Business Strategy – Tata Motors

By :

Ankit Singh

Tata MotorsPassenger Car Business Unit (PCBU)

Vision -

Mission -

Year Period2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 CAGR

Passenger Vehicles1,209,876.00 1,309,300.00 1,545,223.00 1,777,583.00 1,838,593.00 2,357,411.00 2,987,296.00

Growth%8.22% 18.02% 15.04% 3.43% 28.22% 26.72% 16.2580

Maruti Suzuki536,301 561,822 674,924 764842 792,167 1,018,365 1,271,005

Growth %4.76% 20.13% 13.32% 3.57% 28.55% 24.81% 15.4666

Market Share0.443269393 0.429101046 0.436780969 0.430270767 0.430855007 0.431984495 0.425470057

Tata Motors179,076.00 189,070.00 228,220.00 218,055.00 207,512.00 260,020.00 319712

Growth %5.58% 20.71% -4.45% -4.84% 25.30% 22.96% 10.1422

Market Share0.148011862 0.144405407 0.147693893 0.122669377 0.112864565 0.110298968 0.107023877

Relative Market Share

0.333909502 0.336530075 0.338141776 0.285098099 0.261954866 0.255330849 0.251542677

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

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Tata Motors Maruti Suzuki Passenger Vehicles

-5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

Tata Motors Maruti Suzuki Passenger Vehicles

Growth in %

BCG Matrix

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

00.511.52Au

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Relative Market Share

Tata Motors

Strategic InferencesThis matrix clearly states that Tata Motors lies in the Question mark zone whichsignifies that the company in a growing market having relative lower market share ascompared to Maruti Suzuki (the Market Leader).

The data above also shows that in the financial year 2007 and in 2008 Tata Motors had anegative growth in number of Passenger car sales due to financial crisis. But in 2009 thecompany again showed tremendous growth (greater than the industry & Market leader) which wasaccounted by the launch of Tata NANO car. This model promised a lot to middle classpeople in India and they positively responded to it. Tata Motors also acquired the Jaguar andLandRover during this crisis phase which also has brought about inorganic growth in theCompany. With such premium brands into the portfolio of Tata Motors the company has broughtabout a change in brand perception among the masses in India .It also opens the doors to thesepremium cars into India. This acquisition has pull up Tata Motors equivalent to Maruti Suzuki interm s of growth on a year on year basis. If this continues Tata Motors can be a STARperformer in the Passenger Car Market. We can even see that Maruti Suzuki is facing grimLabour problems due to which its business shall be affected in a long run It gives TataMotors a opportunity to excel.

Tata Motors should now focus on integration of the technology which it has gained throughAcquisition and come up with new models catering to INDIA which has a lot of potential as Motor

Vehicles per 1000 persons in India is approx 15 which is expected to grow steeply in future. Tata

Motors has started Jaguar and Land Rover in India which shall also help it build a more strong carbrand In INDIA. The company lives up loud at its Vision and Mission.

Name of The company

Market Capitalization

Operating Income Relative Capital Share

Industry CAGR %2010 2009 2008 2007

Tata Consultancy

Services207,522

29,275.4123,044.45 22,401.92 18,533.72 4.063163253 26.9

Tata

Communications 5,344 5860.51 5428.43 5784.05 4990.49 0.104632494 19.04

Tata Motors 51,07447,957.24

35,373.29 25,660.67 28,767.91 1 16.25801386

Tata Steel 41,48629,307.35

24,940.65 24,348.32 19,654.41 0.812272389 9.4

Taj Hotels,

Resorts and

Palaces

5,347 1,673.50 1,473.29 1,619.57 1,764.51 0.104691232

Tata Power 24,273 6,918.48 7,104.22 7,257.05 5,909.60 0.475251596 9.6

Titan Industries 18,266 2,020.60 1,777.94 1,954.81 1,536.06 0.357637937

Tata Chemicals 8,133 6,224.60 5,411.70 8,363.35 4,036.68 0.159239535

Voltas 3953 5,134.87 4,541.79 4,033.29 3,044.54 0.100537847

Portfolio Matrix

0

5

10

15

20

25

30

35

01234

Tata Consultancy Services Tata Communications

Tata Steel Tata Power

Market

Growth

Relative Portfolio Share

Hot Box

Golden Fleece Black Drawer

Strategic InferencesThe above matrix illustrates the position of other SBUs in the TATA Group relative to Tata

Motors. The matrix is being constructed taking into consideration that the Tata Motors has the

highest Operating Income amongst all SBUs and relative Portfolio share is being taken on the

basis of Market Capitalization. TATA as a group has several deep pockets due to diverse

portfolio of companies. The group has approx 96 companies of which approx 52 are listed on

the Indian stock exchanges.

The matrix affirms that TCS is Star performer with IT market growth coming close to 30%.

The company has huge cash reserves as it has a diverse set of clients (one of the most

important is the INDIAN GOVERNMENT) which mitigates its risk due to financial crisis. Tata

Steel as a brand has a huge presence at world podium of steel giants, susceptible to risks due to

Commodity trading. Tata Power has a huge potential as INDIA has a 4.0% of global energy

consumption but more than 17% of global population and consumption is expected to increase in

near future. Tata Power shows huge promises but the transmission and billing is a big issue for the

industry itself which is dependant on Government reforms. Looking at Telecom sector the future

remains a bit blurred as the sector is going to have a consolidation phase where in big players are

heading for acquisitions of small companies with issues of spectrum allotment. Tata Motors can

leverage on the TCS and Tata Power for future funds via TATA SONS ( holding Company) for

research and development in Automobile Industry in India as Tata Motors has a debt of `15,898.75

Crores as at March 31, 2011.

Strategic Execution Plan

• Technology Transfer , Development and Integration in Indian Sub-Continent.

- Gas Injection technology for LCV, MCV and HCV engines.

- Development of electric & hybrid cars.

• Changes in Value Chain ( assembly line plants) for new electric & hybrid cars.

• To optimize the synergetic strengths between JLR and Tata Motors in India, an examination is also underway on a joint engine development program which would have manufacturing facilities both in the U.K. and India.

• China saw 45% growth respectively in their domestic automobile markets while Europe, U.K. and the U.S. automobile markets declined by 6%, 11% and 21% respectively . Focus on Chinese markets can be fruitful.