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TATA Motors
Porters 5 Force & SWOT
Analysis

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Bargaining Power of Suppliers
Large

number of substitute inputs

When there are a large number of substitute inputs,


suppliers have less bargaining leverage over producers.

This is due to competition among substitutes. Greater


competition positively affectsTata Motors.

High

competition among suppliers

High levels of competition among suppliers acts to reduce


prices to producers.

This is a positive sign forTata Motors.

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Bargaining Power of Suppliers
Diverse

distribution channel

The more diverse distribution channels become the less


bargaining power a single distributor will have.

This positively affectsTata Motors.

Critical

production inputs are similar

When critical production inputs are similar, it is easier to


mix and match inputs, which reduces supplier bargaining
power.

This positively affectsTata Motors.

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Bargaining Power of Suppliers
Low

switching costs

The easier it is to switch suppliers, the less bargaining


power they have.

Low supplier switching costs positively affectTata Motors

Volume

is critical to suppliers

When suppliers are reliant on high volumes, they have less


bargaining power, because a producer can threaten to cut
volumes and hurt the suppliers profits.

This can positively affectTata Motors

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Bargaining Power of Customers
Product

is important to customers

When customers cherish particular products they end up


paying more for that one product.

This positively affectsTata Motors

Buyers

require special customization

When customers require special customizations, they are


less likely to switch to producers who have difficulty
meeting their demands.

Buyer customization positively affectsTata Motors

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Bargaining Power of Customers
High

buyer price sensitivity

When buyers are highly sensitive to prices, a minor


increase in prices would lead to a loss of customers to a
competitor.

This demand negatively affectsTata Motors

Large

number of customers

When there are large numbers of customers, no one


customer tends to have bargaining leverage.

Limited bargaining leverage helpsTata Motors

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Bargaining Power of Customers
Low

Switching Costs

If switching to another product is simple and cheap the


customers does not think much before doing it.

In case of NANO car the switching cost from bike to car is


too high.

BrandImage

The brand image of the TATA is not very attractive but the
segment in which the NANO operates has been the most
attractive thing for them

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Intensity of Existing Rivalry
Large

industry size

Large industries allow multiple firms and produces to


prosper without having to steal market share from each
other.

Large industry size is a positive forTata Motors

Fast

industry growth rate

When industries are growing revenue quickly, they are less


likely to compete, because the total industry size is also
growing.

The only way to grow in slow growth industries is to steal


market-share from competitors.
Fast industry growth positively affectsTata Motors

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Intensity of Existing Rivalry
PriceCompetition

Advertising battles may increase total industry demand,


but may be costly to smaller competitors.

Products with similar function limit the prices firm can


change.

Price competition often leaves the entire industry worse


off.

Exit

Barriers

Even if the product fails in the market its not that easy for
the company to exit the market just like that because
ofthe heavy investment it has made in the initial stage.

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Threat of Substitutes
Price

band

The threat that consumer will switch to a substitute


product if there has been an increase in price of the
product ort here has been a decrease in price
ofthesubstituteproduct.

Substitutes

performance

A lower performance product means a customer is less


likely to switch fromTata Motorsto another product or
service

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Threat of Substitutes
Buyerswillingness

Productswithimproving
price/performance
relative to present industry products.

Substitutes

tradeoffs

quality

A lower quality product means a customer is less likely to


switch fromTata Motorsto another product or service

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Barriers to Entry
High

capital requirements

High capital requirements mean a company must spend a


lot of money in order to compete in the market.

High capital requirements positively affectTata Motors

Strong

distribution network required

Weak distribution networks mean goods are more


expensive to move around and some goods dont get to
the end customer.

The expense of building a strong distribution network


positively affectsTata Motors

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Barriers to Entry
Advanced

technologies

Advanced technologies make it difficult for new


competitors to enter the market because they have to
develop those technologies before effectively competing.

The requirement for advanced technologies positively


affectsTata Motors

Strong

brand names

If strong brands are critical to compete, then new


competitors will have to improve their brand value in order
to effectively compete.

Strong brands positively affectTata Motors

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Barriers to Entry
Industry

requires economies of scale

Economies of scale help producers to lower their cost by


producing the next unit of output at lower costs.

When new competitors enter the market, they will have a


higher cost of production, because they have smaller
economies of scale.

Economies of scale positively affectTata Motors

High

learning curve

When the learning curve is high, new competitors must


spend time and money studying the market before they
can effectively compete. High learning curves positively
affect profits forTata Motors

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SWOT Analysis

Strengths

Indias largest automobile company.

Tata Motors puts emphasis on R&D.

New products, quality improvement and enhancement of


the consumer experience keeping in view the changing
market, customers aspirations and regulatory needs.

Jaguar Land Rover re-affirmed confidence in the premium


car market - JLR posted record sales of 434,311.

The employees, suppliers and channel partners remain


their major source of strength.

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SWOT Analysis

Strengths

International strategy- about new acquisitions.

Brand Name-Tata Motors has a strategy to work with the


old name of the company which Tata bought or acquires
that does not effect the brand value.

Globalization- The company has a strategy to expand its


network world wide.

DomesticStrategy-Tata Motors is the most trusted


vehicle brand in India, and Tata is putting effort to be in
same position.

Employment-Tata Motors is known for good employee


base and management

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SWOT Analysis

Weaknesses

Less Luxury- Tata has not got a foothold in the luxury car
segment in the domestic Indian market.

Safety-Tata Motors does not provide standardsafetyfeatures


in their vehicles in the domestic market. Most of the
automobiles Tata manufactures are based on older platforms.

Poor Product Design- Tata Nano, the peoples car sales is


continuously decreasing The main reason behind this is lack
of security features in the car and it cannot be made to drive
in the Highway

Wrong marketing- Media is focusing on failure of Tata Nano


nowadays. Payment system for Tata Nano that is Rs.99.

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SWOT Analysis

Opportunities

New and mandatory government policy of infrastructure


oriented spending for national development.

The evolving infrastructure in India - demand for better


quality and more comfortable vehicles.

With increase in FDI in Defense sector (from 26% to 49%) increasing their offerings in from providing only pure
logistics solutions to tactical and combat solutions.

Growing wealth in rural markets.

With increasing awareness and education of the Indian


customer.

Thus the Companys R & D group is capable of developing


solutions for different regulatory and emission norms as per
market specifications in minimal time.

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SWOT Analysis

Threats

Business is seasonal in nature.

Input Costs / Supplies: Prices of commodity items used in


manufacturing automobiles, including steel, aluminum,
copper, zinc, rubber, platinum, palladium and rhodium have
become increasingly volatile in recent years.

Environmental Regulations:

Intensifying Competition:

Underperformance of distribution channels and supply


chains:

Changes in tax, tariff or fiscal policies and regulations:

Disruption in the manufacturing, design and engineering


facilities: