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Strategic Alliance Between Fiat and Tata

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Bruno Benavides

on 18 October 2012

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Transcript of Strategic Alliance Between Fiat and Tata

Strategic Alliance Fiat and Tata FIAT History Objectives TATA Goals • Cost reduction

• Increase Benefits

• Increase Sales

• Design New Car Models

• Redesign an Modernization of their Car Models 1899 1900 Fiat was founded The first factory
was opened 1908 Fiat expanded outside Italy
Foundation in the USA 1912-1925 Fiat expands to new sectors
(steel industry, railways, electricity and
public transportation lines) 1937 Works started for the Miriafiori plant, which introduced the most advanced principles of industrial
organization 1978 The Robogate system was created, the new
flexible robotized system for assemblling the
It was the road to innovation and automation of
production 2004 Multijet engines
Fuel saving and fuel performing 2007 Launch of Panda 4x4 Panda MY range was
extended History 1945 2005 2004 (cc) image by jantik on Flickr Foundation First company from India's
engineering´s sector to be
listed in the New York
Stock Exchange Tata formed an alliance
with Fiat 2008 (cc) image by jantik on Flickr Tata unveiled it's “People´s Car” 2009 Tata Nano was launched 2010 (cc) image by jantik on Flickr Tata launched the Tata Aria, the first Indian four-wheel drive crossover • Cost reduction (about 1,500 million euros)

• Reach a benefit between 1.200 and 1.500 millions of euros on 2012

• Have an income of 7,700 millions of euros on 2012

• Launch of 34 New Model Cars by 2014

• Improve and modernize all their line car models by 2014 Objectives Goals • Increase Production

• Develop and Promote Social Responsability

• Increase Benefits of the company

• Overcome Competition

• Have Internacional Growth • Production target on 2012: 1 million of cars in three shifts

• Enviromental protection: Produce cars with the lowest emissions in India

• Produce the least expensive production car in the world (Starting price $2,000)

• More presence in emerging markets thar their directly competition

• Increase sales on a 5% of the nano car un Europe Pre-operational phase Looking for a partner Look and learning process FIAT Objectives Goals Reduce costs on 5% Export 3% of production to emerging markets Redesigne The Palio in India Global footprint while lowering costs Export cars to Latin America Launch redesigned and upgrated cars models in India Bring its Grand Punto and Linea Brands to India Launch more Fiat's Brand in India TATA Objectives Goals Implement Fiat's diesel technology by 2013 Acquire Fiat's design methods to launch new car models by the end of 2012 Reduce costs by 15% Access to Fiat's diesel technology Acess to desing methods Reduce costs Access to about auto-parts expertise Transfer Fiat's auto-parts expertise to worker byt the end of 2012 Increase sales Increase sales by 30% than the previous year Have clear objectives and development cooperation can get together Work as a single economic entity Share information and experience in the target markets Exchange competitive advantage for more market share Organize integration forums periodically Lean on financial subjects and new market research for growth Implementation • 1905: Fiat was on the Indian market
• Marchionne said: "We need an strategic alliance to improve our technology and our industrial know-how, also a brand that it's known and trusted by this market. We need a local business partner"
• Fiat chose Tata •Meetings in Bombay
• Both teams discussed which areas were they going integrate and make collaborate first
• Marketing and distribution were the two first fields were they started
• 2006: Tata's President became member of the administration staff of the Fiat group
• "When we started it was just about cars" Implementation of the strategic alliance • 50% of investments on both sides
• Next step : elaborate a business plan with objectives on the demand of cars and engines
• Both teams had to negotiate to some other important parts of this alliance like the actives values and the exit clause
• After two years the alliance started and it worth 665 millions of euros
• Totally satisfied with the process even though they knew that the results were in a long term Evaluation of the strategic alliance • Improved technologies

• Fiat has offered to help Tata with the technical challenges of building an ultra-low-priced car

• "The coming together of Tata and Fiat through the dealer network sharing signifies better service, after sales support and more convenience to Fiat customers..." Fiat was using the commercial advantages that Tata already had developed in India

In the production facilities that Fiat had in India it took 80 million of dollars in the 2006 to make this alliance go through

Tata could start to selling cars in Latin America A new pick up model just for Latin America with the cheap costs that Tata had and the knowledge in the Latin American market that Fiat had was created, with lots of success

This alliance represents a deeper and long-term strategy between the two companies. Porter's Five Forces
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