Executive Summary

The report talks about the Indian automobile industry in general and Indian
automobile giant. TATA Motors in particular. We have analyzed Indian
automobile industry using Porter‘s 5forces model & its performance in the recent
past. Particularly we have tried to track the path of TATA Motor‘s expansion of
international business in the recent past, at present as well as its future plans. We
have also discussed the impact of current financial meltdown on the recent
international ventures of the company. The company is rapidly increasing its
global footprint and is aiming to match the standards of international automobile
manufacturers in next 3 to 5 years. This rise to the level of a world-class
automotive manufacturer would involve a large quantifiable increase in revenues
from outside India with a focus on certain foreign markets. Currently international
business contributes 18.4% to company‘s revenues. Company is aiming to increase
it by 200% in near future to reduce its dependence on one single economy and one
single business cycle. This ambition of the company has led to numerous joint
ventures and increased activity in countries like the U.K., South Africa, South
Korea, Thailand, Brazil and Spain, as well as the company is listing on the NYSE.

With the recent acquisition of Jaguar Land Rover (JLR) from the Ford Motor
company in early 2008, the company has entered into the world of high-end luxury
brands. Customers of high-end luxury brands value image and exclusivity factors,
while image and exclusivity conflict with the proposition of TML‘s other recent
venture, the inexpensive Nano. In this manner, the decision to compete in both the
high-end luxury and low-end economy markets certainly creates a big and
audacious task ahead for TML. If proven successful, this strategy would provide
the company with high margin (JLR) as well as high volume (Nano) revenues.
These two revenue streams, if proven compatible, could mitigate each other‘s
risks.
Introduction

Indian Automobile Industry

Hailed as ‗the industry of industries‘ by Peter Drucker, the founding father of the
study of management, in 1946, the automobile industry had evolved continuously
with changing times from craft production in 1890s to mass production in 1910s to
lean production techniques in the 1970s.

The automotive industry in India grew at a computed annual growth rate (CAGR)
of 11.5 percent over the past five years, the Economic Survey 2008-09 tabled in
parliament on 2nd July‘09 said. The industry has a strong multiplier effect on the
economy due to its deep forward and backward linkages with several key segments
of the economy, a finance ministry statement said. The automobile industry, which
was plagued by the economic downturn amidst a credit crisis, managed a growth of
0.7 percent in 2008-09 with passenger car sales registering 1.31 percent growth
while the commercial vehicles segment slumped 21.7 percent.

Indian automobile industry has come a long way to from the era of the
Ambassador car to Maruti 800 to latest M&M Xylo. The industry is highly
competitive with a number of global and Indian companies present today. It is
projected to be the third largest auto industry by 2030 and just behind to US &
China, according to a report. The industry is estimated to be a US$ 34 billion
Industry. Indian Automobile industry can be divided into three segments i.e. two
wheeler, three wheeler & four wheeler segment. The domestic two-wheeler market
is dominated by Indian as well as foreign players such as Hero Honda, Bajaj Auto,
Honda Motors, TVS Motors, and Suzuki etc. Maruti Udyog and Tata Motors are
the leading passenger car manufacturers in the country and India is considered as
strategic market by Suzuki, Yamaha, etc. Commercial Vehicle market is catered by
players like Tata Motors, Ashok Leyland, Volvo, Force Motors, Eicher Motors etc.
The major players have not left any stone unturned to be global. Major of the
players have got into the merger activities with their foreign counterparts. Like
Maruti with Suzuki, Hero with Honda, Tata with Fiat, Mahindra with Renault,
Force Motors with Mann.

Key Facts:
• India ranks 12th in the list of the world's top 15 automakers
• Entry of more international players
• Contributes 5% to the GDP
• Production of four wheelers in India has increased from 9.3 lakh units in 2002-03
to 23 lakh units in 2007-08
• Targeted to be of $ 145 Billion by 2016
• Exports increased from 84,000 units in 2002-03 to 280,000 units in 2007-08
Porter’s Five Forces Analysis of Indian Automobile Sector

1. Industry Rivalry
• Industry Concentration: The Concentration Ratio (CR) indicates the percent of
market share held by a company. A high concentration ratio indicates that a high
concentration of market share is held by the largest firms - the industry is
concentrated. With only a few firms holding a large market share, the market is
less competitive (closer to a monopoly). A low concentration ratio indicates that
the industry is characterized by many rivals, none of which has a significant
market share. These fragmented markets are said to be competitive. If rivalry
among firms in an industry is low, the industry is considered to be disciplined.

• High Fixed costs: When total costs are mostly fixed costs, the firm must produce
capacity to attain the lowest unit costs. Since the firm must sell this large quantity
of product, high levels of production lead to a fight for market share and results in
increased rivalry. The industry is typically capital intensive and thus involves high
fixed costs.

• Slow market growth: In growing market, firms can improve their economies.
Though the market growth has been impressive in the last few years (about 8 to
15%), it takes a beat in even slight economic disturbances as it involves a luxury
good. Aggressive pricing is needed to sustain growth in such situations.
• Diversity of rivals: Industry becomes unstable as the diversification increases. In
this case the diversity of rivals is moderate as most offer products which are close
to standard versions and the competitors are also mostly similar in strength

• Highly competitive industry: The presence of many players of about the same
size little differentiation between competitors, and a very mature industry with
very little growth were the features of a highly competitive industry. Higher the
competition in the industry lower would be the profit margin. To remain ahead in
competition, auto-makers were tempted to offer value added services to the
customers incurring more costs.

2. Threat of New Entrants

These are the characteristics that inhibit the entrance of new rivals into the market
and in turn protect the profits of the existing firms. Based on the present profit
levels in the market, one can expect the entrance of new firms into the market or
not. The entrance is however also affected by the start-up costs

• Economies of scale: The Minimum Efficient Scale (MES) is the point at which
unit costs are minimized. The greater the difference between the MES and the
entry unit cost, greater is the barrier. Economies of scale are becoming increasingly
important as competition is driving the profit margins to lower levels. Also being a
capital intensive industry economies of scale have important consequence

• Government policies:
(1) Automobile Industry was delicensed in July 1991 with the announcement of
the New Industrial Policy.
(2) The passenger car industry was delicensed in 1993. No industrial licence is
required for setting up of any unit for manufacture of automobiles except in some
special cases.
(3) The norms for Foreign Investment and import of technology have been
Progressively liberalized over the years for manufacture of vehicles including
Passenger cars in order to make this sector globally competitive.
(4) At present 100% Foreign Direct Investment (FDI) is permissible under
automatic route in this sector including passenger car segment. The import
of technology/technological up gradation on the royalty payment of 5%
without any duration limit and lump sum payment of USD 2 million is
allowed under automatic route in this sector.
 (5) The automotive industry comprising of the automobile and the auto
component sectors has made rapid strides since delicensing and opening up
of the sector to FDI in 1991.
(6) The industry had an investment of about Rs. 50,000 crore in 2002-03 which
has gone up to Rs. 80,000 crore by the year 2007. The automotive industry
has already attained a turnover of Rs. 1,65,000 crore (34 billion USD).
(7) The industry provides direct and indirect employment to 1.31 crore people.
The contribution of the automotive industry to GDP has risen from 2.77% in
1992-93 to 5% in 2006-07. The industry is making a contribution of 17% to
the kitty of indirect taxes of the Government.
With all the policies regarding the FDI and Tariff barriers as mentioned above, it
has become easier for the foreign players to enter the Indian automobile industry.

3. Threat of Substitutes

• The replacement market is characterized by the presence of several small-scale

suppliers who score over the organized players in terms of excise duty exemptions
and lower overheads.
• A product‘s price elasticity is affected by the presence of substitutes as its
demand is affected by the change in the substitute‘s prices
• The cost of the automobiles along with their operating costs was driving
customers to look for alternative transportation options
• The new technologies available also affect the demand of the product
e.g.: In case of Maruti‘s products, the threat of substitutes is high. The competition
is intense as several players have products in the categories given by Maruti.
However, in the 800cc range it is the market leader and the threat of substitute
products is low. Price performance comparison favors heavily towards Maruti in
most product categories. Also the high availability and quality of services offered
by Maruti gives the customer a better trade-off.

4. Bargaining Power of Suppliers

• Suppliers can influence the industry by deciding on the price at which the raw
materials can be sold. This is done in order to capture profits from the market.
• Steel is a major input in this industry and so steel prices have a sharp and
immediate impact on the product price
• The industry being capital intensive switching costs of suppliers is high, other
than steel as raw material which is highly price sensitive and the firm may easily
move towards a supplier with lower cost.
5. Bargaining Power of Buyers

• It specifies the impact of customers on the product

• When buyer power is strong, the buyer is the one who sets the price in the
market. Here there are purchases of large volumes.
• There is prevalence of alternative options.
• Price sensitive customers were some of the factors that determine the extent of
Influence of the buyers in this industry e.g.: In the case of Maruti, the sales
volumes have shown increasing trend over past so many years. The customers are
more or less concentrated in metros or other tier two cities. The industry is also
concentrated in these regions mostly. Most of them are have good amount of
knowledge about the product. Except the 800cc range in other categories brand
loyalty is only moderate. Also it is difficult to measure since repurchases are rare.
Product differentiation is high as there are many categories in the passenger
vehicle segment. Buyers get incentives in the form of cost discounts and better
after sales services.
 TATA GROUP

TATA Group is more than 150 years old. In terms of market capitalization and
revenues, Tata Group is the largest private corporate group in India and has been
recognized as one of the most respected groups in the world. It has interests in
steel, automobiles, information technology, communication, power, tea and
hospitality. The Tata Group has operations in more than 85 countries across six
continents and its companies export products and services to 80 nations. In the past
few years, the TATA group has led the growing appetite among Indian companies
to acquire businesses overseas in Europe, the United States, Australia and Africa -
some even several times larger - in a bid to consolidate operations and emerge as
the new age multinationals.
The TATA group is 11th most reputable company in the world according to
Forbes. At home in the world Anchored in India and committed to its traditional
values of leadership with trust, the Tata group is spreading its footprint globally
through excellence and innovation. The Tata group‘s revenues for 2007-08 from its
international operations were $38.3 billion, which constitutes 61 per cent of its
total revenues. Each operating company in the group develops its international
business as an integral element in an overall strategy, depending on the competitive
dynamics of the industry in which it operates. Exports from India remain the
cornerstone of the Tata group‘s international business, but different Tata
companies are increasingly investing in assets overseas through Greenfield projects
(such as in South Africa, Bangladesh and Iran), joint ventures (in South Africa,
Morocco and China) and acquisitions.
Acquisitions are a crucial component of the global expansion of Tata enterprises.
Over the past eight years the group has made overseas acquisitions of $18 billion.
Among the bigger deals on this front have been Tetley, Brunner Mond, Corus,
Jaguar and Land Rover in the UK, Daewoo Commercial Vehicles in South Korea,
NatSteel in Singapore, and Tyco Global Network and General Chemical in the US.
Priority markets. While individual Tata companies have differing geographical
imperatives, the Tata group is focusing on a clutch of priority countries, which are
expected to be of strategic importance in the years ahead. The regions are North
America, UK, China, the Netherlands, Germany, South Africa, members of the
Gulf Cooperation Council, Brazil, Vietnam, Thailand and Sri Lanka.
Ratan Tata, Chairman, Tata Sons, sums up the Tata group‘s efforts to
internationalize its operations thus: ―I hope that a hundred years from now we will
spread our wings far beyond India, that we become a global group, operating in
many countries, an Indian business conglomerate that is at home in the world,
carrying the same sense of trust that we do today.‖
Tata Group
TATA INTERNATIONALIZATION
MAIN TRENDS
The Tatas‘ outlook has been outward-oriented from the very beginning. Tata
Limited was established in London in 1907 as the Tata Group‘s representative in
Europe. During WW-II, the Tatanagar, a light armoured car, ―was used extensively
by the British Army engaged on the North African front‖ (Tripathi and Jumani
2007, p. 129). Immediately after WW-II, Tata Incorporated was established in New
York as the representative office of the Tata Group in the Americas.
The Tatas‘ personal vicissitudes have also been very international. Sir Ratan
owned York House in Twickenham, to the south-west of London, which he bought
from the Duc d‘Orleans. Many Tatas are buried overseas – Sir Dorabji, for
instance, died at Bad Kissingen in Germany during a trip to visit his wife‘s grave
in England. JRD was born in Paris in 1904 to R. D. Tata, a business partner and
relative of Jamsetji Tata, and his French wife Sooni. JRD was educated in France,
Japan and England before being drafted into the French army for a mandatory
period of
one year. His fascination with planes, which led him to create Air-India, started by
befriending the son of Louis Bleriot, the French flying pioneer. Finally, social
engagement has also trespassed national borders. Between November 1909 and
August 1912, Sir Ratan made three donations equal to £5,000 to assist Mahatma
Gandhi‘s Transvaal passive resistance fund in the fight for the rights of the Indians
in South Africa. In 1912, the Sir Ratan Tata Foundation gave seed research funds
to LSE founders Sidney and Beatrice Webb.
In the 1950s, various Tata companies cooperated with foreign partners such as
Daimler Benz and the World Bank. As developing countries gained independence,
the house implemented many donor-funded turnkey projects in Africa and West
Asia. Tata International was established in 1962 to offer value-added services in
international trading focused on leather and engineering. It also managed customer
support facilities for Tata vehicles and design studios for leather. The company and
its subsidiaries worldwide have taken stakes in a cross section of businesses.
Established in 1972, Singapore-based Tata Precision Industries specialises in high-
precision machining, precision fine blanking, engineering plastic moulded parts
and tool design.29 Nonetheless, the Tatas‘ international reach at the time was
much smaller than other Indian large conglomerates such as the Birlas, the
Thapars, or the Kirloskars, as well as the Oberoi hotel chain.
In 1990, globalization led to new institutional innovations. A wholly-owned
subsidiary of Tata International, Tata Africa Holdings was established in
Johannesburg in 1994. It operates in major industrial sectors such as automobiles,
steel and engineering, chemicals, information technology, hospitality, farming, and
other business areas. Tata Limited in London has become an agent for the global
procurement of goods and services for the entire Tata Group. Tata
International AG, the international investment and holding company of the Tata
Group, its trading subsidiary, Tata AG, and associate, Tata Enterprises (Overseas)
AG, all headquartered in Switzerland, promote and invests in various enterprises
and projects overseas. All these milestone notwithstanding, the Tata Group‘s
operations were mostly India-focused until recently. In the case of tea, possibly the
most outward-looking business, in the late 1990s international sales were
accounting for only 12% of total sales (Chattopadhyay and Lege 2005). Similarly,
while Titan is one of the world‘s top six manufacturer-brands in the watch
segment, its overseas operations are limited to a commercial presence.
In a 2004 interview, Ratan Tata ―visualize in the next few years the following
companies to be the international face of the group: TCS, Tata Motors, Indian
Hotels Co., and to some extent, one which won't be that visible, is Tata Power.‖30
He has been preaching the need to internationalize in giants strides, not in token,
incremental steps.31 As it turned out, two other companies in the stable have made
the largest acquisitions. In 2000, Tata Tea acquired Tetley in a £271 million
(US$432 million) leveraged buyout that was the largest takeover of a foreign
company by an Indian one to that date. A short analysis of the post-merger
trajectory is presented in the following section. Then in early 2007 Tata Steel
acquired Anglo-Dutch firm Corus for US$11 billion – the largest deal out of India
and the fourth-largest ever in the steel industry – and secured the largest loan ever
for an Indian company.32 With these exceptions, most other acquisitions have
been relatively small – in the sense of the target being much smaller in size than
the Tata company making the bid.33
The total sum of the acquisitions for which deal value is available is slightly
larger than US $15 billion, of which 79 percent corresponds to the Corus operation
and 83 percent to Tata Steel in general. In terms of geography, the UK amounts to
84 percent – again, dominated by the Corus deal which in fact involved a British-
Dutch company. Finally, operations concluded in 2007 account for 81 percent of
the post-2000 total.
The extent of corporate internationalization can be gauged through different
indicators, including the proportion of assets, sales and employment outside of one
company‘s home country. Unfortunately, such data are not available for Tata
companies in a way that would be consistent with the UNCTAD methodology for
computing a transnationality index. Table E provides what incomplete information
could be assembled. It highlights that sales (by location of customer) are very
internationalized for TCS and Tata Tea, but also for pre-Corus Tata Steel (by
location of subsidiary). While the very high figure for TCS clearly reflects the fact
that the majority of the business is export of services performed in India, the share
of non-Indian nationals is also very substantial (with no fewer than 67 nationalities
represented in the payroll). An interesting anecdote is that TCS has more than 600
Uruguayan employees, even if India has no embassy in Montevideo!
Directorship and management composition constitute other dimensions of
internationalization. At Tata Sons, besides Group chairman Ratan Tata, the GEO
comprises five Indians and one foreigner. The same six individuals sit on the GCC,
which also comprises three additional Indians. Out of the 11 Tata Sons directors –
all of them male – five have received foreign degrees, although only four seem to
have worked abroad prior to joining the Tata Group. N. A. Soonawala was deputed
by ICICI to the Development Banks in Ghana and Nigeria in the 1960s, Farrokh
Kavarana was with McKinsey and The Bowater Corporation in the 1970s, R
Gopalakrishnan with Unilever Arabia, based in Jeddah, in the early 1990s, and
Alan Rosling with Piersons, the British Prime Minister office, United Distillers,
and Jardine Matheson Group in Hong Kong in 1983-2003.34
Each company has its own management, which is more international, with two
Americans among the Group‘s top 13 executives.35 Among the operating
affiliates, non-Indian residents account for a large percentage of directors for TCS
and post-Corus Tata Steel only (Table E). With the appointment of Andrew Robb
as non-executive independent director and Deputy Managing Director in
November 2007, there are now five Corus directors in the 14-member board of
Tata Steel.36 In particular, TCS is the only Tata company with multiple Indian
directors based overseas – a practice that other Indian corporates such as Infosys
have also adopted to raise their global profile (Khanna and Palepu 2004). Other
Tata affiliates resort to the Indian diaspora occasionally; according to the Financial
Times, ―a key figure in the project [to establish a high tech development centre
near Coventry] has been Lord Bhattacharya. Lord Bhattacharya has made astute
use of his international contacts to build up Warwick Manufacturing Group.‖

DETERMINANTS
With so many large companies and so many deals, it is fair to say that Tata fits
into all of Dunning standard categories for explaining internationalization. A
textbook case of resource-seeking internationalization is Tata Chemicals, the
world‗s third-largest manufacturers of soda ash after the acquisition of the three
plants of Brunner Mond, the second-largest producer in Europe, in December
2005. Strategically, after the acquisition, Tata Chemicals can complement its stake
in Indo Maroc Phosphore (IMACID) with a cheaper source of natural soda ash
from Magadi, Kenya. The operation is unique in that the soda ash at that site is
naturally produced and replenished, making it one of the lowest cost producers in
the world.38 A large part of Magadi production even today finds its way to India.
Similarly, Tata Power has purchased 30 percent equity stakes in two major
Indonesian thermal coal producers (Kaltim Prima Coal and Arutmin Indonesia)
and a related trading company owned by Bumi Resources. The companies are
together among the top three largest exporting thermal coal mines in the world. As
part of the purchase, Tata Power has signed an off-take agreement to purchase
about 10 million tons of coal per annum.
In the case of acquisitions in more developed markets, a combination of
efficiency-, market-, and resource-seeking motivations can be detected. TCS
acquired Switzerland-based TKS-Teknosoft to possess marketing and distribution
rights to the QUARTZ® platform for wholesale banks, to add new products in the
private banking and wealth management space, and for its track record of
successful implementation of large and complex key technology projects in
Europe, including the securities clearing and settlement system of Switzerland. In
the case of Tata Steel, which is already one of the world‘s lowest-cost producers,
Corus brings market access in the EU and higher-value qualities of steel. Already
in 2005 the acquisitions of Singapore‘s NatSteel and Thailand‘s Millenium Steel
strengthened Tata Steel‘s position in higher-value finished products in growing
Asian markets, such as wire rods for construction, as the company also built on its
strength in semi-finished steel. More generally, the aim is to avoid the tariffs on
imported finished steel products. The purchase of Daewoo‘s commercial truck
operation in 2004 served to combine South Korean skills in end uses for trucks,
such as cement mixers and tippers, with the Indians‘ talent for manufacturing
chassis, as well as to enhance business operations in Asia. That of Incat, also by
Tata Motors, in 2005 aimed at integrating engineering and design services skills
into the automotive business.
In the case of VSNL, competition at home has been the main driver.40 Two
months after Tata took it over, VSNL‘s monopoly on international long distance
voice in India – which accounted for nearly 90 percent of its revenue – came to an
end, making diversification and reinvention an issue of necessity. The company
entered new domestic businesses, such as national long-distance, enterprise data
and internet telephony services. Mobility was not an option as other companies in
the Group were already in the mobile market. Then in 2003-05 three deals abroad
enabled VSNL to acquire advanced voice, data and signalling capabilities
(including a 60,000-km network, including submarine cables under the Atlantic
and the Pacific Oceans) and more than 200 direct and bilateral agreements with
leading voice carriers. Teleglobe‘s greatest asset however is a software system
which facilitates the location of roaming mobiles and is in use at 95 percent of
telecom operators in the world. VSNL is now the third-largest carrier of voice
minutes in the world. VSNL has recently purchased Cipris, a small French Virtual
Network Operator, to target the European SME market and learn lessons
applicable to India.
 While most Tata companies are growing by acquisition, TCS has invested more
in greenfield projects to sustain its Global Network Delivery Model. It opened a
software centre in Hungary in 2001, reckoning that while outsourcing business
processes to India may not be difficult for American and British companies, in
non-English speaking countries India seemed remote. In China, operations started
off as a backup site staffed by Indians serving US clients who were worried about
what might happen in the event of an India-Pakistan war. Now, TCS's operation in
the country is focused on the domestic market and employs 1,200 Chinese
nationals. TCS was the first Indian BPO company to invest across Latin America
to provide near-shore services for US clients and plans to open a facility in
Cincinnati, Ohio, to qualify for IT outsourcing work that can only be done onshore,
such as government contracts.
Finally, Indian Hotels, best known for its Taj luxury hotel chain, provides an
interesting model of aggressive growth in different business and regional segments.
The hotelier has earmarked $1.5bn for international expansion. Indian Hotels is
slated to open four new luxury properties in the next two years in countries where
it expects most of the customers to be Indian — the Taj Exotica Resort, Spa and
Golf in Doha, Qatar (2008); the Taj Exotica Resort & Spa in Dubai, UAE (2008);
the Taj Exotica Resort & Spa in Phuket, Thailand (2009), and a yet-unnamed
luxury hotel in Cape Town, SA (2008). In other venues, Taj has bought existing
properties such as 51 Buckingham Gate in London, W (now renamed Blue) in
Sydney, and Boston‘s Ritz-Carlton Hotel, renamed the Taj Boston.43 In September
2007, it paid US$211m for a 10 percent stake in Orient-Express Hotels and hinted
at a deeper ―possible association‖ with the owner of iconic brands such as the
Hotel Cipriani in Venice, the Eastern & Oriental Express rail in south-east Asia
and the 21 Club restaurant in New York.
 TATA MOTORS

TATA Motors is the flagship company of the TATA group & is India's largest
automobile player, with revenues of $7.2 billion in 2006-07. With over 4 million
TATA vehicles plying in India, it is the leader in commercial vehicles and the
second largest in passenger vehicles. Previously TATA Engineering and
Locomotive Company (Telco), TATA Motors is listed on the New York Stock
Exchange in 2004.

Competition at Home
• TATA Motors is vulnerable to greater competition at home. Foreign vehicle
makers including Daimler, Nissan Motor, Volvo and MAN AG have struck local
alliances for a bigger presence.
• TATA Motors, which has a joint venture with Fiat for cars, engines and
transmissions in India, is also facing heat from top car maker Maruti Suzuki India
Ltd, Hyundai Motor, Renault and Volkswagen. Making Waves Internationally
• NANO will mark the advent of India as a global centre for small-car production
• International praise came from Standard & Poor‘s, which in December 2006
expressed the view that the ―policy to support its companies and the improved
financial profile of its entities also enhances the overall financial flexibility of
TATA Motors.‖
Environmental Regulations
 SWOT

Strengths:

Strong domestic player: Tata Motors is India‘s largest automobile manufacturer

by revenue. The company‘s market share in the Indian four-wheeler automotive
vehicle market (i.e. automobile vehicles other than two and three wheeler
categories) stood at 26.1% in FY2008. The company is also the leader in the Indian
commercial vehicles with a market share of 62.7% and is the second largest player
in the Indian passenger vehicles market with a share of 14.2% in FY2008.
Steady revenue growth: The company recorded strong revenue growth during
2004-08. During this time, the revenues of the company grew at a CAGR of 27.1%
to reach INR365,230.6 million (approximately $9,072.3 million) in FY2008 from
INR139,696 million (approximately $3,096 million) in 2004. The strong revenue
growth of the company has contributed to its market dominance.
Research and development activities: Tata Motor has strong research and
development (R&D) capability. The company incurred large expenditure for its
R&D activities. The company‘s R&D activities focus on product development,
environmental technologies and vehicle safety through its Engineering Research
Centre (ERC). The ERC is one of the few government recognized in house
automotive R&D centers in India. In the recent period, the ERC developed the Tata
Nano, an affordable family car. The strong R&D capability enables the company to
build a broad range of vehicle portfolio and improves its competitive strength in
the automotive industry.
Weaknesses:

Decline in vehicle sales: Tata Motors recorded decline or marginal growth in its
vehicle sales in the last financial year. The company recorded a sale of 585,649
vehicles, a growth of 0.9% over last year. During the same time, the automotive
industry in India recorded a growth of 10.4% to reach the total vehicle sales to
2,309,324 units. The overall market share of the company stood at 25.4% in 2008
as compared to a market share of 27.8% in 2007. The decline in sales would
further affect the company‘s market share, and erode investors‘ confidence.
Employee productivity: Tata Motors posted weak revenues in proportion to the
total number of its employees. The revenue per employee of the group stood at
INR10 million (approximately $0.24 million), significantly lower when compared
to its global competitors such as Toyota Motor ($.73 million), and Nissan Motor
($.53 million). The weak revenue per employee of the company compared to the
global auto majors indicates its weaker productivity and operational inefficiency.

Opportunities:

Product launches: Tata Motors has launched various new products during the last
two year period (2007–08). For instance in December 2007, Tata Motors
introduced its new range of Medium and Heavy Commercial Vehicles. In March
2008, Tata Motors (Thailand) launched the Tata Xenon 1-ton pickup truck at the
annual Bangkok International Motor Show. In FY2008, the company launched the
Indigo sedan and Indica with the Direct Injection Common Rail (DICOR) and
Sumo Grande. Furthermore, the launch of its small car, ‗NANO‘ in January 2008
would further fuel its presence in the passenger vehicle market.
Acquisition of Jaguar and Land Rover brands: These brands had sales
operations in more than 100 countries with over 2,200 dealers. Acquisition of JLR
provides the company with a strategic opportunity to acquire iconic brands, and
increase the company‘s business diversity across markets and product segments.

Threats:

Increasing competition: Tata Motors face intense competition from its domestic
as well as foreign competitors including General Motors, Honda Motor, Maruti
Udyog, Mitsubishi Motors, Fiat, Ford and so on. Competition is expected to
intensify further as Indian automotive manufacturers obtain greater access to debt
and equity financing in the international capital markets or gain access to more
advanced technology through alliances. Additionally, in recent years, the
government of India has permitted automatic approvals for foreign equity
ownership of up to 100% in entities manufacturing vehicles and components in
India.
Environmental regulations: The company is subjected to extensive governmental
regulations regarding vehicle emission levels, noise, safety and levels of pollutants
generated by its production facilities. These regulations are likely to become more
stringent in the near future. In addition, Jaguar Land Rover has significant
operations in the US and Europe which have stringent regulations relating to
vehicular emissions. The proposed tightening of vehicle emissions regulations will
require significant costs for the company.
Major international ventures of TATA Motors in recent past are discussed
below:

1. TATA Daewoo Commercial Vehicle- In 2004, TATA Motors acquired the

Daewoo Commercial Vehicle
Company of South Korea. TATA
remains India's largest heavy
commercial vehicle manufacturer
and TATA Daewoo is the 2nd
largest heavy commercial vehicle
manufacturer in South Korea. The
reasons behind the acquisition were:

a) Company's global plans to

reduce domestic exposure. The
domestic commercial vehicle
market is highly cyclical in
nature and prone to fluctuations
in the domestic economy.
TATA Motors has a high
domestic exposure of ~94% in
the MHCV segment and ~84%
in the light commercial vehicle (LCV) segment. Since the domestic
commercial vehicle sales of the company are at the mercy of the structural
econo mic factors, it is increasingly looking at the international markets. The
company plans to diversify into various markets across the world in both
MHCV as well as LCV segments.

b) To expand the product portfolio TATA Motors introduced the 25MT GVW
TATA Novus from Daewoo‘s (South Korea) (TDCV) platform. TATA plans to
leverage on the strong presence of TDCV in the heavy-tonnage range and
introduce products in India at an appropriate time. This was mainly to cater to the
international market and also to cater to the domestic market where a major
improvement in the Road infrastructure was done through the National Highway
Development Project. TATA Motors has jointly worked with TATA Daewoo to
develop trucks such as Novus and World Truck

2. Hispano Carrocera- In 2005, sensing the huge opportunity in the fully built bus
segment, TATA Motors acquired 21% stake in Hispano Carrocera SA, Aragonese
bus manufacturing company with an option to acquire 100% holding. Hispano
Carrocera is an established and reputed
bus and coach manufacturer in Spain
enjoying excellent reputation for
developing high quality vehicles. It
operates in two manufacturing locations
namely, Zaragoza in Spain and
Casablanca in Morocco, North Africa.
Hispano has proven competence in
development of buses and coaches. With
this deal Tata Motors acquired the license
for technology and brand rights from Hispano. The total deal consisting of equity,
debt and technology licensing amounted to about Rs 70 crore to Tatas. This
partnership gives both
companies an opportunity to use their complementary strengths to create high-class
transport solutions for intra-city and intercity mass transportation in Spain, India
and many other countries around the world. Besides Tata Motors is also seeing this
deal as a gateway into the highly competitive and matured European markets
considering the success Hispano's bus range enjoys in these markets. Hispano
enjoys a market share of 25 per cent in the bus market in Spain and sells
considerable numbers in Europe in addition to other countries outside Europe as
well. Further, the Hispano deal will help the Indian commercial vehicle giant grow
in the bus and coach segment as the Daewoo acquisition helped it in trucks. This
strategic alliance with Hispano Carrocera gave TATA Motors access to its design
and technological capabilities to fully tap the growing potential of this segment in
India and other export markets, besides providing it with a foothold in developed
European markets.

3. TATA Marco polo (TMML) - TATA Motors has formed a 51:49 joint venture
in bus body building with Marco polo of Brazil. This joint venture is to
manufacture and assemble fully built buses and coaches targeted at developing
mass rapid transportation systems. The joint venture will absorb technology and
expertise in chassis and aggregates from TATA Motors, and Marcopolo will
provide know-how in processes and systems for bodybuilding and bus body
design. TATA and Marcopolo have launched a low-floor city bus which is widely
used by Delhi, Mumbai and Bangalore Transport Corporations. TMML JV‘s first
assignment in India was to supply 500 premium class low floor buses for Delhi
Transport Corporation. Joint venture has started its operations at Dharwad,
Karnataka & Lucknow, U.P.

Future Plans:

TMML has plans to set up the world‘s biggest bus plant at Dharwad. It is aiming to
cater to the fully built bus requirements of Indian mass as well as luxury markets.
To compete in high volume, low cost market a vendor park has been established in
Dharwad itself. The company plans to make 20,000 buses a year at its full
capacity.

4. TATA Xenon- TATA Xenon was released in late 2007. It was first displayed at
the 2006 Bologna Motor Show. The car is assembled in Thailand by Tata-Thonburi
JV and in Argentina by Tata-Fiat JV. The Xenon has been well received in Europe
especially in Spain and Italy. SPRINT
was the code name of the Project for
development of Tata's World Pick-up
(truck). World Pick-up market (other
than USA) is dominated by Japanese
Auto majors like Toyota, Isuzu,
Mitsubishi, Nissan. As per the study
conducted by Tata Motors, there is a big
opportunity for TML to grab substantial
market share of world Pick-up market. Tata initiated an in-depth market study in
various countries in Europe, Middle East, S Africa, Thailand, Australia, Latin
America etc to understand needs of target segments for a new Pick-up. While a
new product development timeline takes between 36 to 50 months, it is said that so
far only Toyota has achieved the Timeline of 18 months. Hence, the name SPRINT
which signifies and continuously reminded project team about the Speed of the
project. The team worked round the clock relentlessly, applied principles of
"Concurrent Engineering", distributed work load in 9 different countries in order to
crash timeline by overlapping maximum possible key activities. The team
delivered project in 17 months—from styling freeze in Dec 05 to SOP ( Start of
Production) in May 7. Bologna Motor Show 2006 (Dec) was the occasion when
Xenon was unveiled for public display and later in March 2007, it was also
displayed at Geneva Motor Show 2007. Till date Xenon has been launched in 14
countries in Europe, Middle East, Africa and SE Asia. Tata Motors signed a joint
venture with Thonburi Automotive Assembly Plant Co. (Thonburi), the Thailand-
based independent assembler of automobiles to manufacture, assemble and market
pickup trucks in Dec‘06. The joint venture, in which Tata Motors holds 70% of the
equity and Thonburi 30%, gets vehicles manufactured in Thonburi‘s
manufacturing facility.

The joint venture facilitated Tata Motors address the Thailand market, the second
largest pickup market in the world after the US. Both partners jointly manage the
operations.

5. TATA Fiat- The TATAs and Italian car giant Fiat kicked off their partnership
with the former marketing Fiat cars since Mar‘06. Fiat
branded cars are distributed by Tata through the Tata-Fiat
dealer network. The partnership took off to the next level in
Dec‘06 with both the sides announcing the formation of a
joint venture with aggregate investments of over Rs 4000
crore (over euro 665 million) in a phased manner to
manufacture vehicles for the Indian and overseas markets.
The 50:50 joint venture enabled Fiat plant at Ranjangaon,
Pune with capacities to produce in excess of 200,000 cars
and 300,000 engines and transmissions yearly, at steady
state. The JV may be expanded to produce trucks as well.
This strategic alliance with Fiat enables the two companies
jointly to present a wider range of
product offerings to the Indian market. It enables Tata Motors to access world-
class powertrains from Fiat for its next generation car offerings while enhancing
the model line at its dealerships. Fiat‘s Ranjangaon manufacturing facility is
benchmarked against the global car manufacturer‘s units in Turkey and Brazil. It
compares well as the lowest-cost manufacturer, and Fiat will eventually source
right-hand drive Linea cars from here for the UK and Australia. Fiat has a cost
advantage of 14-17% over Brazil and Turkey due to localisation of parts and
labour costs. Fiat had almost decided to quit the Indian market but for Fiat chief
executive officer Sergio Marchionne and Tata group chairman Ratan Tata coming
together in 2005. Such was the level of confidence among both the partners that
investments began at least two years before even a formal agreement was signed.
JV is already producing the Fiat Palio, Stile and Linea models and select Tata
Indica models.

Future Plans:

The company is readying to

launch the Grande Punto, a
compact car, in the third
quarter of the fiscal year- 2009-
10. The second model will be
Tata Motors‘ new three-box
offering, code-named X1.

Planned launch of the Fiat Bravo is being delayed because of the economic
slowdown. Fiat manufactures Tata Motors‘ 1-tonne pick-up truck at its plant in
Argentina for Latin American and overseas markets. The JV is expected to break
even by 2011-12.

6. City Rover- The City Rover was a hatchback car model offered by MG Rover
Group in the UK market. Launched in the
Autumn of 2003, the car was a rebadged
version of the Tata Indica. MG Rover group
used to import TATA Indica from India and
sold as City Rover in UK market. The City
Rover's running costs were
rather high, and its asking price was high
compared with newer, better built and better
specified rivals such as the Fiat Panda. MG Rover was reported to be paying Tata
£3,000 for each car and, despite each model featuring a Rover corporate nose and
revised suspension settings, the buying public was not impressed by the £7,000
starting price. Along with the rest of the MG Rover range, production of the City
Rover ended in April 2005 when the company went into receivership, the last
vehicles brought into the UK being purchased and sold on by a non-franchised
discount dealer group. Although MG Rover was bought by Nanjing Automobile of
China in July 2005, the company's new owners did not include the City Rover or
indeed any direct successor in their plans for a new model range. This was one of
the unsuccessful attempts of Tata Motors to go global.
 7. Exports Market (CV)- TATAs export
its commercial vehicles to neighboring
Asian countries like Nepal, Sri Lanka,
Bangladesh, Afghanistan apart from South
Africa and Middle East markets. It
competes with the likes of Mercedes,
Volvo, and Hyundai etc in Middle East
markets.

8. World Truck- TATA Motors unveiled its ‗World Truck‘ range, developed
jointly with TATA Daewoo Commercial Vehicles of South Korea in May‘09. The
developing infrastructure in India makes it
possible for transporters to reap the benefit of
trucks with higher power, speed and carrying
capacity. The new range from Tata Motors
will meet those needs. It will also help it
penetrate international markets more
effectively and competitively.

Future Plans:

The commercial launch of these trucks in India is scheduled during July-

September‘09. They will debut in South Korea, South Africa, the SAARC
countries and the Middle-East by the end of the fiscal. The trucks will be made at
the Jamshedpur facility and at Gunsan in South Korea. The company expects
international volumes to be at par with numbers in India.
9. TATA Nano- Conceived in 2003, Tata Motors had launched the much- hyped
'cheapest' car in India in Mar‘09. The car has cost over Rs 2,000 crore to the

company. The car is expected to boost the Indian economy, create entrepreneurial-
opportunities across India, as well as expand the Indian car market by 65%. The
car was envisioned by Ratan Tata, Chairman of the Tata Group and Tata Motors,
who has described it as an eco-friendly "people's car". For the first time, thanks to
Tata's Nano, India has been established as an R&D leader, and not just a low-cost
hub known for cheap labor. It has shown to the world that India can be a
technology leader. It is a great innovation, because innovation is all about thinking
of the next decade and not the next quarter.
The Tata Nano will certainly find big takers in India. However, it can have a
market in the US, as well. If the car is enriched with high technology functions to
make it an intelligent car, many in the US will look forward to own it. An
intelligent car at $3000 would be a good A Promise is a Promise bargain after all,
for many Americans. Tata's Nano shows that there is a huge opportunity for Indian
companies to build profitable low-cost products and then take them to the US.

Future Plans:

Tata Motors will be launching it in Nigeria within the next year and a half. In
Nigeria, the Nano will cost 357,480 NGN (Rs 1.16 lakh), almost the same as its
cost in India, making it cheaper than even used cars in the country. According to
TATA Motors officials, Nano will greatly benefit Nigerians as there is no proper
public transport system in the country. Company is yet to decide whether the car
would be assembled in Nigeria itself or if it would be made available as a
Completely Built Unit (CBU). The company is planning to market Nano in other
countries, but timelines, modes and countries are yet to be finalized. Earlier this
year, the Tata Nano Europa (the European version of the Nano) was unveiled at the
Geneva Auto Show. The Nano Europa will be launched in 2011.

10. TATA-JLR: TATA Motors bought the iconic Jaguar and Land Rover
operations from Ford for 1.15 billion pounds in Mar- Apr‘08. Tata gained the
rights to the Daimler, Lanchester, and Rover brand names. In addition to the
brands, Tata Motors also gained access to 2 design centers and 3 plants in UK. The
key acquisition would be of the intellectual property rights related to the
technologies. With the acquisition of Jaguar and Land Rover (JLR), Tata Motors
killed several birds with one stroke. The acquisition paves the way for the
company‘s entry into the European car market and gives the company a
comprehensive range of models ranging from the luxury Jaguar to the $2,500
Nano. It provides an entry point into India‘s growing luxury car market which
gives new impetus to the company‘s development program as well and provides a
captive customer base for the component companies of the Tata‘s. In the long-run
TATA Group and TATA Motors‘ footprint in South-East Asia should help
Jaguar/Land Rover diversify their geographic dependence from US (30% of
volumes) and Western Europe (55% of volume). Analysts believe that TATAs‘
ownership of JLR will open doors for outsourcing of parts from India, particularly
from the current pool of suppliers who service TATA Motors in India.

Present and Future Plans:

A year after Tata group purchased Jaguar

and Land Rover, it launched the British
iconic luxury brands in the Indian market.
The India foray comes at a time when
worldwide sales of luxury cars are falling.
The global meltdown dragged JLR into
huge losses as consumers‘ halted
purchases. Sales, after the $2.5 billion
takeover by Tata Motors last June, dropped a third to 1.67 lakh vehicles. The
bridge from the Nano to Jaguar XF is probably the biggest that exists in the
industry. A $2,500 car and a $100,000 car: no other company in the world has a
portfolio that wide.
Why JLR?
• Long term strategic commitment to automotive sector
• Opportunity to participate in two fast growing auto segments
• Increased business diversity across markets and products
• Land rover provides a natural fit for TML‘s SUV segment
• Jaguar offers a range of ―performance/luxury‖ vehicles to broaden the brand
portfolio
• Benefits from component sourcing, design services and low cost engineering.
 Impact of Current Global Slowdown on
TATA-JLR Deal:

―We went too far with JLR‖: Ratan Tata

Tata Sons Chairman Ratan Tata recently said
he may have overstretched himself in paying
1.15 billion pounds for Jaguar Land Rover
just as a recession loomed. A year after the
Tata group took over the two of Britain‘s
most iconic automobile brands, Jaguar and
Land Rover, it is faced with newer and bigger challenges than it would have
expected when it paid $2.3 billion to Ford for the acquisitions on March 26, 2008.
In FY 2008-09, Tata Motors Ltd posted its first annual loss in at least eight years
after sales at the luxury units, Jaguar and Land Rover plunged amid the global
recession. The consolidated net loss was Rs 2,500 crore in the year ended 31
March, 2009 compared with a net income of Rs 2,200 crore billion a year ago.
Ratan Tata is slashing investments by as much as 38% in the year to March on
slow economic growth. At the time of acquisition of JLR by TATA Motors, there
were some who called for caution. They pointed out that buying into an automobile
major when the market for automobiles was set for a downturn might not reflect
good business sense. Moreover, post acquisition, debt at the level of both parent
and the United Kingdom subsidiaries in the TATA group was slated to rise
sharply. Unfortunately for Tatas, the worst fear of the skeptics has come to pass.
Within months of the acquisition, the world witnessed the onset of a financial crisis
that triggered a credit crunch and precipitated a real economy recession. Industries
such as steel and automobiles were among the worst affected. This had two
implications. First, the sales and revenues of JLR were far short of expectations,
making it difficult for Tatas to meet commitment on their debt and reduce the
degree of leverage. Second, with much of this debt being of a bridge loan kind,
loans that mature and cannot be repaid have to be refinanced and rolled over to
prevent default. Given the current circumstances, this is difficult, as Tatas
discovered this May, when the $3 bn it had borrowed to finance acquisition of JLR
was due for refinancing. After the Tatas acquired the company, business challenges
were mostly a result of adverse market conditions. In the first half of 2008,
Jaguar‘s sales volume was 11.2 % more than in the same period in 2007 while
Land Rover‘s was 0.6 % ahead of 2007. At the end of 2008, Jaguar was 8.2 %
ahead of 2007 for the year, while Land Rover had felt the impact of the downturn
and its full-year sales were 17.6 % less than in 2007. In the first two months of
2009, Jaguar was 6.9 % ahead of 2008 and Land Rover 45 % down when
compared with the same period last year. There have been a series of non-
production days at all three of its UK assembly plants — Castle Bromwich and
Solihull in the West Midlands and Halewood on Merseyside. Each plant lost an
average of 25 days‘ production, which equated to a volume reduction of
approximately 25 per cent month on month. A worsening economic situation could
lead to further job losses and even plant closures at Jaguar Land Rover (JLR) in
Britain. Tata‘s bankers are seeking to secure short-term finance of between £500
million and £1 billion to allow Jaguar Land Rover to pay off supplier payments
due by the end of the summer and stop it running out of cash. The Tatas are trying
to persuade the British government to stand guarantee for loans that they plan to
seek from the UK banks to bail out JLR. The British government has been
reluctant to provide these loan guarantees so far. If the UK government‘s help does
not come soon, Tata Motors will have to cut down its investment plans for Jaguar
Land Rover (JLR) with possible job losses and plant closures. While Tata looks to
sustain JLR through the downturn, the UK government's support is crucial as JLR
wants it to guarantee a pound 340 million European Investment Bank loan
sanctioned in April. Although JLR has the option of getting guarantees from
private banks, it may work out to be an expensive proposition. To get the
government's help, Tata may have part with some equity interest in JLR, besides
giving board representation. According to a recent report in The Economic Times,
the company is negotiating at the moment and if there was a large financial
package from the UK government to the company then there would be a
commensurate level of representation on the board.
Despite the challenges, there have been some good news, the company‘s 14,000-
odd workers agreed to a two-year pay freeze on condition of no compulsory
layoffs. This is expected to save the company up to £68 million a year. The
company also bagged a significant order from China for supplying 13,000 cars
worth £600 million over the next three years. More recently, the UK government
approved a grant of £27 million (Rs 192 crore) to JLR for producing a new eco-
friendly car based on Land Rover‘s LRX Concept. Luxembourg-based European
Investment Bank is also considering giving a loan of £275 million (Rs 2,100 crore)
for research to reduce the CO2 emissions from JLR‘s future products.
What is remarkable is that the Tata group has been able to ride the waves and come
ashore safely this time as well. Tata Motors returned $1.11 bn of its original bridge
loan by mobilizing funds through a rights issue, launching a fixed deposit scheme
and by selling the shares of Tata Steel it held. Second, the Tata group has
mobilized the support of the Indian government. Even when the group embarked
on its ambitious overseas acquisition strategy, there was evidence that it had the
backing of the Indian government, which too was seeking to build India itself as a
global brand. Tatas mobilized Rs 42 bn through bond markets with the help of
government-owned State Bank of India. Tatas are also in talks with defense
establishment to obtain secure orders for the Land Rover. Finally, the Tatas have
used innovation to obtain support from the Indian public for its UK operations.
Tatas launched Nano in Apr‘09 and received 203,000 advance orders & raised
Rs 25 bn from Indian public. This money was in essence a loan from public at
large & Tatas will pay interest rate on the same. This money is also crucial to the
Tatas‘ survival strategy. In sum, despite its grievous errors in the form of the crisis-
eve, debt-financed acquisition JLR, the Tata group has escaped a group-wide crisis
by leveraging its brand, the Indian government and the Indian public. That is
indeed remarkable, even if fortuitous to some degree.
Conclusion

Since the opening of the Indian economy in 1991, Tata has been subject to
global competition, making it imperative for the group to become competitive in
India against the new entrants. To gain scale, reduce their exposure to the
cyclicality of India‘s economy, survive, and achieve a sustainable competitive
position in industries that are globalizing, most Tata companies then looked
overseas. Tata‘s recent experience is an excellent case for analyzing ‗accelerated
internationalization‘ (Matthews 2002). As it pertains to a challenger conglomerate
from formerly peripheral areas that goes international in order to access resources,
the Tata group has been driven by multiple factors, including the need to access
new markets (e.g., in BPO services), the opportunity to integrate the value chain
(e.g., in steel), and the quest for brand control (e.g., in tea). This strategy proved
feasible because Tata possesses strong leadership combined with vision; can
exploit the possibility of leveraging increasingly developed financial markets in
India, a large domestic market, and global liquidity; and reacted fast to the opening
of specific opportunities at given times.

The process of growth, especially when it takes form through international

acquisitions, has considerable consequences on the nature of corporations, their
internal characteristics, and their relationship with stakeholders. Changes take time
to unravel and loops may originate whereby target companies pass their DNA to
the acquirer and modify the latter‘s basic features. Such transformational dynamics
is likely to be more complex in the case of emerging economies‘ multinationals.
On the one hand, these companies may use acquisitions in order to access
resources they do not have, rather than to deploy un-imitable ones in the way that
is predicted by the standard models of traditional multinationals. On the other
hand, for this very reason emerging economies‘ multinationals are likely to
conclude their deals in more developed economies, where firms are not very
amenable to adopt management methods and values developed in poorer countries.
Operating across borders and time zones and integrating diverse management
teams and corporate governance practices do not seem to have modified the Tata
imprinting. Of particular interest is the fact that Tata has not blindly embraced
ready-made recipes to face the challenges of multinational management, preferring
instead organizational solutions aimed at fostering mutual recognition and
knowledge exchange within the multinational conglomerate. A praise for this way
of managing the group came from Standard & Poor‘s, which in December 2006
expressed the view that the ―policy to support its companies and the improved
financial profile of its entities also enhances the overall financial flexibility of Tata
Motors.‖ In the case of VSNL, a strategic link with TCS has given the advantage
of offering customers a single partner option that can deliver a combined IT and
telecom solution. Another Tata advantage is the fact of being run by a very
successful minority, the Parsis, without stirring anger amid the majority of the
population (as is tragically common in other countries, see Chua 2002). This gentle
approach may distinguish Tata from counterparts that produce much noise in their
expansion. the process of internationalization of large corporations from non-
Western countries – be they in some kind of East like China, India, or Russia, or in
some kind of South like Latin America, South Africa, or Turkey – is more than a
passing fashion. Future research will inevitably focus on detailed case studies of
key firms, to analyze a broad variety of issues, from management practices and
industrial relations, to the organization of R&D function and innovation.
Mimicking the trajectory of the history of industrial nations‘ business, the issue of
hybridization – i.e. the process whereby corporate models, far from converging on
a single model, take multiple and diverging roads to innovate and become
increasingly open to the global economy – will figure prominently in the research
agenda. This paper has offered a first modest contribution in this direction,
especially in analyzing the time and geographic dimensions of diversification.
Recommendations

Industry analysts expect GM to sell the Hummer brand in 2009 and without a seller
in sight, there is a real possibility that the brand will cease to exist. A push in
developing cutting-edge products in the Land Rover brand could enable Tata to
capture Hummer customers as they look for comparable - or better products.
Company needs to focus on these 3 aspects to attract the consumers of the high-
end market products:
1. Brand Appeal and Endorsement
2. Performance Characteristics
3. Quality
TML can greatly enhance customers‘ perceptions of these three criteria with
targeted increased investments. Brand appeal, performance and quality are all
functions of the investments made in product development and marketing. As
competitors such as Volvo, Saab, Hummer and others fail to maintain investments
in either development or marketing, this leaves the door open for TML to
capitalize and gain both market share and momentum. TML is in a unique position
to invest given the company's strong balance sheet and overall financial health.
The two ways firms compete are by either a differentiation strategy or a low cost
strategy. However, as we've seen the route TML has taken involves competing on
both strategies. While the Nano targets the price conscious common man, the
Jaguar Land Rover deal shows us that TML is now targeting brand conscious,
high-end consumers. TML needs to have a similar differentiated strategies
focusing separately on these brands. TML‘s vision is to be ―best in the manner in
which we operate, best in the products we deliver and best in our value systems
and ethics‖. TML has come to be known as an innovator in the passenger car
segment not just in manufacturing but along multiple areas along the value chain.
The Tata Indica and Tata Nano are prime examples of the company‘s innovation
capabilities and bear testimony to the strength of the company‘s R&D efforts. This
innovation fuelled growth coupled with strategic acquisitions is expected to
catapult the company to a preeminent position internationally.

Bibliography:

• www.tata.com
• www.tatamotors.com
• http://en.wikipedia.org/wiki/Tata_motors
• http://en.wikipedia.org/wiki/Tata_group
• http://en.wikipedia.org/wiki/Indian_automobile_industry
• http://en.wikipedia.org/wiki/Tata_Xenon
• www.rediff.com
• www.ndtv.com
• Kelly School of Business Report on Tata Motors Limited Comprehensive
Strategic
Analysis
• IHS Global Insight Report: India (Automotive) - July‘09
• The Economic Times