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Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream

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International Journal of Global Business and Competitiveness
https://doi.org/10.1007/s42943-019-00006-z

ORIGINAL PAPER

Internationalization of Tata Motors: Strategic Analysis Using Flowing

Stream Strategy Process
Sushil1   · Shamita Garg1 

Received: 14 October 2019 / Accepted: 15 November 2019

© Global Institute of Flexible Systems Management 2020

Abstract
In the past few years, Tata Motors succeeded by exploiting international opportunities. Its percentage of revenue from
international operations has increased from 9% in 2016 to 79.80% in 2018. Hence its strategy is worthy of study. ‘Flexible
Strategy Framework’ is used to analyse the strategy of Tata Motors which evolved to gain its international presence in the
automotive manufacturing industry. This framework is an attempt to manage change, along with the consideration of con-
tinuity forces in the organization. The ability of the firm to integrate continuity and change forces effectively has made the
firm competitive in the international market. The organization is continually doing innovations to keep itself ahead of the
competition. This study is a novel attempt to explore linkages between internationalization and competitiveness using the
framework of flowing stream strategy.

Keywords  Competitiveness · Flowing stream strategy · Internationalization · Tata Motors

Introduction and limited avenues were available for expansion. Naray-

The Indian automobile is a promising industry and is grow-
ing immensely with each passing year. The Indian automo-
bile industry has shown growth trajectory in domestic as
well as in international markets in the past few years. The
Indian auto business became the fourth largest in the world,
with sales growing to 9.5% year-on-year to 4.02 million units
(excluding two-wheelers) in 2017. It was the seventh largest
maker of commercial vehicles in 2018 (IBEF 2019). Sagar
and Chandra (2004) mentioned that intense competition, an
increase in demand, customers’ price sensitivity, and gradu-
ally tighter emission standards, the international sourcing
and exporting strategies of Indian auto manufacturers have
changed the landscape of the auto industry.
The performance of the four-wheeler manufacturing
industry in India is lagging from its counterparts in the rest
of the world. The regulatory atmosphere that was prevalent
until the 1990s is the primary reason for this situation. In
the  period of pre-1980, automobiles, particularly cars,
were subject to strict licensing, restricted tariff structure
* Shamita Garg
shmita.garg89@gmail.com
1 the Indian auto sector. According to data released by the
Indian Institute of Technology Delhi, New Delhi, India
anan (2001) compared the differences in the performance
and conduct of Indian automobile firms operating before
1991 and afterward. He found that technology acquisition,
performance, in-house R&D, exports, and profitability have
increased post-1991 period. Maruti Udyog Limited, a joint
venture with Suzuki of Japan, launched its first vehicle,
i.e. Maruti 800. This joint venture was first technological
collaboration for four-wheelers with the Japanese. At that
period, possessing a car was never easy and waiting time to
purchase a car was very long; although after the liberaliza-
tion the auto segment saw a boom, and many foreign firms
as well as Indian companies, entered the industry.
With liberalization, licensing was abolished, and trade
policies were eased. These measures have brought many
revolutions in the automobile industry. Kale (2017) said that
the Indian industrial system has further helped to develop
local auto component capabilities. Liberalization in foreign
trade policies like India–ASEAN and India–South Korea
Free Trade Agreements (FTAs) has increased the cost com-
petitiveness of Indian automakers. It is more cost-effective to
import auto components to India rather than merely import-
ing raw material. Numerous Indian automobile makers
have spread their operations internationally across various
nations, and many foreign firms have heavily invested in

1 Vol.:(0123456789)
3

Department for Promotion of Industry and Internal Trade
(DPIIT), the industry has attracted Foreign Direct Invest-
ment (FDI) worth US$ 21.38 billion during the period April
2000–March 2019 (IBEF 2019). Numerous big players like
Fiat India Ltd., Honda Cars India, Ford India Ltd., Skoda
India, etc., have made their manufacturing units, and formed
joint ventures in India. Sarwade (2015) mentioned that with
the establishment of ‘A Core Group on Automotive Research
and Development’ (CAGR) in 2003, research activities got
encouragement in India.
The automaker industry has witnessed growth owing to
the availability of a skilled workforce at low cost, robust
R&D units across various parts of the country, and produc-
tion of steel at low cost. At present, the industry produced
a total of 30,915,420 vehicles, including commercial vehi-
cles, passenger vehicles, two-wheelers, three-wheelers,
and quadricycles in April  2018–March 2019 as against
29,094,447 in April 2017–March 2018. Hence, the indus-
try registered a growth of 6.26% over the same period last
year. The sale of passenger vehicles registered an increase
of 2.70% in April 2018–March 2019 over the same period
in the previous year. The Commercial Vehicles segment
grew by 17.55% in April 2018–March 2019 when com-
pared with the same period last year. In April 2018–March
2019, overall automobile exports grew by 14.50%. Though
passenger vehicle exports declined by (−) 9.64% but com-
mercial vehicles, three-wheelers, and two-wheelers regis-
tered a growth of 3.17%, 49.00%, and 16.55%, respectively,
in April 2018–March 2019 over the same period last year
(SIAM 2019a, b). The Government of India has planned to
make India a top automobiles maker as a part of ‘Make in
India’ initiative (SIAM 2019a, b). Indian automaker busi-
ness (including component manufacturing) is likely to reach
Rs 16.16–18.18 trillion (US$ 251.4–282.8 billion) by 2026
(IBEF 2019).
In the present scenario, the auto industry is experienc-
ing a high degree of competition. Tambade et al. (2019)
have highlighted numerous factors that directly or indi-
rectly impact the competitiveness of the auto industry. Few
constructs of competitiveness impacting the auto industry
include demand factors, factor conditions, business envi-
ronment, firm strategy, industry structure, and employee
engagement. He emphasized that the size of the domestic
market as a significant factor in the demand side. Factor
condition includes access to technology, government sup-
port for innovations, physical infrastructure, availability of
raw material, and cost (Nauhria et al. 2018). Shalender and
Yadav (2019) talked about the impact of business dynamism
on competitiveness of the firm. The business environment is
affected by industrial relations, inflation rate, interest rates,
and industry competencies. Chatzoglou and Chatzoudes
(2018) also advocated the importance of business envi-
ronment on competitiveness of the firm. A firm strategy is
13
Sushil, S. Garg
another area to emphasize to improve competitiveness. Man-
agement practices, focused strategy and strategic alternatives
define the firm policy. Firms are competing on factors like
price, delivery, flexibility, improved technological models,
quality, and others (Kumar et al. 1999). The big automak-
ers can do radical innovations and bring out technologically
enhanced models in the market (Kumar and Balasubrhmanya
2010). The presence of entry barriers is a critical component
in industry structure. In today’s era, employee productivity,
quality orientation of employees, effectiveness of training,
and employee empowerment also play a significant role in
maintaining competitiveness.
In the present turbulent business environment, firm com-
petitiveness has become most important for survival and
success of an organization. In different studies, firm com-
petitiveness has been defined in various ways. Porter (1990)
stated that competitiveness is the ability of an organization
to compete in emerging business scenario. According to Lall
(2001) ‘firm competitiveness’ is the ability of the firm to
perform better than benchmark organizations in terms of
market share, sales, profitability, and others.
Similarly, Buckley et al. (1988) argued that competitive-
ness is connotation with the long term profit performance
of the firm. In line with these, the current study focuses on
the strategic factors that have increased the competitiveness
of Tata Motors.
In changing business environment also Tata Motors has
managed to keep itself above troubled waters by exploit-
ing global opportunities (see Appendix A Fig. 10). The
percentage of revenue from international operations has
increased from 9% in 2016 to 79.80% in 2018. Till 2016,
Tata motors used to earn international revenue only through
exports. After the acquisition of premium brands like Jaguar
and Land Rover, its international sales have increased, and
at present, the firm makes almost 80% of its revenue from
international operations. In the passenger vehicles segment,
the firm was able to deliver a plausible performance and had
sales growth at the rate of at 13.9% when compared with the
auto industry growth rate of 2.8% in FY2018–2019 (Tata
Motors, Annual Report, 2019). The firm has the maximum
unit sales as well as market towards the global economy.
Here a case study of Tata Motors has been taken to examine
how Tata Motor has reconfigured its activities in internation-
alization scenario. In this study, their strategy to integrate
continuity and change forces is addressed by using Flowing
Stream Strategy.
Flexible Strategy Framework
There are numerous models to manage strategic changes
focusing on multiple aspects. Kim and Mauborgne (2005)
stated that blue ocean strategy emphasizes on radical
Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process
changes to create uncontested market space. This strat-
egy deals with changes linked with novel business ideas.
Sushil (2005), in his work, has suggested a ‘Flexible strat-
egy framework’ as a paradox of continuity and change. This
framework is a bold attempt in managing change, along with
the consideration of continuity forces in the organization.   Change Forces
It is supported by numerous methodologies and innovative
tools for strategy formulation to manage critical areas of
continuity in conjunction with the change.
Flowing Stream Strategy Process
The flowing stream strategy is implemented using a strategic
crystal framework, as shown in Fig. 1. It uses the concept of
duality theory and consists of two dual planes (Sushil 2013).
One plane based on the reality of an organization compris-
ing opposing forces of continuity and change, and the other
based on major strategic elements for enterprise as well as
customers (Sushil 2012). The flowing stream strategy’ pro-
cess as illustrated by Bhat et al. (2011) in the case of ‘Moser
Baer Industries Limited’, which is one of the largest makers
of optical storage media is done in following steps:
1.Identification of continuity and change forces,
2.Mapping on C–C matrix,
3.Identification of strategic factors,
4.Analyse strategic crystal,
5.Formulate strategic direction,
6.Selection of channels and strategies.
Continuity Forces
Every organization has specific set of continuity forces that
help it to steer through the obstacles and aid to succeed. The
forces that give better performance in current scenario may
become counterproductive in different situation. The larger
organizations carry huge baggage of inertial forces with it
and require substantial amount of energy to change its course
Fig. 1  Flowing stream strategic crystal (adopted from Sushil 2013)
of action. Volberda (1998) stated that organizations need
continuity along with flexibility. Sushil (2013) highlighted
some of the significant continuity areas that an organization
needs to maintain (see Appendix A Fig. 11).
Continuously changing business scenario inspires firms to
strive for change. Change forces can be either external or
internal. External change forces may ensue from economic,
political, technological, or social fronts. Internal change
forces may occur because of changes in top management,
loss of market share, decrease in profitability, and others.
Nelson (2003) gave ‘dynamic models of change’, and did
study reflecting the discontinuous nature of organizational
change. Few more literature has found the positive impact
of organization change on their performance (Barnett and
Carroll 1995; Van de Ven and Poole 1995; Weick and Quinn
1999). Change management is a mantra of success for any
firm. Some of the change forces given by Sushil (2013) are
listed in Appendix A Fig. 11.
The Confluence of Continuity and Change
One of the earliest philosophy of integrating change and con-
tinuity in decision-making was suggested by Mintzberg et al.
(1998). Sturdy and Grey (2003) also elaborated on managing
continuity and change simultaneously to remain competitive
in turbulent situations. Collins and Porras (1994) advocated
that a firm needs to balance change with continuity areas to
grow over time. In the flowing stream strategy, continuity
forces and change forces are reduced, maintained or raised
according to the status of selected factors. Hence, it inte-
grates continuity and change to grow naturally and open new
areas of opportunities. Sushil (2013) listed few ‘continuity
forces’ and ‘change force (see Appendix A Fig. 11).
The ‘continuity’ and ‘change forces’ are different across
industries and generally can be depicted on a C–C matrix.
According to Sushil (2012), the continuity forces, as well as
the ‘change forces’, could be ‘low or ‘high’ with four pos-
sible combinations : (i) low continuity forces–low change
forces—Quick Encashers (‘mushroom’); (ii) low continu-
ity forces–high change forces—Change Masters (‘wind’);
(iii) high continuity forces–low change forces—Stabilizers
(‘tree’) and (iv) high continuity forces–high change forces—
Synthesizers (‘flowing stream’).
Analysing Strategic Crystal
Sushil (2005) contended that the continuity and change ele-
ments (in accordance with the current reality), and the cus-
tomer variables and enterprise factors (delineating the com-
position of the strategic intent) would lead to crystallization
13

of the ‘flowing stream’ of the concerned enterprise and are
portrayed as ‘flowing stream strategy crystal’ in Fig. 1.
Case Study of Tata Motors
Here, Tata Motors’ study is taken up to analyse the reason
behind the sudden increase in the global share of the com-
pany’s turnover. Tata Motors is an Indian origin automaker
firm. Bruche (2010) stated that the ability of Tata Motors to
absorb technology, effective utilization of resources, efficient
management of acquisitions, ability to develop cooperative
relationships, resource sharing, and innovation capability
are few parameters that have led the firm to succeed in the
industry. Tata Motors managed to ‘Leapfrog’ from commer-
cial vehicle to passenger vehicle segment by asset creation
and asset seeking ability (Becker-Ritterspach and Bruche
2012). The performance of the company has shown a sudden
rise in its global share in the past 3 years. The firm man-
aged to deliver a 17.2% volume growth in FY 2018–2019
compared to the previous year (2017–2018) (Tata Motors,
Annual Report, 2019).
The study is organized in the following manner: firstly
background of the company is discussed. Then, change
forces and continuity forces are identified. This is followed
by an assessment of change and continuity forces. Then,
the firm performance affected by different continuity dimen-
sions within an organization and change factors associated
with business environment is studied. Finally, strategic land-
scape and strategic direction are presented. At last, strategies
adopted by Tata Motors to deal with change and continuity
forces are discussed.
Background
Tata Motors is incorporated on 1st September 1945, head-
quartered in Mumbai, India. The firm is listed on both Bom-
bay Stock Exchange (BSE) and National Stock Exchange
(NSE). Its product variants include buses, passenger cars,
coaches, trucks, sports cars, vans, military vehicles, and con-
struction equipment. The firm is a market leader in medium
and heavy commercial vehicles. The firm ranks first in the
commercial vehicle segment with 48.13% market share in
2017–2018 (Industry Outlook, accessed on 19th Sept 2019)
(Industry Outlook 2019). Tata Motors has auto manufactur-
ing units in Lucknow, Dharwad, Pune Jamshedpur, Pantna-
gar, and Sanand in India. It also has marked its global pres-
ence by establishing manufacturing plants in South Africa,
Great Britain, Argentina, and Thailand. It has research and
development centres in different parts of India, including
Jamshedpur, Dharwad, Lucknow, and Pune. On global side,
it has formed R &D centres in Spain, South Korea, and
Great Britain. Tata Motors had done various acquisitions
13
Sushil, S. Garg
and mergers to increase its global market share. Tata Motors
has purchased the British premium car manufacturing firm
Jaguar and Land Rover and the South Korean commercial
motor vehicle maker Tata Daewoo. Tata Motors has formed
a joint venture with Marcopolo S.A. (Tata Marcopolo), in
construction-equipment area it has formed a joint venture
with Hitachi (Tata Hitachi Construction Machinery), and in
automotive manufacturing with Fiat Chrysler which makes
automotive components.
India’s most globalized automobile firm was established
as a producer of locomotives. The company made its first
commercial motor vehicle in 1954 in partnership with Daim-
ler-Benz AG, but—collaboration ended in 1969. Then, Tata
Motors entered the passenger vehicle segment in 1988 with
the launch of the Tata Mobile. The car was designed as per
the needs of Indian consumers. It was a small car with a fair
bit of space inside (Sagar and Chandra 2004). In 1991, with
the launch of the Tata Sierra, it became the first indigenous
competitive automobile maker. Afterward, it has numer-
ous success stories like the launch of the first fully native
Indian passenger car, the Indica in 1998 (Kale 2017). In
2004, the firm signed a joint venture with Daimler-Benz for
making Mercedes Benz passenger cars in India. Mercedes
held 51% of the equity in this joint venture (Kale 2017).
They jointly manufacture a large number of medium com-
mercial vehicles. In 2005, Tata Ace was introduced to meet
the unique needs of Indian users. Tata Motors entered the
small commercial vehicles segment in India with the launch
of Tata Ace. The mini truck is in competition with the three-
wheeled goods vehicles from Bajaj Auto, Mahindra, Piaggio
and Force Motors (Palepu and Srinivasan 2008). In 2008 the
firm brought out Tata Nano, the cheapest car with its frugal
innovation (Van den Waeyenberg and Hens 2008). Recently,
TML Starbus Hybrid has received special recognition at the
Apollo CV Awards 2018 (Tata Motors, annual report, 2018).
Tata Motors has a low-debt ratio of 0.843 times on the
total borrowings of Rs 186, 396.3 million. The firm earned
the revenue of Rs 720, 962.7 million, as per its latest annual
report for the year ended 31st March 2019. The firm also
managed to make a profitable operating margin of 8.8%
and a net margin of 2.8% during the year ended 31 March
2019 (prowessdx.cmie, accessed on 19th Sept 2019) (Prow-
ess 2019). Appendix B Fig. 14 exhibits the 10-year analysis
of standalone profit after tax for Tata Motors. Tata Motors
earned a profit after tax of Rs 2020.60 crores compared to
the loss of Rs 1034.85 crores in the preceding years. After
occurring decline in profit for specific years, Tata Motors
had initiated a “Turnaround” plan in July 2017. Tata Motors
re-examined the traditional perceptive of the internation-
alization and reframed their strategies. Afterward, the firm
has taken a sequence of steps to deal with diverse aspects of
the big business. This resulted in the strong operational and
financial performance of the firm. As a result, the automaker
Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process
succeeded in maintaining its leadership place in the domestic
industry with a 45.1% market share in the FY2018-19 (Tata
Motors, annual report, 2019).
Continuity and Change Forces in Tata Motors
Broad continuity and change forces that are given in the
flowing stream strategy framework are examined specifically
in the case of Tata Motors Limited. Measurement of the
same is done by secondary data using surrogate measures.
The various continuity and change forces in the case of Tata
Motors are stated below. Select continuity and change forces
are measured using secondary data (see Appendix B).
Continuity Forces
The select continuity forces in case of Tata Motors are cus-
tomer centricity, leveraging production and supply-chain
efficiencies, established infrastructure, research and devel-
opment, brand equity, employee welfare, and performance.
Some of the continuity forces of Tata Motors are analysed
for 10 years and are depicted in Appendix B (Source: Devel-
oped based on data searched on ACE Equity). Data related
to all variables are available in Ace Equity database, and
hence it is preferred.
Customer Centricity
Tata Motors has large domestic as well as a significant global
customer base because of its customer-centric approach.
According to Senthil Kumar (2012), the quality of prod-
ucts in Tata Motors has led to customer satisfaction and
customer loyalty. Its initiatives, like reducing rejection and
inventory costs, have increased customer satisfaction levels
to a large extent. Better planning and execution has improved
its accuracy in forecast, adherence to manufacturing plan,
and reduction in unplanned shipments (Tata Motors, annual
report, 2019).Though market situation remained challenging
in the previous year, still Tata Motors’ passenger vehicles
outperformed in the industry. The firm registered a 13.9%
growth in FY 2018–19 with sales of 2,10,500 units. The
market share for the year was 6.3% and saw an up-gradation
of 60 basis points when compared with FY 2017–18 (Tata
Motors, annual report, 2019). This is the highest unit sales as
well as the market share in the last 5 years. The revenue from
net sales of Tata Motors for 10 years is shown in Appendix
B, Fig. 12. It can be inferred from the above-mentioned fig-
ure that its revenue from net sales is highest in the year 2019.
Leveraging Production and Supply‑Chain Efficiencies
Tata Motors has built a strategic supplier base. The firm fre-
quently conducts workshops to strengthen its supplier base,
along with precise and comprehensive supplier assessments.
This has enabled automakers with optimized manufactur-
ing operations and reduce its cost to a great extent. During
FY18–19, the firm has achieved a ~30% reduction in sup-
plier base cost through rationalization (Tata Motors, annual
report, 2019).
Established Infrastructure
Tata Motors is increasing its manufacturing and infrastruc-
ture capacity by establishing more and more plants across
the globe. Recently, the firm has acquired Land Rover and
Jaguar to expand its infrastructure base internationally. This
has helped Tata Motors to make its presence felt at the inter-
national level. With this acquisition, the net sales and profit
of the firm have increased on a large scale. Tata Motors
Limited has managed to reduce its cost by optimizing its
manufacturing operations like production scheduling, shift
patterns, and others by desired manufacturing plan. The firm
has chosen lower-cost locations and selective outsourcing,
and thus, established infrastructure has proven to be a bliss
for Tata Motors.
Research and Development
Continuous innovation is a major strategic factor that keeps
the firm competitive in the market. Technological excel-
lence helps the firm to achieve performance goals like
quality improvement, cost reduction, and product variety.
Sahoo et al. (2011) emphasize that firms should do radi-
cal innovation to keep themselves ahead in the dynamic
automotive industry. In the auto segment, the firm keeps
on coming with new variants to attract customers towards
itself. Tata Motors has gained popularity by beginning with
new models like electric Jaguar I-Pace. All the models of
electric Jaguar I-Pace has received the ‘2019 World Car’
award of the Year, ‘2019 World Car Design’ award of the
Year and the ‘2019 World Green Car’, this is the first car to
win three World Car titles, along with the ‘Car of the Year’
award at the European Car of the Year Awards 2019 (Tata
Motors, annual report, 2019). As per the annual report of
Tata Motors in the year 2017–2018, TML has 80 patents and
has registered 23 designs. The firm has developed India’s
first bio-methane engine for buses. The firm has also regis-
tered design for Cloud car and connected car technology for
JLR. An increase in expenditure on research and develop-
ment by Tata Motors in 10 years is presented in Appendix
B, Fig. 13. It can be observed that the firm has spent highest
on R&D in 2019 (i.e. 2965 crore).
13

Brand Equity
The expressions like brand recall, brand loyalty, or brand
equity signify a strong continuity force that a firm car-
ries. According to Mahapatra et al. (2010), a highly sat-
isfied customer will remain a customer for long and will
provide word-of-mouth advertisement and enhance sales.
Tata Motors has managed to build its image of trust and
commitment and hence gain popularity in the auto industry.
Mitra (2011) argues that heritage, technological advance-
ment, global footprint, and social responsibility are few fac-
tors that have built the reputation of Tata Motors. Globally
also, it has acquired the two English brands Land Rover
and Jaguar from Ford Motor. Through this acquisition, the
firm entered in premium car segment and hence established
itself as a global brand. An increase in expenditure on adver-
tisements and sales promotion by Tata Motors is depicted
in Appendix B, Fig. 13. It can be inferred that the firm is
spending a hefty amount on advertisements and promotions.
Employee Welfare
Tata Motors does its utmost to attract, retain, develop, and
reward talent. They have built a diverse labor force to draw
requisite skills to make themselves competitive in the inter-
national scenario. Tata Motors takes efforts to make life
worth living for their workmen (Tata Motors, annual report,
2018). They spend to improve the comfort, intellectual, and
social wellbeing of their employees. The spending of the
firm on employees for 10 years is exhibited in Appendix B,
Fig. 13. It can be inferred that the firm is spending a large
share of its revenue on employee welfare.  ufacturing industry is facing stiff competition in the market.
Performance
For decades, Tata Motors has been the leading player in
the auto manufacturing industry. Tata Motors focuses on
designing innovative strategies to gain maximum domestic
share and enter the global business. The firm has incurred
a loss of 1034.85 crores in FY 2017–2018, while the firm
attained the standalone profit after tax of 2020.60 crores in
FY 2018–2019 (Tata Motors, annual report, 2019). Hence,
the firm managed to increase its profit share along with the
market share. Despite the slowdown in the industry and cut-
throat competition, Tata Motor’s performance improved in
last few years. The 10-year analysis of profit after tax for the
firm is shown in Appendix B, Fig. 14. The firm suffered a
loss in the year 2015, 2017, and 2018, but soon, in 2019, the
firm had profit of 2020.60 crores (in rupees).
13
Sushil, S. Garg
Change Forces
Change forces that have an impact on the business environ-
ment of the Auto Industry include globalization, an increase
in competition, emergence of novel technology, e-business,
merger and acquisitions, and government policies. Some of
the selected factors are assessed over 5 years using surrogate
measures. Some of the change forces of auto industry are
analysed for 5 years and are depicted in Appendix B (the
identified determinants of change elements in case of auto
Industry as applicable to Tata Motors are stated below).
Globalization
The word globalization means increasing the integration of
nations across the world. Global integration has strength-
ened trade among countries with fewer trade barriers. Com-
mercial integration has brought down the trade barriers,
increased the rate of technological shift, and lower the pro-
duction cost. It looks as if the entire world has grown up as
one nation due to global integration. With global integra-
tion, export in the auto industry has increased. The export
of auto vehicles in 2019 is 4,629,054 units. The impact of
global integration on the export of the Indian auto industry
is exhibited in Appendix B, Fig. 15.
Increase in Competition
With the advent of global integration and technological
developments, the auto industry has seen many new entrants
and old entrants coming with new models. Hence, this man-
The revival of old brands like Tata Motors, TVS, and entry
of new auto manufacturing brands like Honda, and Suzuki,
has increased the competition in the industry. To be com-
petitive in the market, Tata Motors came with variants like
Tiago, Bolt, Tigor, Zest, and Nexon Sumo Gold in passenger
segments.
Changing Needs of Customer
Fast-changing customer needs are a significant change force
in the auto industry. With the digital revolution, the custom-
ers are nowadays becoming more aware of quality, brand
choice, performance, and other factors. The needs of the
customer are changing at a fast rate, and the auto firms have
to fuel those needs to remain competitive in the industry.
With the growing middle-income class, people of India are
shifting from two-wheelers to four-wheeler segment. The
rise of commercial vehicles is also growing at a fast rate,
and its growth is shown in Appendix B Fig. 16. The grow-
ing passenger vehicle requirement is exhibited in Appendix
B, Fig. 17.
Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process
The Emergence of Novel Technology
Technology has ushered the international business to a great
extent. Advancement in information technology, transporta-
tion, and communication have been the driving forces lead-
ing to internationalization in trade. There are certain factors
like environmental sustainability, cost, and brand credibility
that decide the acceptability of customers towards the new
technology and value additions in the products.
E‑Business
Revolution in information technology has led to a change
in a business scenario. The emergence of e-commerce has
led to an increase in accuracy and speed, reduction in cost,
and a more extensive customer base. The auto industry uses
e-business to reach its global customer base. With the use
of e-commerce, the automaker has become transparent in
its operations and dealings. The implementation of ERP in
auto industry has reduced the spending of firms to a great
extent. Further, online connectivity program has helped in
improving its connections with vendors and dealers.
Mergers and Acquisitions
Auto Industry has seen many mergers and acquisitions in
the last few decades. The automaker’s goal is to acquire
complementary capabilities. Tata Motors acquires a firm
if it gives them a new customer base, improved products,
and novel technology (Lessard et al. 2013). In 2008 Tata
Motors has acquired the two English brands Land Rover and
Jaguar from Ford Motor to compete globally in the industry.
This acquisition has helped Tata Motors to gain production
scale and technology and to become the world’s growing car
maker (Goldstein 2008). The firm also purchased a Spanish
bus manufacturing unit, Hispano Carrocera. Similarly, in
2004 Tata’s acquired the commercial vehicle unit of Daewoo
to develop world-class capabilities in truck manufacturing.
Government Policies
The government has the power to decide all the monetary
policies, fiscal policies, and taxation modules (Okhma-
tovskiy 2010). So the policies of the government in power
have a massive impact on the economy and the operation
of firms in the marketplace. According to Mecklinga and
Nahm (2019), the government should take strict initiatives to
ban environmentally harmful technologies (e.g. nuclear) and
resources (e.g. coal)   to acheive green goals in auto industry.
Upadhyayula et al. (2019) mention that Indian government is
emphasizing on electrification and lightweighting strategies
for enhancing environmental performance of passenger vehi-
cles in the country. Also efforts like Make in India initiative
will encourage production in manufacturing sector including
auto industry.
Stringent rules and regulations over ecological concerns
have been passed by the government in the last few years. In
response to it, Tata Motors has taken several initiatives con-
cerning the environment in the past. The company believes
that electric vehicle is an essential initiative to reduce pollu-
tion in India. The firm is dedicated to leading this transition
and started working in collaboration with other companies to
create a viable environment required for adoption of electric
vehicles. The all-electric Jaguar I-Pace has received 2019
World Green Car award (Tata Motors, annual report, 2019).
Mapping of Tata Motors on Continuity–Change
Matrix
After analysing of continuity and change forces of Tata Motors,
it has been observed that the firm is having high level of both
continuity and change forces. Hence, the flowing stream strat-
egy is suggested as a preferred approach for the firm. To map
the continuity forces of the firm, each continuity force is nor-
malized, and then the average of each continuity force for each
year is calculated. Here, surrogate measures of revenue from net
sales, expenditure on research and development, expenditure
on advertisements and promotions, expenditure on employees,
and profit and loss incurred are taken to map continuity forces.
Similarly, the change forces are normalized and the average of
change forces for every year is computed. In case of change
forces, surrogate measures of number of vehicles (export) and
growth in commercial and increase in passenger vehicles are
considered for analysis. The overall status of continuity forces
is shown in Fig. 2 and mapping of change forces is depicted in
Fig. 3. Dynamic mapping of continuity and change forces for
Tata Motors is presented in Fig. 4.
Strategic Crystal Analysis
Flowing streamstrategy crystal for Tata Motors is formed by
examining the interplay among continuity forces, change forces
and, strategic factors. Flowing stream strategy crystal for Tata
Motors is exhibited in Fig. 5. In this defined crystal, select con-
tinuity forces, identified change forces, vital customer elements,
and significant enterprise elements are considered for analy-
sis. In the previous section, continuity and change forces are
described. The following section sheds light on strategic cus-
tomer’s factors and enterprise factors of Tata Motors:
Customer Factors
Jahanshahi et al. (2011) contended that product quality and
service quality play an essential role in enhancing customer
satisfaction in auto industry. Dua and Dua (2013) argued that
13
 Sushil, S. Garg

Fig. 2  Year-wise continuity 4.5

4.21
force of Tata Motors
4

SCORE OF CONTINUITY FORCES

3.5
2.73 2.84
3 2.67 2.6
2.45 2.45
2.5 2.23
2.05
2

1.5

1
1.04
0.5

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
YEARS

Fig. 3  Year-wise change force 5 4.55

of Tata Motors 4.31
4.5
SCORE OF CHANGE FORCES

3.91
4
3.45
3.28
3.5
3
2.5
2
1.5
1
0.5
0
2015 2016 2017 2018 2019
YEARS

Fig. 4  Dynamic mapping of 5
forces for Tata Motors
Wind Strategy 2018 (A4)
2017 (A3) 2019 (A5)
High

2016 (A2)
Change Forces

2015 (A1) Flowing Stream

Strategy
2.5
Low

Mushroom Strategy Tree Strategy

0 Low 2.5 High 5

Continuity Forces

the customers of Tata Motors are satisfied with the price, factors for customer satisfaction in the case of Tata Motors
safety, design, interior space, mileage, status, comfort level, were interior space, price, and mileage. Subsequently,
brand name, and after-sale service. The most influencing the strategic landscape for macro-variables of customers

13
Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process

is portrayed in Fig. 6 for the firm. The strategic direction
diagram of the customer factors is depicted in Fig. 7. Tata
motors should take action to raise sales and service offer-
ings, improved technology models and reduce product cost.
In addition to it, factors like product features, and brand
name needs to be maintained. Figure 7 exhibits the future
intent that Tata Motors needs to follow.
Enterprise Factors
The strategic landscape for enterprise-related factors is
depicted in Fig. 8. In this landscape, the “As-Is” strategy
and “To-Be” strategy for select enterprise-related elements
are portrayed. Figure 9 illustrates the strategic direction dia-
gram of the enterprise factors. It is worth noting that the
firm should reduce its investments and risk, while factors
like profitability, flexibility, and market share still need to be
improved. Further, Tata Motors needs to maintain customer
satisfaction to sustain leadership in the market.
Selection of Strategic Channels
In the flowing stream strategy crystal, four major strategic
channels are anticipated viz., divert, shift, partition, and inte-
grate. They are prioritized based on the maturity in strate-
gic flexibility and complexity in their implementation. Tata
Motors, being a global automaker, is a firm with growing
strategic maturity, and hence flowing stream strategy is fol-
lowed. Being one of the largest and oldest organization, it
is trapped in the burden of continuity forces that will lead
to the brink of extinction. However, Tata Motors has been
finding innovative ways to integrate the change forces with
high impact and vital continuity forces. This has aided the
firm to leverage the strength of the continuity momentum

Key Enterprise Factors

Investments
Risk
Profitability
Flexibility
Markets Share
Customer Satisfaction

Change Forces
Continuity Forces
Globalization
Customer Centricity
Increase in Competition
Leveraging Production and
Changing Needs of Customer
Supply-Chain Efficiencies
The emergence of Novel
Established Infrastructure
Technology
Research and Development
E-business
Brand Equity
Mergers and Acquisitions
Employee Welfare
Government Policies
Performance
Environmental Concern

Key Customers Factors

Sales and Service Offerings
Improved Technology Models
Product Cost
Product Features
Brand Name

Fig. 5  Flowing stream strategy crystal for Tata Motors

13
 Sushil, S. Garg

Sales and Service

Offerings Raise
(Profitability, Flexibility,
Market share)
‘To-Be’
Maintain
(Customer
Technological Satisfaction)
Models Cost Reduce
(Risk,
Investment)

‘As- Is’

Product Features Brand Name Fig. 9  Strategic direction diagram for enterprise factors at Tata
Motors

Fig. 6  Strategic landscape for customer factors at Tata Motors

Divert

Raise Momentum of continuity are diverted for new opportunities

(Sales and Service,
Technology models)
• Tata Motors has acquired the two English brands Land
Maintain Rover and Jaguar from Ford Motor to exploit the oppor-
(Product features,
Brand name)
tunities in the global market.
• The firm has successfully cannibalized the existing infra-
Reduce
(Cost) structure of the two English brands with its new technol-
ogy-based models.

Shift
Fig. 7  Strategic direction diagram for customer factors at Tata Motors
Shift the burden of continuity
Market Share
• The firm has reorganized its supply chain and expands its
delivery channels to multiple countries.
Investment
‘To-Be’ • To remain competitive, Tata Motors created a new market
space. The firm exploited new opportunities by offering
radically different variants.

Partition
Flexibility Risk

With the impending business situations

‘As- Is’ • With changing business environment, Tata Motors has

restructured itself as a bimodal organization. The firm
has an excellent approach to global standardization as
Customer
Sasfacon well as local operations.
Profitability
• Using new technology for reducing rejection and rework
has helped the firm to achieve better quality.
Fig. 8  Strategic landscape for enterprise factors at Tata Motors • The firm concentrates on the domestic marketplace and
simultaneously keeps an eye at global markets of Europe,
with the change forces. The critical strategic channels with China, the United States, and others to expand its reach.
strategies of the firm are outlined below. • The firm successfully remained competitive in the market
by making appropriate modifications in existing models.

13
 Table 1  Strategy formulation matrix: actions at the intersection of continuity and change forces
Change forces Continuity forces
Customer centricity Leveraging produc- Established infrastruc- Research and develop- Brand equity Employee welfare Performance
tion and supply- ture ment
chain efficiencies

Globalization Exploited new The firm managed

markets cross-culture effi-
ciently
Increase in competi- Created a new The firm tried to be
tion customer base and competitive in the
made competition market by timely
irrelevant modifying exiting
products
Changing customer Strengthened existing Customer needs are Building brand value
needs customer base and considered while helps to capture the
entered the global developing new market
market products
The emergence of Existing R&D Developed novel tech- New technology is used
novel technology capability is used nology indigenously to reduce rework and
for innovating new rejection rates. Hence
products quality and delivery
targets are met quickly
E-Business Establishment of the Developed e-business Use of e-business prac-
Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process

effective supply infrastructure tices in all spheres of

chain through business
e-business
Mergers and acquisi- The effectively inte- Post-merger integra- Technical, as well as
tions grated infrastructure tion financial collabora-
of the acquired firm tion with market
leaders, helped the
firm in capturing new
markets
Government policy Managed risk in view
of changing govern-
ment policies
Environmental Diversification into
concern new markets with
environment-
friendly products

13
 Sushil, S. Garg

• The promotion of e-business practices among all stake- heavily in research and development to provide improved
holders is another strategy that helped the firm in gaining variants continuously over time.
success. • The latest drive of the firm is to “go green”. The organi-
zation has synergized financial performance along with
Integrate environmental concerns. It is promoting the use of envi-
ronment-friendly vehicles like Electric Jaguar I-Pace.
Balance continuity with the change to leverage the available
opportunities Discussion on Strategy Adopted by Tata Motors

• Expansion into a global market segment with new tech-
nology-based products.
• Building a brand and managing better customer relation-
ships is another integrating strategy of Tata Motors.
• Tata Motors has created novel technological solutions to
meet changing customer requirements. The firm invests
The strategy formulation matrix (Table 1) presents the strat-
egies adopted by Tata Motors while managing the conflu-
ence of continuity and change forces simultaneously. Annual
reports are studied, and secondary data analysis is done to
analyse the strategies corresponding to select continuity as
well as change forces. Table 2 depicts the impact of the strat-
egy adopted by the firm on customer and enterprise factors.

Table 2  Impact of strategies on strategic landscape

Strategy Strategy Impact on strategic customer factors and enterprise factors
code
Raise Maintain Reduce

D1 Acquisition of the two English brands Market share (EF) Risk (EF)
Land Rover and Jaguar Investment (EF)
S1 The reorganization of the supply chain Flexibility (EF) Risk (EF)
and expanding their delivery channels to Product cost (CF)
multiple countries
S2 The exploitation of new opportunities and Improved technological models (CF)
shifting customer needs by offering radi- Product features (CF)
cally different variants Profit (EF)
Market share (EF)
P1 Global standardization as well as local/ Flexibility (EF)
decentralization in operations
P2 Using new technology for reducing rejec- Profit (EF) Product cost (CF)
tion and rework and getting better quality Risk (EF)
Investment (EF)
P3 Concentrate on the domestic marketplace Product features (CF) Customer satisfaction (CF)
and simultaneously keep an eye at global Improved technological models (CF)
markets Profit (EF)
Brand name (CF)
Market share (EF)
P4 To remain competitive in the market by Product features (CF)
doing timely modification in existing Profit (EF)
models
P5 Promotion of e-business practices Flexibility(EF) Investment (EF)
Sales and service offerings (CF)
I1 Diversification into the global market with Profit (EF)
new technology-based products Brand name (CF)
Improved technological models (CF)
I2 Building a brand and managing better Brand name (CF) Customer satisfaction (CF)
customer relationship
I3 Utilizing existing research and technology Product features (CF) Investment (EF)
capabilities for innovating new products Profit (EF) Product cost (CF)
and variants Improved technological models (CF)
I4 Synergizing financial performance along Profit (EF) Customer satisfaction (CF)
with the environmental concern Improved technological models (CF)

D divert, S shift, P partition, I integrate, CF customer factor, EF enterprise factor

13
Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process

It further portrays the effects of strategy on strategic direc- Continuity Forces

tion of significant enterprise and customer factors.
• Customer Base
From the analysis of continuity forces, it can be stated • Infrastructure
that the continuity forces of the firm have increased in the • Core Competence
last 10 years. The firm has increased its expenditure on • Supply Chain
• Distribution Network
R&D, and this has helped the firm to meet changing needs • Culture
of customers. The firm’s spending on advertisements and • Performance
promotion has helped the firm to increase its sales in the
Change Forces
past decade. The firm spending on employee welfare has
also shown an upward trend. After acquisition of Jaguar and • Globalization
Land Rover the firm incurred losses after FY-2015, but soon • New Opportunities
• Competition
it resumed its profit in FY 2019. • Customer Needs
• New Technology
• E-Business
• Mergers and Acquisitions
Conclusion • Govt. Policies

Hence, it can be stated that the ability of Tata Motors to Fig. 11  Continuity and change forces
leverage the continuity and change forces expertly has made
the firm competitive in the market. Tata Motors is continu-
ously trying to integrate the conflicting forces of continuity Acknowledgements  The authors acknowledge all those who have con-
and change upfront. The organization is continually doing tributed in improving the quality of the paper, including the anonymous
innovations to keep itself ahead of the competition. Technol- reviewers and editors. The authors acknowledge the value-addition by
the Editor-in-Chief.
ogy continuity and changing needs of customer interaction
is a crucial reason for its increase in sales and net profit.
The ability of the firm to improve product features, sales
and service offerings, flexibility in operations, and customer
Appendix A
satisfaction has increased its competitiveness in the interna-
See Figs. 10 and 11.
tional market.

Key Questions Reflecting Applicability in Real Life

Appendix B: Continuity and Change Forces
1. In what way internationalization impacts competitiveness
for Tata Motors Over Time
of the firms?
See Figs. 12, 13, 14, 15, 16 and 17.
2. How Flowing Stream strategy process can be used for
strategy formulation in real-life organizations?

Fig. 10  Percentage of revenue 90.00

PERCENTAGE OF REVENUE ( From Internaonal

from (international operations) 79.80

(source: developed based on 80.00 82.80
data collected from annual 70.00
reports of Tata Motors)
60.00
50.00
Operaons)

40.00
30.00
20.00
8.40
10.00
9.60 9.00
0.00
2014 2015 2016 2017 2018
YEARS

13
 Sushil, S. Garg

Fig. 12  Revenue from net sales 80000

(in Rs crores) (source: devel- 69203
oped based on data searched on 70000
ACE equity)
57897
60000 54307

NET SALES ( In Rs Crs)

47088 44316
50000 44766
42845
35593 34288 36302
40000

30000

20000

10000

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
YEARS

Fig. 13  Expenditure (in Rs Research and Development Employee Cost Adversing and Sales promoon
crores) ( source: developed
based on data searched on ACE 10,000
8768 8968 8729
equity) 8501 8698
9,000 8064
8,000
EXPENDITURE ( In Rs Crs)

6607
7,000
6,000 5398

5,000 4089 4,273

3,764 3,966
4,000 3,091 3,188
2974 2,837 2,877
2,691
3,000 2,294
1,822
2,000 2,965
2,144 2,204 2,217 2,397
2,100
1,000 1,548 1,759
1,170 1,187
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
YEARS

Fig. 14  Profit and loss incurred 3,000.00 2,240.08

(in Rs crores) (source: devel- 2,020.60
1,811.82
oped based on data searched on 2,000.00 1,242.23
ACE equity)
1,000.00 301.81 334.52
-62.30
0.00
PROFIT ( In Rs Crs)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-1,000.00
-1,034.85
-2,000.00
-2,429.60
-3,000.00

-4,000.00
-4,738.95
-5,000.00

-6,000.00
YEARS

13
Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process

Fig. 15  Number of vehicles 50,00,000.00 46,29,054.00

NUMBER OF VEHICLES (EXPORT)

(export) source: developed 45,00,000.00
based on data searched on 40,00,000.00 35,73,346.00 40,42,841.00
SIAM)
35,00,000.00
36,43,828.00 34,80,725.00
30,00,000.00
25,00,000.00
20,00,000.00
15,00,000.00
10,00,000.00
5,00,000.00
0.00
2015 2016 2017 2018 2019
YEARS

Fig. 16  Growth in commercial 1200000

GROWTH IN COMMERCIAL VEHICLES

vehicles (source: developed 1007319

based on data searched on 1000000
SIAM)
800000 856916
614948
714082
600000 685704

400000

200000

0
2015 2016 2017 2018 2019
YEARS

Fig. 17  Growth in passenger 40,00,000

GROWTH IN PASSENGER VEHICLES

vehicles ( source: developed 33,77,436

based on data searched on 35,00,000
SIAM) 26,01,236 32,88,581
30,00,000
30,47,582
25,00,000 27,89,208
20,00,000

15,00,000

10,00,000

5,00,000

0
2015 2016 2017 2018 2019
YEARS

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Internationalization of Tata Motors: Strategic Analysis Using Flowing Stream Strategy Process
Sushil  is Abdulaziz Alsagar Chair
Professor (Professor of Strategic,
Flexible Systems and Technol-
ogy Management) at the Depart-
ment of Management Studies,
Indian Institute of Technology
Delhi. He has served as Deputy
Director (Operations) and Dean
(Faculty) at IIT Delhi. He has
served as Visiting Professor and
delivered seminars in many lead-
ing universities, such as Mont-
pellier Business School, France,
Kyoto University, Tokyo, Uni-
versity of Minnesota, Minneapo-
lis, MN, Stevens Institute of
Technology, NJ, University of Lethbridge, Alberta, Université Paris 1
Panthéon-Sorbonne, Paris, among others. He is an active researcher
and has supervised more than 60 doctoral dissertations. He has 20
books to his credit in the areas of Flexibility, Strategy, Systems Think-
ing, and Technology Management and over 300 papers in various
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refereed journals and conferences. He is the Founder Editor-in-Chief
of Global Journal of Flexible Systems Management and serving on the
Editorial Boards of leading international journals. He is the Editor of
Book Series on Flexible Systems Management published by Springer.
Shamita Garg  is a Research
Scholar at the Department of
Management Studies, Indian
Institute of Technology Delhi,
New Delhi. She has been an
active member of the Global
Institute of Flexible Systems
Management and has presented
papers at conferences such as
Glogift. Her current research
interests are international busi-
ness and strategic management.
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