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TATA MOTORS & BMW
INTERNATIONAL BUSINESS MANAGEMENT
FALL 2009
10
leadership, whereas the company pursues with the JLR brand a strategy of
differentiation. With JLR ittries to catch up in terms of quality and product
design as well as enable global know-how transfersbetween the business
units. Without any doubt, Tata’s corporate strategy of unrelated
diversification hasthe advantages of easy access to capital, a balanced
portfolio, synergy effects as well as the reduction ofbusiness cycle
vulnerability. The BMW Group is diversified in related businesses,
comprising differentcar brands and the own brand of motorcycles. From the
functional perspective one can say that BMW’smain focus lies on operations
and research & development. Tata Motors’ functional strategies are
alignedto seek for an overall low-cost position.
Tactical Goals and Plans
Tata Motors focus at the tactical level to develop strict goals, which
the middle management hasto accomplish. All tactics strive to foster the
cost leadership while in the meantime catching up in terms
oftechnology.Tata focus on the details of implementing these goals. The
general administration isconstraint to an intensified lean management
process until December 2011. Reduced levels ofmanagement shall cut
corporate overhead costs and ease the managerial communication in terms
ofstrategic management. Moreover, the implementation of a computerized,
integrated information systemwill reduce administrative costs by 5%. The
operations department has the tactical goal to open a newfacility for the
Tata Nano in Gujarat by the end of 2010. As this facility comes online, it will
produce50,000 – 60,000 cars per year. The R&D department has the
tactical goal to develop a redesign of theseveral product platforms in order
to reduce the number of components and improve economies of scale.The
implementation is planned in May 2010. On the contrary, the R&D
department of JLR has the tacticalgoals to introduce a new developed
hybrid power engine in the new models of 2010 as well as to equip the2010
models with light weight aluminum bodies resulting in considerable savings
in weight and reductionof C02 emissions.
In the preceding sections we have figured out what resources BMW
possesses and which opportunitiesand threats it has to face from the
external environment. In the following we will develop short-term
goals(targeted less than one year) and derive tactics from that. These will
focus on a detailed implementingprocess and involve middle managers. In
the fiscal year 2008, deliveries to customers went down by 5.8%.BMW has
to stabilize its sales and ensure a growth of sales of at least 4% during the
coming 12 months.Its net profit went down to€330 million. BMW has to aim
for the target of more than€3,000 millionduring the coming five years,
which will be broken down to an increase of the net profit during the
coming12 months of at least 50 percent. As we figured out, the emerging
markets do not only offer great growthpotential but can also help to hedge
the general volatility of sales. Thus, the markets of Russia and Chinahave to
be focused more by conducting extensive marketing campaigns.
Particularly, the new X6 M andthe 5GT have to be promoted to achieve
double-digit growth rates there.
Control Framework
Tata has implemented several aspects of strategic control to oversee
its strategic development andanalyze the progresses of strategic
implementation. The company has implemented a corporate
riskmanagement, which has the objectives to check systematically whether
the premises on which the strategyis based are still valid (environmental
and industry factors) as well as managing a so-called special alertcontrol.
Management actions are undertaken to thoroughly reconsider Tata’s
strategy and tactics if asudden, unexpected event happen. Moreover, an
implementation control was designed to assess whetherstrategic goals and
tactics should be changed in light of the results associated with the
incremental actions.For this process, the senior management sets several
milestones that will be reached during strategyimplementation. These
milestones are often critical events (e.g. test drive of Tata Nano due to
31st October2005) or the passage of a certain amount of time.

TATA MOTORS & BMW

INTERNATIONAL BUSINESS MANAGEMENT
FALL 2009
11
Before we start to conclude what our competitive advantages are in
essence, we will focus on the controlframework of the process of strategy
formulation. It poses a crucial element by ensuring that our companyis
moving toward the strategic goals developed before. BMW has established
an advanced integratedcontrol system. It provides a systematic approach to
addressing complex, intersecting requirements ofcompliance. BMW
employs a Total Quality Management (TQM) approach for both the quality
of themain production units (and the supply chain) as well as for the service
quality, which is directly targeted atthe customer. As they are pursuing a
strategy of differentiation, constant monitoring of quality andcontinuous
improvements are necessary in order to meet high customer expectations.
The quality ofBMW’s end products highly depends on the quality, which is
delivered by suppliers. Thus, the followingcontrol system is employed: Level
1 - Problem discussion, Level 2 - Problem Situation at the supplierlocation,
Level 3 - Supplier Support. Escalation is used when target deviations in core
or support processescannot be resolved solely by those concerned. If the
supplier is unable or unwilling to resolve targetdeviations, it will be re-
classified in the BMW’s supplier portfolio and monitored more strictly.
Comparison of Monitoring and Control Framework
As far as quality management approaches are concerned, BMW and
Tata share their main goals:both companies have implemented a corporate
risk management, which has the objectives to checksystematically whether
the premises on which strategies are based are still valid. Furthermore,
managingthe so-called special alert control is a key issue. Management
actions are undertaken to solely reconsiderthe corporate strategies and
tactics if a sudden unexpected action should occur.
Comparison of Competitive Advantages and Managerial
Recommendations
Tata has been able to gain competitive advantage through global
efficiencies. It achieves locationefficiencies by concentrating facilities in
low-cost countries. By building factories to serve more and moreforeign
countries (especially emerging markets), it achieves economies of scale.
BMW also achieveseconomies of scale by drawing its supply from relatively
small numbers of big global companies. Therebythey achieve great
bargaining power and can exert great influence. As BMW’s product portfolio
is broaderthan Tata’s, with nine different car series and several sub
categories plus motorcycles, Tata (as a costleader) benefits more from
economies of scale. Through its corporate strategy of a broad portfolio
itenjoys economies of scope. With this international strategic approach Tata
has been very successful inemerging markets where its low-cost, low-price
portfolio meets a high demand of a rising mid-incomepopulation.
Similarities can be found in a different segment of this field: the high-
income population ofAsia and Eastern Europe. Moreover, Tata has been
recognized as a successful example of creatingsynergies and economies of
scope through its diversification strategy. Albeit, regarding the
corporatestrategy we clearly recommend to spin-off marginal businesses
like retail, telecom or hotels. Theconglomerate should focus more on its
heavy industry business units like engineering, steel, cars andenergy. The
synergy effects are greater and Tata would be able to allocate its resources
to corecompetencies. As BMW pursues a strategy of related diversification,
such spin-offs are not necessary.Although they are involved in several joint-
ventures (i.e. China together with Brilliance), BMW couldhave a stronger
focus on strategic alliances in the German domestic market. We propose
them to act inconcert with Mercedes Benz in terms of their high-price, high-
quality cars series in order to make use oftechnology transfer and bundle
research and development activities, particularly in the fields of
passengersafety and eco-efficiency.
Concerning the business level, Tata Motors should follow its low-cost
strategy in emerging markets whereit faces great opportunities to compete
with its portfolio. It has great chances to gain huge market sharesand use
economies of scale. JLR should pursue its differentiation strategy for the
premium sector. Tatashould foster know-how transfers and reduce
overhead costs by concentrating R&D and certainproduction processes
between the business units. In the long-run we recommend Tata Motor to
implement

TATA MOTORS & BMW

INTERNATIONAL BUSINESS MANAGEMENT
FALL 2009
12
the strategic goal of changing its brand’s image in western markets from a
cheap brand to an innovative,affordable brand. BMW has to maintain its
strong brand image. As we could see from the past, theinvention of the
lower cost 1series did not interfere with the strategy of technology
leadership and cleardifferentiation. Nonetheless, we recommend BMW to
control prices more carefully, because Tata directlyattacks them with its
luxury brand Jaguar (offering comparable cars at prices, which are lower by
up to16%). By improving its economies of scale and catching up in terms of
technology and design with thehelp of Jaguar Land Rover, Tata Motors can
conquer saturated, sophisticated markets in the long termwith innovative,
high-efficient cars for the low- and mid-income customers. As the world
becomes moreand more global, not only in terms of cross-border trade but
also regarding people’s attitude and globalcultural awareness, we
recommend both companies to join there forces and work together hands in
hands.
By analyzing and comparing both companies’ strategic management
process, we became aware ofsimilarities and differences as well as of
numerous strengths and weaknesses across BMW and Tata. Inorder to
successfully compete in global markets and meet increasing customer
expectations, BMW andTata should work on seizing global opportunities (i.e.
growing demand from emerging markets) togetherand eliminate individual
 weaknesses. One suggestion is to set up production facilities in India, so
thatBWM can benefit from low-cost labor, while supporting Tata in terms of
safety issues and efficient designof engines.
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