Running Head: TATA MOTORS

Tata Motors

Institution

Name

Date

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Executive summary

Marketing is a key tool in market domination especially in markets that have immense

completion like Indian. However, though the automotive industry is competitive and no single

company boasts of dominating it, Tata Motors is ready to take its chances. The project looks at

the automobile industry in Indian in respect to how Tata motors has performed in meeting the

need of the customers at the same time remaining competitive. Through use of tools like porter’s

diamond and PESTLE we look at how Tata has managed the competition in the Indian market to

gain a competitive advantage. The project is therefore categorized into four subheadings namely

the introduction, macro environment factors such as politics, economy, social, technology,

environment and legality, poster diamond model that focuses on factors, demand, related &

supporting industry and firm strategy, structure and rivalry and finally the recommendations.

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Table of Contents

Executive summary ....................................................................................................................................... 2

1.0. Introduction ........................................................................................................................................... 4

1.1. Purpose of the project ....................................................................................................................... 5

1.2. Organisation Goals ............................................................................................................................. 5

2.0. Macro environment factors ................................................................................................................... 5

2.1. Political ............................................................................................................................................... 6

2.2. Economical ......................................................................................................................................... 6

2.3. Social .................................................................................................................................................. 7

2.4. Technological ..................................................................................................................................... 8

2.5. Environmental .................................................................................................................................... 8

2.6. Legal ................................................................................................................................................... 8

3.0. Poster Diamond model .......................................................................................................................... 9

3.1. Factors condition ............................................................................................................................... 9

3.2. Demand condition............................................................................................................................ 10

3.3. Related and supporting industries ................................................................................................... 10

3.4. Firm strategy, structure and rivalry: ................................................................................................ 11

4.0 conclusion and Recommendations ....................................................................................................... 11

References .................................................................................................................................................. 13

Appendices .................................................................................................................................................. 14

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1.0. Introduction

The rapid growth of Indian market positions it as a good market for most product

Automobiles included. According to the report by Auto-mobile Industry in India (2016), the

Indian automobile industry account for 7.1 percent of Indian Gross Domestic Product (GDP). In

the general global market, around 31 percent of small automobiles are produced from Indian.

Tata Motors therefore is located in a country with high market potential. Interestingly Indian has

so much untapped automobile market as depicted by (Suisse, 2014). A snapshot of the Indian

automotive market info-graphic show a market experiencing consistent growth as shown in

figure one below.

Fig1: India Automobile industry source: (Auto-mobile Industry in India, 2016)

The automobile market in India is interesting since despite its potential, no major

automobile producer has more than 5% share with 30% of the demand of the automobile coming

from rural area. Fortunately the Indian government is supportive and have several initiatives to

help the market enjoy sustainable growth.

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1.1. Purpose of the project

The purpose of the project is to help student develop market analysis skills. Therefore the

students are instructed to choose an overseas company and analyse its market potential through

analysis tools like PESTEL and POSTER Diamond model.

1.2. Organisation Goals

Tata motors strive to:

Be the most admired multi-national Indian car company producing vehicles that people

love to buy

Create an organization that people enjoy working for ,doing business with and investing

in

2.0. Macro environment factors

Macro environment in business set-up is the external surrounding that has direct influence on the

performance of the business. Therefore Tata has to strategize based on accurate analysis of the

macro-environment it operate in. The figure below shows different factors upon which

businesses depend on and are external hence beyond the control of the company.

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In this project we will use Pestle as the framework to analyze the macro environment of

Tata motors located in Mumbai India. The company has it’s headquarter in Mumbai

(Maharashtra) India and was founded in 1945 with an option of exploiting many untapped

markets like Canada. The company specializes on automotive manufacturing and is a subsidiary

of Tata Group of companies. The abbreviation in the framework PESTLE stands for political,

economic, socio-cultural, technological, legal and environment. The components are discussed

further below:

2.1. Political

Business requires a political stable environment to thrive. Therefore the stability and

attitude of the political players and the government influence tax policies and other trading

agreements have great influence on the business prospects. The political stability enjoyed in

Canada is almost next to none especially among the North America countries. The Canadian

government enjoy balanced budget deficit which is very relative to other economies and the

countries has high financial potential due to surplus in trade. The stability was reflected during

inflation with the country managing to keep sound monetary policy. The limited corruption and

transparency in Canada allow investment to be simpler and cheaper since corruption and hidden

charges are eliminated.

2.2. Economical

Though it vary from country to country, it factor in issues such as economic growth rate,

cost of inputs, employment and unemployment rate, exchange rate, inflation rates and other

policies relevant to the business. Automotive innovation Fund (AIF) give support to automotive

firms to allow research and accommodate innovation, green environment and more fuel efficient

people ("Canadian Automotive Industry", 2014). The Canadian economic growth drivers such as

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growth of infrastructure, the growth in the agricultural industry, rising Indian per capita,

increasing urbanisation, easier finance scheme and favourable government policy have all

factored in and created larger demand for automobiles. The Canadian commercial sector enjoys

large demand for efficient and affordable automobiles to support other sectors of economy. Tata

motors through its operation in various countries and collaboration with other major market

players continue to learn the marketing and consumer needs to its favour. The overall economic

performances of Canada give it a better avenue to provide potential market since it has high

population of potential customers.

2.3. Social

The social factors take consideration of factors such as age distribution, wealth

distribution, growth rate, lifestyle and living standards. Tata motor management understand the

impact the management styles have on the social values of the people around and their culture. In

their acquisitions Tata motors have continued with the model of the initial company acquired. A

good example is Daewoo commercial vehicle Company which they acquired at the time it was

the 2nd largest Korea truck best seller. Due to their understanding of the social values, Tata did

not de-culture or assimilate but build on the marketing model used by Daewoo. Therefore Tata

can use the same concept to exploit Canadian market and compete successfully.

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2.4. Technological

Technology improvement has a way of making the business environment better as speed

of production improve and cost of manufacture drops. The factor therefore focuses on issues

such as new material development and better manufacturing methods. Tata motors have done

well in the Indian market due to its innovativeness and ability to understand the need of the

customer. Therefore Tata has come up with world smallest car to accommodate the need of its

market that need small, a affordable and easy to maintenance vehicle (Blitterswijk &

Karadzhov, 2009). In its quest to keep with technology and the environmental regulations, Tata

Motors is already producing cars that are electrically powered that run on lithium batteries.

Indica one of Tata brands released in 1998 was the first indigenous car that did well in the

market due to its powerful engine and fuel economy.

2.5. Environmental

Coined around issues such as natural resource and recycling technologies. Tata has been

at the forefront in the quest for green environment as reflected in their fight to stop deforestation,

the large investment on eco-cars, adherence to the Indian and European standards on emission of

greenhouse gases and finally involvement in green earth and clean earth campaign. Canada being

a country that value environment, Tata has to understand the expected environmental standards

and adhere to them.

2.6. Legal

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Legal are the laws and regulations. Every business venture has to respect the laws and

regulations to run smoothly. Examples of legal considerations are: the employment laws, local

& international trading regulation, trading restrictions and finally rules that revolve around

monopoly & mergers. The labour law reforms have smoothen the working environment between

employers and their workers. The Canadian government understand the importance of trade

relations with other countries in terms of improving the economic potential hence Tata will be

highly appreciated.

3.0. Poster Diamond model

The diamond porter’s model was introduced by Michael porter and is used to analyze the

competitive advantage of a company due to mere fact of location near other relevant but

supportive companies (Smit, 2016). The companies form a cluster where the competitiveness of

one trigger a value added chain and improve the client customer relationship in a region.

3.1. Factors condition

Factors entail the physical resources, knowledge resources, human resources, the capital

resources and infrastructure. Tata motors have always adopted system that enhances the

employee performance through offering training and retraining to enhance the skills of the

employees (MaJeed, 2016). Other focus is on the employee welfare and benefits such as health

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care and retirement benefits which increase employee confidence and commitment. At the same

time Tata has adopted a versatile and flexible strategic plan that helps it adapt to the new local of

the new market they venture in even though factors like infrastructure, transportation,

government policies, and environmental regulation and salary rates may differ (Blitterswijk &

Karadzhov, 2009).

3.2. Demand condition

This is a situation where the local market pressure the companies to be innovative and

create products that are more customer oriented and better than the competitions. The Indian

market is not only sophisticated but the demand is growing at an alarming rate (MaJeed, 2016).

The Indian people like commercial vehicles that are convenient and cheap and that make the

industries located within India have an upper hand in understanding the customers, producing the

models they need and that lead to impossible demand from both urban and rural set-up.

3.3. Related and supporting industries

Industries interlink and one industry can be significant to the other in that its produce are

inputs for the other company and that assist in internalization and subsequently make the

business model cost effective. The idea stimulates growth and innovation in the chain of

industries. Indian had slept in the past in terms of economic development. Fortunately the Indian

government has realized their potential and Indian is one of the fastest growing economy and an

emerging market for various suppliers and other players. This has created a strong network for

service providers, suppliers and various competitors and that has led to business growth due to

the ever rising demand. Such competition improves the strength of the domestic market due to

the financial inflows, transfer of global business best practises and innovation (Arline, 2015).

Tata motors has also acquired a market dominating model from ford that constitute establishment

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of operations sin the shortest time possible and that incorporate spare unit, service unit and sales

outlet. Such model has enable Tata motors to expand to countries like Argentina, Thailand,

South Africa and United Kingdom.

3.4. Firm strategy, structure and rivalry:

This has to with the manner in which a company is set up in respect to the goals and

vision. At the same time it is deals with how rivalry and the created competition trigger

innovation due to pressure to stay in the competition. Tata has a strategy to be dominant and to

meet the customer need and has strategically located itself in several countries to oversee that

(Arline, 2015). However, the competition in that Indian market where no single company enjoy a

market share of more than 5% continue to push Tata motors to be more innovative and

competitive. Tata motors at the same time has acquired ISO 9001:2000 for quality compliance

and ISO 14001:1996 for environmental management system compliance and the two contribute

to making Tata motors brand recognized and competitive.

4.0. Conclusion and recommendations

Tata motors has done well in terms of market identification, global position and

versatility in terms of technology and understanding of consumer interest like they have done

with their various models which are cheap and affordable to maintain. However, there is still

room for development and increased market domination if nice strategies are implemented.

Therefore I would recommend that Tata Motors:

Embark on massive research to identify customer needs like they have done in the Indian

market where people prefer small and affordable vehicles.

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Be a step ahead in new market identification especially in other untapped markets like

Indian where people can afford cheap cars.

Enhance quality and performance to help retain the already available customers and

target new buyers.

Scrutinize the best performance strategize of best performing automobile industry and

filter the qualities that can perform in their versatile market.

Encourage the government to do more investment in infrastructure especially the

transport system to enhance trade.

Need to be versatile and produce different types of cars especially in the area of luxury

cars which they have exploited fully.

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References

Airline, K. (2015). Porter's Five Forces: Analyzing the Competition. Business News Daily.

Retrieved 27 March 2016, from http://www.businessnewsdaily.com/5446-porters-five-

forces.html

Automobile Industry in India, Indian Automobile Industry, Sector, Trends, Statistics.

(2016).Ibef.org. Retrieved 26 March 2016, from http://www.ibef.org/industry/india-

automobiles.aspx

Blitterswijk, M., & Karadzhov, R. (2009). Financial and Strategic Analysis of Ford Motor

Company and Tata Motors, 3(2), 100-189. Retrieved from

http://studenttheses.cbs.dk/bitstream/handle/10417/708/miel_van_blitterswijk_og_rosen_

karadzhov.pdf?sequence=1

Home - Canadian Automotive Industry. (2014). Ic.gc.ca. Retrieved 29 March 2016, from

https://www.ic.gc.ca/eic/site/auto-auto.nsf/eng/Home

KPMG,. (2015). The Indian Automotive Industry. Retrieved 27 March 2016, from

https://www.kpmg.de/docs/Auto_survey.pdf

MaJeed, A. (2016). Key factors that will propel growth in auto industry - AutoLogue by Abdul

Majeed | ET Auto. ETAuto.com. Retrieved 27 March 2016, from

http://auto.economictimes.indiatimes.com/autologue/key-factors-that-will-propel-growth-

in-auto-industry/557

Ranawat, M., & Tiwari, R. (2009). Influence of Government Policies on Industry Development:

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The Case of India’s Automotive Industry. Technology And Innovation

Management, 2(1), 3-6. Retrieved from

https://www.tuhh.de/tim/downloads/arbeitspapiere/Working_Paper_57.pdf

Ray, S. (2012). ECONOMIC PERFORMANCE OF INDIAN AUTOMOBILE INDUSTRY: AN

ECONOMETRIC APPRAISAL, 3(2), 12-24. Retrieved from

http://www.saycocorporativo.com/saycouk/bij/journal/vol5no1/article_16.pdf

Smit, A. (2016). The competitive advantage of nations: is Porter’s Diamond Framework a new

theory that explains the international competitiveness of countries?, 3(2), 12-34.

Retrieved from

http://www.unisa.ac.za/contents/faculties/service_dept/docs/SABVIEW14_1_chap5.pdf

Suisse, C. (2014). The Untapped Potential of the Indian Auto Market - The Financialist. The

Financialist. Retrieved 26 March 2016, from https://www.thefinancialist.com/the-

untapped-potential-of-the-indian-automobile-market/

Appendices

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SOURCE (KPMG, 2015)