SWOT Analysis - Tata Motors Limited
The company began in 1945 and has produced more than 4 million vehicles. Tata Motors
Limited is the largest car producer in India. It manufactures commercial and passenger
vehicles, and employs in excess of 23,000 people.
Strengths
• The internationalisation strategy so far has been to keep local managers in new
acquisitions, and to only transplant a couple of senior managers from India into
the new market. The benefit is that Tata has been able to exchange expertise. For
example after the Daewoo acquisition the Indian company leaned work discipline
and how to get the final product 'right first time.'
• The company has a strategy in place for the next stage of its expansion. Not only
is it focusing upon new products and acquisitions, but it also has a programme of
intensive management development in place in order to establish its leaders for
tomorrow.
• The company has had a successful alliance with Italian mass producer Fiat since
2006. This has enhanced the product portfolio for Tata and Fiat in terms of
production and knowledge exchange. For example, the Fiat Palio Style was
launched by Tata in 2007, and the companies have an agreement to build a pick-
up targeted at Central and South America.
Weaknesses
• The company's passenger car products are based upon 3rd and 4th generation
platforms, which put Tata Motors Limited at a disadvantage with competing car
manufacturers.
• Despite buying the Jaguar and Land Rover brands (see opportunities below); Tat
has not got a foothold in the luxury car segment in its domestic, Indian market. Is
the brand associated with commercial vehicles and low-cost passenger cars to the
extent that it has isolated itself from lucrative segments in a more aspiring India?
• One weakness which is often not recognised is that in English the word 'tat' means
rubbish. Would the brand sensitive British consumer ever buy into such a brand?
Maybe not, but they would buy into Fiat, Jaguar and Land Rover (see
opportunities and strengths).
Opportunities
• In the summer of 2008 Tata Motor's announced that it had successfully purchased
the Land Rover and Jaguar brands from Ford Motors for UK £2.3 million. Two of
the World's luxury car brand have been added to its portfolio of brands, and will
undoubtedly off the company the chance to market vehicles in the luxury
segments.
• Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in
2004 for around USD $16 million.
• Nano is the cheapest car in the World - retailing at little more than a motorbike.
Whilst the World is getting ready for greener alternatives to gas-guzzlers, is the
Nano the answer in terms of concept or brand? Incidentally, the new Land Rover
and Jaguar models will cost up to 85 times more than a standard Nano!
• The new global track platform is about to be launched from its Korean
(previously Daewoo) plant. Again, at a time when the World is looking for
environmentally friendly transport alternatives, is now the right time to move into
this segment? The answer to this question (and the one above) is that new and
emerging industrial nations such as India, South Korea and China will have a
thirst for low-cost passenger and commercial vehicles. These are the
opportunities. However the company has put in place a very proactive Corporate
Social Responsibility (CSR) committee to address potential strategies that will
make is operations more sustainable.
• The range of Super Milo fuel efficient buses are powered by super-efficient, eco-
friendly engines. The bus has optional organic clutch with booster assist and
better air intakes that will reduce fuel consumption by up to 10%.
Threats
• Other competing car manufacturers have been in the passenger car business for
40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of
quality and lean production.
• Sustainability and environmentalism could mean extra costs for this low-cost
producer. This could impact its underpinning competitive advantage. Obviously,
as Tata globalises and buys into other brands this problem could be alleviated.
• Since the company has focused upon the commercial and small vehicle segments,
it has left itself open to competition from overseas companies for the emerging
Indian luxury segments. For example ICICI bank and DaimlerChrysler have
invested in a new Pune-based plant which will build 5000 new Mercedes-Benz
per annum. Other players developing luxury cars targeted at the Indian market
include Ford, Honda and Toyota. In fact the entire Indian market has become a
target for other global competitors including Maruti Udyog, General Motors, Ford
and others.
• Rising prices in the global economy could pose a threat to Tata Motors Limited
on a couple of fronts. The price of steel and aluminium is increasing putting
pressure on the costs of production. Many of Tata's products run on Diesel fuel
which is becoming expensive globally and within its traditional home market.
Bibliography
Tata Motors' Official Website
Wiki - Tata Motors Ltd
Business Today - Pick and Choose
Business Today - Tata Motors to bring Jaguar, Land Rover to India
