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In this assignment, I am going to do SWOT analysis consider to establish current position of TATA MOTORS and how this swot analysis can be used to develop corporate strategy for them.
TATA was established in 1945. It is India's largest commercial vehicle manufacturer and passenger vehicles and employs 23000 people. It was the first Indian automobile company to list on the New York Stock Exchange. Tata Motors began manufacturing commercial vehicles in 1954 with a 15-year collaboration agreement with Daimler Benz of Germany.
SWOT stands for Strength, Weaknesses, Opportunities and Threats. SWOT analysis is an important for strategically formulation rule, which Tata has to embrace. The current strength can become weaknesses of tomorrow. If Tata does not develop strategies to support those strengths, to convert weaknesses into strength, realize opportunities and also minimize threats and convert them into opportunities.
For the method of investigation I used Internet, Tata Company's report, some literatures of management.
Tata Motors is India's largest automobile company, with consolidated revenues of $ 4 billion in 2008-09. [www.tatamotors.com] It is also the world's 4th largest manufacture and the 2nd largest bus manufacturer. It is financially strong to enable to devote its resources to Research & Development. They can obtain good international publicity which has an implication on the stock exchange for increasing their share prices.[ www.tatamotors.com]
Tata cars, buses and trucks are being marketed in several countries in Europe, Africa. The Middle East, South
Africa, South Asia, South East Asia and South America. Tata Motors is the country's market leader in commercial vehicles and among the top 3 in passenger vehicles. [www.tatamotors.com/press_release] It has its operations in around 85 countries across ix continents. The products and services of the companies of the Tata Group are exported in more than 120 nations. Its market leadership has increased Tata's international profile hence its stock and shares prices. [www.tatamotors.com]
Innovation and Research and Development
TATA is very innovative company. Tata Motors is innovative through intensive research and development
activities. Tata has enjoyed the prestige of having developed Tata Ace, India's first indigenous light commercial vehicle; Tata Safari, India's first sports utility vehicle; Tata Indica, India's first indigenously manufactured passenger car; and the Nano, the world's least expensive car. They have been able to make the least expensive car on the market. This innovation gives Tata Motors their main competitive advantage as they are the first in the market and are able to dictate the prices. (Competitive Strategies; Michael E. Porter, 1985) Tata Motors makes everything from tractor-trailers to the world's least expensive car. This product diversity grants them a competitive advantage over their competitors because they can satisfy more markets and customer needs. [www.tatamotors.com]
Corporate Social Responsibility
Tata has very good Corporate Social Responsibility Programmed where it donates from stock increases different charities and has very good recreational facilities for their employees and invests in the staff development and also pays attention to environmental issues. This helps Tata to be a good citizen in the community. [Catalyst Consortium (2000)."What is Corporate Social Responsibilities?", www.tatamotors.com]
Environmental Friendly Policies
Tata Motors is also a very eco-friendly company. One of their goals is to produce an emission friendly car, and in 2000 Tata Motors launched the first compressed natural air bus. This air bus requires the owner to plug the car into a standard electric plug for four hours to fill the air tank. At present pollution causing vehicles has adverse effects to the environment and is of great concern to everyone. [www.tatamotors.com]
Acquisition and Staff policies
Mergers and acquisitions refers to the aspect of corporate management dealing with the buying, selling and combining of different companies help a growing company in a given industry grow rapidly without having to create another business entity. [http://en.wikipedia.org/wiki/Mergers_and_acquisitions] Here, Tata Motors is unique in a way in which when it buys a company. Tata Motors keeps the original management of that company intact. The company that Tata Motors purchases will look exactly the same in terms of management and organizational structure as if it was never purchased by Tata Motors. However they will train the staff into Tata procedure and corporate culture. [www.tatamotors.com]
Tata large range is based on vey old models expect for the Nano. The automobile industry is a dynamic one where the major car manufactures are bringing in new models every year. If you are not competitive then your market is bound to be eroded, because the market wants new designs, shapes, and style in its every model on a yearly basis. [www.marketingteachers.com]
Ignorance of Tata's involvement in the luxury car market
Tata has bought the Jaguar and Land Rover brands, but it has not any more experience in luxury car segment in its own domestic Indian market. Tata is brand associated to low-cost car production and ignorant of their luxury association with European car producers. Therefore they need to publicize their involvement in the luxury simply the need to improve their Public Relations. [www.tatamotors.com]
Bad Safety Standards
Tata Motors faces are its inability to meet safety standards. Although they have made the most inexpensive car out on the market, it has yet to pass all the safety standards which is a legal requirement. Some consumers questions Tata's capabilities and sincerity to produce such an inexpensive car without cutting corner in terms of safety. [www.marketingteachers.com]
Inexperience in manufacturing passenger Cars
Tata Motors only have been making passenger cars for the approximately last ten years. This can be viewed as a weakness from a customer standpoint since a decade does not seem like a lot to consumers and therefore they will think that Tata Motors is inexperienced car manufacturing. Consumers will wonder how a car manufacturer can be in the market for 10 years and produce the cheapest car out on the market. How can Tata Motors manufacture such a cheap car that meets emission and safety standards being so young? This causes consumers to be skeptical. [www.marketingteachers.com]
Small Domestic Market & Prices
Tata Motors domestic market Car sales in India are less than 1 million annually yet they expected more than that. Their emission free claim is not correct and that does not help in being considered as an honest company. Also the Indian labour does not remain cheap. Now the labor prices are going up. [www.tatamotors.com]
Negative Brand Name
Tat in English means rubbish and this does not help the brand image of Tata. Public relations are important to change that negative impression of such a global player Tata. [www.marketingteachers.com]
Exploitation of large markets in India and China
Tata has a good opportunity to exploit big market of India and China with large population. Equally, Tata has market knowledge of these markets from emerging economies. China's government forecasts that demand for cars will top 20 million by 2020. If consumers get sophisticated in that tastes of consumers luxury goods and services. This is a huge opportunity for Tata Motors because Nano car is the cheapest car in the market. [www.marketingteachers.com]
Acquisition /Take over
Tata is taking over or acquiring companies' car manufacturing in Britain and South Korea.
As of March 2008 Tata Motors finalized a deal with Ford Motor Company to acquire the British businesses,
Jaguar Cars and Land Rover. This is a huge opportunity for Tata Motors since they will acquire the large
knowledge based and technologies for producing and marketing luxury vehicles. This acquisition helps them dive into the more mature markets in Japan, Europe and the U.S. The knowledge transfer from these two companies will greatly improve Tata Motors ability to continue to grow and flourish in both developing and developed market segments. Tata can benefit from sophisticated manufacturing techniques from its companies from Europe and South Korea. Tata Motors, which had a 21% stake in Hispano Carrocera S. A., Spain, since 2005, has acquired the remaining 79% shares in Hispano by way of exercise of the existing call option, through mutual agreement with the other share-holder, Investalia S.A, Spain. [www.tatamotors.com/press_release] This acquisition demonstrates Tata Motors' ongoing commitment to Hispano Carrocera. X, Thompson, J.L.Strategic Management: Awareness, Analysis and Change]
It has its operations in around 85 countries across ix continents. The products and services of the
companies of the Tata Group are exported in more than 120 nations. [ www.tatamotors.com ]
Manufacturing technical experience
The company is newly coming in car manufacturing business whereas the other competitors are already
established for 40, 50 or more years. [www.marketingteachers.com/swot/tata_motors_swot.html] Therefore Tata Motors Limited has to catch up in terms of quality and lean production techniques. The company has concentrated to the money-making and small vehicle segments, so it has left itself from the competition of overseas companies rising in Indian luxury segments. [www.marketingteachers.com]
Increases in Raw materials and Labour Costs
Today the prices of global economy are increasing, which may create threats to Tata Motors Limited. The price of steel and aluminum is increasing, which put the pressure on them to think about the costs of production. Many of Tata's products run on Diesel fuel which is becoming expensive globally and within its traditional home market. [www.marketingteachers.com/swot/tata_motors_swot.html] Also the labour cost is increasing now.
Industrial espionage intellectual property rights
The obvious threat to Tata Motors is intellectual property rights. Tata invented the cheapest car on the market and every automobile manufacturer wants to know how Tata did it. This is a huge threat to Tata Motors because at first they had low competition, but once other car manufactures find out how they invented such a low cost car, and then these companies too will jump on board and design their own line of low cost automobiles. Other companies are starting to compete for some of this market share. In fact, the Pakistan's Transmission Motor Company has built a basic four-wheeler for only $2,100. This car is considerably cheap and the Pakistan Transmission Motor company started exporting them to Sudan, Qatar, and Chile. This is going to be the beginning of new emerging car manufactures that will be producing low priced cars. [www.marketingteachers.com , www.tatamotors.com]
Rising fuel prices
Another obvious threat is that dealing with gas prices. Gas prices continue to rise and the Nano requires gas, but those who purchase the Nano probably do not have a lot of money and so if gas prices keep jumping up then that market of consumers will not be able to purchase the car. If OneCAT can be made as cheaply as the Nano then that will benefit the consumers even more because they will get a car that does not run on gas and it will be cheap to purchase. On the other hand, gas company will not want OneCAT to hit the market because there will be no profits to be made off the vehicle. Gas companies have a lot of say over the automobile industry so this could be a big threat. [www.tatamotors.com]
Another main concern that Tata Motors faces is that cheap cars in India will have an adverse effect on pollution and global warming because most of the population will be able to afford the cars. With more people driving cars there will be more accidents and deaths, as well as higher fossil fuels leaked into the environment causing even more pollution then there already is.[www.marketingteachers.com]
Tata Motors is an overall strong company that has found strength and expansion through its parent company, Tata Group, but also through its numerous acquisitions and mergers. Although Tata Motors stock prices have fallen since the start of the 2008 year due to suggestions that Tata Motors is overreaching by adding luxury brands to pair with the Nano, the world's cheapest car. It is an interesting SWOT analysis is inters exploding the current position. Tata is holding in the market. It has grown from a small company based in India to global company. It grew a producing few products now. To make this assignment I put my attention to all angles of Tata Company found the Strength, Weaknesses, Opportunities and Threats.