Automobile sector can be divided into four main segments:
• The automotive manufacturing industry comprises the production of commercial vehicles, passenger cars, three & two-wheelers.
• Two-wheelers are by far the most popular form of vehicle in India, taking an 80 per cent share in 2015-16.
• 25 million automobiles produced in FY17.
• Total production volume grew at a CAGR of 5.56 per cent between FY12-17
• Two-wheelers and passenger vehicles dominate Indian auto market.
• Two-wheelers and passenger cars accounted for 78 per cent and 15 per cent of production volume in FY17 respectively.
• Domestic passenger car sales are dominated by small and mid-size cars.
• Over 67 per cent of export volumes comprised of two-wheelers, followed by 22 per cent for passenger cars.
Porter's Five Force Analysis
Electric cars –
• The Indian government has shifted its focus on electric cars in order to meet the emission reduction targets. It has aims to sell only electric cars by 2030 under the National Electric Mobility Mission Plan which was launched in 2013.
• Mahindra has launched its new electric car and Tesla motors are also set to enter the Indian market.
Luxury cars –
• The luxury car segment has been seeing high growth rates and expanded at 37 per cent CAGR between FY07-15. Sale of luxury cars stood at 33,279 units in 2016. The luxury car market in India is expected to grow at 25 per cent CAGR till 2020
• With 12th largest population of high net worth individuals (HNIs), India still has huge room for this segment.
New financing options –
• Carmakers such as BMW, Audi, Toyota, Skoda, Volkswagen & Mercedes-Benz have started providing customised finance to customers through NBFCs
• Major MNC & Indian corporate houses are moving towards taking cars on operating lease instead of buying them
Growth drivers and opportunities
Growth drivers –
• Rising income and a large young population.
• Greater availability of credit and financing options.
• Demand for commercial vehicles increasing due to high level of activity in infrastructure sector.
• Clear vision of Indian government to make India an auto manufacturing hub.
• Initiatives like ‘Make in India', ‘Automotive Mission Plan 2026', and NEMMP 2020 to give a huge boost to the sector.
• Improving road infrastructure.
• Established auto ancillary industry giving the required support to boost growth.
• 5 per cent of total FDI inflows to India went into the automobiles sector.
• Strong support from the government; setting up of NATRIP centres.
• Private players, such as Hyundai, Suzuki, GM, keen to set up R&D base in India.
• Strong education base, large skilled English-speaking manpower.
• Comparative advantage in terms of cost.
• Firms both national and foreign are increasing their footprints with over 1,165 R&D centres.
• Mahindra & Mahindra targeting on implementing digital technology in the business.
• Bajaj Auto, Hero Honda & M&M plan to jointly develop a technology for 2-wheelers to run on natural gas.
• Tata Motors to launch MiniCAT, a car running on compressed air
• By 2018, Hyundai is planning to enter the hybrid vehicles segment, to explore alternative fuel technology & to avail the government incentives.
• General Motors, Nissan & Toyota announced plans to make India their global hub for small cars.
• Passenger vehicle market is expected to touch 10 million units by 2020.
• Strong export potential in ultra-low-cost cars segment (to developing & emerging markets).
• Maruti Suzuki launched facelift version of Alto 800, after the success of earlier model
Indian automobile sector has seen huge investments from both domestic and foreign manufacturers. FDI inflows to the sector were US$ 16.67 billion between April 2000 and March 2017.
• Planning to double its current investment level of about US$ 2.5 billion over the next five years
• Aims to raise its market share to 10 per cent by FY19
• To increase the Chennai Plant capacity to 400,000 units a year in a few years' time
• The company plans to launch 8 new car models in India by 2021
• Toyota is planning to invest US$ 165 million on its new engine plants and projects.
• Plans to invest US$ 552-737 million over the next two to three years to develop new products.
KEY SUCCESS FACTORS
Internal Factor Evaluation Matrix
An Internal Factor Evaluation (IFE) Matrix allows strategists to summarize and evaluate major strengths and weakness in functional areas of business.
INTERNAL FACTOR EVALUATION (IFE) MATRIX
KEY INTERNAL FACTORS
WEIGHT RATING WEIGHED SCORE
GLOBAL PRESSENCE 0.06 3 0.18
NEW VISION & STRATEGY 0.07 3 0.21
LARGEST MANUFACTURER IN INDIAN MKT 0.08 4 0.32
STRONG BRAND MANAGEMENT 0.07 4 0.28
RESEARCH AND DEVELOPMENT 0.08 4 0.32
LARGE SCALE OF EMPLOYEES & QUALIFIED ENGINEERS 0.07 3 0.21
WIDE RANGE OF AUTOMOBILES 0.07 3 0.21
FLEXIBLE PRICE RANGE AS PER VEHICLE TRAITS 0.06 3 0.18
KEY INTERNAL FACTORS
WEIGHT RATING WEIGHED SCORE
SENSITIVENESS TO FUEL PRICES 0.07 3 0.21
CUSTOMERS PREFERENCE CHANGE 0.07 3 0.21
COUNTRY POLITICAL SITUATION 0.06 4 0.24
GREEN CAR DEMANDS AND DEVELOPMENT 0.07 4 0.28
TECHNICAL PROBLEMS 0.09 4 0.36
RAW MATERIAL PRICE INCREASE & INFLATION 0.08 4 0.32
External Factor Evaluation Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information.
EXTERNAL FACTOR EVALUATION (IFE) MATRIX
KEY EXTERNAL FACTORS
WEIGHT RATING WEIGHED SCORE
LOW PRICE BUT PROFITABLE 0.07 3 0.21
LARGEST MARKET SHARE 0.08 4 0.32
DIVERSIFICATION IN VEHICLES 0.08 3 0.24
COULD PENETRATE IN RURAL MARKET 0.07 3 0.21
NEW ACQUISATION CAN BOOST IN UK, CHINA AND OTHER COUNTRIES SALES 0.09 4 0.36
VERTICAL INTEGRATED INTEGRATION FOR BETTER CONTROL 0.08 3 0.24
KEY EXTERNAL FACTORS
WEIGHT RATING WEIGHED SCORE
GLOBAL RECESSION AND POOR ECONOMIC CONDITION 0.08 4 0.32
LONG TERM FINANCING PROBLEM 0.07 3 0.21
HIGH FUEL PRICES 0.08 4 0.32
NEW ENTRANTS WITH BETTER TECHNOLOGY 0.07 4 0.28
POLITICAL PRESSURE 0.08 4 0.32
GOVERNMENT POLICIES 0.08 3 0.24
FAILURE OF NEW TECHNOLOGY 0.07 3 0.21
Introduction to Tata Motors
Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company) headquartered in Mumbai, is an Indian multinational automotive manufacturing company and a member of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses, sports cars, construction equipment and military vehicles. Tata Motors has auto manufacturing and assembly plants in India, Argentina, South Africa, Great Britain and Thailand. It has research and development centers in Pune, Jamshedpur, Lucknow, and Dharwad in India, and in South Korea, Great Britain and Spain. Tata Motors was founded in 1945 as the manufacturer of locomotives, the company manufactured its first commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969. Tata Motors entered the passenger vehicle market in 1991 with the launch of the Tata Sierra, becoming the first Indian manufacturer to achieve the capability of developing a competitive indigenous automobile. In 1998, Tata launched the first fully indigenous Indian passenger car Indica, and in 2008 launched Tata Nano, the world's cheapest car. Tata motors acquired the South korean truck manufacturer Daewoo Commercial Vehicles Company in 2004 and purchased Jaguar Land Rover from Ford n 2008.
Customer Value Proposition at Tata Motors
Customer centricity is at the core of a few of Tata Motors innovation developments. For instance, the Zest, Bolt and Tiago autos now offer clients the accommodation of the multi-drive choice – where the client can pick between three diverse drive modes relying on whether they require more power, higher fuel proficiency or a mix of both. The new motors, Revotron and Revotorq, which have pushed the envelope for Indian diesel and petroleum autos were produced in the organization's R&D focuses at India and UK. Our business vehicles are designed to offer clients the perfect blend of energy, fuel proficiency and least cost of proprietorship. Mechanically, they have progressed to offer armada proprietors the fingertip accommodation of across the country organizing and telematics through the Tata Fleetman telematics frameworks.
Advancement at Tata Motors dives deep past item and innovation to include different parts of operations, for example, promoting and client benefit. The Made of great battle that restricted in football legend Lionel Messi as a brand diplomat for Tata Motors autos made waves the world over. Another a valid example is the way breaking T1 hustling title occasion that duplicates the energy of Formula1 dashing with the crude power and power of truck motors. Our clients get the advantage of the Tata Motors' innovative approach at different touchpoints. For instance, the Tiago offers a virtual test drive application that utilizations movement and signal acknowledgment innovation to give the client a virtual on-street driving background, while additionally displaying the auto's important highlights. India's initially benefit application – Tata Motors Connect – gives our clients a calm driving knowledge by associating in a split second to the merchant and workshop organize through GPS route. VTabs is another new administration related application that tracks vehicles that come in to our administration focuses through RFID perusers; this lessens time taken for adjusting, along these lines specifically profiting our clients. Imaginative intuition permeates through the association from various perspectives. Our kin connect with each other through inventive stages, for example, the endeavor person to person communication instrument Yammer, casual systems administration sessions, learning sessions and online courses, and so forth.
Marketing Mix of Tata Motors
Tata Motors is a leading automobile brand. It is most widely known for its commercial vehicles such as buses and trucks. However, Tata Motors has also started an excellent expansion in passenger cars and it is rapidly gaining market share. The marketing mix of Tata motors talks about the P's of the brand which has helped the brand to rise in the automobile industry.
Tata Motors has a very wide range of products like passenger cars (Indica, Indigo, Nano, Tiago), utility vehicles (Safari, Sumo, Xenon), trucks (Tata Novas, TL 4x4), commercial passenger carriers (Buses, Winger, Magic) and defence vehicles.
The prices of Tata Motors are generally affordable acceptable by the general public at large. Tata motors have always have something for the lower class people with Nano being their trump card. Giving discount every month and special promotion for certain type of vehicle also one of the strong strategy use by Tata Motors. Discount can be made from Company's profit or from dealer's profit at certain range.
Tata motors has an extensive dealer network covering Indian and International markets. The channel of distribution, physical location, and dealership method of distribution and sales is generally adopted. The distribution of vehicle must be in a very systematic way, from the plant to dealer and to end user. This is not only in India itself but also to the world-wide dealership.
Tata Motors promote their products via advertising and after sales services as they have a very good reputation among the customers.
Tata Motors owe their success to the highly motivated and talented staff. Their recruitment picks from premier universities, management and engineering institutes in India, and then they put them through rigorous training programmes to excell their entrepreneurial skills and impart comprehensive product knowledge.
Tata motors follow balanced scorecard collaborative inc. for achieving execellence in overall Company performance.
• Physical Evidence
The management of Tata Motors has managed to keep their hopes alive even in the recession and hopes that the worse is behind Tata motors launching the most awaited car of the year, Tata Nano in 2008, and the company has already received 2 lakhs booking that are fully paid and the 70 percent of the applicants are ready to wait till the end of 2010 for the car to be manufactured.
What works for Tata Motors
• Most energy efficient and safest automobile plants in India.
• Minimum outsourcing
• Demand driven production, cut on plant cost, “produce on demand”.
• Strategically located manufacturing units in India, “supply on order”.
• Being suppliers, in case of low demand in house, they could continue with their production.
• Backward integration helps keep very low inventories.
• Tata CV's most trusted brand (Forbes) and easy maintenance and value for price vehicles.
• Most fuel efficient Commercial vehicles and Passenger vehicles in their respective segments.
• Excellent spare parts and a service network with 6700 touch points in India.
Value Chain Analysis
Value chain analysis are divided into 5 parts as phases which are follows as inbound logistics, operations, outbound logistics, marketing & service. In the inbound logistics part it is segregated into suppliers and contractors. Further in the operations part, tata motors look for any strategic alliances which it can be part and be associated with it. Outbound logistics can be accompanied by transporters, convoy and drivers association. Further marketing part is handle towards dealer network, marketing and research firms and vehicle financing.
Services can be done by various measure as it is can be regional warehouses, dealer workshops, distributors and TASS.
Inbound logistics can be divided into various parts, depending upon term of contract whether it is long term contract with service provider which are transporters and agents. Further there can be personnel at regional offices for over seeing the smooth and easy transit of goods.
Also the case can be made which is of transparency and monitoring. These can be done through deployment of IT. These transactions are done through SAP technology. Further DTL (daily transport logistics) supplies for critical high value items. One of the key information to use it is to be efficient storage facilities which is easy storage and retrieval.
The Organization claims various licenses and it has connected for new licenses which are pending for give in India and also in different nations. The Organization has likewise recorded various patent applications outside India under the Patent Participation Bargain, which will be successful in various nations going ahead. The Organization gets new licenses as a feature of its continuous innovative work exercises.
The Organization possesses enlistments for various trademarks and have pending applications for enrollment of these in India and in addition different nations. The enrollments for the most part incorporate trademarks for its vehicle models and other limited time activities. The Organization utilizes the "Goodbye" mark, which has been authorized to the Organization by Goodbye Children Restricted. The Organization trusts that foundation of the "Goodbye" word check and logo stamp, in India and universally, is material to its operations. As a component of the Organization's securing of TDCV, it has the rights to the ceaseless and select utilization of the "Daewoo" brand and trademarks in Korea and abroad markets for the item scope of TDCV.
There are various steps which take part in operations which can be capital equipment manufacturing division which can be tooling development capabilities of global standard. Further tata motors which have developed apprentice trainee courses. These course enables stable sources of skilled manpower which does actual provide adequate real time skills and attributes. Then to make employment engagement more efficient, an total productive management team (TPM) which has continuous drive to improve efficiencies. Many of the process which are automated manufacturing processes which help the company to be efficient.
The distribution can be attributes to various assembly units established at South Africa, Thailand, Bangaldesh and Brazil. There maintenance department is attributed to various technical capability which we used. Further it has improve its capacity utilization which makes mercedez benz cars which make use of Tata motors paint shop facilties.
It stockyards are established across all over the country. Tata motors also established long term contracts with transporters which has high volume of business to transporters which ensures competitive price. Employment opportunities are also regional sales office and vehicle dispatch section linked through SAP.
They have been efficient security system for prevention of any other kind of pilferage. The Organization has rearranged the sourcing office in India under four divisions, to be specific, Obtaining, Provider Quality, Inventory network and Generation and Arranging Administration, or PPM. The redesign was done keeping in mind the end goal to set up and characterize obligation and responsibility in the sourcing division. Obtaining administers the business parts of item sourcing; Provider Quality is principally in charge of keeping up the nature of provisions that the Organization buys; Store network directs the coordination's of the supply and conveyance of parts for its sellers while PPM supervises execution of new undertakings.
As a major aspect of the Organization's system to wind up plainly an ease vehicle maker, it has attempted different activities to diminish its settled and variable expenses. The Organization utilizes an e-sourcing activity to get supplies through turn around barters. The Organization utilizes outer offices, for example, outsider coordinations suppliers. This has brought about space and cost reserve funds. The Organization's drives to use data innovation in store network exercises have brought about enhanced proficiency through continuous data trades and preparing with its providers.
Marketing & Sales
Structured approach are required to understand the requirements of individual customers which can be QFD's conducted at regular intervals. They have clear identification of product requirements and leading to development of innovative products, example of Tata 207 DI, Tata Ace. It has pan India presence and global footprint.
Various teams for addressing the additional requirements of institutional customers which can be defense, state transport units. Quick assessment of the changing market dynamics and consumer preferences which can be example of Tata 407 LCV. Large network of dealers which use of technology which can be CRM-DMS.
It can be available for ease availability of spare parts. It is efficient collection of data from field and communication to respective manufacturing plants. Tata motors have pan India presence as well as global presence. It has large network of workshops which has dealer workshops and TASS.
They have established training facilities which can be dealer end and TASS personnel.
E procurement initiative which can be transport to various global sourcing team. Companies like tires, power, steering units etc have procured from Belarus. Further long term relationship with stable and loyal pool of suppliers are important for the business. Technology driven procurement which is very important SAP. They are providing different group resources which have Tata Steel and Tata International.
Localized supplier base is also situated at manufacturing locations which have low inventory levels. The primary materials and segments required for use in Puma Land Wanderer vehicles are steel and aluminum sheets (for in-house stamping) or remotely pre-stamped frames, aluminum castings and expulsions, iron and steel castings and forgings and things, for example, compound wheels, tires, fuel infusion frameworks, batteries, electrical wiring frameworks, electronic data frameworks and showcases, cowhide trimmed inside frameworks, for example, seats, cockpits, entryways, plastic finishers and plastic utilitarian parts, glass and consumables (paints, oils, more slender, welding consumables, chemicals, cements and sealants) and powers.
The Organization trusts it is ready to address developing requests and changing inclinations of clients in the middle of the road and light business vehicle classes with its new scope of vehicles in those classifications, as the advancing foundation in India will change the way the transportation business develops, as the Organization expected expanded interest for better quality and more agreeable vehicles.
India has developed as a noteworthy center for worldwide assembling with its favorable position of lower input costs, accessibility of neighborhood provider base and high household request. As a set up local producer, the Organization trusts that is in a perfect world set to exploit for focusing on lucrative global markets, either through completely fabricated or finish thump down fares.
What's more, the Organization trusts it additionally has the benefit of solid in-house outline and improvement offices and experts. In this manner the Organization trusts that its Research and development aggregate is equipped for creating answers for various administrative and emanation standards as per showcase requests in insignificant time.
The Organization is concentrating on expanding its worldwide nearness to support against residential downturns and also a development opportunity. While the Organization is as of now exhibit in Africa and a few sections of the Relationship of Southeast Asian Countries, or ASEAN, it is concentrating on expanding nearness in more key markets in ASEAN and Latin America. The Organization is additionally effectively considering growing its worldwide assembling impression in key global markets to exploit import obligation differentials and nearby sourcing benefits.
BUISNESS MODEL OF TATA MOTORS
Critical success factors Weight Tata Motors Toyota Honda Mahindra & Mahindra Nissan
Market share 0.20 4 0.8 4 0.8 3 0.6 4 0.8 1 0.20
Inventory system 0.10 3 0.30 4 0.4 3 0.3 4 0.4 3 o.3
Financial position 0.10 3 0.30 3 0.30 4 0.40 3 0.30 4 0.40
Product quality 0.10 4 0.40 4 0.40 4 0.40 3 o.30 2 0.20
Consumer loyalty 0.10 2 0.20 4 0.40 4 0.40 4 0.40 2 0.20
Sales distribution 0.05 3 0.15 3 0.15 2 0.1 4 0.20 3 0.15
Organization structure 0.10 3 0.30 4 0.40 3 0.30 4 0.20 4 0.40
Production capacity 0.10 3 0.30 3 0.30 2 0.20 3 0.30 4 0.40
E-Commerce website presence 0.05 3 0.15 3 0.15 2 0.1 3 0.15 2 0.1
Price competitive 0.10 4 0.4 2 0.20 2 0.20 4 0.40 2 0.20
Total 1.00 3.3 3.5 2.85 3.45 2.55
COMPETITIVE PROFILE MATRIX OF TATA MOTORS
Competitive profile matrix is a key vital management device around will look at the firm for the real players of the industry. This matrix demonstrates the clear picture of the firm around their solid focuses and also feeble focuses relative to their rivals.
Rating in CPM represent the response of firm toward the critical success factors. Highest the rating better the response of the firm towards the critical success factor, rating range from 1.0 to 4.0 and can be applied to any factor.
There are some important point related to rating in CPM.
Rating is applied to each factor:
• The response is poor represented by 1.0
• The response is average is represented by 2.0
• The response is above average represented by 3.0
• The response is superior represented by 4.0
TOTAL WEIGHTED SCORE
The sum of all weighted score is equal to the total weighted score, final value of total weighted score should be between range 1.0 (low) to 4.0(high). The average weighted score for CPM matrix is 2.5 any company total weighted score fall below 2.5 consider as weak. The company total weighted score higher than 2.5 is consider as strong in position. The other dimension of CPM is the firm with higher total weighted score considered as the winner among the competitors.
Tata Nano (Re-inventing the Business Model)
Tata Motors have established a strong position in the Indian automobile industry by launching new products, investing in research and development and therefore maintaining great financial strength. Tata Motor's goal is to position themselves as a major international automotive company by offering products across various markets by combining their engineering and other strengths through strategic acquisitions.
Tata Motors aims to emerge as the world-class automobile leader with the remarkable price-performance ratio in combination with hyper-efficient engines to acquire the large market share internationally. Tata Motors' mission is to create an organisation that people enjoy working for, doing business with and investing in. It focuses on customer needs to provide them a range of innovative products and maintain long-term relations, by working closely with its workforce and business partners. The company's purpose is to consistently create shareholder value by generating greater returns and to foster long lasting ties with the vendors and channel partners
Tata Motors unmatchable ability to manufacture low cost vehicles provides the company with a greater scope of earning high profit margins and enjoys a greater market share. Economic slowdown has hyped the competition to provide low priced but the best quality vehicles. Understanding rural Indian economy and growing incomes of the farmers, Tata Motors view increased opportunities for its commercial sector. Tata Motors have remarkable advantages of manufacturing in India when compared to other MNC competitors. It benefits from the low labour cost, extensively skilled and interwoven backward and forward linkages, boosting IT engineering, strong auxiliary industry, substantial knowledge of the market, improving infrastructure and increasing domestic demand. Tata Motors aspires to be a world-class maker of quality vehicles by striking balance between the needs of its customers, employee, suppliers, investors and the community as a whole.
Tata's Product & Brand Strategy
Tata Motors follows a sub brand strategy. Although there is no separate brand for Tata motors as such but the Tata brand is used as a mother brand. All products of benefit from the association with the Tata brand, which in India stands for trust and reliability. Tata motors product can be categorised: Passenger Cars, Utility Vehicles, Trucks and Commercial Passenger Carriers. The product strategy in Tata motors has been driven by two primary objectives- Identifying the market need and creating new market segments. The success stories in the past two decades such as Sumo, Ace and Indica have been able to fulfil these overall objectives.
The strategy adopted behind these products also reflects the commitment of Tata Motors to customer needs and new product innovation. The company has also exported its vehicles after creating customised variants which have higher payload and engine capacity. It has also customised its domestic products by introducing passenger option, higher payloads and bigger enemies etc.
Tata Motors have a pricing advantage due to its low cost leans manufacturing abilities. The in-house steel company acts a shock absorber against steel price fluctuations. The price methodology is that of a perceived value pricing
Tata Motors uses extensive promotion for its passenger car segment. The Utility vehicle and commercial passenger carrier follow this segment based on Share of Voice.
Tata Motors has a large network of dealers and stockyards, all across the globe and uses the DMS technology of efficient cooperation between these dealers. Its distribution network includes operations in India, Nepal, Bhutan, Ghana, Italy, Poland, South Africa, Spain, Sri Lanka and Turkey. The company's dealership, sales, service and spare network comprises over 3500 touch points.
Tata Motors also has manufacturing and assembly units at South Africa, Thailand, and Bangladesh, Brazil apart from India. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Patnagar (Uttarakhand) and Dharwad
• TATA Motors have acquired Daewoo Commercial Vehicle Company in 2004, this acquisition gave Tata Motors a significant presence in the Korean market.
• The acquisition of Jaguar and Land Rover has thrown them into the luxury car business for the first time.
• TATA Motors is located in India. Tata can take advantage of the fact that manufacturing labour cost is only eight to nine percent of sales in India, compared to 30 to 35 percent of sales in developed countries.
• India is one of the world's largest producers of automotive components which give Tata Motors direct access to many of these components.
• Being a local car manufacturer Tata has higher bargaining power with suppliers. Tata Motors has been able to leverage Indian automotive market because the current increase in demand due to the improvements in infrastructure and growth of population and disposable incomes in India.
• In December 1997, the Indian government launched policies that require foreign carmakers to invest at least 50 million dollars in equity to set up manufacturing operations in India. This means that Tata Motors is able to take advantage of the low cost of labour, land assets, and overall investment practices without having to implement this 50 million dollar investment.
• It has always prospered and grown in only developing markets for over 70 years which is being the biggest competitive advantage for Tata Motors. Tata Motors has implemented programs that allow it to prosper while maintaining low costs and high profits.
• Tata Motors has a competitive advantage since they are part of the larger Tata Group. Tata Group supplies Tata Motors with access to knowledge, resources, technology and companies operating in many different industries worldwide allowing innovation and easy availability to access other sources.
1) Effects of government policies on Tata motors –
In the past effect of Government Policy on TATA Motors CV Division Commercial Vehicles segment sector has been at the forefront of the strong showing by the automotive industry over the past few years. Following changes have led to growth in sales:
• Reducing excise duty has enabled manufacturers like TATA Motors to reduce prices.
• The attractive financing offers and freebies enabled by low interest rate policies by Government
• The need to transport higher volumes of industrial goods
• Uttarakhand plant enjoys an exemption of excise duty (otherwise – 16%) for initial 10 years
• Singur plant enjoys exemption from income tax for initial 5 years
• TATA Motors have experience and resources from 5 continents across the globe, thus when any variable changes in the market they can gather information and resources from all over the world to address any issues.
• Tata Motors and its parent company, the Tata Group, are ahead as far as technology field is concerned. The Tata Group as a whole has over 20 publicly listed enterprises and operates in more than 80 countries world-wide.
• Huge demand in domestic market: There is huge demand in domestic markets due to infrastructure developments and Tata Motors is able to leverage its knowledge of Indian market.
• High economic growth: After 1991 economic liberalisation, India achieved 6-7% average GDP growth annually. In FY 2015 and 2017 India's economy became the world's fastest growing major economy surpassing China. . This results in prosperity and creates demand for Tata Motors' products.
• Reduction in taxes: The cut in tariff on petroleum and diesel will make commercial vehicles more economical
• Labour cost advantage: Cost advantage as labour cost is 8-9 per cent of sales as against 30-35 per cent of sales in developed economies. This results in lower production cost and higher margins for Tata motors' products.
• Employment Generation: It employs a total of approximately 60,000 people according to March 31st 2016. It's the largest automobile company in India.
• Social Image: Tata Motors has bagged a number of awards in certain categories which show that the society's image of it is very favourable.
• TATA Motors has set up its R&D centre in UK by the name of Tata Motors European Technical Centre. This centre will provide engine development and support services.
• Tata Motors has also signed an agreement with engage next iSourcing which will shift to delivery based from staff accumulation one and this will also help to streamline activities, fasten the process of advancement and development at Tata Motors.
• Engage next will help Tata Motors to deliver against a set of standards and measures.
Comments, suggestions and learnings
The study shows a brighter future for the automobile industry in India. However, vigorous scope for the development of this market has attracted many players. Availability of numerous alternatives and substitutes has further increased customer's expectations. Also, the growing youth market comprises of the experimenters, who desire up gradations and new innovations in their possessions. All these analyses provide Tata Motors to become more sensitive to the needs of the buyers and ensure is execution much before the rivals. The company must constantly explore new markets and ensure new innovations because the risk takers are the profit makers. Over and above the company can segment the market and have something for everyone in order to capture a major proportion of the market.
Understanding the immense competition where every automobile company is fighting to become the best, Tata Motors is required to build additional competencies. The brand must stabilise its position as a leader in the commercial vehicle market and set new trends in the passenger. The recommended differentiation strategy will give the company a leading edge through its careful implementation and execution.
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