipment manufacturing) is at a strong
position and is constantly acquiring
significant share in the automotive market.

Companies like Tata motors might have

certain level of threat from this or it could MEDIUM
possibly affect its profitability margin as
bargaining power of suppliers would be
slightly higher in such a case.

However, established and experienced

automobile conglomerate like Tata motors
particularly ties up with those supplier firms
whose business solely depends on them.
Therefore, in such a case tata has an upper
hand, and the bargaining power of suppliers
is low.

BARGAINING POWER OF BUYERS

TATA motors have been facing intense

rivalry from established automotive players
like Maruti Suzuki and Mahindra.

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 As a result, due to a variety of options and
diverse products and services at different
prices being made available and accessible MEDIUM
to buyers, consumers and customers, the
bargaining power tends to increase rapidly.

However, currently since Tata motors have

a really broad customer base, therefore
serving to their diverse needs and
requirements the company can get a
significant amount of control over the
buying power of the buyers. Henceforth, the
buyer power of suppliers can also be lower
in such a case.

CAPABILITY ANALYSIS OF TATA MOTORS LIMITED:

As we have learnt form the course, Capability Analysis is a primary tool for analysing the
internal capability or potential of an organisation to understand the internal environment of an
organisation. It basically helps the organisation to ascertain various capabilities it possesses
along with the assessment that whether these capabilities provide a significant competitive
advantage or not, and whether they are sustainably moving forward.

With respect to our company of interest, TATA MOTORS LIMITED.

As per my analysis and understanding of the operations of Tata Motors, I have determined
that the core capabilities of this automotive company are:
• Research and Development Infrastructure
• Competent and Technically proficient Human Resource Management
• Opportunistic as an effective exploiter of the ‘First Mover Advantage’.
• Ability to adapt, change and evolve sustainably to thrive competitively in the market.

On taking into account, the Research and development infrastructure, over the years, the
automotive company has devoted significant amount of time and resources towards the
research and development activities. They primarily focus on product development,
environmental technologies and vehicle safety.

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In addition to that, the engineering research centre established by Tata Motors in 1966, is one
of the few in house key automotive research centres recognised by the Government of India.
It is integrated with all the other development centres in South Korea, Italy, and the United
Kingdom.
The company leverages its core competencies through various engineering service suppliers
and design team of its suppliers. Few notable examples like passenger car electrical and
electronics facility for the development of hardware-in-the-loop systems, lab cars and
infotainment systems to achieve system and component integration. a crash test facility for
passive safety development in order to meet regulatory and consumer group test requirements
and evaluate occupant safety, which includes a full vehicle-level crash test facility, a sled test
facility for simulating the crash environment on subsystems, a pedestrian safety testing
facility, a high strain rate machine and a pendulum impact test facility for goods carrier
vehicles etc are the by-products of their excellent automated research and development
infrastructure.

The Human Resource Management:

One of the core capabilities of Tata Motors is its efficient and effective Human Resource
Management. Tata motors employs vast pool of technically proficient and competent
engineers and managers. For example, the company employs approximately 1400 scientists
and engineers and development officers for their research centres. They operate forums to
develop and test durability, engine performance, emission, safety, design and style, noise,
hydraulics, tracks, and instrumentation. They have won numerous national awards in research
and development efforts since their establishment in 1966.
Moreover, the Human resource management policies in Tata motors like the Executive
selection scheme which is a fast track programme of Tata motors which basically accelerates
growth of high potential professionals and the schemes facilitates their earlier advancement to
challenging and visible assignments through a systematic procedure. Employees selected gain
a huge lead in terms of promotion as well as learning. They are promoted to manager’s level
thereby saving almost 10 to 13 years of work time within Tata motors.

On considering the company’s capability of First mover advantage, one of the best examples
to comprehend this is by taking into account the development of ‘Nano’ car. It is the world’s
cheapest car. Tata Motors achieved this is through using new materials such as, re-engineered
plastics and modern adhesives. It will revolutionize the auto industry in India and soon in
other emerging markets when Tata starts exporting. The Nano was able to achieve its low
price and gain the attention of the entire automotive industry through its advances in
materials and adhesives technology. Henceforth, their ability to make the least expensive car

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on the market, the Nano retailing for almost $2500 is far beyond what any other car
dealership has created. This innovation gives Tata Motors their main competitive advantage.
Tata Motors makes everything from tractor-trailers to the world’s least expensive car. This
product diversity grants them a competitive advantage over their competitors because they
can satisfy more markets and customer needs.

The capability of Tata motors to adapt, change and thrive sustainably in the market could be
examined from the acquisition of Jaguar and Land Rover which allows Tata to enter into the
luxury car market without having to research the market, build the technology, among other
important aspects of getting into a new market segment. It further helps them enter into the
very competitive and highly desirable mature markets in Europe and in future hopes of
securing market segments in the United States. Tata Motors is currently in a growth stage as
stated on their website: “Tata Motors Ltd is in a mega expansion mode. The investments
would be in product development, capital expenditure in capacity enhancement, domestic and
international acquisitions and mergers.” These acquisitions and mergers allow Tata Motors to
break into foreign markets and develop a much larger share of the automotive industry.

RESEARCH & COMPETENT FIRST ADAPTIVE &

CAPABILITIES DEVELOPMENT HUMAN MOVER TO THRIVE
INFRASTRUCTURE RESOURCE ADVANTAGE SUSTAINABLY
MANAGEMENT (Opportunistic) IN THE
MARKET
PEOPLE 1400 (approx.) Skilled, talented, The upper Several mergers
scientists and capable and management and acquisitions
engineers are competent members are being taken
employed every year employees are visionary and place like the
who are skilled, recruited, exploitative purchase of
capable and expertly trained enough to take Jaguar land rover
technically competent and counselled. advantage of for entry into the
enough to manage the current luxury car
and operate forums at HRM policies market need market segment,
ERC, Pune (research like Executive which they leverage
centre recognised by selection scheme ultimately their
the Govt. of India) and SCIP adds up provides them competencies
and the best research to their goodwill with the and provides
facility in the country and development competitive them autonomy
in their business

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 of their edge over their in order to
employees. employees. operate
effectively and
Eg. TATA efficiently in the
Nano, world’s market. Thus,
cheapest car they are adaptive
and fuel- and continues to
efficient thrive
retailing for sustainably in
$2500 far from the market.
any car
dealership has
created. They
recognised the
need for the
Indian middle-
class
population and
gained the
market share
with its rapid
understanding
of prevailing
demand and
technical
capability.
PROCESS Product development Fully aligned and With more than There is
activities, automated, 80 years of effective
environmental employees are experience, cooperation with
technologies and well trained and Tata motors is coordination,
transparent process in expertly skilled in an established and hence they
vehicle safety. managing player are able to adapt
operations. especially in strategically and
the domestic thrive in the
market, their market.
activities and
processes are
aligned with
respect to the
current market
demand.
SYSTEM Advanced and highly Competent and The highly Pursuing various
scientific methods of skilled scientists advanced, initiatives, such
manufacturing and engineers mechanised as the
products and employed to and skilled introduction of
vehicles. product possess various systems premium
design and forums operate employed in lightweight
development centres and manage the product architecture, to
create a highly operations in development enable their
scalable digital several research provides them business to

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 product development centres like competitive comply with the
and virtual testing engineering edge in terms existing and
and validation research centre in of quality and evolving
environment, Pune, and durability, thus emissions
targeting a reduction manufacturing acquiring legislations in
in product units. broader the developed
development cycle- customer base world, which
time, improved and market they believe will
quality and the ability share in the be a key enabler
to create multiple first place. of both reduction
design options. in CO2 and
further
efficiencies in
manufacturing
and engineering.
They have
implemented
initiatives in
vehicle
electronics, such
as engine
management
systems, in-
vehicle network
architecture and
multiplexed
wiring. Hence,
provides them
incentive to
adapt and sustain
under different
circumstances.
ALIGNMENT People, processes and There is Tata motors People, process
systems are well considerable Limited is the and system are
aligned in place, there alignment in leading aligned, the
is effective activities and automotive company is able
coordination and as a operations in company in to thrive
result they are able to terms of HRM India presently, sustainably and
produce and sell they have adapt as per the
more than 10 million dominated the situation is,
units of their vehicles market and deploying
in the domestic owns specialised
market substantially a methods of
broader training and
customer base, technology and
henceforth it producing
shows that desired output
their activities itself exhibits
are aligned that the people,
with their process and

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 people, process systems are
and systems effectively
and they are aligned.
able to
generate
significant
amount of
rents.
SUSTAINABILITY The organisation of Every It is heavily With their
people, process and organisation has difficult for the advanced
systems provides a human resource automotive systems and
significant management firms to imitate processes,
competitive edge practices, something like efficient Human
over the existing however, for a first mover resource
players. company like advantage, the management,
Tata motors with tata motors efficient pricing
However, in terms of an experience of have the strategies,
R&D infrastructure, more than 80 capability to mergers and
the systems are years and an foresee market acquisitions like
highly advanced and highly demand and purchase of
automated, it is established potential, as jaguar land rover
substantially difficult automotive firm they are to enter into the
for other companies in India, possess experienced luxury car
to imitate their best of the and established market segment
operations, especially employees since 1945, provides them a
for the new entrants working for however it is highly
with no significant them, which not impossible competitive
experience and makes the established advantage.
required knowledge possibility of players like
in the field. imitation by new Mahindra or
entrants slightly Ashok Leyland
difficult, there are certain
best of engineers segments like
and scientists commercial
working with the vehicles or
advanced trucks and
technology and buses could
constantly possibly
upgrades them to exploit the first
meet the change mover
in demand, it advantage.
does provides
them competitive
advantage.

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COMPETETOR ANALYSIS OF TATA MOTORS LIMITED:

As we have learnt from our course, the competitor analysis is an identification of your
various competitors and then collecting information about their performance and their
capabilities. It is the fundamental analysis in any analysis or strategy.

In the case of our company of interest, TATA Motors Limited in the domestic and global
market segment, there are 3 major rivals of this automotive firm:
• MARUTI SUZUKI
• HYUNDAI
• VOLKSWAGEN

Maruti Suzuki is the biggest rival of Tata Motors. Maruti Suzuki is headquartered in New
Delhi, India and was founded in 1981. Like Tata Motors, Maruti Suzuki also operates in the
Automotive Manufacturers space. Maruti Suzuki generates 27% the revenue of Tata Motors.
Hyundai is Tata Motors's second biggest competitor. Hyundai is a Public company that was
founded in Seoul, Seoul Teugbyeolsi in 1967. Like Tata Motors, Hyundai also works within
the Automotive Manufacturers sector. Hyundai has 198,031 more employees than Tata
Motors.
Volkswagen has been one of Tata Motors's top competitors. Volkswagen's headquarters is in
Wolfsburg, Other, and was founded in 1937. Volkswagen operates in the Automobile
Manufacturers industry. Volkswagen generates 671% of Tata Motors's revenue.

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THE COMPETITOR ANALYSIS:

Automotive Performance
company Metrics Capabilities Objectives/Values Strategy
TATA As of 2019, Research and Building excellence in Manufacturing
MOTORS tata motors Development buying and servicing plants are located
LIMITED have resulted infrastructure, process, with an objective to strategically,
a net loss of Efficient and improve consumer's supply on order,
287242 competent perception for the products. minimum
crores, the net Human outsourcing,
profit margin resource backward
stands at - management- integration for
9.5%, The talent low inventories,
debt to equity acquisition-first fuel efficient
ratio stands at mover vehicles and
1.2, Return on advantage demand driven
Assets is - opportunistic- production.
7.5%, and adaptive to Produce on
Return on changes and demand.
equity stands thrives
at -47.7%. sustainably.
MARUTI As of 2019, Excellent Modernizations of the Indian Strategic
SUZUKI Maruti Suzuki manufacturing Automobile Industry. alliances with
has resulted a and production Production of fuel-efficient major
net profit of technology, vehicles to conserve scarce corporations like
76506 crores quality focus, resources. Production of state bank of
with a net high customer large number of motor Indian and
profit margin relationship vehicles, which was M&M financial
of 8.9%. The and necessary economic growth. services ltd. Cost
debt to equity satisfaction, leadership
ratio stands at pioneers in strategy and they
0, Return on advanced and focus on
Assets is latest personal vehicle
12.1% and technology, segment.
Return on alliances with
equity stands dealers and
at 16.2%. suppliers.
Volkswagen As of 2019, Product • Volkswagen intends to Excellent value
Volkswagen development deploy intelligent chain system,
has resulted a facilities, innovations and technologies procurement,
to become a world leader in
net profit of engineering research and
customer satisfaction and
14029 crores, manufacturing quality. ... development,
debt to equity and purchasing, quality and
• The goal is to generate unit
ratio stands at effective sales of more than 10 million human resources,

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 1.67, return financial vehicles a year; in software enabled
on assets management particular, Volkswagen inten car company,
stands at research and ds to capture an above- CSR activities on
average share of growth in
2.32% and development. a large scale.
the major growth markets.
return on
equity stands
at 24.6%.

REFERENCES:
https://www.owler.com/company/tatamotors
http://fernfortuniversity.com/term-papers/pestel/nyse4/864-tata-motors-limited.php
https://www.tatamotors.com/wp-content/uploads/2016/11/18070456/TML-Capabilities.pdf
https://www.ukessays.com/essays/marketing/the-tata-motors-limited-company-in-india-
marketing-essay.php
https://www.slideshare.net/keshavcrashk/maruti-suzuki-business-level-strategy
https://tradebrains.in/porters-five-forces-competitive-analysis/
https://www.britannica.com/technology/automotive-industry
https://www.123writing.com/sample/tata-motors-porter-five-forces-analysis-2018

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