Tata Motors Case Study

Zhaofan Zhou

10/4/2015

ADMN703

Tata motors summary report

        This report was asked by Tata motors management to examine current environment in vehicle industry and develop strategic plan for Tata motors in order to improve the overall performance.

        Tata motors is one of India's largest private sector companies with a turnover of over Rs80 billion, is the country's leading commercial vehicle manufacturer and has significant presence in the multi-utility and passenger car segments.

        The research draws attention to the key economic and competitive characteristics of the global motor vehicle industry. Since financial crisis in 2008, global economy had been hurt deeply, and fell into recession. Indian economy recovered well from recession because of strong domestic demand. However, considerable uncertainty about the future remains due to the sluggish economy in many other regions. Therefore, automotive industry has developed a trend of gas efficiency, low cost, green cars.

        It’s crucial to understand the industry’s key success factors. Such as, innovation, competitive sale price, dealerships, services, quality, and international market. Innovation is the most important key factor for companies to stay leadership in the industry. High quality and low price products will keep consumers’ loyalty and constantly boost company’s reputation. Broad distributed dealership network and maintenance service makes convenience for costumers. Keep developing international market share will stabilize company’s growth rate even the domestic market is saturated.

        Apparent strength can be seen from Tata motors. Tata has successfully reached a breakthrough low cost, high gas efficient production of Nano, which satisfy the rapid growing demand in Indian automotive market. Also, Tata motors owns two luxury brands - Jaguar and Land Rover, these two divisions are largely benefited by the rise in sales and profitability as a result of its increasing popularity. On the other hand, weakness of Tata motors are also noticeable. The biggest weakness that Tata has is safety issue. Due to its low cost, the safety design of Nano is poor, which caused fire accident and led to diminish company’s public image. Despite buying the Jaguar and Land Rover brands, Tata has not got a foothold in the luxury market car segment in its domestic market, India. Additionally, (Exhibit 1) Tata stock price has dived to a low level from year to date, which causes a poor return on equity for its investors.

        Tata has opportunity that based on its international strategy by signing a joint venture agreement with Chinese manufacturer Chery Automotive to design, manufacture, and sell Jaguar in Chinese market. This investment and cooperation in China will help Tata to achieve more international market share. Conversely, increasing fuel cost, competition from other big automobile giants by offering same level feature products at a lesser price, product innovations and frugal engineering by competitors, all of these are causing threats for Tata motors.