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,Tata 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.
