4.1. General Overview and Background
TheIndian automobile industry has remained one of the most rapidlygrowing markets around the globe. By the year 2016, the industry hadalready reached the level when it could account for over 7.2% of thenation’s GDP (Pathak& Pathak, 2016).Even though it is still categorized as an emerging market, thesegment shows an element of drastic improvement courtesy ofmotorcycles and vehicles. Further, the progress of the industry hasbeen aided by the companies’ increased urge to explore the isolatedmarketplaces (Ramamurti,2013).Tata Motors group is one of the most pronounced firms in the Indianmotor sector. The company is a renowned manufacturer of both carrierand private vehicles. Tata was founded in the year 1945 and from thepoint if its establishment, the company has remained the leader inthe Indian auto industry (Brandl& Mudambi, 2014).Presently, Tata group owns over five lines of commuter vans andanother bigger section that manufactures larger machines includingtippers, trucks, and tractors. Important to note is that the twolines have been unceasingly successful. The achievement is ascribedto the organization’s unique business strategies and competitiveadvantages. The following section discusses Tata group’scompetitive advantages, timing of market entries and penetration, aswell as the company’s successful business strategy.
TataAuto Company has been prosperous in gaining and increasing its marketshare because of its ability to capitalize on various competencies.The business is highly dynamic and competitive in every aspect oftrade. The organization ensures that there are always multipleactivities in progress to protect them from low production. Themanagement understands the benefits of innovation in the highlyevolving locomotive segment (Cuervo-Cazurra,Newburry & Park, 2016).One of the ways that Tata uses to handle this is through its capacityto adopt and integrate technology in all its operations. The otherformula that it applies to be at par with the evolution is throughthe production of highly effective and low-cost automobiles(Shalender& Singh, 2015).The management of Tata is a team of qualified individuals who areable to handle matters of mergers and acquisitions. By doing so, theyenable the company to expand rapidly an element that is crucial forthe sustenance of its philosophy. The other key competency held bythe group is its strategic positioning in India a country withcomparatively low GDP (Brandl& Mudambi, 2014). Thelocation works for its good by allowing it realize the possibility ofpenetrating other emerging and developing markets. The economy ofIndia forces Tata group to manufacture low-cost vehicles which areeasy to sell to other unindustrialized economies.
4.2.2Research and Development
Besidesthe core competencies, Tata also utilizes the excellence posed by itsR&D experts. The team enables Tata to have the capacity ofconstant progress in auto technology as a result of intensiveresearch and development activities. Tata emphasizes on high level ofresearch because it believes that through market studies, it can givethe clients quality products. To have an upper hand in this, thecompany has over 700 researchers and more than 800 developmentexperts. Moreover, the business has established a series of researchand development points within the country (Brandl& Mudambi, 2014). Asa result of this great emphasis on research, Tata has been able tocome up with ultramodern assembly lines.
4.2.3Mergers, Acquisitions and Expansion
Tatais a typical business venture that aims to grow just like any othercompany. Therefore, the organization has found it important to alwaysgrow and expand by mergers and acquisitions (Brandl& Mudambi, 2014).For example, in the year 2004, the company acquired Daewoo in a bidto take over the Korean market share. Instead of assimilating thecompany, Tata managers opted for the method of continuing to buildand market the existing models of Daewoo. The business even wentahead to introduce some Daewoo’s motor vehicle makes to the globalmarket. Tata aimed to convince the Korean administration that it wasactually positive-willed in helping the country’s economy growinternationally. Apart from acquiring Daewoo, Tata signed othermergers with companies like Land Rover and Jaguar, which made it beregarded as belonging to the luxury car segment (Patel,2015).
Asstated before, the Tata’s setting in a country that is stillundergoing development makes it successful and highly competitive.The business utilizes the idea that the cost of labor in India iscomparatively low. The amount that goes to manpower is less than 8%of the total cost of the finished machines. Additionally, India isamongst the most preferred automobile manufacturers, which impliesthat the business has direct dealership with most consumers(Rasmussen,2012).The fact that Tata is a renowned manufacturer also gives it an upperhand in bargaining. Related to the negotiation power is the idea thatthe Indian administration has put in place protectionist rules thattend to favor the company’s dealings (Ramamurti,2013).The competitive advantages of the business are all made possible byvirtue that it is a division of the greater . The auto unitbenefits from in terms of supplies, technologies,knowledge transfer, and innovative culture.
4.3Timing of Market Entries and Market Penetration
Basedon its ideology of internalization, Tata plans to center itsoperations in around 14 nations. The reason for this narrow focus isthat these are the countries whose market conditions and economiestend to simulate the Indian system. Tata aims to have self-sufficientprocesses within the few nations. Because of the economic sense ofthe company, it does not have the capacity to overspend in setting upits divisions in highly developed regions. Moreover, Tata assessesthe viability of sites based on their labor costs and marketopportunities (Brandl& Mudambi, 2014). Inthe view of internationalization strategies, the business can beconsidered as a penetrator that focuses on getting into areas withsimilar conditions as those of home. The approach guarantees Tataeasy growth due to the use of pre-established competencies.
Onthe basis of timing, Tata group realized that as years passed, manyareas were getting industrialized but there were no adequatesuppliers of machines to these regions. From then henceforth, thebusiness has identified the best ways that it can utilize to reachareas with high power of purchasing (Shalender& Singh, 2015).The focus on developing economies has worked out for the good of thebusiness because these are the same areas where industrialization ispicking up, hence the high demand for heavy automobiles. In addition,Tata has always taken advantage of situations such as when thecompetitor manufacturers are undergoing political crises. During suchmoments, the industries may not be able to fully exploit the fullpotential of the market. As a result, through its highly skilled teamof researchers, Tata is able to cover for what is lacking in themarket as far as auto supply is concerned. For instance, when thebiggest suppliers of Europe went into a state of dormancy as a resultof the political wrangles that hit the country, Tata came out as aresort and catered for almost 30% of all the nation’s motor vehicleneeds till the end of the chaos.
4.4Successful business strategy
Thecause of Tata’s prominent achievement in the world of motors is itskey success factors. In terms of economies of scale, the business hasbeen able to take advantage of the fact that it is a renownedproducer of the low-cost vehicles. Equally, Tata enjoys theprivileges of diversification. It has a large collection of productline ranging from the most lowly-priced cars to the luxurious brandsincluding Land Rovers and Jaguars. On the scope of innovation, theorganization has more than 1900 technologists and engineers who helpit achieve in research and development (Brandl& Mudambi, 2014). Thelarge team of experts gives the business an opportunity for constantimprovements, hence attending to the unique demands of the clientele.
Moreimportantly, the business has always centered its operations on theaspect of quality. Tata esteems its R&D experts because it is fortheir effort that the company has been able to have the large marketshare that it enjoys today. The firm believes in total qualitymanagement exercises because it is from the practices that they areable to achieve merit. Through the utilization of the low-coststrategy, the business has been able to influence most of theunexploited and emerging markets. Nonetheless, the culture of lowcost may not be sustainable for many years because the country hasstarted experiencing many changes in terms of heightened interestrates, costly fuel prices, and expensive raw materials (Patel,2015).
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Cuervo-Cazurra,A., Newburry, W., & Park, S. H. (2016). EmergingMarket Multinationals: Managing Operational Challenges for SustainedInternational Growth.Cambridge University Press.
Pathak,A. A., & Pathak, A. A. (2016). Tata Motors’ successfulcross-border acquisition of Jaguar Land Rover: keytake-aways. StrategicDirection, 32(9),15-18.
Patel,K. J. (2015). A study of economic value added based performancemeasurement of selected automobile companies in India.
Ramamurti,R. (2013). Cross-border M&A and competitive advantage of IndianEMNEs. The competitive advantage of emerging market multinationals,239-259.
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Shalender,K., & Singh, N. (2015). Marketing flexibility: Significance andimplications for automobile industry. GlobalJournal of Flexible Systems Management, 16(3),251-262.
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