Tata Ace

“Small is
Big”

Business Strategy - Group 5

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overview
üIntroduction üNeed and Development of ACE üKey issues üFunctional Strategy § § § Financial Strategy Operational Strategy Marketing Strategy

üCompetitors üRecommendations
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History
1945 Tata Engineering & Locomotive Ltd. (TELCO) was Company established 1954-Start manufacturing commercial vehicles 1961-Exporting Trucks 1966-Machine tools division in Pune. 1983-Start Producing Heavy Commercial Vehicle. 1986-Light Commercial Vehicle, TATA 407 and TATA 608
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Contd..
1994- Launch Multi-Utility Vehicle, TATA Safari 1998-Launch Of Indica 2001-Stock Prices Fell Rs.564 in 2006 to Rs.59 in 2001 Sumo 1998-India’s First Utility Vehicle, TATA

Business Strategy - Group 5

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Mergers And Acquisitions
1993-TATA Cummins Ltd. 1994-TATA Holset Ltd. 1994-Mercedes-Benz India Ltd 1997-Concorde Motors Ltd. 2004- Daewoo commercial vehicles comp. 2008-Jaguar Land Rover

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Case KEY ISSUES
§ Was there really a need to introduce Tata Ace? § Was Tata Motors justified in indigenously developing a new

vehicle instead of buying/licensing technology from already established vehicle manufacturer.
§ Was Tata Ace justified to be launched as a last mile

distribution vehicle?
§ Is there a loophole observed in the financial strategy of Tata

motors?

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Findings of Research
üPrime Minister’s Rural Roads Program üImprovement Of Infrastructure – Hub and Spoke üCue from foreign Countries

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NEED FOR TATA ACE

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NEED FOR TATA ACE
üCustomer needs•An alternative with fuel efficiency, comfort, safety, low maintenance costs. •Social status •Last mile distribution vehicle üCompany needs•Cyclic decline of sales •Capture growing market opportunity

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LICENSING TECHNOLOGY
üCostly Expenditure üCreate Competitors üLegal Constraints üLose Position In The Market

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Strategies
---Financial ---operational ---Marketing

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Financial strategy Lost Cost strategy initiatives
üOutsourcing üManufacturing üTooling üMarketing üCost Reduction – Direct material cost, Variable conversion cost, Fixed Cost, interest cost reduction üBreak even point low
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Financial Strategy - Outcome

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Financial Strategy - Outcome
Days of sale Days of sale

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Operation strategies
Project CUB!! üHeavy truck & last mile distribution vehicle üFeatures important for customers üE- sourcing üNew manufacturing plant at Pantnagar üVarious strategiesüValue engineering
Business Strategy - Group üUse of carry over items 5

16

Operation strategies
üEngine modification üDealership & service strategies

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small is

BIG

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Marketing ACE !!
üValue proposition üPricing strategy üPositioning: sub -one ton pay load segment üDistribution: South India Export üPromotional strategies : Chota Haathi, Life Ban Jayegi Pyaare

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“ch o t a

HA ATHI”

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“LIFE BAN JAYEGI TERI PYARE”

Rushing to school

Wife seeing husband off for the day

To school in TATA Ace

“Safalta ki nayi sawari – Jo do lakh zindagi badal chuka hai – Aapka pyara chota haathi”.
Business Strategy - Group 5

Off to work in TATA Ace

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COMPETITORS
Three-Wheeler Cargo Vehicles: Piaggio BAL M&M

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Value enhancers……
§ looked and performed better than the

existing alternatives.
§ Addressed the key concern of

commercial vehicle buyers : Lead & Load.

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New Entrants

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Piaggio - quadricycle
§ § § § §

Create a new segment Capacity between 1 to 1.5 tonne Cargo and passenger variant Similar to Light commercial vehicle Priced within Rs.200000

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Force motors
§ Large Cargo Holding with three side § § § § §

opening Also available with power steering Low maintenance cost Heavy duty chassis and axles Wider wheel track and optimum ground clearance Drivers cabin

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Competition in near future…
§ Eicher & Swaraj Mazda § BAL § Hyundai

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Strategies to Counter Competition
üMore Concentration on Fuel Efficiency and Fuel alternatives üImprove Product features on KPPs üDevelop variants on the same platform üIncreased use of CAD/CAE/CAM üTMF – Provide cheaper loans on Tata Products

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Impact of ACE on Tata Motors
§ Leveraged the First Mover’s Advantage

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Impact…Contd…
üSales growth achieved the all time high rate i.e. 33.36 % üCreated and maintained a new segment in the commercial vehicles üAttracted Market Competition and Innovation

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ISSUE – Point for Discussion
Sustainability of growth in the era of rising crude oil prices and the increase in the raw material costs.

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Recommendations
§ Cost down efforts § Focus on quality in process/design § Focus on distribution network(channel

partners)

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Learnings
§ Balance between quality, cost and

time. § Stretch targets and motivate the team to achieve the desired objectives § Set a common goal and a objective

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QUESTIONS

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THANK YOU

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