Management 3800

Group 6
Sean Politte
Olivia Pollard
Taylor Rothgeb
Megan Tyrie
Tim Wilson

May 20, 2008

INTRODUCTION...........................................................................................................................3
CURRENT SITUATION.................................................................................................................3
Company Overview.............................................................................................................3
Corporate Governance.........................................................................................................5
Financial Position.................................................................................................................6
CORE COMPETENCIES................................................................................................................7
Research & Development....................................................................................................7
Acquisitions, Mergers & Expansion....................................................................................9
Organization Location.......................................................................................................10
PEST..............................................................................................................................................11
Political..............................................................................................................................11
Economic...........................................................................................................................13
Social..................................................................................................................................14
Technological.....................................................................................................................15
SWOT ANALYSIS.......................................................................................................................16
Strengths............................................................................................................................16

Weaknesses........................................................................................................................17
Opportunities......................................................................................................................18
Threats................................................................................................................................19
CAPITALIZING ON TATA MOTOR’S SUCCESS....................................................................20
CONCLUSION..............................................................................................................................21
WORKS CITED............................................................................................................................22
APPENDIX A, B, C, D, E.............................................................................................................24

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3
INTRODUCTION

Established under the parent company, Tata Group, in 1945, Tata Motors Limited has

become India’s largest automobile company. It was the first Indian automobile company to list

on the New York Stock Exchange. Tata Motors began manufacturing commercial vehicles in

1954 with a 15-year collaboration agreement with Daimler Benz of Germany. This partnership

has led Tata Motors to not only become India’s largest automobile company but also India’s

largest commercial vehicle manufacturer; the world’s top five manufactures of medium and

heavy trucks and the world’s second largest medium and heavy bus manufacturer. Having just

entered the passenger vehicles market segment in 1991, Tata Motors now ranks second in India’s

passenger vehicle market.

Tata has enjoyed the prestige of having developed Tata Ace, India’s first indigenous light

commercial vehicle; Tata Safari, India’s first sports utility vehicle; Tata Indica, India’s first

indigenously manufactured passenger car; and the Nano, the world’s least expensive car. A full

timeline of Tata Motors Limited is supplied in Appendix A.

CURRENT SITUATION

COMPANY OVERVIEW

The Tata Motors group is a passenger and commercial vehicle manufacturer based in

India. The motor group was established in 1945 as part of the larger Tata Group. They have

long been known for their commercial vehicles and in the past ten years entered into the

passenger car market. Currently, Tata Motors has a line of five passenger vehicles and a large

line of commercial vehicles producing pickups, trucks, tractor trailers, tippers, and buses. Both

product lines of the Tata Motors group have seen success, but much of this has been built upon

the more deeply established commercial vehicle product line.

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 Tata Motors commercial line has been established for several years in many market

segments such as Europe, Africa, The Middle East, Australia, Southeast Asia, and South Asia.

Tata Motors has expanded their business and market share around the world through a series of

acquisitions. In 2004, they acquired Daewoo commercial vehicle Company in South Korea

which was South Korea’s second largest truck manufacturer. This acquisition gave Tata Motors a

significant presence in the Korean market. They have also entered into joint ventures with

companies such as Thonburi Automotive in 2006, which allowed them to manufacture and

market pickup trucks in Thailand. “We think it makes sense for Tata to expand through

acquisition (as it did in tea and steel) than spend a decade to build the business” (Lehman

Brothers). The commercial vehicle area of the business has certainly been how Tata Motors

have built their reputation, with commercial vehicles accounting for 80-85% of company profits.

They are beginning to employ a similar technique as they now expand into the passenger car

business.

Tata Motors have been making global headlines in the auto industry lately; the largest

news being their acquisition of Jaguar and Land Rover from Ford. “Tata paid 2.3 billion dollars

to Ford for the two brands that cost Ford 5.3 billion” (Carty, USA Today). This is a major step

for the company because it catapults them into the luxury car business which they are not known

for at this time. Tata, like many new businesses it acquires, is allowing this new segment of the

business to be run by previous management since they have more experience in the luxury

automotive business. “Tata will give us some space. They want us to run our business, be a

premium British car company” (Mike O’Driscoll, managing director of Jaguar). This is yet

another large acquisition for the Tata Motors group and could create great success for the

company in the near future.

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 Furthermore, Tata Motors made another large announcement regarding their progress in

the passenger vehicle segment. In January they announced that they, “would release a $2,500 car

that could replace the motor scooters commonly used in developing countries to cart around

whole families” (Carty, USA Today). This is a major break through in the automotive industry

and shows how far reaching, diverse, and competitive the Tata Motors group is becoming. Soon

they will be serving customers in the high-class luxury market while still catering to their older

niches in developing countries.

CORPORATE GOVERNANCE

Since Tata Motors is a part of a large conglomerate company it needs to have a strong

corporate governance to ensure that its employees act ethically and the business continues to run

smoothly especially during the ever changing and dynamic global economy. “Tata Group’s

corporate governance is founded upon a rich legacy of fair, ethical, and transparent governance

practices” (tatacarsworldwide.com). One of the more important parts of this is the transparency

of the company people have a right to know what the company is doing not only to ensure ethical

practices, but for the insurance of their many shareholders whom have a right to know the inner

workings of the company. A full list of top management is visible in Appendix B.

Tata has created some models for employees to guide themselves through everyday

business practices to ensure that the corporate governance is continuously being upheld. The

Tata business excellence model is upheld by Tata quality management services. Quality

management is an in-house group dedicated to helping the various Tata companies achieve their

business objectives through specific processes. The two main processes that the quality

management services employees focus on are business excellence and business ethics. These

two objectives have helped build Tata into the strong, dynamic company it is today. These

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models are entrenched in the company’s ethnical standards and Tata feels strongly about

enforcing both throughout the company. “Tata quality management services plays the role of

supporter and facilitator in the journey that Tata enterprises undertake to reach the peaks of

business eminence while, at the same time, adhering to the highest ethical standards” (Tata.com).

To further prove their commitment to quality and ethical practices Tata has introduced

annual quality awards for those companies conducting business with the utmost quality. These

awards are called the JRD quality value awards named after the late chairmen JRD Tata. These

awards are presented annually on July 29th, the birthday of JRD Tata. Tata has committed to

ensuring quality and ethical standards not only within Tata Motors, but throughout their many

other branches and sectors of the Tata Group. They have done so by benchmarking quality

standards through the Tata business excellence model as well as providing incentives for

companies to strive to improve the quality of their service, by awarding JRD quality

management awards.

FINANCIAL POSITION

Tata Motors have increased its earnings over the years through their various acquisitions

and joint ventures with truck manufacturers in Southeast Asia. Gross profit in the year 2006 was

1,160.9 million and increased to 1,510.1 million in the year 2007. Earnings after taxes also

increased significantly between 2006 and 2007 increasing from 336.6 million to 405.5 million in

2007. After a large drop in revenues from 2004 to 2005 when the company first went public on

the NYSE (stock prices from May 1-22, 2008 can be found in Appendix C), it has been

increasing revenues greatly annually, from 4,422.0 million in 2005 to 7,354.0 in 2007. Tata

Motors income statement, balance sheet and statement of cash flows along with other key

statistics can be found in Appendix D.

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CORE COMPETENCIES

Tata Motors is able to maintain, as well as increase, their market share by capitalizing on

their core competencies. Tata Motors is active, competitive, and dynamic in all aspects of the

automotive industry, which means that there must be many different activities going on in all

areas of the company. As a result of the ever evolving automotive industry Tata Motors must

always be changing and one way to stay at the forefront of the industry is to make continuous

improvements in technology through research and development. One way that Tata Motors has

done this is by producing one of the most efficient and low cost vehicles on the market.

Acquisitions, mergers, and expansion is another core competency that Tata Motors has is

embedded in their company structure and philosophy. Another core competency that Tata

Motors holds is being located in the India. This location has allowed them to understand not

only the Indian market but also the dynamics of emerging and developing markets. This market

understanding and knowledge allows Tata Motors to manufacture their products at lower costs,

sell them to emerging markets while making profits as well as take advantage of the strong labor

base in India.

RESEARCH AND DEVELOPMENT

One factor to Tata Motors success is their constant advances in automobile technology

through research and development. There is a high emphasis on thorough research that provides

the much-needed inspiration for the birth of new ideas, which in turn breathes new life into

products. They employ approximately 1,400 scientists and development officers. Tata Motors

has several research and development centers in India. The Research Center at Jamshedpur and

the Engineering Research Center in Pune are among the finest in the country (Tata.com). They

possess forums to develop and test durability, engine performance, emission, safety, design and

8
style, noise, hydraulics, tracks, and instrumentation. Both have won numerous national awards in

research and development efforts since their inception in 1966.

Through these advanced research centers Tata has created sophisticated emission

measurement systems and digital prototyping laboratories. Some other technologies that are part

of Tata Motors’ arsenal are those that offer improved electronic controls for engine systems and

other “vehicle drive-train and chassis systems” (Tata.com). The company is currently focused on

equipping vehicles of the future with technologies for improving communication, navigation and

entertainment. One example of these technological improvements is highlighted in the OneCAT

(Appendix E). This concept car is a fiberglass vehicle that virtually powered by air and is

emission free. The OneCAT weighs only a 350 kg and has a piston engine that runs on

compressed air. This car can run between 200 to 300 kilometers on one Euro of compressed air.

A spokesman for Moteur Development International, a company that partnered in the

development of this car said, "The engine is efficient, cost-effective, scalable, and capable of

other applications like power generation," (Autopartswarehouse.blog.com) This car is truly a

representation of the next step in green automobiles. The car’s engine’s emission can be used as

an air conditioner in the cabin. This car is very futuristic and is still in the development stages:

“Nonetheless, Tata and Moteur Development International are confident that

Some of Tata Motors other technological advances can be seen in the new car the Nano

nicknamed the People’s Car (Appendix E). This car, which is just emerging into the market, is

the world’s cheapest car. Tata Motors achieved this is through using new materials such as, re-

engineered plastics and modern adhesives. It will revolutionize the auto industry in India and

9
soon in other emerging markets when Tata starts exporting. The Nano was able to achieve its

low price and gain the attention of the entire automotive industry through its advances in

materials and adhesives technology.

ACQUISITIONS, MERGERS & EXPANSION

Like other companies, Tata Motors is always growing and expanding and the main way

they do this is through acquisitions and mergers. Since 2004, Tata Motors has merged or

acquired all of or at least part of four different companies. In March 2004, Tata Motors acquired

100 percent of the Korean based Daewoo Commercial Vehicle Company, Korea’s second largest

truck maker, for 102 million dollars. Rather than using de-culturation or assimilating Daewoo,

Tata took an integrated approach, and continued building and marketing Daewoo’s current

models as well as introducing a few new models globally just as it had been done under Korean

management.

In February 2005, they acquired 21 Percent of Hispano Carrocera, Spain-based company,

for 12 million Euro. In April 2005, Tata Motors Limited merged with Tata Finance, and lastly in

March 2008 Tata paid Ford Motor Company 2.3 billion for Jaguar and Land Rover companies

(Tata.com). These acquisitions and mergers allow Tata Motors to break into foreign markets and

develop a much larger share of the automotive industry.

It also helps them attain the knowledge, technology, and programs that allow them to

succeed in that particular sector of the automotive industry or in a particular region or culture.

For instance, the purchase of Jaguar and Land Rover allows Tata to enter into the luxury car

market without having to research the market, build the technology, among other important

aspects of getting into a new market segment. It further helps them enter into the very

competitive and highly desirable mature markets in Europe and in future hopes of securing

10
market segments in the United States. Tata Motors is currently in a growth stage as stated on

their website: “Tata Motors Ltd is in a mega expansion mode. The investments would be in

product development, capital expenditure in capacity enhancement, domestic and international

acquisitions and mergers” (Tata.com).

ORGANIZATION LOCATION

Tata Motors is located in the developing country of India. This location has been and will

continue to be vital to Tata’s success. In India, Tata can take advantage of the fact that

manufacturing labor cost is only eight to nine percent of sales, compared to 30 to 35 percent of

sales in developed countries. In addition, India is one of the world’s largest producers of

automotive components which give Tata Motors direct access to many of these components. Tata

has higher bargaining power with suppliers because it is a local, not foreign, car manufacturer.

Tata Motors is 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. The Society of Indian Automobile Manufacturers stated, “India, where some 1.4 million

new cars are sold each year, is also a hugely attractive market for dozens of car companies and

most of them can’t risk ignoring what appears to now be a potent competitive advantage for Tata

Motors. India’s car market is expected to touch 2.2 million units a year by 2010”

(Livemint.com). Additionally, the India government has made protectionist polices and

regulations that are extremely favorable to Tata. In December 1997, the Indian government put

in place 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 labor, land assets, and overall investment practices without having to

implement this 50 million dollar investment. Finally, Tata Motors largest competitive advantage

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is that it has prospered and grown in only developing markets for over 70 years. Tata Motors has

implemented programs that allow it to prosper while maintaining low costs and high profits.

Lastly, Tata Motors has a competitive advantage simply because 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.

PEST ANALYSIS

POLITICAL

Since Tata Motors operates in multiple countries across Europe, Africa, Asia, the Middle

East, and Australia, it needs to pay close attention to the political climate but also laws and

regulations in all the countries it operates in while also paying attention to regional governing

bodies. Laws governing commerce, trade, growth, and investment are dependent on the local

government as well as how successful local markets and economies will be due to regional,

national and local influence.

On March 26, 2008, Tata Motors reached an agreement with Ford to purchase Jaguar and

Land Rover. In order to be capable of this acquisition, Tata Motors must have a full

comprehension of the governing bodies and laws regulating commerce in the home country, the

United Kingdom, but also in countries Jaguar and Land Rover operate in.

In accordance, Tata’s headquarters in Mumbai, India, strictly controls and regulates

operations in all dealerships and subsidiaries, in addition to knowing and abiding by all labor

laws in the multiple countries where they have manufacturing plants it has to watch political

change. This will be especially vital in the future as Tata Motors continues to expand and grow

into new markets. “While currently about 18% of its revenues are from international business,

12
the company's objective is to expand its international business, both through organic and

inorganic growth routes” (Tata.com). The foundation of the company’s growth internationally is

a deep understand of economic stimulation, customer needs, and individual government

regulations and laws. Although it is the headquarters ultimate responsibility to make sure each

individual office and branch is operating and abiding by the local laws, it will become

increasingly more important for that duty to be taken care of at the regional or even local level.

ECONOMIC

Operating in numerous countries across the world, Tata Motors functions with a global

economic perspective while focusing on each individual market. Because Tata is in a rapid

growth period, expanding or forming a joint venture in over five countries world-wide since

2004, a global approach enables Tata Motors to adapt and learn from the many different regions

within the whole automotive industry. They have experience and resources from five 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. For instance, if the price of the

aluminum required to make engine blocks goes up in Kenya, Tata has the option to get the

aluminum from other suppliers in Europe or Asia who they would normally get from for

production in Ukraine or Russia.

Tata Motors also has to pay close attention to shifts in currency rates throughout the

world. Currency fluctuations can equate to higher or lower demands for Tata vehicles which in

turn affect profitability. It can also mean a rise in costs or a drop in returns. But they also have to

pay attention to not just the domestic currency, the rupee, but also to the dollar, euro, bhat, won,

and pound, to just name a few. Just because the rupee is strong against the dollar does not mean

13
it is strong against all the other currencies. Attention to currency is important because it

influences where capital investment will develop and prosper.

SOCIAL

Undoubtedly, the beliefs, opinions, and general attitude of all the stakeholders in a

company will affect how well a company performs. This includes every stakeholder from the

CEO and President, down to the line workers who screw the door panel into place, from the

investor to the customer, the culture and attitude of all these people will ultimately determine the

future of a company and whether they will be profitable or not. For this reason, Tata Motors

tends to use an integration and rarely separation technique with foreign companies they acquire.

On the other hand, some economic issues that Tata Motors face must also be looked at

from a more localized perspective. For instance, the market in India for cars is much different

than the market for cars in Italy. For one, India has over one billion more people than Italy does,

thus the market is much larger or not as limited. Second, you must also take into affect the

demographics and the average income of each market. Italians have a higher average income per

capita than Indians and Italian citizens tend to drive larger and fancier cars. For this reason, the

Tata Nano might not do so well in the Italian market. In summation, Tata Motors views the

economy from a global perspective with operations across the entire globe; however, they must

also maintain a local market understanding and knowledge when it comes to product positioning

and placement throughout the different markets Tata conducts business in.

In 2004, Tata Motors acquired Daewoo Commercial Vehicles Company, which was at

the time Korea’s second largest truck maker. Rather than using de-culturation or assimilating

Daewoo, Tata took an integrated approach, and continued building and marketing Daewoo’s

14
current models as well as introducing a few new models globally just as it had been done under

Korean management.

With the new acquisition of Jaguar and Land Rover, Tata will have to be careful with

how they handle the acquisition. While Land Rover is thriving while under the helm of Ford,

Jaguar was more of the trouble child. “Jaguar cost Ford some $10 billion during its 18-year

stewardship and its sales were in headlong decline, especially in America, its most important

market. Industry analysts also struggled to see what value Tata could add that had eluded Ford,

and what synergies there could be between a maker of trucks and basic cars… and two luxury

marques.” (Economist). Separation could be a good approach for the immediate future to keep

the name of Jaguar and Land Rover distinguishable and associated with the luxury automobile

market. Overall, Tata does a good job of integrating some aspects of their large multi-national

conglomerate into new acquisitions; however, the company must also understand that separation

from the name Tata can be valuable in some social areas.

TECHNOLOGY

Tata Motors and its parent company, the Tata Group, are ahead of the game in the

technology field. The Tata Group as a whole has over 20 publicly listed enterprises and operates

in more than 80 countries world-wide. This equates to Tata Motors having lots of experience and

resources to draw from for research and development purposes. “The foundation of the

company’s growth is a deep understanding of economic stimuli and customer needs, and the

ability to translate them into customer-desired offerings through leading edge R&D” (Tata).

Employing 1,400 scientists and engineers, Tata Motors’ Research and Development team is

ahead of the pack in India’s market and right with the rest of the field internationally. Among

Tata’s firsts are “the first indigenously developed Light Commercial Vehicle, India's first Sports

15
Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger car,” as well

as the increasingly famous Tata Nano, which is projected to be the world’s cheapest production

car (Tata). In the automotive industry, it is becoming increasingly crucial for manufacturers to

stay on top of the technology curve with new problems always rising such as escalating gas

prices and pollution problems. Tata recognizes this and dedicates lots of resources and time into

research and development to be even with or preferably ahead of other competitors, global

trends, and changing economies. In all, an automobile manufacturer must change, adapt, and

evolve to stay competitive in the automotive game, and this is exactly what Tata is doing with

their rapid growth, and extensive research and development.

SWOT ANALYSIS

STRENGTHS

Tata Motors excels when it comes to innovation through intensive research and

development. Their ability to make the least expensive car on the market, the Nano which will

retail for $2,500, is far beyond what any other car dealership has created. This innovation gives

Tata Motors their main competitive advantage. Tata Motors makes everything from tractor-

trailers to the world’s least expensive car. This product diversity grants them a competitive

advantage over their competitors because they can satisfy more markets and customer needs.

Another strength that Tata Motors possesses is high corporate responsibility. They donate a

portion of their profits from stock increases towards a specific charity. This highlights Tata

Motors overall desire for community improvement while also emphasizing Tata Motors’ high

morals and values which is something money can not buy.

Tata Motors is also a very eco-friendly company. One of their goals is to produce an

emission friendly car, and in 2000 Tata Motors launched the first compressed natural air bus.

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This air bus requires the owner to plug the car into a standard electric plug for four hours to fill

the air tanks. This brought the concept of an “air-car” to reality and the name for this

compressed natural air car is “OneCAT.” OneCAT has no gas costs or fossil fuel emissions

which makes it a very attractive car for the more mature markets but also the upper classes in

developing countries at this point. It is also a great car to have in highly populated countries,

such as China and India, because pollution with its adverse effects is a very large concern.

OneCAT also is more efficient that any other present Hybrid car, so when inventors think they

have the best product out on the market, they actually do not. There will always be something

else to invent or improve on and Tata Motors is a prime example of that.

Tata Motors is unique in a way in which when it buys a company. Tata Motors keeps the

original management of that company intact. The company that Tata Motors purchases will look

exactly the same in terms of management and organizational structure as if it was never

purchased by Tata Motors.

WEAKNESSES

There are strings attached with every new invention and improvement on products.

These strings are Tata Motors weaknesses and what other groups perceive as their weaknesses.

One weakness that Tata Motors faces is its inability to meet safety standards. Although they

have made the most inexpensive car out on the market, it has yet to pass all the safety standards

which is a legal factor. Some consumers and pessimists inquire as to how Tata Motors can make

such a cheap car and withstanding a car accident or not just falling apart after hitting something

once. Pessimistic people also want to believe that car manufactures are already doing everything

they can to keep costs low for the consumer, and if that is the case, then putting the cheapest car

out on the market automatically questions if it is safe to drive.

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 Tata Motors only have been making passenger cars for the approximately last ten years.

This can be viewed as a weakness from a customer standpoint since a decade does not seem like

a lot to consumers and therefore they will think that Tata Motors is inexperienced car

manufacturing. Consumers will wonder how a car manufacturer can be in the market for 10

years and produce the cheapest car out on the market. How can Tata Motors manufacture such

a cheap car that meets emission and safety standards being so young? This causes consumers to

be skeptical.

Another weakness that Tata Motors faces is within its domestic market. Car sales in

India are less than 1 million annually. This draws a problem because Tata Motors may not get

the sales that the company hopes for and how can they sell cars to people who are not buying

cars?

The new and innovative OneCAT still has some rough spots that need to be worked out

and one of them is that it has pollutant emissions and greenhouse gas emissions from the

generation of electricity used to compress the air. So although it is marketed as being emission

free, it technically is not and this is another weakness. Also, OneCAT only goes 62 miles per

hour for 56 miles in an urban cycle. This is not very far and Tata Motors will have to improve

on this weakness as well as the emission weakness in order to draw more comsumers to this new

automobile.

OPPORTUNITIES

Tata Motors has already opened the doors for many new and innovative ideas, but not

only for their company, but their competitors as well which could turn into a threat. One of the

major opportunities that Tata Motor faces is that as of right now 90 percent of China and India’s

adult population do not own cars, partly because cars are costly and require more expenses after

18
purchased. So the market for a low-priced car is huge which benefits Tata Motors perfectly

since they produce the lowest priced car on the market. This is a huge opportunity for Tata

Motors because if they can get their feet into that market of people that do not have cars because

they cannot afford them, then they will make large profits down the road. China’s total car sales

are estimated at over 8 million dollars annually and they were the world’s second largest car

market in 2006. China’s government forecasts that demand for cars will top 20 million by 2020.

With Tata Motors in the market with the cheapest car, China’s demand for cars will probably

increase even more significantly which will in turn increase sales for Tata Motors.

Japan, North America, and Europe automobile sales went up over the years because of

demand for smaller cars increased. This demand for smaller cars is a great window of

opportunity for Tata Motors because not only are their cars small, but they are cheap and

environmentally friendly as well. Once people in these countries get Tata Motor automobiles

then their automobile sales will continue to rise.

As of March 2008 Tata Motors finalized a deal with Ford Motor Company to acquire the

British businesses, Jaguar Cars and Land Rover. This is a huge opportunity for Tata Motors

since they will acquire the large knowledge base and technologies for producing and marketing

luxury vehicles. This acquisition helps them dive into the more mature markets in Japan, Europe

and the U.S. The knowledge transfer from these two companies will greatly improve Tata

Motors ability to continue to grow and flourish in both developing and developed market

segments.

THREATS

The obvious threat to Tata Motors is intellectual property rights. Tata invented the

cheapest car on the market and every automobile manufacturer wants to know how Tata did it.

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Headhunters are soon going to find out this valuable information and make it available to their

own company. This is a huge threat to Tata Motors because at first they had low competition,

but once other car manufactures find out how they invented such a low cost car, and then these

companies too will jump on board and design their own line of low cost automobiles. On one

hand this can be a threat, but on the other it may not affect Tata Motors at all because people will

still want to purchase their product since they were the pioneers of all the excitement.

Other companies are starting to compete for some of this market share. In fact, the

Pakistan’s Transmission Motor company has built a basic four-wheeler for only $2,100. This car

is considerably cheap and the Pakistan Transmission Motor company started exporting them to

Sudan, Qatar, and Chile. This is going to be the beginning of new emerging car manufactures

that will be producing low priced cars.

Another obvious threat is that dealing with gas prices. Gas prices continue to rise and the

Nano requires gas, but those who purchase the Nano probably do not have a lot of money and so

if gas prices keep jumping up then that market of consumers will not be able to purchase the car.

If OneCAT can be made as cheaply as the Nano then that will benefit the consumers even more

because they will get a car that does not run on gas and it will be cheap to purchase. On the

other hand, gas company will not want OneCAT to hit the market because there will be no

profits to be made off the vehicle. Gas companies have a lot of say over the automobile industry

so this could be a big threat.

Another main concern that Tata Motors faces is that cheap cars in India will have an

adverse effect on pollution and global warming because most of the population will be able to

afford the cars. With more people driving cars there will be more accidents and deaths, as well

20
as higher fossil fuels leaked into the environment causing even more pollution then there already

is.

Tata Motors is family owned and this can potentially cause problems down the road

because some family members can become greedy and money hungry. Once they really start to

rapidly grow then there may be family feuds and people not pulling their part.

Another threat is the whole point of their cars being made with cheap plastic. Are these

cars durable? Will they hold together in a head-on collision? As off August 2007 there was no

further information on this topic though.

CAPITALIZING ON TATA MOTORS’ SUCCESS

Arguably, one of the most significant aspects of a business’s strategy is constant

environmental scanning, or looking for opportunities that will either help a business grow or

salvage plummeting profit margins and stock values. In the case of Tata Motors, and the

creation of the Nano and OneCAT from a line of service and military vehicles provide a variety

of different ways for other companies as well as other industries to capitalize on the success that

Tata has realized. There are three main avenues that businesses can take to exploit the success

that Tata Motors has generated. First, through acquisitions and mergers, like early discussed,

Tata integrates the management, programs, and knowledge of the businesses it buys out.

Secondly, Tata Motors places heavy investment into research and development. These two points

have been discussed extensively throughout this report so please refer to the previous sections:

Core Competencies and the SWOT Analysis. Finally, Tata understands and has succeeded in

growing, profiting, and reducing costs in developing markets for over half a century.

Tata Motors, like its parent company Tata Group, has much knowledge and

understanding in working in developing markets and countries. Companies considering

21
expanding into developing markets should consider forming a joint venture or partnership with

any of Tata Group’s numerous industries. The knowledge transfer can save time and money and

further ensure a more successful expansion.

CONCLUSION

Tata Motors is an overall strong company that has found strength and expansion through

its parent company, Tata Group, but also through its numerous acquisitions and mergers.

Although Tata Motors stock prices have fallen since the start of the 2008 year due to suggestions

that Tata Motors is overreaching by adding luxury brands to pair with the Nano, the world's

cheapest car. Chairman of Tata Group, Ratan Tata, rejects suggestions that, ``We're not trying to

be a global player,'' he told reporters in New Delhi Jan. 10 after unveiling the Nano, which will

be built in a new plant costing 10 billion rupees ($249 million). ``We will grow internationally in

select markets'' (Krishnamoorthy).

22
 Works Cited

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<www.usatoday.com>.

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2008 <http://wheels.blogs.nytimes.com/2008/01/11/can-detroit-be-relevant/>.

"Corporate Governance." Tata Group. 13 May 2008 <www.tata.com>.

David, Ruth. "Tata Motors: Ready to Take on the World?" 13 May 2008 <www.forbes.com>.

Korzeniewski, Jeremy. "A New Agreement Between Tata Motors and MDI Bring the Air-Car

Closer to Reality." AutoblogGreen. 21 Mar. 2007. 03 May 2008

<http://www.autobloggreen.com/2007/03/21/a-new-agreement-between-tata-motors-and-

mdi-bring-the-air-car-cl>.

Krishnan, Ravi. "Tata Small Car Throws a Big Punch." Livemint.com. 11 Jan. 2008. 22 May

2008 <http://www.livemint.com/2008/01/11001158/Tata-small-car-throws-a-big-

pu.html>.

Krishnamoorthy, Anand. “Jaguar Purchase Drives Tata Motors Shareholders to End Holdings.”

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pid=20601091&refer=india&sid=aYHS5AD.zR5c>.

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<http://www.tata.com/0_about_us/tatam&as.htm>.

23
"Morningstar Quicktake Report." 12 May 2008 <ww.morningstar.com>.

Murph, Darren. "Ndia's Tata Motors Developing Uber-Cheap Plastic Automobile." Engadget. 20

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May 2008 <http://www.india-defence.com/reports-3099>.

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<http://www.iht.com/articles/2007/12/17/business/ford.php>.

Appendix A

Tata Motors Timeline:

24
1945- Tata Engineering and Locomotive Co Ltd (TELCO) is set up as a locomotive maker at the
end of World War II

1954- Company shift to making trucks in a joint venture with Germany’s Daimler-Benz

1961- Exports begin with the first truck begins being shipped to Ceylon (present-day Sri Lanka)

1977- First commercial vehicle manufactured in Pune

1983- Manufacture of heavy commercial vehicles commences

1986- Production of first light commercial vehicle

1991- Launch of the first passenger car, the Tata Sierra. One millionth vehicle rolled out.

1994- Enters joint venture to make Mercedes Benz cars in India

1999-Beings production of India’s first fully indigenous passenger car, the Indica

2002-Ends joint venture with Daimler

2002-TELCO is renamed Tata Motors Ltd.

2003-Tata Motors Ltd. Announces plan to build world’s cheapest car for 100,000 rupees (1,250
pounds or 2,500 dollars)

2004- Acquires South Korea’s Daewoo Commercial Vehicle Company and is listed on the New
York Stock Exchange

2005- Buys 21 percent stake in Spanish bus maker Hispano Carrocera SA, launches mini-truck,
the Ace

2006- Signs initial agreement with Fiat

2008- Unveils one-lakh (100,000 rupee) “People’s Car” also know as the Nano. Acquires Jaguar
and Land Rover.

Appendix B

Top Management of Tata Motors Ltd.

Name Age Since Current Position

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 Sait, Zackria -- 2007 Vice President - Technical Services
Mani, Shyam -- 2007 Vice President - Sales & Marketing, CVBU
Rajarao, M. -- 2007 Vice President - Manufacturing, Pune
Girotra, K. -- 2007 Vice President - Lucknow Works and FBV
Tambe, S. -- 2007 Vice President - Human Resources
Thakur, R. -- 2007 Vice President - Finance
Gurav, P. -- 2007 Vice President - Corporate Finance - Accounts and Taxation
Krishnan, S. -- 2007 Vice President - Commercial, PCBU
Dube, Rajiv -- 2007 President - Passenger Cars
Arya, A. -- 2007 President - Heavy and Medium Commercial Vehicles
Mehta, V. 73 1998 Non-Executive Independent Director
Wadia, N. 63 1998 Non-Executive Independent Director
Palia, Sam 69 1998 Non-Executive Independent Director
Soonawala, N. 72 1989 Non-Executive Director
Irani, Jamshed 71 1993 Non-Executive Director
Gopalakrishnan, Ramabadran 62 1998 Non-Executive Director
Tata, Ratan 70 1996 Non-Executive Chairman of the Board
Mashelkar, Raghunath 64 2007 Independent Director
Mankad, A. -- 2007 Head - Car Plant
Telang, P. 59 2007 Executive Director - Commercial Vehicles
Sethna, H. -- 2007 Compliance Officer, Secretary
Ramakrishnan, C. -- 2007 Chief Financial Officer, Executive Director
Kant, Ravi 63 2005 Chief Executive Officer, Managing Director, Director

Appendix E

26
Above: Tata Nano

Below: Tata OneCAT

27