SYMBIOSIS INSTITUTE OF BUSINESS MANAGEMENT

BENGALURU

STRATEGIC MANAGEMENT: TATA MOTORS

BY:
Amandeep Singh Walia (18020841150)
Anurag Sharma (18020841153)
Protick Kar Purkayastha (18020841174)
Rishi Shahdeo (18020841177)
ABOUT THE COMPANY:
Tata motors Group is a $45 billion organisation. It is a leading global automobile manufacturing
company. Its diverse portfolio includes an extensive range of cars, sports utility vehicles, trucks,
buses and defence vehicles. Tata Motors is India’s largest and the only original equipment
manufacturer (OEM) offering extensive range of integrated, smart and e-mobility solutions.
Part of the USD100 billion Tata group founded by Jamsetji Tata in 1868, Tata Motors is among the
world’s leading manufacturers of automobiles. They believe in ‘Connecting aspirations’, by offering
innovative mobility solutions that are in line with customers' aspirations. They are India's largest
automobile manufacturer, and continue to take the lead in shaping the Indian commercial vehicle
landscape, with the introduction of leading-edge powertrains and electric solutions packaged for
power performances and user comfort at the lowest life-cycle costs. Their new passenger cars and
utility vehicles are based on Impact Design and offer a superior blend of performance, driveability
and connectivity.
They focus on connecting aspirations and their pipeline of tech-enabled products keeps them at the
forefront of the market. They have identified six key mobility drivers that will lead them into the
future – modular architecture, complexity reduction in manufacturing, connected & autonomous
vehicles, clean drivelines, shared mobility, and low total cost of ownership. Their sub-brand TAMO
is an incubating centre of innovation that will spark new mobility solutions through new
technologies, business models and partnerships.
MISSION:
Across our globally dispersed organisation – is to be passionate in anticipating and providing the best
vehicles and experiences that excite our global customers.

VALUE:
1. Integrity
2. Accountability
3. Excellence
4. Teamwork
5. Customer Focus
6. Speed

PRODUCT:
TATA Motors has broadly three types of product segments, namely:
1. Cars and Sports utility vehicles
2. Trucks and Buses
3. Defence

WORLDWIDE PRESENCE:
TATA MOTORS has manufacturing operations in the UK, South Korea, Thailand, South Africa,
Indonesia, Austria and Slovakia, their international presence has expanded through joint ventures
like the strategic alliance with Fiat and Brazil - based Marcopolo.

With over 8.5 million Tata branded vehicles plying globally, Tata Motors is among the select
companies in the world to offer an extensive portfolio to its consumers. We have expanded our
international footprint through exports since 1961. In passenger vehicles, the company has a strong
presence in the hatchback and the sedan segment, going up to SUVs and MUVs. In commercial
vehicles, Tata Motors offers a wide spectrum of vehicles that are customized for local conditions and
meet the highest standards for quality, safety, environment norms and user comfort. Today, the Tata
Motors group is present in over 175 countries, with a worldwide network comprising over 6,600
touch points. Tata Motors has R&D centres in UK, Italy, India and South Korea. With vast global
experience, the company brings deep understanding of customer expectations from diverse markets,
and is well positioned to cater to ever changing automotive norms and consumer trends across the
globe.
INTERNAL ANALYSIS:
VALUE CHAIN ANALYSIS

INBOUND LOGISTICS:
TATA MOTORS have long term contract with service providers – transporters and agents. They
have personnel at regional offices for overseeing the smooth transit of goods. Their system has
transparency through deployment of IT- SAP. They thrive on efficient storage facilities.

OPERATIONS:
They have tooling development capabilities of global standards. To ensure a stable skilled
manpower, they have an apprentice trainee course. Total productive management team ensures
continuous improvement. Automated and distributed manufacturing process – assembly units in
South Africa, Thailand, Bangladesh, Brazil, etc. Capacity utilization- Mercedes Benz car makes use
of TATA MOTORS paint shop facilities.

OUTBOUND LOGISTICS:
They have stockyards all across the country. Additionally, they have long-term contracts with
transporters. Their regional sales office and vehicle dispatch section is linked through SAP. They
have efficient security system for prevention of any kind of pilferage .
MARKETING & SALES:
TATA MOTORS boasts of a structured approach to understanding the requirements of individual
customers. They have a clear understanding of product requirements, leading to development of
innovative products. Presence of various teams for addressing requirements of institutional
customers- defence and state transport units. They also have a large network of dealers.

SERVICES:
Easy availability of spare parts. Pan India as well as global presence. Efficient collection of data
from field and communication to the respective plants. Training facilities for dealer and TASS
personnel make TATA MOTORS a great service provider.

PORTER’S FIVE FORCES ANALYSIS OF INDIAN

AUTOMOBILE SECTOR
It’s true that the average person can’t come along and start manufacturing automobiles. The
emergence of foreign competitors with the capital, required technologies and management skills
began to undermine the market share of various companies. The domestic auto industry posted a
robust over 24 per cent jump in August sales, fuelling hopes of an even better performance in the
coming festival season. According to the Society of Indian Automobile Manufacturers (SIAM), the
industry sold 10,08,702 units in August against 8,11,341 units in the same month last year. Passenger
car sales continued to grow for the seventh straight month for August, up 25.59 per cent while sales
for motorcycles soared 25.94 per cent for the same month. At present 100% Foreign Direct
Investment (FDI) is permissible under automatic route in this sector including passenger car
segment. The import of technology/technological upgradation on the royalty payment of 5% without
any duration limit and lump sum payment of USD 2 million is allowed under automatic route in this
sector. Therefore, it becomes essential to look at the potential external factors that can have a
significant impact on the strategies that a company chooses to pursue.
BARRIERS TO ENTRY: HIGH
Economies of scale: Companies like Maruti, Hero Honda, TATA and Hyundai etc have been present
in market from many years now and have therefore achieved the optimum level of production
allowing them to realize economies of scale. But for a new player it will not be easy to get similar
benefits due to high price competition from exiting players.

Demand side benefit of scale: It is never easy to win the trust of the customer. Companies like Hero
Honda, Bajaj and TATA etc have a large customer base that has an inherent trust in the product.
Building a similar level of trust for a new entrant will be extremely challenging.

Customer switching cost: Customers in automobile industry has high switching cost. This is because
after buying a vehicle once, a buyer would not, in most cases, replace it for the next 3-5 years.
Hence, the switching cost in this industry is high.

Capital requirements: Capital investment required to start an automobile business is very high. Land
and machinery, human resource, and high competition means that not everyone can get into such a
business.

Distribution channels: In any industry, particularly the automobile industry, in order to capture the
huge market, one should have a big distribution network, not only for sale of vehicles through
dealers but also for services. Hence for a new business, developing such a diversified network of
dealers and service stations is extremely tough.

Joint Ventures and Strategic Alliances: Perhaps the most common and sought-after method for
companies to enter the automobile industry is through joint ventures and strategic alliances. Whether
its Toyota-Kirloskar, Jeep-Mahindra, Renault-Mahindra etc. there are plenty of examples to suggest
the potency of this method.

THREAT OF SUBSTITUTES: MODERATE

If we talk about the substitute for automobiles then there are mainly two:

 Railways
 Airlines

But both of these can’t possibly be substitutes for every customer and in every situation. For
instance, in short journey within cities neither airplanes nor railways will be substitutes. Also, there
are places where both these means of travel are not reachable. But in the coming future, as airfares
are getting cheaper and cheaper, they will certainly affect the sales of conventional automobiles if
not eradicate them completely.
At the same time, for a company like TATA, competition within the automobile industry has always
been quite high, especially for the four-wheeler segment, where TATA predominantly operates in.
The average Indian is always torn between the choice of buying a two-wheeler or a four-wheeler.
But, the good news for TATA is that the affordability of four-wheelers is urging more and more
people to opt for them rather than two-wheelers.

BARGAINING POWER OF SUPPLIERS:

MODERATE
To manufacture a vehicle, a number of inputs are used like steel, seat covers, electrical equipment’s
tyres etc. Suppliers of inputs that add value to the vehicle always enjoy some bargaining. This is
even more the case when we talk about the automobile industry. Due to high competition, there are
more customers (the car makers) for the suppliers to work with and hence they can regulate the input
prices.

For instance, when we talk about steel, the major input for the automobile industry, demand is more
than its supply and most of the steel is imported from the abroad so in this case also automobile
company are lacking. But when we talk about inputs like seat cover, plastic etc. cost of switching is
very low. So, in this case bargaining power of supplier will be low.

BARGAINING POWER OF BUYERS

When buyer power is strong, the buyer is the one who sets the price in the market. Here there are
purchases of large volumes. There is prevalence of alternative options It specifies the impact of
customers on the product.

Companies have to maintain good relation with their suppliers to enjoy the benefits like discounted
prices. Thus, they have to try to establish long relation with supplier. This means that they can’t
change their suppliers from time to time. In that case buyer will have high bargaining power.

When automobile company decide to go for backward integration, in that case, buyers will have high
bargaining power. E.g. Tata which have its own steel plants, they can face the problem of shortage of
raw material.

INDUSTRY RIVALRY
When total costs are mostly fixed costs, the firm must produce capacity to attain the lowest unit
costs. Since the firm must sell this large quantity of product, high levels of production can lead to a
fight for market share and results in increased rivalry. This is precisely what is happening in the
automobile industry as all players are big and are putting in huge investment.
Industry becomes unstable as the diversification increases. In this case the diversity of rivals is
moderate as most offer products which are close to standard versions and the competitors are also
mostly similar in strength.

The presence of many players of about the same size with little differentiation means that rivalry
would be high. Higher the competition in the industry lower would be the profit margin. To remain
ahead in competition, auto-makers get tempted to offer more value-added services to the customers
thereby incurring more costs.

SWOT ANALYSIS
CORPORATE STRATEGIES
Tata Motors have a distinct way of doing business, more profoundly known as, “The TATA way”.
The most deeply engraved value in the company is trust. The company’s logo, “leadership with
trust” personifies people’s belief in the brand. Thus, the company respects the trust embedded in it by
many and strives to honor its commitments. Other five core values that underpin the Tata way of
doing business include integrity, responsibility, unity, understanding and excellence.

The corporate governance of the company originates from its rich legacy of ethical, fair and
transparent governance practices followed since ages, even before they were made mandatory by
fostering highest standards of professionalism, integrity, honesty and ethical conduct.

Information and power passes through a vertical hierarchy with CEO being the foremost authority.
The vice chairman of Tata Motors, Ravi Kant, attaches greater importance to communication. He
strongly believes oral communication helps one understand the behavioural pattern. As a leader, the
body language, communication style and the way of treating employees matter the most because the
followers observe and take their own cues. Friendly relations with workers allow easy flow of ideas,
thereby encouraging greater yield. Further, ‘Code of Corporation Disclosure Practices’ confirms
transparent declaration of its operations. Company successfully integrates advanced international HR
management processes by retaining local managers in recent acquisition and transferring few senior
managers from India. This makes exchange and adaption to new expertise easier while maintaining
the company’s core values.
Quality has always remained the cornerstone of the Tata way of business; as such a formal system to
scale the performance of different companies was introduced. TQMS help companies under the Tata
group to conduct and enhance its business endeavours especially in relation to business excellence
and ethics. Further, JRD Quality Value Awards named after the late chairman of the group, JRD Tata
where incorporated for ensuring and encouraging quality consciousness. The award acknowledges
the company within the group that achieves highest level of quality and excels quality management.
Such practices entrench a learning environment that would consequently help achieve leadership in
the marketplace by constantly striving to become the best. Strict fellowship of company’s culture has
allowed it to smoothly adhere to its strategy.

BUSINESS STRATEGIES
Tata Motors has constantly strived to be a low-cost leader in the automobile market. Thus, by
employing “Low cost strategy”, it has made its presence felt especially in the untapped and
developing markets like India. However, with increasing interest rates, raw material and fuel prices
the company may not be able to sustain this strategy in the long run.
Tata Motors looks to be putting its shoulder to the wheel of its commercial vehicle business. Once
the bulwark of the company, the CV business has taken a beating over the past few years. While Tata
continues to be the market leader, numbers and market share have dropped considerably. In 2013-14,
it had a market share of 50.23 percent; barely three years later, in 2016-17, commercial vehicle
market share fell to 42.79 percent. As per the latest April-July 2017 CV numbers, this is further
down to 40.99 percent.

The company aims to benefit from modular platforms, reducing complexity and increase flexibility.
While the overarching goal is to produce more products at lower costs, the comprehensive CV
strategy involves an over Rs 1,500 crore investment across CV segments this year and annually; 20
percent topline contribution from CV exports; developing a full range of products for the defence
sector; achieving operational excellence in capacity utilisation and productivity; and a customer-
centric mix of SCR and EGR emission reducing technology.

FUNCTIONAL STRATEGIES
1. MARKETING STRATEGY: Tata Motors does not follow a single marketing approach or
formula but it believes that all members of the community should be served. Tata Motors
offers products such as Tata ACE a mini truck mainly used for agriculture transport purpose,
a huge array of commercial vehicles Tata Nano for the middle class, Tata Indica
and Indigo for commercial purposes and Jaguar in the high-class segment thus creating the
image that there’s something for everyone in its huge line of offerings. Differentiated targeting
strategy is used by Tata Motors to target the customers and satisfy their need and wants.
2. HUMAN RESOURCE STRATEGY: H ir ing t he r ig ht t ale nt is t he gr eat est
cha l le ng e in bu s ines s e nvir o nme nt a nd new a nd innovative hiring strategies are
the need of the hour if Indian companies have to succeed in the changing global scenario.
Some of the innovative hiring strategies could include hiring teams and not just individuals
and offering education and placement packages. Over the past few years HR is witnessing a
dramatic increase in lateral hiring of professionals with some years of experience,
hiring fr o m t he public se ct o r as well a s exper ie nced peo ple lo o king fo r
seco nd car eer s.

3. OPERATIONS STRATEGY: Tata motors has reduced its number of shifts from 3 to 2 in a
day and so as to control reduce cost of production and started making production according to
the sales required. Quality management is crucial to effective operations management,
particularly continuous improvement. More recent advancements in quality, such as
benchmarking and Total Quality Management, have resulted in advancements to operations
management as well for Tata Motors. Costs can be substantial to store and move inventory.
Innovative methods, such as Just-in-Time inventory control, can save costs and
move products and services to customers more quickly.

STRATEGIC BUSINESS MODEL:

 DIVERSIFICATION: Diversification is a corporate strategy to enter into a new market or
industry in which the business doesn't currently operate, while also creating a new product for
that new market. Tata Motors is trying this approach to enter the luxury car segments and
focussing more on the demanding consumer needs and preferences.

 INORGANIC GROWTH: Inorganic growth is the rate of growth of business, sales

expansion etc. by increasing output and business reach by acquiring new businesses by way
of mergers, acquisitions and take-overs. Tata motors have over the year tried to implement
this process by marketing its products more and making the consumer aware of their new
focus and product line. They have come together with many companies to provide the best of
the products to its consumers.

 PARTNERING WITH GLOBAL BRANDS: Tata motors always a different outlook when
it came to have competitive leverage over its competitors. For this they believed in partnering
with the global brands that brings about an exposure. For instance, Tata Motors and Castrol
announced the signing of a three-year strategic partnership agreement for supply of
Commercial Vehicle Oils to Tata Motors globally on Jan 5 2017.

- Guenter Butschek – CEO and Managing Director, Tata Motors Limited, said: “Tata
Motors has had a long and enduring partnership with Castrol in India, delivering
exceptional products and outstanding service for our customers. We are delighted to
 extend this partnership to a global level and look forward to leveraging our
complementary strengths to offer our channel partners high quality support.”

INTERPRETATION:

The implementation of various strategies by Tata motors had a positive impact in the overall
performance of the company. It’s efforts to get into a more customer-oriented demands was
appreciated by the market and it boosted the sales of the company further increasing the profits of the
automobile giant. This was witnessed in it’s 73rd Integrated Annual Report. Their revenue rose to
2,94,243 crores and it sold approximately12,21,124 units. The profits of the company also witnessed
a hike due to the various strategies that were implemented by the management gradually. The
6063.56 crores of FY2017 rose to 6813.10 crores in FY2018. The company noticed a profit growth
of 12.36% and the strategies opted by it were bringing about the chances.

CONCLUSION:

Tata Motors has been a well-known name in the automotive industry for decades and as a result, has
stood the test of time. While Tata’s name was already strong, the launch of Indica made it famous as
India’s first indigenous car manufacturer. Tata received more than 115000 bookings for the Indica in
the 1st year alone, making the best-seller for years and managed to sell close to 1 million Indica’s in
20 years. This means 'Tata' has a better recall value across the country as compared to some of the
newer brands that have entered the Indian market in the past few years. And when it comes to the
Indian buyers, they take their time before fully trusting a brand and that's an area where Tata Motors
have an upper hand amongst others. All they needed was a strong product to reassert their brand.
While Tata is actively working towards creating an exciting image in the minds of the young car
buyers who are set to be the big spenders in the coming years, Tata didn’t see the success it is
witnessing today overnight. Factors like attractive design language, futuristic features, refined
engines and competitive prices helped make Tata such a promising brand today.
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