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Strategic Management

Group Assignment – 1

TATA MOTORS

Submitted To:
Prof. Amar KJR Nayak

Submitted By – (Group 5)
Sourabh Kumar Choudhury – U108 109
Subhransu Sekhar Mandal – U108 110
Sujit Kumar Sahoo – U108 111
Swarup Kumar Kar – U108 112
Sweta Sah – U108 113
Tanya Gupta – U108 114
Thendral I. – U108 115
Udaya Bhanu Satapathy – U108 116
Vibhav Kumar – U108 117
Vikrant Krishan Mahajan – U108 118
Vineet Agrawal – U108 119
Zubair – U108 120
Contents
INTRODUCTION.......................................................................................................3

CORPORATE STRATEGY..........................................................................................3

Corporate Governance........................................................................................3

Enterprise Process Model (EPM) - Process Management at Tata Motors ................5

Operations & Production Management...................................................................6

Inbound Logistics................................................................................................ 6

............................................................................................................................... 6

Vendor Management ..........................................................................................6

Manufacturing..................................................................................................... 7

Product development..........................................................................................7

Cost Cutting Techniques.....................................................................................7

Quality Management...........................................................................................8

Operations...........................................................................................................8

Sales & Marketing at Tata Motors ..........................................................................8

Product and Brand Strategy................................................................................8

Pricing............................................................................................................... 10

Promotion.......................................................................................................... 10

Distribution........................................................................................................10

Financial Strategy of TATA MOTORS.....................................................................11

Cost cutting and recovery strategies:...............................................................11

Tata Motors Finance Ltd (TMFL)........................................................................12

Human Resource at Tata motors..........................................................................14

Information Technology Strategy.........................................................................17

Enterprise Resource Planning............................................................................17

Customer Relationship Management................................................................17

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INTRODUCTION
Tata Motors, leader in commercial vehicles, is India's largest automobile
company with revenue of USD 14 billion in 2008-09. Tata Motors, the first
company from India's engineering sector to be listed in the New York Stock
Exchange and has operations in the UK, South Korea, Thailand and Spain.

Tata Motors started operations in 1945 and entered commercial vehicle sector in
1954 after forming a joint venture with Daimler-Benz that lasted till 1969. In
more than six decades of its operations, it has grown both organically and
inorganically. In 2004, Tata Motors bought Daewoo’s truck manufacturing unit in
South Korea followed by the acquisition of the Hispano Carrocera in South Africa.
In 2008, it acquired prestigious brands Jaguar and Land Rover from Ford Motor
Company. This acquisition was important since before that Tata Motors was
considered as a formidable global player at lower market segment only.

CORPORATE STRATEGY
The current strategy of the Tata Motors can best be summarized as ‘Disruptive
Innovation’, wherein it has offered lower priced products and surpassed the
market expectations. Its two latest offerings have further strengthened the Tata
Motors position as a leading player. While Ace has been a rage in the market,
Tata Nano has taken the world with awe.

Much of the practices of Tata Motors, including its customer focus, attributes to
the learning and experience of over six decades. Tata Motors that started with a
huge success and market demand faced its first product failure in the launch of
1516. With the foreign players entering India, Tata motors that was primarily
focusing on High weight commercial vehicles, included LCV in its offering and
came up with Tata 407. Tata Motors in the meanwhile was also vying to develop
end to end in-house technical competence and thus ventured into engine design
by partnering with Cummins. Tata motors continuously faced the problem of
overloading by the users and responded by introducing stronger machines.
However, a major change came after a heavy loss of Rs 550 cr in 1999 where in
it re-aligned its marketing team and became more sensitized to customer needs.
The revival strategy of Tata motors had three phased business plan. Firstly, it
focused on the cost reduction initiatives for immediate turnaround. Secondly, it
focused on domestic and international growth through new products and
improved sales and service. Finally, it linked long term growth with increased
business in LCVs, new product segments and new geographies. The strategy and
learnings have gone a long way with Tata Motors earning net profit of more than
Rs 1000 cr even in a lean FY 2008-09.

Corporate Governance
Tata Motors being part of the Tata conglomerate has its philosophy deeply linked
to the core philosophy of the Tata group. It has fair, ethical and transparent
governance practices along with highest standards of professionalism, honesty,
integrity and ethical behaviour. The company gives maximum importance to the

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value creation and sustainability of all the other stakeholders’ viz. customers,
creditors, employees, vendors, community and the Government. Tata Motors
have implemented the Tata Business Excellence model which is a part of Tata
code of conduct applicable to all subsidiaries of Tata group. The company
operates with a strong social conscience and believe in bringing benefit to
people’s lives.

Tata Motors strictly follows The Whistle Blower Policy, an extension of the Tata
Code of Conduct, which requires very employee to promptly report to the
management any actual or possible violation of the Code or an event he
becomes aware of that could affect the business or reputation of the Company.
the Ethics and Compliance Committee who monitors the compliance of the ‘Tata
Code of Conduct for Prevention of Insider Trading’ by checking monthly reports
on dealings in securities and also decides penal action, if necessary. This is more
important since in Indian market Tata brand is synonymous with Trust. CSR
activities of Tata Motors covers major areas like environment, energy and water
conservation, health, education and livelihood.

SWOT Analysis

TATA-JLR

TATA Motors bought the iconic Jaguar and Land Rover operations from Ford for
1.15 billion pounds in Mar-Apr’08. Tata gained the rights to the Daimler,
Lanchester, and Rover brand names. In addition to the brands, Tata Motors also
gained access to 2 design centres and 3 plants in UK. The key acquisition would
be of the intellectual property rights related to the technologies. However there is
a challenge related to the technology changes in the new entity and Ford’s
technology will help in the short run and looking at the emerging emission
standards hybrid and green technology will be the need of the hour.

BCG Matrix for Tata Motors SBU’s

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The Major SBU’s of Tata Motors in which they have divided their business are:

• Commercial Vehicles (Light weight trucks to multi-axle 40 ton vehicles)

• Passenger Cars, economy and luxury (Indica, Nano, JLR)

• Utility vehicles, standard and premium (Sumo, Safari)

• Spare parts, components and accessories (HV Axles and transmission,


High horse power engine via Tata Cummins)

• Financing for customers and channel partners (via Tata Motors Finance)

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Enterprise Process Model (EPM) - Process Management
at Tata Motors
When Tata Motors made a huge loss of 500 crores in the year 2000-01, analysts
had all but written off Tata Motors fortunes. But TML was determined to bounce
back and hence started the process of serious introspection. Three key reasons
were identified for the massive loss—a) Lack of customer focus b) lack of process
management c) lack of new products and variants. TML had decided the three
elements in a systematic manner, the major emphasis being process
management.

Tata Motors hence started to adopt the APQC 13 (American Productivity and
Quality Center) processes and sub process and hence derive the Tata Business
Excellence Model (TBEM, based on the Malcolm Baldrige National Quality Award
Process), thus adopting a process oriented approach than merely people oriented
approach. This practice minimized the ‘influence of individual employees’ in
running the operations. This also entailed the documentation of the processes,
which brought about lot of clarity in terms of roles and responsibilities of process
owners, inputs and outputs of the processes, in process and end process
measures, entities involved and its linkage with the ISO and TS standard system.

The Enterprise Process Model has been depicted in the figure below.
1
Hasamnis, Sudhir, ENTERPRISE PROCESS MODEL (EPM) – PROCESS MANAGEMENT AT TATA MOTORS LIMITED,
2008

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1
Figure: Enterprise Process Model

Operations & Production Management

Inbound Logistics

Procurement

Vendor Management
In the Year 1997, Tata Motors promoted a company called “Tata
Autocompsystems Limited (TACO) “. The main objective was to serve form joint
ventures with international auto component manufacturers and streamlining the
vendor management processes for the company. 2 Tata Motors sources from
2
ICMR case study, Operation Management at Tata Motors, excerpts.
3 www.scribd.com/tatamotors

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vendors who focus on their own R & D to reduce cost. Most of the vendors
develop products with Tata Motors itself and quite a few were given designs by
Tata Motors. TML also helped the vendors find international partners to make
products that would meet their requirements. Some of the vendors who supply to
Tata Motors also did competitive buying of material from China and Thailand.3

Manufacturing
In an automotive industry, the main emphasis on quality would be on the
manufacturing process. There would be about fifteen thousand accessories and
component parts to assemble and activate while we manufacture a car. Tata
motors believes in the indigenous development of manufacturing process and
development of technology. Unless many automobile companies, the strategy of
the firm is not to blindly adopt any new successful technology. It believes in
state-of-the-art technology. With reference to the product market matrix (with
product development, market development, market penetration and
diversification) which composes the merging of production and marketing
strategies Tata motors is seen to follow the diversification strategy wherein it
produces new products and gets into new market to target with the product.

Product development
New Product Development would involve idea generation, product screening,
concept testing, Business and financial analysis, product development, test
marketing and commercialization. An automobile product development cycle is
said to be consisting of concept stage (where the car starts), Advance
engineering (where the car takes shape), product engineering (where the details
are filled in), production engineering (where the car is worked out) and the
manufacturing stage (where all comes together)3. Tata Motors Engineering
Research Centre in Jamshedpur focuses in upgrading the components and parts
with evolution of technology and also is one of the best in determining the needs
of a customer and developing a new product to cater to the needs. Tata Nano is
one such product from the stable of Tata motors. Besides this centre the
Research and development of Tata motors has become international with centres
in Spain, UK and South Korea also.

Cost Cutting Techniques


After a rough fiscal year in 2001, Tata Motors realized that the only way to
survive this market was to cut down on costs. They started practicing an entirely
new way of procuring their supplies and hence gave rise to a unique way of
managing supplier relationship. The earlier traditional method that Tata Motors
gave the technical specifications to the supplier and the supplier who was
successful in acquiring the bid filled up the orders. However under the new
system Tata Motors simply provided the output they expected, and allowed the
suppliers to be as creative and innovative with their designs, materials, and
prices. In other words Tata Motors would simply describe the goal that they

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http://msl1.mit.edu/TPP12399/Session01/lecture018.htm

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wanted to achieve with certain part and the suppliers would supply the parts
according their own convenience. For example instead of giving technical
specifications for the wind shield of Tata Indica, it would just describe the goal of
cleaning the windshield, and let the suppliers come up with ideas to meet those
goals in the most cost effective manner, without compromising on quality. This
practice led to huge cost savings in raw materials and the Tatas could deliver the
cheapest car of the world at just 2500$. By leveraging local design capabilities
and avoiding the dependency on high end design systems, Tata Motors has been
able to provide low cost solutions in a continuous and efficient manner. Also Tata
Motors tried the innovative method of Zero Based Costing. For example initially
TML paid for forged components on a cost plus basis, in the new system it
paid a price depending on the weight of the forgings.

Quality Management
The shifting of focus on TQM (Total Quality Management) and Six Sigma
principles by Tata Motors has been a gradual one since the year 2000. One
quarter of the work force undergo training to maintain and create high quality
products every year. The personnel are even sent to foreign manufacturer’s
locations, whenever a new machine would be imported, to undergo training.

Operations

Outbound Logistics

Sales & Marketing at Tata Motors

Product and 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

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products of benefit from the association with the TATA brand, which in India
stands for trust and reliability. TATA motors products can be categorised into
four major categories: Passenger cars, Utility vehicles, trucks and commercial
passenger carriers. The following table shows the different product lines of each
category and the launch periods as well. (Source: Company Website).

TATA Motors Product Portfolio Product and Variant Launch years

TATAMobile

TATASierra
TACCrane

TATAEstate

Sum o
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 (Sumo, 207, Ace, Indica etc) have

Safari
been able to fulfil these overall objectives. The strategy adopted behind these

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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, bigger engines etc.

In broad terms the following sums up the TATA motors marketing philosophy:

Pricing
TATA motors have a pricing advantage due to its low cost leans manufacturing
abilities. The in-house steel company acts as a shock absorber against steel price
fluctuations. The pricing methodology adopted is that of a perceived value
pricing. It was demonstrated by the Rs 1 Lakh price of TATA Nano, where the cost
of producing the car left a very small margin for TATA.

Promotion
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.

Distribution
TATA Motors has a large network of dealers and Stockyards, all across the globe
and uses the DMS technology for 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, services and spare parts network comprises over 3500 touch points.

Apart from the wide distribution network Tata Motors also has Distributed
manufacturing – it has Assembly units at South Africa, Thailand, Bangladesh,
Brazil apart from India. The company's manufacturing base in India is spread
across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh),
Pantnagar (Uttarakhand) and Dharwad (Karnataka).

To augment the scarce resources, it has a joint venture with Fiat wherein Fiat
sells its vehicles through Tata dealerships and in return Tata Motors has access
to Fiat’s technology and unutilized capacity

Over the years, one of the major success factors of Tata Motors is their supply
chain excellence. To keep their distribution costs to the minimum they have
outsourced the logistics and distribution part of their business to Tata Motors Ltd.
Distribution Company (TDCL), a wholly owned subsidiary of Tata Motors Ltd.

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Through this arrangement, Tata Motors is able to reduce its logistical costs by at
least 1% and to focus more on the core business. This in turn has provided
flexibility to Tata Motors in terms of delivering the right product at the right time
at the right place. Therefore, today, Tata Motors is a fully integrated automobile
manufacturer with a portfolio which covers trucks, buses, utility vehicles &
passenger vehicles/cars.

The dealers and suppliers are bound by a Supplier Relationship Management


Program and Dealer Management System. These programs are reviewed from
time to time. The efficiency of transactions within the organization and also
supplier coverage are given importance. Supplier’s day, Vendors meets, Channel
partner meets are organised wherein the Board members can interact with
suppliers to share ideas and thoughts.

Financial Strategy of TATA MOTORS

Cost cutting and recovery strategies:

The transformation of Tata Motors into a highly successful, well-diversified, and


globally ambitious automobile giant represents one of India’s most remarkable
corporate-success stories in recent times.

In 2001 after a decade of strong revenue and margin growth, Tata Motors
plunged into a financial crisis when demand for its trucks suddenly collapsed. The
lost sales compounded by heavy investment for its entry into the passenger car
business, the cost of complying with new emissions standards, and an increasing
threat from overseas competitors caused Tata Motors to shock the markets with
a 5 billion rupee ($110 million) loss for the fiscal year ending March 2001.

Even in late 90’s Tata Motors was predominantly a manufacturer of commercial


vehicles, and that is a very cyclical business. At the time it was making huge
investments in car manufacturing to move away from that cyclicality. But while it
was in the middle of this diversification, the commercial-vehicle market in India
shrank by more than 40 percent, with massive consequences for both the top
and, more particularly, the bottom lines of the company. The 5 billion rupee loss
in 2001 was the first time something on this scale had happened in the
company’s history which really shook everybody within the organization.

So in 2001 Tata Motors decided on a recovery strategy that had three distinct
phases, each of which was intended to last for around two years—six years in all.

Phase one was intended to stem the bleeding. Phase two was to be about
consolidating our position in India, and phase three was to involve going outside
India and expanding our operations internationally.

The key objectives were to move to a system of market pricing and to reduce our
break-even point, both of which called for major reductions in costs—variable
costs, fixed costs, and interest costs. It used many approaches to cost reduction,
including bench-marking its rivals. For example, it took apart vehicles to see what

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they could do to modify their products and to lower costs. They went in for e-
sourcing, which was then very new, but today it is the largest company doing e-
sourcing in India and one of the leading ones in the automobile industry
worldwide. In two and a half years, it reduced our break-even from nearly two-
thirds of capacity utilization to around one-third, which meant that even if the
market shrank by close to 60 percent, it would still be profitable. The whole
organization really got together to ensure that the bleeding stopped.

For phase two, the concentration was on improving product quality and
upgrading product features so as to make the products more competitive. It also
started work on new products that would be required by the market after three to
five years and strengthened its position in the marketplace by setting up a new
sales-planning process, tightening credit norms, improving the liquidity and
profitability of the dealers, reorienting toward customer satisfaction, and
extending the reach of its distribution network. For phase three, the
concentration was on starting work on international markets by identifying key
markets and segments and developing a comprehensive plan to improve its
competitive position so as to get a respectable market share. It also started
looking at opportunities for inorganic growth.

Tata Motors Finance Ltd (TMFL)


The auto financing arm for Tata Motors was established in 1957 in the name of
BHPC (bureau for Hire Purchase and Credit). TMFL came into existence in June
2003. This was a common front-end, jointly formed by BHPC (Bureau for Hire
Purchase and Credit) of Tata Motors and the asset financing arm of erstwhile Tata
Finance Ltd. It was in the market for exclusively financing Tata Motors vehicles.
Subsequently Tata Finance was merged with Tata Motors and in April 2005 TMF
became a division of Tata Motors. It is engaged in financing entire range of
passenger cars & commercial vehicles manufactured by Tata Motors Ltd.

TMF is the largest financier of vehicles manufactured by Tata Motors Ltd. With
more than 2 million customers financed, TMF reaches out & helps customers to
realize their dreams of owning a Tata vehicle easily.

Corporate Purpose

TMF aspires to be a preferred financier by choice for Tata Motors customers &
dealers across all its products. Tata Motor finance would be the top-of-the-mind
choice for all stakeholders when it comes to Tata Motors products. With a core
purpose to reach out & help customers realize the dream of owning a TATA
vehicle easily, we are present across 150+ locations and at all Tata Motors Ltd
authorized dealerships.

Schemes designed to suit every customer requirement, flexible repayment


options, hassle-free eligibility criteria, simple documentation and fast sanctioning
process makes it the preferred choice of any customer desirous of owning a Tata
Car or Commercial vehicle.

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Strategy defined

TMF came into existence for the prime reason of easy financing the Tata Car or
Commercial vehicles. Through these new initiatives, TMF aimed to reach small
towns and villages, where they could find buyers for their products, such as the
Ace and, going forward, for their small car. In the competitive world, there is an
existing demand for cars, and along with it, it is important to make finance
available to the potential buyers to help them buy the vehicles. With the low
availability of conventional banking services in rural areas, it was necessary for
them to offer finance to their buyers in such far-flung markets.

Tata Motors has dealers in nearly every district in India. This helps them to build
a good database of the financial credibility and worthiness of their customers
across the country, which will be valuable information for the entire Tata Group.

Similarly, this perspective would be deployed in their global operations — in


South Africa, South Asia, South Korea and the Middle East – where they can adopt
a partnering strategy.

The partnering strategy could well involve a local bank in the respective country
as the individual countries have their own financial regulatory requirements. In
other cases we could partner with Indian banks which have operations in foreign
countries. The State Bank of India, for example, is already present in many
African countries. So it can be looked upon as a prospective partner
PAT/Sales structure of TATA Motors for the last 30 years:

1975 1980 1985 1990 1995 2000 2005


19691 56831 89611 206486
Sales 22510 44827 93353 0 2 4 6
PAT 541 1762 2313 10254 31895 7120 123695
PAT/Sale
s 2.40% 3.93% 2.48% 5.21% 5.61% 0.79% 5.99%

In last 5 Years:

2005 2006 2007 2008 2009 CAGR


206486 242905 321298 287679 256606
Sales 6 2 8 1 7 5.58%
-
PAT 123695 152888 191346 165417 92151 7.10%
PAT/Sal
es 5.99% 6.29% 5.96% 5.75% 3.59%

The above table shows the net profit margin for the last five years and also
shows the compounded annual growth rate over the last 5 years. We can see
that there has been a 5.58% growth in sales whereas PAT has gone down by
7.10%. However we cannot blame its strategy being wrong because we see that

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TATA motors has invested heavily in various mergers & acquisitions which has
bought down its PAT, but is in line with their Inorganic growth strategy.

Sustainability and road ahead:

In a broad way, Tata Motors has been silently transforming itself for a long time
and this will continue. The company started manufacturing locomotives, and then
concentrated on heavy trucks before moving to light trucks, multi-utility vehicles,
passenger cars, and buses. It has to continually reinvent itself. The important
thing is to keep looking at external changes in the marketplace and to respond to
these changes appropriately while continuing to retain its values, which have
been its beacon for the past 60 years. Tata Motors used to be an engineer’s
organization that needed to understand more about profits, costs, and
contributions. Now people at all levels realize it doesn’t make sense to just
manufacture anything, that products must sell to make a healthy contribution,
and that market share must continually be increased to sustain growth.

It should grow and produce a healthy bottom line, necessary for sustained
growth. But in doing so, it be seen as an innovative company breaking new
ground and going into uncharted territories successfully like the recent JLR deal.

Human Resource at Tata motors


Few specific events related to downsizing at Tata Motors would help us describe
the HR culture at the company.

From 1970s to present Tata Motor’s share value has increased nearly 4000 pp,
turnover has increased from about 1800Cr. to 75000 Cr. But manpower figures
have not been following the same trend. From a figure of 11000 employees it
rose to 35000, then came down to almost half (18000) and the number is again
on rise.

For understanding the trend, we must become familiar with the factors affecting
manpower. Some of these factors are listed below:

• Volume of business: a fast growing business like Tata Motors needed more
hands to work on day by day

• Locational delinkage: Tata Motors started off a new unit at Pune

• Adopting new product or technology: advent of passenger cars and light


commercial vehicles

• Shift in customer preferences: style and comfort became important like


never before

• Starting support activities

o Finance: the need to provide finance to people to buy their vehicles,


Tata Motors started off Tata Motors Finance

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o Logistics: the Hub ‘n’ Spoke model of the dealer network was
introduced

o IT: need for information was growing day by day and it needed to be
addressed soon

o Automation: automation in assembly was introduced

This has provided us with a fair background of the changes in the company. Now
let us try to understand the company’s HR policies and culture against this
backdrop.

Phase I: During 1970s, money and people were available in abundance with
Tata Motors. It cared for its employees like a father cares for his children. Today’s
buzz words like mentoring and coaching were actually practiced nearly three
decades back in Tata Motors. Senior executives handheld new employees and
helped them blend with the company.

Colonies were made for the TELCO community, which provided residents, apart
from basic amenities, with, facilities like security, health care, clubs etc. Tata
Motors wanted its employees to have no reason to leave the organization before
their retirement. Though it also set out some basic codes of conduct, to which, if
one fails to conform, he would be asked to leave the Tata Motors family within a
stipulated time period. These included refraining oneself from stealing (even
stealing a pencil was an offence), and not indulging in an undesirable relationship
between a man and a woman who lived in the colony. The sincerity of
management at Tata Motors in implementing these two rules can be judged from
the incident that when Daimler’s Chief was found guilty of getting into an
undesirable relationship he was given a return ticket to his homeland.

Also employees were given loans without any interest rates being charged from
them.

With the advent of IT, IBM 1401 was introduced in the company. The machine
required inputs through punch cards and hundreds of people were required to
punch these cards. Tata Motors again found a chance to work for the society at
large. It employed several widows to do the job in three different shifts and
helped them earn bread and butter for their families. Also there was some
reconditioning of motors and the winding department had work that could again
be performed by women, so again it employed even more women for the job.

By 1980s, too much automation had taken place, the wizards of the organization
who earlier experienced a sense of vanity about their expertise of precisely
identifying the problem areas in a machine or assembly line, felt useless. They
were gradually becoming technologically obsolete.

At that point Tata Motors offered them a scheme that if they do not wish to stay
in the company they may leave but they would continue to get benefits of
employment till 60 years of age. Company was in good shape at that time and
was still trying to look after them as parents. The scheme received an

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overwhelming response and resulted in voluntary downsizing. We see here that
though there was a downsizing still it was not cruel; employees weren’t chopped
cruelly off the muster rolls of the company.

Phase II: This would show the survival mode adopted by the company. From
the year 1995 onwards, company was compelled to share publicly the quarterly
results for the benefit of the shareholders. Cost of employees had also risen from
about 10% to nearly 30%. Also the company was facing stiff competition. This led
to the development of the Tata Business Excellence Model. Every individual was
put under a scanner. 360 degree appraisals, Balance Score Cards started being
implemented to assess employee performance. Big consultants like Mckinsey and
the Tata group itself joined the scanning process. The company was bleeding,
everyone was fearing that the company might close down completely. Finally it
was decided that the bottom 10% would have to leave the organization. A hockey
stick syndrome prevailed throughout the organization; within a very short period
of time there was a tremendous morale crash. The company lost about 7000
employees over the years due to the process. It had to take corrective actions. As
a result:

• Salaries of those who stayed were jacked up 4-6 times

• Huge induction from outside was done at every level

• Brilliant people were given promotional jumps, eg: Tata Nano chief

Phase III: Tata Motors started in Jamshedpur, operating in the product range of
locomotives, commercial vehicles, excavators. Then it started off a new unit at
Pune that was majorly a centre for R&D along with production of commercial
vehicles. It then had to open up a new plant in Lucknow without any agenda, just
because of the pressure from the centre. It involved huge costs. The hierarchy
had been becoming unwieldy. Company had to adopt a profit oriented face.

It revisited following areas of improvements;

• Automation Development employed nearly 3000 employees, so many of


them were not really needed and were a burden on the company

• Today finance is available in abundance, a captive finance company like


Tata Motors Finance was not really needed

• The Hub ‘n’ Spoke model required thousands of drivers, a number of


logistics companies are available today and all this could be easily
outsourced at a much lower cost

All these led to several of integrated organs like Tata Motors Finance, Tata Motors
Automation Ltd., Tata Engineering & Constructions, Tata Motors Logistics etc. to
be snapped out and become individual companies with independent GMs of
whom Tata Motors would only be one of the clients.

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Today the core values of Tata Motors are slightly skewed towards business, but
that is because the context changes with era. As the time changes one has to
constantly change and adapt with the changing times and as they say, “No
prescription is a permanent prescription”, Tata Motors is simply evolving with
time, yet at every step, taking care of what it leaves behind.

Information Technology Strategy

Enterprise Resource Planning


Prior to the SAP implementation TML has a host of legacy applications which had
been developed and maintained over a period of time. Thus the underlying
technologies and platforms were diverse along with diversity in functions and
locations. This led to redundancy, inconsistency and inefficiency in data
management. A unified real time database with an IT infrastructure that was
integrated across the functions, locations and even businesses was the need of
the hour, in order to cut costs and manufacturing cycle times and also serve the
customers more efficiently.

Why SAP?

“SAP has a clear superiority in the market. It has a large presence and good
support, so we chose the SAP ERP Solution for our company. The results have
definitely exceeded our expectations,” says Probir Mitra, CIO, Tata Motors.

• SAP was the business leader in ERP solutions space.

• SAP offered strategic fit to TML’s TO-BE stage process mapping.

• SAP was able to integrate various functions across geographies yet


maintaining real time data updates.

• TML’s business processes were rationalized across all manufacturing units


using the power of SAP’s ERP infrastructure.

The existing environment prior to SAP implementation was – Oracle database


solutions, Unix as operating system and predominantly IBM for hardware support.
The implementation of SAP ERP solution (Version 3.1H) started in about 1998 and
was finished by 2000 for about 3500 users. Later in 2003 TML moved to version
4.6C on a single server platform.

The major benefits from implementation included enterprise integration,


reduction of inventories, better control over receivables, easier financial
consolidation, single unified database, improved efficiency by reducing
redundancy and inconsistency, reduced response time to customers and
reduction of operational costs.

Customer Relationship Management


With increasing competition from both Indian and foreign automakers in a
cyclical business environment, Tata Motors needed strategies to build

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competitive advantage through strong relations with customers and good
customer service. Being a global player with a widely dispersed dealer network
Tata Motors was in the need of a common system to link its company, dealers
and customers. In 2005, Tata Motors took a decision to implement a robust CRM
throughout the organization. Oracle’s Siebel Automotive CRM solution
customized for the automotive industry was chosen as the CRM system for the
organization.

Standardizing Customer-Facing Processes

Tata Motors aimed to standardize its customer-facing business processes


companywide through reengineering, thus improving operational efficiency and
effectiveness, building stronger dealer relationships and a better customer
experience. This task involves working with about 250 dealers and more than
1600 locations staffed by more than 10,000 salespeople across India. TML has
also deployed a robust technology platform consisting of an innovative dealer
management system to improve the information flow across the enterprise. This
system helps dealers in functions such as inventory management, credit
reporting, calculating commissions etc. Siebel Automotive CRM, in conjunction
with the dealer management system, has streamlined transactions, ensuring real
time capturing of customer data. The solution provides a 360-degree view of
customers to the extended organization, with appropriate visibility controls to
ensure that one dealer is not privy to information from another.

Registering Strong Success with Dealer

Siebel Automotive has transformed Tata Motors into a truly customer-centric


organization. Information redundancy and disparity has been reduced and the
business processes have been improved. By working upon real-time, centralized
customer and vehicle data, the employees and dealers have been empowered
immensely.

References:
http://www.tatamotors.com/pdf/2009/CG-Report-2009.pdf

http://www.tatamotors.com

http://www.tata.com/aboutus/articles/inside.aspx?artid=/CZR9jStvb0

Corporate Reporting Framework (CRF): Benchmarking Tata Motors against AB


Volvo and Exploring Future Challenges by Subhasis Ray and Subhrajyoti Das

18

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