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Transcript of Tata Motors
over 80 countries
450,000 employees Mumbai Jamshedpur Internal Analysis
Responsibility Core values Integrity Understanding Unity Excellence Company Introduction: Tata Motors largest automobile company in India
over 55,000 employees
Since 1954 sold over 7.5 million Tata vehicles Products Passengers Cars Commercial Vehicles among the top 3 in India leader in India History 1945 1,000,000 2,000,000 3,000,000 4,000,000 6,000,000 5,000,000 2012 1990 2000 Phase 1: Nationalism Phase 2: Developing World Phase 3: Developed World 1945:
Foundation Tata Engineering and Locomotive company
Renamed Tata Motors Weaknesses Nano is the Tata's Ipod
Collaboration with Daimler-Benz 1978:
Commercial vehicles 1988:
Ratan N. Tata 1991:
Passenger vehicles 1998:
Financial Crisis 2001:
Recovery strategy 2004:
Daewoo Commercial Vehicles 2005:
21% acquired Hispano Carrocera 2006:
Joint venture with Marcopolo 2008:
Acquired Jaguar and Land Rover year Standalone turnover Engineering products
and services Materials Services Consumer products Energy Core Businesses rank45th most
valuable global brands
valued the Tata brand
at $16.3 billion
rank17th '50 Most
Innovative Companies' Gaining growth
-> The best in India
-> Global group vision
''best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.'' Jaguar & Land Rover Defence and Homeland security vehicles cheapest car in the world world's fourth largest truck and bus manufacturer Tata Indica is its best selling car Greenfield ventures -> Eco Car strategic partner of the Indian Armed Forces since 1958
enhancing defence, paramilitary and police mobility in the SAARC and ASEAN regions and Africa In developing countries In Developed Countries 1740 Euros 2007 Chemicals Information technology
and communications 1.Steeming the Bleeding 2.Consolidating the
companys position in India 3. International Diversification Recovery strategy Expand markets for our
Environment friendly vehicles Cut costs
Focus on core activities Diversification
R&D External Analysis In Developed Countries Swot Analysis Opportunities Threats Opportunities Threats In Developing Countries TATA Motors in the car market TATA Motors' main results Not the best car seller... ... BUT one of the most profitable companies Acquisition of JLR was the right method for the company Conclusions
First announcement took place in March
The acquisition was closed in September 2008
Tata Motors raised $ 3 bn. bridge loan from Citigroup, JP Moran , State Bank of India and other 5 banks to complete the deal
2.3 billion was paid directly to Ford for JLR acquisition. Rest 0.7 billion towards working capital requirements of JLR
Ford agreed to pay 600 million towards Pension funds Acquisition of Jaguar and Land Rover (JLR) “The acquisition has worked because the investment has been carefully targeted and effective,” Phil Popham, global operations director for Jaguar Land Rover
"It seems as though they have resolved some tricky supply issues," said Ernst & Young's automotive expert Eric Wallbank.
“It was very worthwhile strategic move bringing in considerable technology and global presence”, Ratan Tata, Tata Group Chairman
“This would be a large scale acquisition for company that could potentially have a negative impact on the company, especially if it is heavily funded by debt”, S&P's credit analyst Anshukant Taneja. Experts opinion
Jaguar sales dropped by 33% in the US and Europe in the first quarter of 2008
Land Rover sales fell 13% in the US and 7.7% in Europe during this period
Ford is considering a restructuring plan in North America (about 40.000 were slashed)
Ford is getting less than half it was paid for two brands Reasons for acquisition of JLR?
2004 – Tata Motors acquired Daewoo
2005 – Tata Motors acquired stock of Hispano Carrocetta
2006 – joint venture with Brasil- based Marcopolo
2008 – acquisition of Land Rover and Jaguar
Tata Motors strategy of internationalization Price is what you pay. Value is what you get
Warren Buffet, Chairman of Berkshire Hathaway Inc.
IS M&A a way to become global?
experience from Tata Motors Source:http://www.assocham.org/events/recent/event_702/Technical_Session-III/Siddhartha_Nigam.pdf How the problem was solved ? Automotive net sales Automotive operating profit Net income € 20.30 billions € 2.03 billions € 1.54 billions Ford has lost $ 15.3 billion over the past two years (2007-2008) Cheap and Diversified products and big product Range Passenger Vehicles Segment Product recall Brand recognition Strengths Local knowledge "The right First Time" Adaptation to external conditions Brand recognition Product diversified and large product range Weaknesses Passenger Vehicles Reputation Knowledge and experiences from developed firms Falling/ low growth economy Inimitable Firm Specific Advantage ( FSA ) Environment regulations Cheap labor forces and resources High Returns on Investments Growing Economies Environment, Social and Governance ( ESG ) Main Competitors Outlines 2004 In English: "Tat" = Rubbish 2011- Now : company has replaced motors of around 50,000 Nanos Introduction and History: Karolin Konn
Financial summary: Pauline Boutelier
SWOT Analysis : Anastasia Fontana
Problem statement : Sergey Platonov
What the company can do? Kelsey Yu and Gerard Tan Mentalities and Culture Mentalities and Culture Fiat Palio Style AirOne http://eprints.lse.ac.uk/35984/1/Disspaper3.pdf
http://www.hg.org/environ.html Clean Air Act
Environment ,Energy, and Resources Sections
Energy Policy Act ADVANTAGES
DISADVANTAGES "Charlie Rose Talks To Muhtar Kent." Bloomberg Businessweek 4298 (2012): 34. Business Source Complete. Web. 15 Nov. 2012.
"Managing Investments Across Diverse Markets Challenging." Financial Executive 28.3 (2012): 10. Business Source Complete. Web. 15 Nov. 2012.
Chen, Victor Zitian, Jing Li, and Daniel M. Shapiro. "International Reverse Spillover Effects On Parent Firms: Evidences From Emerging-Market Mnes In Developed Markets." European Management Journal 30.3 (2012): 204-218. Business Source Complete. Web. 15 Nov. 2012.
Khalid, Saba, and Jorma Larimo. "Firm Specific Advantage In Developed Markets Dynamic Capability Perspective." Management International Review (MIR) 52.2 (2012): 233-250. Business Source Complete. Web. 15 Nov. 2012.
Ayyagari, Meghana, Asli Demirgüç-Kunt, and Vojislav Maksimovic. "Firm Innovation In Emerging Markets: The Role Of Finance, Governance, And Competition." Journal Of Financial & Quantitative Analysis 46.6 (2011): 1545-1580. Business Source Complete. Web. 15 Nov. 2012.
Mobius, Mark. "The Attraction To Emerging Markets." Super Review 22.9 (2009): 11. Business Source Complete. Web. 15 Nov. 2012. Sources Why?
4.) Stagnant and mature markets don't provide high profits
5.) Competition and diversity promotes innovation
6.) Concentration on emerging markets also provides experience and learning opportunities
7.) Losing share on growing market vs. losing share on mature market Heavy on Developing Markets Why?
1.) It would take a relatively long time and effort to absorb all knowledge, skills, and experiences of firms from developed countries.
2.) Knowledge, skills, and experiences can overlap.
3.) Firms from developed markets might make inimitable FSAs (tacit knowledge) Heavy on Developing Markets Why? Best Possible Choice?
Which One? Huang, Alex YiHou. "Volatility Forecasting In Emerging Markets With Application Of Stochastic Volatility Model." Applied Financial Economics 21.9 (2011): 665-681. Business Source Complete. Web. 15 Nov. 2012.
Ghauri, Pervez N., and Grazia D. Santangelo. "Multinationals And The Changing Rules Of Competition." Management International Review (MIR) 52.2 (2012): 145-154. Business Source Complete. Web. 15 Nov. 2012.
Van Dijk, Andrea, Griek, Lotte, and Jansen, Chloe. “Bridging the Gaps: Effectively Addressing ESG Risks in Emerging Markets.” 1-35. Sustainalytics. Web. 15 Nov. 2012.
Hillestad, Hilde Christin. “How Does Multinational Enterprises from developed markets succeed in emerging markets?” Copenhagen Business School. 2-4, 71-77. Web.15 Nov. 2012.
KPMG. “Emerging Market Acquisitions in Developed Economies.”1-12. Web. 15 Nov. 2012.
Kearney, A.T. “The Rise of Emerging Markets in Mergers and Acquisitions.” 1-10. Web. 15 Nov. 2012. Sources Annual Report 2010, 2012
Factiva. Red Tree Convergent Media Private Limited. “Tata motors plans six new passenger and 25 commercial vehicle launches.” 8 Nov. 2012.
Factiva. Automatic Business. “Tata Motors limited launches special edition Nano in India.” 12 Nov. 2012.
Factiva. The Business Times. “China, India seen overtaking OECD members in 50 years.” 10 Nov. 2012.
Factiva. Foreign Policy. “Think Again: The BRICS.” 1 Nov. 2012.
Factiva. Domain-B. “JLR-Chery to invest $1.75 bn on manufacturing facility in China. 19 Nov. 2012.
Factiva. Weekend Argus. “Thailand second to China as top investor Market.” 26 Feb. 2012.
Factiva. Reuters. “African Markets – Factors to watch on Nov 16.” 16 Nov. 2012. Sources Focus on Developing Markets include high risks (ESG and Volatility)
Passenger vs. Commercial Vehicles
Failure of Nano? (Special Edition)
Develop their own brands
Joint Ventures to lower risk
JLR JV with Chery in China Implementation With What countries? Achieving Turnover? Why? Best Possible Choice?
Which One? Balanced:
15(+) - 10(-) = 5(+)
Heavy on Developing
18(+) – 13(-) = 5(+) Status Quo:
16(+) - 11(-) = 5(+)
Heavy on Developed
15(+) – 10(-) = 5(+) Advantages - Disadvantages 2013 – 50%
2014 – 55%
2015 - 60% % increase Turnover Target Balanced:
25,909 crores (developing)
25,909 crores (developed)
Heavy on Developing:
38,863 crores (developing)
12,954 crores (developed) Status Quo:
31, 090 crores (developing)
20,727 crores (developed)
Heavy on Developed:
15, 545 crores (developing)
36, 272 crores (developed) How? (year 1) 2010 - 26%
2011 - 42%
2012 - 47% % increase Actual Turnover Volatility Risk (----)
ESG Risk (----)
Inimitable FSA (-) Disadvantages Reduce cost through labor (++++)
Cost Leadership (+)
Growing economies (+++)
Available Experience and Knowledge (+)
Reputation gain (+)
Ability to weather external shocks (++++)
High returns (++++) Advantages Heavy on Developing Markets Volatility Risk (-)
Falling/Stagnant economies (---)
ESG Risk (-)
Inimitable FSA (----) Disadvantages Reduce cost through labor (+)
Cost Leadership (++++)
Available Experience and Knowledge (++++)
Reputation gain (++++)
Ability to weather external shocks (+)
High returns (+) Advantages Heavy on Developed Markets Volatility Risk (---)
ESG Risk (---)
Inimitable FSA (--) Disadvantages Reduce cost through labor (+++)
Cost Leadership (++)
Growing economies (+)
Available Experience and Knowledge (++)
Reputation gain (++)
Ability to weather
External shocks (+++)
High returns (+++) Advantages Status Quo Competition (-)
Low growth (- - -)
Inimitable FSA’s (- - -) DISADVANTAGES Ability to weather external shocks (+)
Market knowledge (+++)
Cost knowledge (+++) ADVANTAGES DEVELOPED COUNTRIES Volatility (- - -)
Competition (- - -)
ESG (- - -)
Inimitable FSA’s (- - -) DISADVANTAGES Cheaper labor and resources (+++)
Growing economies (+++)
Ability to weather external shocks (+++)
High returns (+++)
Market knowledge (+) ADVANTAGES DEVELOPING COUNTRIES Heavy on Developed Markets
Concentrate on developed markets
30% - Developing markets Option 2 Status Quo
Continue what they are doing
Retain current developed and developing market ratio
60% - Developing Markets
40% - Developed Markets Option 1 Possible Options… Heavy on developing Markets
Concentrate more on developing markets
75% - developing markets
25% - developed markets Option 4 Balanced Markets
Make a even distribution between emerging markets and developed markets
50% - developing markets
50% - developed markets Option 3 Possible Options… Volatility Risk (--)
Falling/Stagnant economies (-)
ESG Risk (--)
Inimitable FSA (---) Disadvantages Reduce cost through labor (++)
Cost Leadership (+++)
Available Experience and Knowledge (+++)
Reputation gain (+++)
Ability to weather external shocks (++)
High returns (++) Advantages Balanced Markets Different OPTIONS and their Advantages and Disadvantages GROUP DECISION In Developed Countries Why? Best Possible Choice?