Sunteți pe pagina 1din 8

ASSIGNMENT No. 1 1. Tata Motors represent a classic case of strategic stretch, leverage and fit. Elaborate. Ans.

1 As the global financial crises wreaked havoc on major Western automobile companies, particularly in the United States, Tata Motors, the biggest Indian automobile manufacturer seems to have weathered the storm albeit with some dents so far. In this paper we explore how the global financial crisis has affected Tata Motors and how the company responded to the crisis strategically. While we focus on the passenger car division, we will also discuss to some degree the commercial vehicle side, because the effect of the financial crisis on Tata Motors (TM) cannot be fully understood without it. Based on Boyer and Freyssenets (2003) definition of productive models the focus will be on changes in the productive model (constituted by the interplay of profit strategy, product policy, production organization and employee relations) in relation to key contextual changes in the companys external environment (liberalization, market conditions, financial crisis) before and after the global financial crisis. A major conclusion of our analysis is that given Tata motors embeddedness in the Tata conglomerate given the remaining importance of the Indian market, the company was buffered to some degree from the effects of the financial crisis. Nevertheless, the financial crisis did leave its trace on the company as the shortfalls in demand of commercial vehicles, passenger cars and SUVs were exacerbated by two major strategic initiatives, the Jaguar Land Rover (JLR) acquisition and the Nano project, which had developed their own problems and challenges as the following quotes from sources in the investor community indicate: The rapid reversals at Tata Motors, which is probably the most internationally visible of Indian automakers, mirror the suddenness with which many Indian companies have seen their fortunes change as global lines of credit have frozen and the local economy has slowed down . They are now fighting on three fronts: Their core business is collapsing, the small car project will have to prove itself, and the global credit availability is a problem TMs market performance and the evolution of its strategy and productive model including its foray into the passenger car segment in the ten years leading up to the financial crisis in fall 2008 can be characterized as the outcome of the interplay between the transformation Indias economic regime and policy environment and a strong strategic intent of the top management (Ratan Tata, the Chairman of the Tata Group and of Tata Motors, took a strong personal interest in Tatas automotive engagement). It was the fundamental change of this economic environment that changed demand and supply conditions in the Indian automotive market for both commercial vehicles and passenger cars. As we have shown the effect of the financial crisis on Tata Motors passenger car business must be understood in the context of several concomitant processes and interfering conditions. TMs original core business in the passenger car division (small cars in India) was mildly influenced by the crisis as TMs passenger car sales decreased by only 5%. The company was much more negatively affected by the decline in sales of its commercial vehicle division which represented not yet taking into account the JLR acquisition some 2/3 of its turnover. However, the financial crisis had a much more serious impact [in the last quarter of 2008 and the first quarters of 2009] because of the burden of two major strategic initiatives. The shift of the production site and postponement of the full Nano launch which was originally scheduled for launch in March 2008 by two years led to unexpected

resource needs (new manufacturing site) and a shortfall of otherwise expected 2008-09 revenues. While this burden was not caused or much exacerbated by the crisis in the global car industry, the acquisition of JLR only few months before the onset of the crisis actually affected TM much more: the dramatic decrease in JLRs sales (JLR being fully exposed to European and US markets) significantly increased the heavy losses of the new combined company in FY 2008/09; even more importantly, the refinancing of the short term bridging loan of $ 3 billion for the acquisition became much more complicated and costly in a situation of dried up capital markets. The refinancing difficulties and increasing financing cost contributed to a serious debt overload of TM which might have led to bankruptcy (and a take-over) if the TM would have been a stand-alone company and would not have been protected and supported by its affiliation to the Tata group and its well connected chairman. While it is no surprise that the crisis caused (temporary) problems and challenges for TMs business it seems much more remarkable how little effect it had on the companys st rategy. TM steered through the crisis without much change in its path-changing (Nano) as well as its path-breaking (JLR) strategy initiatives. The constancy of purpose as well as a continuous and consistent execution of strategic plans was maintained despite highly skeptical capital market markets which had temporarily withdrawn support from TM. The unwavering pursuit of a transformational strategy of TM in the face of the financial crisis can be ultimately explained only by the affiliation of the company to a very strong and supportive conglomerate with a particular mode of operation: TM is one of the few strategic companies of the Tata group; it is guided personally by the Chairman of the Tata Group who has committed the group to a course of globalization and innovation while relying on Indias comparative location advantages; it allows the company to sustain long periods of low profitability and significant investments in resource and capability accumulation; TM profits from the value and attraction of the TATA brand in its dealings with suppliers, customers and the Government, as well as in attracting talented staff; it also profits from various group support services like the groups excellence model, its acquisition and finance expertise and its training efforts. This inherent affiliation strength enabled TM to even use the crisis as an accelerator for the implementation of its strategies by legitimizing a more swift course towards cost cutting in the JLR operations (announced closure of one plant and shift of significant supply sources to India). It may also have facilitated the far-reaching changes in TMs top management as experienced top managers were available due to the crisis and a change of top management seemed to be justified in view of TMs difficulties and temporary low performance. It can therefore be concluded that the financial crisis has not much affected TMs transformational change change in productive model?] or even reinforced and accelerated it. 2. Explain the 5Ps of Strategy. Ans. 2. Mintzberg first wrote about the 5 Ps of Strategy in 1987. Each of the 5 Ps is a different approach to strategy. They are: 1. 2. 3. 4. 5. Plan. Ploy. Pattern. Position. Perspective. By understanding each P, you can develop a robust business strategy that takes full advantage of your organization's strengths and capabilities.

In this article, we'll explore the 5 Ps in more detail, and we'll look at tools that you can use in each area. 1. Strategy as a Plan Planning is something that many managers are happy with, and it's something that comes naturally to us. As such, this is the default, automatic approach that we adopt brainstorming options and planning how to deliver them. This is fine, and planning is an essential part of the strategy formulation process. Our articles on PEST Analysis , SWOT Analysis and Brainstorming help you think about and identify opportunities; the article on practical business planning looks at the planning process in more detail; and our sections on change management and project management teach the skills you need to deliver the strategic plan in detail. The problem with planning, however, is that it's not enough on its own. This is where the other four Ps come into play. 2. Strategy as Ploy Mintzberg says that getting the better of competitors, by plotting to disrupt, dissuade, discourage, or otherwise influence them, can be part of a strategy. This is where strategy can be a ploy, as well as a plan. For example, a grocery chain might threaten to expand a store, so that a competitor doesn't move into the same area; or a telecommunications company might buy up patents that a competitor could potentially use to launch a rival product. Here, techniques and tools such as the Futures Wheel , Impact Analysis and Scenario Analysis can help you explore the possible future scenarios in which competition will occur. Our article on Game Theory then gives you powerful tools for mapping out how the competitive "game" is likely to unfold, so that you can set yourself up to win it. 3. Strategy as Pattern Strategic plans and ploys are both deliberate exercises. Sometimes, however, strategy emerges from past organizational behavior. Rather than being an intentional choice, a consistent and successful way of doing business can develop into a strategy. For instance, imagine a manager who makes decisions that further enhance an already highly responsive customer support process. Despite not deliberately choosing to build a strategic advantage, his pattern of actions nevertheless creates one. To use this element of the 5 Ps, take note of the patterns you see in your team and organization. Then, ask yourself whether these patterns have become an implicit part of your strategy; and think about the impact these patterns should have on how you approach strategic planning. Tools such as USP Analysis and Core Competence Analysis can help you with this. A related tool, VRIO Analysis, can help you explore resources and assets (rather than patterns) that you should focus on when thinking about strategy. 4. Strategy as Position "Position" is another way to define strategy that is, how you decide to position yourself in the marketplace. In this way, strategy helps you explore the fit between your organization and your environment, and it helps you develop a sustainable competitive advantage . For example, your strategy might include developing a niche product to avoid competition, or choosing to position yourself amongst a variety of competitors, while looking for ways to differentiate your services.

When you think about your strategic position, it helps to understand your organization's "bigger picture" in relation to external factors. To do this, use PEST Analysis , Porter's Diamond , and Porter's Five Forces to analyze your environment these tools will show where you have a strong position, and where you may have issues. As with "Strategy as a Pattern," Core Competence Analysis , USP Analysis , and VRIO Analysis can help you craft a successful competitive position. You can also use SWOT Analysis to identify what you do well, and to uncover opportunities. Note: There can be a lot of overlap between "Strategy as Position" and other elements of the 5 Ps. For instance, you can also achieve a desired position through planning, and by using a ploy. Don't worry about these overlaps just get as much value as you can from the different approaches. 5. Strategy as Perspective The choices an organization makes about its strategy rely heavily on its culture just as patterns of behavior can emerge as strategy, patterns of thinking will shape an organization's perspective, and the things that it is able to do well. For instance, an organization that encourages risk-taking and innovation from employees might focus on coming up with innovative products as the main thrust behind its strategy. By contrast, an organization that emphasizes the reliable processing of data may follow a strategy of offering these services to other organizations under outsourcing arrangements. To get an insight into your organization's perspective, use cultural analysis tools like the Cultural Web , Deal and Kennedy's Cultural Model , and the Congruence Model . Using the 5 Ps Instead of trying to use the 5 Ps as a process to follow while developing strategy, think of them as a variety of viewpoints that you should consider while developing a robust and successful strategy. As such, there are three points in the strategic planning process where it's particularly helpful to use the 5 Ps: 1. When you're gathering information and conducting the analysis needed for strategy development, as a way of ensuring that you've considered everything relevant. 2. When you've come up with initial ideas, as a way of testing that that they're realistic, practical and robust. 3. As a final check on the strategy that you've developed, to flush out inconsistencies and things that may not have been fully considered. Using Mintzberg's 5 Ps at these points will highlight problems that would otherwise undermine the implementation of your strategy. After all, it's much better to identify these problems at the planning stage than it is to find out about them after you've spent several years and millions of dollars implementing a plan that was flawed from the start.

3. Explain in briefly the strategic management process. Ans. 3.

1. Mission: A company's mission is its reason for being. The mission often is expressed in the form of a mission statement, which conveys a sense of purpose to employees and projects a company image to customers. In the strategy formulation process, the mission statement sets the mood of where the company should go. 2. Objectives: Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target. The objectives should be challenging but achievable. They also should be measurable so that the company can monitor its progress and make corrections as needed. 3. Situation Analysis: Once the firm has specified its objectives, it begins with its current situation to devise a strategic plan to reach those objectives. Changes in the external environment often present new opportunities and new ways to reach the objectives. An environmental scan is performed to identify the available opportunities. The firm also must know its own capabilities and limitations in order to select the opportunities that it can pursue with a higher probability of success. The situation analysis therefore involves an analysis of both the external and internal environment. The external environment has two aspects: the macro-environment that affects all firms and a micro-environment that affects only the firms in a particular industry. The macro-environmental analysis includes political, economic, social, and technological factors and sometimes is referred to as a PEST analysis. An important aspect of the micro-environmental analysis is the industry in which the firm operates or is considering operating. Michael Porter devised a five forces framework that is useful for industry analysis. Porter's 5 forces include barriers to entry, customers, suppliers, substitute products, and rivalry among competing firms. The internal analysis considers the situation within the firm itself, such as:

Company culture Company image Organizational structure Key staff

Access to natural resources Position on the experience curve Operational efficiency Operational capacity Brand awareness Market share Financial resources Exclusive contracts Patents and trade secrets

A situation analysis can generate a large amount of information, much of which is not particularly relevant to strategy formulation. To make the information more manageable, it sometimes is useful to categorize the internal factors of the firm as strengths and weaknesses, and the external environmental factors as opportunities and threats. Such an analysis often is referred to as a SWOT analysis. 4. Strategy Formulation: Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be developed. While different firms have different alternatives depending on their situation, there also exist generic strategies that can be applied across a wide range of firms. Michael Porter identified cost leadership, differentiation, and focus as three generic strategies that may be considered when defining strategic alternatives. Porter advised against implementing a combination of these strategies for a given product; rather, he argued that only one of the generic strategy alternatives should be pursued. 5. Implementation: The strategy likely will be expressed in high-level conceptual terms and priorities. For effective implementation, it needs to be translated into more detailed policies that can be understood at the functional level of the organization. The expression of the strategy in terms of functional policies also serves to highlight any practical issues that might not have been visible at a higher level. The strategy should be translated into specific policies for functional areas such as:

Marketing Research and development Procurement Production Human resources Information systems

In addition to developing functional policies, the implementation phase involves identifying the required resources and putting into place the necessary organizational changes. 6. Control: Once implemented, the results of the strategy need to be measured and evaluated, with changes made as required to keep the plan on track. Control systems should be developed and implemented to facilitate this monitoring. Standards of performance are set, the actual performance measured, and appropriate action taken to ensure success. 7. Dynamic and Continuous Process: The strategic management process is dynamic and continuous. A change in one component can necessitate a change in the entire strategy.

As such, the process must be repeated frequently in order to adapt the strategy to environmental changes. Throughout the process the firm may need to cycle back to a previous stage and make adjustments. 8. Drawbacks of this Process: The strategic planning process outlined above is only one approach to strategic management. It is best suited for stable environments. A drawback of this top-down approach is that it may not be responsive enough for rapidly changing competitive environments. In times of change, some of the more successful strategies emerge informally from lower levels of the organization, where managers are closer to customers on a day-to-day basis. 4. What is the different between Vision and Mission? Ans.4 BASIS MISSION A Mission statement talks about HOW you will get to where you want to be. Defines the purpose and primary objectives related to your customer needs and team values. It answers the question, What do we do? What makes us different? A mission statement talks about the present leading to its future. It lists the broad goals for which the organization is formed. Its prime function is internal; to define the key measure or measures of the organization's success and its prime audience is the leadership, team and stockholders. VISION

About

A Vision statement outlines WHERE you want to be. Communicates both the purpose and values of your business. It answers the question, Where do we aim to be? A vision statement talks about your future. It lists where you see yourself some years from now. It inspires you to give your best. It shapes your understanding of why you are working here.

Answer Time

Function

Change

Your mission statement may change, As your organization evolves, you but it should still tie back to your core might feel tempted to change your values, customer needs and vision. vision. However, mission or vision statements explain your organization's foundation, so change should be kept to a minimum. What do we do today? For whom do we do it? What is the benefit? In other words, Why we do what we do? What, For Whom and Why? Purpose and values of the organization: Who are the Where do we want to be going forward? When do we want to reach that stage? How do we want to do it? Clarity and lack of ambiguity: Describing a bright future (hope);

Developing a statement Features of an effective

statement

organization's primary "clients" (stakeholders)? What are the responsibilities of the organization towards the clients?

Memorable and engaging expression; realistic aspirations, achievable; alignment with organizational values and culture.

5. What is the different between Goal and objectives. ANS.5 BASIS GOALS The purpose toward which an endeavor is directed. I want to achieve success in the field of genetic research and do what no one has ever done. Generic action, or better still, an outcome towards which we strive. Goals may not be strictly measurable or tangible. Longer term OBJECTIVES

Meaning

Something that one's efforts or actions are intended to attain or accomplish; purpose; target. I want to complete this thesis on genetic research by the end of this month. Specific action - the objective supports attainment of the associated goal. Must be measurable and tangible. Mid to short term

Example

Action

Measure Time frame

S-ar putea să vă placă și