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Tata Motors Limited

The company began in 1945 and has produced more than 4 million vehicles. Tata Motors
Limited is the largest car producer in India. It manufactures commercial and passenger vehicles,
and employs in excess of 23,000 people.

SWOT ANALYSIS
Strengths

• The internationalisation strategy so far has been to keep local


managers in new acquisitions, and to only transplant a couple of
senior managers from India into the new market. The benefit is that
Tata has been able to exchange expertise. For example after the
Daewoo acquisition the Indian company leaned work discipline and
how to get the final product 'right first time.'
• The company has a strategy in place for the next stage of its
expansion. Not only is it focusing upon new products and
acquisitions, but it also has a programme of intensive management
development in place in order to establish its leaders for tomorrow.
• The company has had a successful alliance with Italian mass
producer Fiat since 2006. This has enhanced the product portfolio
for Tata and Fiat in terms of production and knowledge exchange.
For example, the Fiat Palio Style was launched by Tata in 2007, and
the companies have an agreement to build a pick-up targeted at
Central and South America.

Weaknesses

• The company's passenger car products are based upon 3rd and 4th
generation platforms, which put Tata Motors Limited at a disadvantage with
competing car manufacturers.
• Despite buying the Jaguar and Land Rover brands (see opportunities below);
Tat has not got a foothold in the luxury car segment in its domestic, Indian
market. Is the brand associated with commercial vehicles and low-cost
passenger cars to the extent that it has isolated itself from lucrative
segments in a more aspiring India?
• One weakness which is often not recognised is that in English the word 'tat'
means rubbish. Would the brand sensitive British consumer ever buy into
such a brand? Maybe not, but they would buy into Fiat, Jaguar and Land
Rover (see opportunities and strengths).

Opportunities

• In the summer of 2008 Tata Motor's announced that it had successfully


purchased the Land Rover and Jaguar brands from Ford Motors for UK £2.3
million. Two of the World's luxury car brand have been added to its portfolio
of brands, and will undoubtedly off the company the chance to market
vehicles in the luxury segments.
• Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in
2004 for around USD $16 million.
• Nano is the cheapest car in the World - retailing at little more than a
motorbike. Whilst the World is getting ready for greener alternatives to gas-
guzzlers, is the Nano the answer in terms of concept or brand? Incidentally,
the new Land Rover and Jaguar models will cost up to 85 times more than a
standard Nano!
• The new global track platform is about to be launched from its Korean
(previously Daewoo) plant. Again, at a time when the World is looking for
environmentally friendly transport alternatives, is now the right time to move
into this segment? The answer to this question (and the one above) is that
new and emerging industrial nations such as India, South Korea and China
will have a thirst for low-cost passenger and commercial vehicles. These are
the opportunities. However the company has put in place a very proactive
Corporate Social Responsibility (CSR) committee to address potential
strategies that will make is operations more sustainable.
• The range of Super Milo fuel efficient buses are powered by super-efficient,
eco-friendly engines. The bus has optional organic clutch with booster assist
and better air intakes that will reduce fuel consumption by up to 10%.

Threats

• Other competing car manufacturers have been in the passenger car business
for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in
terms of quality and lean production.
• Sustainability and environmentalism could mean extra costs for this low-cost
producer. This could impact its underpinning competitive advantage.
Obviously, as Tata globalises and buys into other brands this problem could
be alleviated.
• Since the company has focused upon the commercial and small vehicle
segments, it has left itself open to competition from overseas companies for
the emerging Indian luxury segments. For example ICICI bank and
DaimlerChrysler have invested in a new Pune-based plant which will build
5000 new Mercedes-Benz per annum. Other players developing luxury cars
targeted at the Indian market include Ford, Honda and Toyota. In fact the
entire Indian market has become a target for other global competitors
including Maruti Udyog, General Motors, Ford and others.
• Rising prices in the global economy could pose a threat to Tata Motors
Limited on a couple of fronts. The price of steel and aluminium is increasing
putting pressure on the costs of production. Many of Tata's products run on
Diesel fuel which is becoming expensive globally and within its traditional
home market.

STRATGIES ADOPTED IN LAST FIVE YEARS

West Asia, formerly known as the 'Middle East', was one of the first few regions
where Tata vehicles were seen outside India. It was in the 1960s that Telco (now
Tata Motors) first exported its medium commercial vehicle (MCV) trucks to Kuwait.
Business built up slowly. Murari Trivedi, who has been heading West Asian
operations since 2003, clarifies: "Export was done mainly by participating in
international tenders or by following up on business enquiries. In those years the
company's focus was on the domestic market; there was a very high demand for
our vehicles." Telco did not have enough sales personnel in the region. It would
follow up on leads given by Tata International, which had offices in the region,
contacted customers and sourced orders.

The business built up in this clutch-brake fashion over the next three decades. Even
so, Tata vehicles were soon rolling down the roads of UAE, Bahrain, Kuwait, Saudi
Arabia, Qatar, Turkey, Yemen and Oman.

The scenario changed significantly in early 2000. Ravi Kant, managing director of
Tata Motors (then executive director) made international operations a major focus
area in the company's business plan. The erstwhile export division was transformed
into the international business division. A four-filter process decided which countries
had business potential, and a strategy was developed for each target country.

Understanding the competition, pricing and product segments is vital, and people
have been placed in the chosen countries to develop business. Tata Motors has a
young and enterprising bunch in the West Asia team, comprising Jayant Athawade,
FS Khan, Sandeep Bathija, Sudhansu Shekhar, Ayub Sayed and Kailash Vispute, who
are revving up operations and exploiting the full potential of the region.

With high oil prices boosting revenues, West Asian governments are spending huge
sums on infrastructure like roads, bridges, ports, airports, refineries, warehouses
and hotels. Tata Motors has the right products for the construction sector, at very
competitive prices. Potential business for both commercial and passenger vehicles
is very high.

The automotive industry in the region is highly competitive. All major global players
have a presence in the region. Tata Motors has been able to carve a niche by
addressing specific segments, such as transportation of school children and
workers. Today, Tata Motors' vehicles have a strong brand value. They are
perceived to be reliable and suitable at the given price. The company is now the
market leader in MCV buses in the target segments, with a share of over 60 per
cent in the region versus 38 per cent just three years ago.

But this didn't happen by itself. Over the last four years, the company has
completely changed its attitude in terms of customer focus — from just selling its
products to being tuned in to customer requirements. Tata Motors works with its
distributors to understand the end user's needs, bring in appropriate products,
undertake value additions wherever required and thereby satisfy customer
requirements.
Tata Motors markets its vehicles through one or two distributors in each country in
the region, depending on the size of the market. The distributors interact with the
customers, who include institutional buyers and fleet operators. United Diesel, the
company's Dubai distributor, has been selling Tata buses in the UAE for more than
30 years. Its customers are construction companies and schools.

United Diesel general manager Mike Makary was in India recently, to visit the
company's bus building plant in Goa and discuss the company's growing business.
The construction boom and many new schools opening each year have led to an
increase in customers as well as repeat orders. "Tata vehicles are in demand, as
they are suitable for the required applications, at very competitive prices," says Mr
Makary.

The Tata Motors 80-seater bus is the number-one selling bus in the UAE today. It
was a different scenario just two years back when Ashok Leyland, Tata's only
competitor in the large bus segment in the UAE, had a better market share. Tata
Motors made a concentrated effort to change the scenario, setting up a regional
office in UAE to give better support and help sell more vehicles in the market. "The
quality of the vehicles has improved. It shows in the reduced number of complaints
our customers bring to us," says Mr Makary. Tata Motors wants to build a long term
relationship with its distributors, so that business growth is healthy and increasingly
profitable.

Distributors are invited to visit the plants at Jamshedpur, Lucknow and Pune, where
they interact with engineers, get a first hand feel of the technology and production
processes, as well as make suggestions. When United Diesel is faced with a
technical issue, the distributor sends a technical representative to interact with
plant personnel.

They come with photographs and video recordings of the problems, and discuss
them threadbare till a solution is found and the required modifications are made. Mr
Makary is very happy with the quick response he gets from the company on
technical issues. Tata Motors wants to build a long-term relationship with its
distributors, so that business growth is healthy and increasingly profitable.

After sales support is a critical component for success in the automotive business.
Distributors have their own facilities for servicing Tata vehicles, and Tata Motors
trains the distributor's and even the customer's service teams. Service managers
visit customers along with the distributors to understand the customer's complaints
and ensure that they are resolved.

West Asia continues to be a very traditional region. Business, even today, is done
on the basis of relationship. "Customers like to meet a representative from the
manufacturer. It creates a good impact; the customer feels confident, comfortable
and secure. It helps convince them to buy from us, specially when it is a large deal,"
says Mr Makary. "Here, marketing is through personal discussion," concurs Mr
Murari, "your physical presence is very important, and you have to be close to the
customer."

The company has chalked out a two-pronged strategy, to retain existing customers
and to get new ones. There is also a specific strategy for each product segment —
medium and heavy commercial vehicles, light commercial vehicles (LCVs) and
pickups. The company aims to be among the top three in each of these segments.

The company and product strategies are driven through structured systems and
processes. Anil Sekhar, senior manager, channel and process management, was
earlier based in Jamshedpur and involved in setting up plant systems and
processes. Now, he's bringing his expertise to the area of international sales and
marketing. Market review and customer feedback is done regularly. An application
matrix helps track sales and vehicle usage.

A 'sales talk' manual ensures that all salesmen talk the same language about Tata
Motors products in the region. Mr Sekhar is also working on standardising branding
and signage in the Middle East. "With higher volume sales, we are now ensuring
that our distributors and dealers display the corporate identity on all signages. This
helps in visibility and an increased awareness about the Tata brand," says Mr
Sekhar.

The company has increased its product range from large buses to small buses, air-
conditioned buses, LCV trucks, MCV and HCV trucks, and pickups, which have
proved very popular in the region. Passenger vehicles have also made their debut in
the region, in Turkey in December 2004. So far 1,500 vehicles have been sold and
more markets are being explored.

The company is gearing up to introduce new buses and trucks. The Tata Novus
range, with a higher horsepower and load carrying capacity, is under consideration.
Tata Motors has ambitious plans for the region, to enter new markets like Iran, Iraq,
and Egypt. These are big markets, where large volumes can be generated. Egypt is
in close focus. After a comprehensive market analysis, Tata Motors is re-entering
the country, and is conducting a feasibility study for setting up an assembly plant in
the country.

So, even as West Asia looks to invest its new riches, in the region itself, Tata Motors,
is now all set to translate its recent successes into a more dominant presence in the
region.