Tata Motors

The Tata Group (www.tata.com) is India’s largest conglomerate company spanning seven business
sectors with 98 companies and employs in excess of 300,000 people in 85 countries. The revenues of
the group account for approximately 4 % of India’s GDP. Tata Motors is one of the companies within
the conglomerate and is one of India’s largest automobiles manufacturers, making buses,
commercial trucks, tractor-trailers, light commercial vehicles and utility vehicles passenger cars and
the ultra-cheap Tata Nano. The majority of car sales are in India with approximately 20% of sales
coming from overseas. Tata motors has 22,000 employees and three manufacturing plants and in
2008 the company bought the Jaguar and Land Rover brands from Ford.

Within the Indian market, Tata Motors have less than 20% market share of the passenger car
market. Outside of India they sell only a few cars and so their experience of international sales and
marketing is weak. The company does however have some particular advantages in comparison to
other automobile competitors. Firstly labour costs in India are low and represent about 9 % of sales
turnover against 30 – 35% in developed economies. Furthermore the company has extensive
backward and forward linages and benefits from the machine tools and metal sectors from other
parts of the Tata Group. Government policies in India are also favourable and incentives are given
for R and D and for expanding overseas.

The acquisition of both Jaguar and Land Rover put considerable financial pressure on Tata motors
and this is ongoing as the company plans to spend a considerable sum developing the facilities
manufacturing the luxury brands. Tata also have a deal with Fiat and are already distributing Fiats in
India and may expand the offering into South America, a Fiat stronghold.

Tata Nano Business Model.

Independent suppliers provide about 80% of Nano’s components and 97% of the vehicle is sources in
India. Suppliers such as Bosch worked with Tata and Indian engineers with motorbike experience
were used to craft innovative low-cost components.

By concentrating on the essentials and encouraging creativity in making components smaller, lighter
and cheaper, Tata avoided engineering non- functional non-essential parts. Bosch for example
adapted a smaller and lighter motorcycle starter for use in the Nano.

Similar to Henry Ford’s “any colour so long as it is black “approach, the Nano offers consumer few
options and only a few have any impact on the manufacturing process.

The distribution model in India is also new as the company mobilises large numbers of third parties
to reach the remote rural consumers ad to tailor the products to serve their needs.

1. a. Describe the Brazilian market as a favorable destination for MNCs like TATA based on 4 affected
factors. How do that drivers influence on the global value chains of the industry

b. Using the basic supply chain model to explain how TATA could get the benefit in Brazilian market.