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TATA MOTORS case study

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Dasha Kozhevnikova

on 24 October 2015

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Transcript of TATA MOTORS case study

Found in 1868
Part of TATA
GROUP
7 business sectors
98 operating companies
Tata Motors: the beginning
Tata Nano - the cheapest car in the world!!
Two key developments 2008
Fire related Issues
After accident, Tata insists that Nano has been tested for over 2 million km under all conditions, so it’s just a one off case

But images of world’s cheapest car naturally made consumers to wonder their tradeoff between their durability and price
Financial perfomance
Tata Product line
But first... let's watch one video
Our strategic options and interesting facts
TATA MOTORS: becoming a global contender
TATA MOTORS case study:

1. Julian El Yafi
2. Takhun Kim
3. Anne-Cécile Griseri
4. Junlong Meng
5. Daria Kozhevnikova
2. External analysis
1. Introduction
3. Internal analysis
4. Competitive advantage
5. Strategic options
6. Option 1
7. Option 2
9. Conclusion
10. Discussion board
Advertisement 1
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JLR - acquired from Ford
Internationalisation experience
Acquisition of Nissan's plant in South Africa
Focus was on building significant market share in selected developing regions of Africa and Asia and to insure strong, long-term presence here
Acquisition of Daewoo Commercial Vehicles
"Light touch" acquisition approach. "We are connected to the local society and want to add value to it!"
1) Acquisition of 21% stake in Hispano Carrocera
2) Joint venture with Marcopolo
3) Joint venture with Assembly Plant Company of Thailand
Greenfeeld ventures
Collaboration with Norway
The challenges ahead...
Launching the Nano
Integraiting Jaguar Land Rover
Executing and ensuring superior financial performance
Innovating continuously
Developing leaders for global company
WHAT IS NEXT?
relaunching Nano in India??
launch Nano in other markets??
Drop Nano?
Develop JLR?
The growth potential of auto market
PESTEL Analysis
India has a great potential
In term of sales by revenue, Tata is still a small player
Porter 5 forces
Growth rate 2008 - 2012
High threat with developing market like China which sells in emerging and developed countries
Hard competition with the low end market
Low influence because Tata adopts its products for customers
Substitute products are airplanes and train but the real threat is green engines
Depends a lot on Chine and overall on Hyva
For JLR the profit growth rate also slowed down
Tata and JLR
BCG matrix without JLR
Cows
Dogs
Indica Vista
Manza
Winger
Nano
Versa
Safari
Sumo
Indigo CS/XL
Indigo sedan
Sierra
Estate
Sales by region
Strengths and weaknesss
Vision and mission
For the commercial vehicles the goal is to further the interest of all stakeholders.

Tata wants to create consistently shareholders value by generating returns in excess of weighted average cost of capital.

For the customers, Tata wants to work with business partners to provide superior value in order to create a better relationship with customers.
Vision and mission
For the Employees, Tata wants to create a seamless organization that incubates and promotes innovation, excellence and the Tata core value.

For the vendor, foster a long-term relationship to guarantee a better quality of products and services.

For the community, participate in the country’s economic growth and take an approach towards environmental protection.
Vision and mission
R&D for alternative fuel vehicles
Tata wants to launch the MINI CAT car which a crompressed air car to get on well with the environment

Their annual expenditure on R&D is 2% of their turnover because they care about the environmental situation.

They are also introduicing cleaner engine for their car

But the real goal is cars which are functionning with air or electricity
Option 1 - Relaunch Tata Nano in India
→ Launched in 2008 : “cheapest car in the
world” (2,500$)
Problems with farmers of West Bengal led to a schedule delay → Gujarat plant
Increasing of raw materials prices threatened the 1 lakh price (2,500$)
Doesn’t provide the need of “wealth appearance” towards a part of the population

Objectives
to regain the Indian market with a real 1 lakh car which can be bought by the growing middle class & the poorest

reboost the sells of the Tata Nano

Strong habit of two-wheel
In grey: passengers cars
In black: two-wheel

Almost the same relation today (80/20 in 2013-14)

http://www.makeinindia.com/sector/automobiles/
http://siteresources.worldbank.org/
Decreasing price of raw materials
http://www.infomine.com/investment/metal-prices/
Conclusion
Conditions seem in favor of a re-launch of the 1 lakh Tata Nano:

Growing middle-class which will guarantee the demand

Decreasing price of raw materials

Trend of Urban car worldwide (Smart, Mini…)

A future cash cow
+5% on marketing in 2015 for promoting the real 1 lakh Tata Nano

Revenue of 90 millions $ in 2020 with the Tata Nano
Option 2 - Develop Jaguar Land Rover
Why developing JLR ?
cash-cow
TATA Motors best contributor
luxury car market

The real cash cow
http://www.jaguarlandrover.com/
Presence all over the world
170 countries, in FY2015
jaguarlandrover.com
Objectives
→ develop sales in Russia, China and Middle-East BUT

Russia is unstable geopoliticaly -carmakers stop selling there for a moment

Focus on China and Middle-East

“Jaguar Land Rover pauses sales of vehicles in Russia as rouble's volatility raises fears over profits on car purchases”

http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/11302347/Jaguar-halts-sales-in-Russia-as-rouble-collapse-bites.html
In China
Slowdown of sales due to :

tougher pricing led to a growth for local manufactures

unexpected low sales of Range Rover Evoque produced in China

http://www.forbes.com/sites/greatspeculations/2015/08/11/tata-motors-earnings-review-will-the-gloom-for-jaguar-land-rover-in-china-end-soon/
http://www.wsj.com/articles/china-car-sales-driven-lower-by-slowing-economy-1441869976
Develop JLR in Middle-East
Saudi Arabia 1st market
UAE
46% demand from 2012 to 2013 in ME
50% car market until 2018
http://www.themiddleeastmagazine.com/wp-mideastmag-live/2014/03/gcc-demand-drives-middle-east-car-market/

Plan
End of 2015: A factory is built in Saudi Arabia



Sales increase by 48% in 2017 thanks to this factory



In 2018, women are allowed to drive → launch SUV for women

Plan
Conclusion
Developing JLR in Saudi Arabia seems to be a good option since:

the luxury car market is well settled there, especially the JLR brand

demand is on constant growth

social issues are evolving, which can create more markets

8. Option 3
Passenger car market overview
Main car markets
TATA's position
Commercial vehicle Business Unit :
Passenger car business unit:
For the personal vehicle, Tata wants to innovate a new brand of superior value vehicles

The mission is to improve the interior space and the passenger comfort, but also the reliability and the quality.

Moreover the objectives are to adapt the price and have for example more content for the same price.

The mission is also to stay the most appreciated multinational for both costumers and employees
Value Chain
Relaunch TATA Nano in India
Launch Tata nano in other countries
Develop JLR
+
-
Can become a real cash cow if it works well
the brand image will be improved

Can be dominant in different market similar as India
Renovate the recognition more highly
Competition in Europe Market

Risk of failure due to competition and dependant of raw materials as the 1st time
Abandoning the merit of representing cheap-priced car
The automobile market is growing with lots of improvement and research and because there are more and more consumers but there are lots of things, which are curbing its growth like regulations or protectionism.
Size and growth- compared to the computer market
The computer sales in the world
As the automobile market, the computer market is growing and the sales are rising because of emerging countries. But the automobile car is bigger than the computer market because the car is necessary for people and in emerging countries in one of the first big expenditures.
Raise of sales in Car market because of emerging countries

Tata is one of the leader of emerging market but at a level world not big enough

The forces which have an influence on Tata motors are customers and new entrants
Conclusion
Risk of new markets
Option 3 - Launch Tata Nano in other countries
Objectives
Reboot TaTa Nano as a flourishing revenue source

Renovate TaTa Nano Model
Increasing demand for small cars
Renovate Tata Nano
Response to the middle class in need of “wealth appearance”

Tata GenX Nano in 2015

Between 3,000€-4,000€
(http://www.caradisiac.com/Nouvelle-Tata-Nano-GenX-embourgeoisee-102757.htm
Dacia Case
- Dacia was integrated with Renault(Fr)

- Dominate in cheap car since 2004 in Europe

- 6900 Euros in Germany
Sandero(Dacia) - www.dacia.uk
- Dacia’s one of main factory in Morocco
- Geographical advantage
- Tax advantage
- New Labor and Market advantage
Dacia manufacturing, Tangier Morocco
-bestsellingcarsblog.com
Conclusion
- Decide to launch in Europe, the cheapest car in Europe

- But in renovated model

- Launch Manufacture in Morroco(FTA btw Morocco and EU)

- Small car booms would lead TaTa Nano sales successfully
- Reboot TaTa Nano, it would be as a flourishing revenue source

- Renovate TaTa Nano Model

- Develop JLR for dominant sales in China and Middle-East
Tata Motors & Natura: are there any similarities?
System of implementations
Will Tata Nano be successful in country you are from?
Based on analysis, which option do you prefer?
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