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Tata Motors is an automobile industry that is based in India and has been in existence for over 130 years. Tata group is among the leading industries in India contributing to the economic grown. As a matter of fact, the revenue of Tata is approximately 2.6% of the entire country's Gross Domestic Product (GDP). In this essay we examine the features of Tata motors from different points of perspectives considering the provided case study.
Features of Indian Market that Make Tata Vehicles Attractive
The strong feature of Indian market is that it is made up of several people who are categorized as lower-class economically. Therefore the fact that Tata Motors produces low cost vehicles some retailing at less than $2000 means that these individuals will afford. The other fact is that India experiences a tremendous growth in population of the middle-class population with high purchasing power of low cost vehicles making a huge market for Tata Motors. Moreover, the economy of India has been growing and the trend is expected to grow up to around 2045-2050. This economic growth increases the per capita GDP which increases purchasing power thus making it the highest market that demanding cars. Furthermore, the Indian market is improved by the government support by developing infrastructure such as roads which lead to a demographic shift to transportation thus facilitating higher car purchases.
SWOT Analysis for Tata Motors
Firstly, Tata Motors offers the cheapest cars fitted with all safety and design features which attract a huge customer base of middle and lower class income earners. Secondly, the company offers a wide range of products ranging from the smallest through to the luxury cars which makes it to capture a large market segment. In addition, the company has the largest revenue in India's automotive industry which gives it the strength to expand and implement its growth strategies. Furthermore, it has strength in its huge markets coupled with international growth strategis which are propelling the company to greater competitiveness.
The company is also faced with some weaknesses beginning from the fact that despite the purchase of Jaguar and the Land Rover brands, the Indian domestic market does not record high sales. This is because of the low economic class of the huge population. Moreover, automotive industries makes a lot of profit by selling luxury vehicles thus making Tata Motors to miss on the profit since most of its sales are of low cost vehicles which are either commercial or passenger.
The first opportunity that exists for the company is that of more acquisitions and partnerships across the global markets. This opportunity will enable the company to access larger markets and develop a command in automotive industry. In addition, it has an opportunity to expand its services by not only manufacturing cars but also providing the maintenance and selling accessories. Moreover, it has an opportunity to use the latest technology in developing its products so as to attract new customers in a market of huge dynamics.
The first threat is that the company is that of competition from other automobile industries across the globe which includes Japan industries. Secondly, there is a threat caused by increasing costs of input materials which exerts pressure on the manufacturing costs. Moreover, it is faced by the threat of emission compliance measures which are costly thus cutting on its revenues. Furthermore, the increasing fuel costs poses a threat in that the consumers may no longer be willing to purchase the cars due to high prices of fuel servicing.
TATA Five Force Model
The five force model of Tata indicates that it is constantly facing the threat of new entrants into the lucrative automobile industry not only from India but entire globe. The only limiting factor that could reduce the entrants is the huge costs of capital required. Secondly, the company is in an automotive industry which is characterized by high intensity of competitive rivalry. In addition,, the substitute products including aircrafts, trains may be expensive thus there is less threat from substitutes facing the company. Moreover, the customers of Tata have got high bargaining power because they have several automobile industries to buy their cars thus subjecting the company to their prices. Furthermore, the company has its suppliers' bargaining power reduced because it buys several input materials from a single supplier thus benefiting from economies of scale.
Key Success Factors of Global Automobile Major
The first factor is that of acquiring an international company which brings new markets, technology and business growth. The other success factor is that of access to global markets to purchase new products and technology at competitive prices. Moreover, the international strategic alliances make it possible for the company to develop strong business ties leading to product swaps and strong brands development.
International Success Strategy for TATA
The international growth strategy of Tata Motors was successful in achieving its objective of developing new products. This was through acquisitions and strategic collaborations as well as leveraging own abilities. The company managed to acquire several international companies including Tata Daewoo in 2004 and Jaguar Land Rover in 2008. Also, the company developed new products such as a new people's car called Tata Nano in 2008 and the India's first mini truck in 2005.
Focused Positioning and Marketing In Selected Countries
I do agree with Mr. Ravi Kanth Managing Director TML that the success internationally will be through focused positioning and marketing in selected countries. This is because through this strategy, Tata Motors has been able to succeed in South Africa, Sri Lanka, Russia and East Europe. For instance, in South Africa the annual sales were 360,000 units achieved through focused positioning and marketing which had an initial target of 2,000 units.
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