1. Internal analysis
1.1 Business scope
TATA Motors established in 1945.
Vision to be "best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics." (TATAmotors, 2010)
Definition for value covers all the facets of customer satisfaction. Be it in the area of product safety, reliability, utility or aesthetics (Jobstreet, 2010).
The first company from
Through subsidiaries and associate companies, TATA Motors has operations in the
1.2 Company products and performance
TATA Motors offers two types products- passenger cars, commercial vehicles (TATAmotors, 2010).
In 2009, it sold 642,686 vehicles which is the highest ever for the company, the figures shown in Table 1 indicate that the number continues to grow in 2010, however most of its sales is from domestic market, only 5% comes from international market.
| | Mar. 2010 | Mar. 2009 | Mar.2008 |
| | 71,046 | 52,653 | 35% |
| Worldwide | 4,105 | 1,799 | 128% |
| Total | 75,151 | 54,452 | 38% |
Table 1: Sales from
Source: http://www.TATAmotors.com/our_world/profile.php
1.3 Operational capability
Financial positioning：TATA Motors Limited is India's largest automobile company, the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer, with consolidated revenues of USD 14 billion in 2008-09 （TATAmotors, 2010）.
Manufacturing: TATA Motors owes its leading position in the Indian automobile industry to its strong focus on indigenisation. This focus has driven the company to set up world-class manufacturing units with state-of-the-art technology. Every stage of product evolution-design, development, manufacturing, assembly and quality control, is carried out meticulously (TATAmotors, 2010).
Supplier relationships: The growth of TATA Motors is marked by customer focus and passion for engineering, and as importantly a collaborative relationship with its vendors. TATA's belief is that "together we can achieve more, when each – the company and the vendor" – focuses on its respective area of excellence and bring to bear its unique competencies on product development. Working towards this goal, TATA have adopted practices like early vendor involvement and mentoring, which have resulted in effective deployment of resources by the vendor as also up gradation of their capabilities (TATAmotors, 2010).
But earlier February 2009, press reports surfaced that the company had missed payments to suppliers (Singh, 2009).
Technical
▪ World-class automotive research and development are key factors that contribute to the leadership of the Company (TATAmotors, 2010).
▪ TATA motors produced world's first Air-Powered Car in 2008 (Sullivan, 2008).
Tooling capability: The Central Tool Room at TATA Motors,
Figure 1: Stamping Tools Manufacturing Process
Source: http://www.tatamotors.com/ctr/
People : The Company employs around 24,000 people (blue & white collared) who share a passion for automobiles (TATAmotors, 2010).
TATA owe its success to the highly motivated and talented staff. Recruitment division picks the elite from premier universities, management and engineering institutes in
1.4 Present marketing mix strategy
1.4.1 Products
Passenger Vehicles: Originally focused on providing Low budget cars, now they spread to luxury cars since they acquired Land Rover and Jaguar (TATAmotors, 2010).
Commercial Vehicles: The wide array of commercial vehicles from TATA Motors are designed to take care of almost every business needs, big and small. From rigid trucks to tractor trailers, from light commercial vehicles to specialised defense carriers, from luxury buses to compact city carriers (TATAmotors, 2010).
1.4.2 Pricing
▪ Price is not too low or too high with the prices of same vehicle from competitors, it has to be at par.
▪ Vehicle finance is available.
▪ Giving discount every month and special promotion for certain type of vehicle also one of the strong strategy use by TATA motors (TATAmotors, 2010).
1.4.3 Distribution
▪ Retailer and dealer based over 28 countries worldwide.
1.4.4 Promotion
▪ Different methods are being used, such as Advertising, Personal selling, Sales Promotion and Publicity
1.5 Existing customer groups
1.5.1 End users consumer
▪ Young personal users
▪ Medium-Low income family
▪ Military
1.5.2 Business, resellers- retailers/ distributors
▪ Dealers
▪ Commercial users
1.6 Customer needs and value
▪ Who：
▪ What: Vehicles for multiple purpose and continued services
▪ Why: Through dealers and distributers
2. External analysis
2.1 Macro environment analysis of new country
2.1.1 Economic Environment
Despite a global slowdown, the Australian economy has remained strong over the past 10 years. Income growth has been brisk and employment has expanded (Kotler et al, 2009, P82,).
Measuring national income is also important to chalk out the future course of the economy. It also broadly indicates people's standard of living (TradeChakra, 2010). According to the Australia Bureau of Statistic (2009),
Figure 2: Real net national disposable income per person
Source: Australian System of National Accounts, 2007-08 (cat. no. 5204.0).
2.1.2 Political Environment
▪ The level of Regulation is medium.
▪ The trend of Regulation is increasing.
This industry is set to face more stringent emissions standards in the future. The European Community tightened its limits on exhaust emissions at the beginning of 2001, and they will become even stricter in 2009. By 2008, regulations in
In June 2006, the Australian Transport Council (ATC) urged the Federal Government to make it compulsory for new cars to include computerised safety technology that detects and avoids skids (IBISworld, 2010).
Tariff rate is another factor needs to be considered. In
2.1.3 Technological Environment
Nowadays, consumers not only consider the utility of the products, but also whether the products have positive or negative effect to the environment. For the vehicle industry, electric car or hybrid car becomes more and more popular.
For example:
▪ Nissan unveiled in
▪ Mitsubishi, its product- Mitsubishi iMiEV which is also electric car will be shown on
2.2 Market/industry analysis
2.2.1 Definition and structure
Companies in the Motor Vehicle Manufacturing Industry manufacture motor vehicles. These vehicles mainly include cars, sports utility vehicles (SUVs), light commercial vehicles, buses, vans and medium, heavy and special purpose highway trucks ( see Figure 3). Vehicles produced in this industry are used for private and commercial purposes (IBISworld, 2010).
Market Segment
| | Product/Services Segment | Share |
| | 51.8% | |
| | 20.8% | |
| | 12.0% | |
| | 5.8% | |
| | 3.5% | |
| | 3.1% | |
| | 2.4% | |
|
| | 0.6% |
Figure 3: Market Segment of Australian market
Source: IBISWorld Industry Report, 2010, Motor Vehicle Manufacturing in
2.2.2 Porter's 5 forces model
Threat of new entrants
-The market is attractiveness
▪ The next five years the short term import will increase as the tariff on imported cars will be lowered from 10% to 5% in 2010.
▪ Along with the development of fuel-efficient car production and a shift away from manufacturing big cars, it will lead to a rise in industry profitability.
▪ The industry revenue is forecast to grow by 3.1% to $13.74 billion.
-Entry barriers:
▪ Barriers to entry in this industry are high, and these barriers are steady.
▪ Domination of existing companies with greater market power.
Bargaining power of buyer
-The bargaining power of buyer is low.
▪ Car does not represents a significant fraction of the buyers cost
▪ Buyers' switching costs are high
▪ Buyers' are less price- sensitive
Bargaining power of suppliers
- The bargaining power of suppliers is medium.
▪ Some parts of car can be offered in different ways, and there are many substitutes. For example: Holden has replaced several local suppliers and sourced parts from
▪ The price of some raw material is not stable, such as oil and steel.
Threat of substitute products and services
- Threat of substitute products and services is high
▪ As the development of technical, the traditional motor vehicle manufacturing is threatened by new motor vehicles such as environment- friendly car.
▪ The existing players in this industry have launched new kinds products, for example:
-
Intensity of rivalry among competitors in industry
▪ Competition in this industry is high and continually increasing (see Figure 4)
▪ The main sources of competition in this industry stem from imports, pricing and branding.
▪ Imports are on the rise due to lower tariffs and the proliferation of relatively cheap foreign vehicles.
-Main competitors
▪ Toyota Motor Corporation
During the past 5 years, the company's revenue grew by 4.8% annually, and the average performance was mainly due to it being the only car maker to have a medium car offering such as Camrys and Aurionst
It will start producing the hybrid Camry (small size and green car) in
▪ GM Holden Ltd
Focus on large, powerful fuel-inefficient vehicle.
Holden's Revenue fell by 1.5% annually and the company has been making losses since 2005. As the consumers could have been demanding smaller cars, there were not enough of them to satisfy demand.
Market Share
| | Major Player | Market Share range |
| | 35.1% (2010) | |
| | 29.4% (2010) | |
| | 17.0% (2010) | |
| | 18.5% (2010) |
Figure 3: Market Share of Australian market
Source: IBISWorld Industry Report, 2010, Motor Vehicle Manufacturing in
3. SWOT analysis
| Strengths i. Performance good in ii. Leading position in the iii. Overall, it has good relationship with its vendors iv. The level of technical is high v. Recruit elite from premier universities vi. Price of product is reasonable | Weaknesses i. Few sales is made in worldwide market ii. Distribution network is not big enough in worldwide level |
| Opportunities i. Australian economy has remained strong over the past 10 years ii. The level of regulation is medium iii. Tariff rate is lower than many countries iv. Industry revenue keeps growing | Threats i. The trend of regulation is increasing ii. Some companies already sold environment- friendly cars in iii. Entry barriers are high and steady iv. Competition in this industry is high and continually increasing v. Domination of existing companies with greater market power |
4. Critical success factors
- Positive Image
Public image could influence buyer decisions, because buyers entrust their safety, as well as a sizable portion of income, to a car company. They want to buy better products with less money (Dudenhoffer et al, 2006).
- Strong Distribution Network
Auto manufacturer rely on franchised dealerships to offer local showrooms. The dealer must have professional knowledge and must be reputable in selling cars (Kotler et al, 2009, p27).They must could add value to the products, and provide more opportunities for the products (IBISWorld, 2010)
- Efficient cost control management
An automaker needs to keep costs under control, because their cost such as the price of raw materials and outsourced components are fluctuating all the times (Dudenhoffer et al, 2006). Efficient cost control management could help them to access to relatively cheap price (IBISWorld, 2010).
- Good research and development management
An automaker needs to keep researching and developing their manufacturing technologies to meet consumers' need (IBISWorld, 2010).
- Optimum capacity utilization
The company needs to control how many products they should produce. That means it needs to keep balance between demand and supply, not too much, not too less (IBISWorld, 2010).
- Compliance with various local regulations
Auto manufactures need to pay attention on local regulations such as safety standards, fuel efficiency and emissions standards. Sometime, it may cost less to produce perform marginally vehicles in some areas. However, if the products once cause problems, the cost of government-mandated repairs or a safety recall may cost much higher (Kotler et al, 2009, p87-88).
- Follow consumers' demand
While making buying decision, customers may think about the price of fuel, the state of the economy, and new automotive technologies (Kolter et al, 2009, p166). It is important for automakers to follow these trends and quickly create new products which could meet customers' current and near-future needs. (Hartman, 2010).
5. Statement of key problem and opportunities
Key problems:
1. Positive Image- so far, TATA motors' products mainly sell in
2. Strong distributing network- TATA motors' distributing network is mainly in
Key opportunities
1. Good Research and Development management- TATA motors has world-class research center. And it is the first company which produce air-power car.
2. Follow consumers' demand- nowadays, people care about the environment more, and TATA Motors has began produced environment- friendly cars.
3. Compliance with various local regulations- TATA Motors has follows the emissions standards
References
Australian Bureau of Statistics (2009) National Income, Retrieved from http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/1383.0.55.001Main+Features142009
Dudenhoffer F., Neuberger K., Wiegand P., Steinel J. (2006) Developments and success factors in automotive retail
Heasley,A. (2009, August 3) Nissan turns over a new, green Leaf, Retrieved from
http://business.theage.com.au/business/nissan-turns-over-a-new-green-leaf-20090802-e5wm.html
Hartman, D. (2010) Automotive Critical Success Factors, Retrieved from
http://www.ehow.com/list_6181968_automotive-critical-success-factors.html
Jobstreet (2010) Tata Motors Ltd, Retrieved from http://siva-in.jobstreet.com/_profile/previewProfile.asp?advertiser_id=7301
IBISWorld Industry Report (2010) Motor Vehicle Manufacturing in
Kotler, Philip, Kevin L. Keller, and Buron, S (2009) Marketing Management (1st edition),
Productivity Commission (2002) Review of Automotive Assistance, Report No. 25,
Singh, M, (2009)
http://www.time.com/time/world/article/0,8599,1881404,00.html
Tata Motors (2010) Profile, Retrieved from http://www.TATAmotors.com/our_world/profile.php
Tata Motors (2010) Tata Motors March sales at 75,151 nos, retrieved from http://www.TATAmotors.com/our_world/press_releases.php?ID=551&action=Pull
Tata Motors (2010) Products, Retrieved from http://www.TATAmotors.com/products/
Tata Motors (2010) Worldwide, Retrieved from http://www.TATAmotors.com/landing/
Tata Motors (2010) Manufacturing, Retrieved from http://www.TATAmotors.com/our_world/manufacturing.php
Tata Motors (2010) Centre Tool Room, Retrieved from http://www.TATAmotors.com/ctr/
Tata Motors (2010) Research, Retrieved from http://www.tatamotors.com/our_world/research.php
Sullivan, M. (2008) World's First Air-Powered Car: Zero Emissions by Next Summer, Retrieved from http://www.popularmechanics.com/cars/news/preview-concept/4217016
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