Case Study : Tata Motors : Becoming a global contender
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Transcript of Case Study : Tata Motors : Becoming a global contender
Tata Motors – Way ahead
MEP VI - Group 5
• Abhishek Panicker
• Kedar Huddar
• Koushik Ganguly
• Pushkar Sabne
• Rakesh Kadarkarai
Energy
Tata Power
Tata BP Solar
Chemicals
Tata Chemicals
Rallis
Engineering
Tata Motors
TACO Group
Voltas
Tata Projects
IT & Communications
TCS
Tata Teleservices
Tata Elxsi
Consumer products
Tata Tea
Titan
Trent
Tata Salt
Tata Swach
Services
Tata Hotels
Tata AIG Life & GIC
Materials
Tata Steel
Advance Materials
Tata Group
Tata Motors – Laggards in a stressed market
Commercial Vehicles Passenger vehicles
Market Growth -8.4% 5.5%
Tata Motors -15.9% -3.2%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
Growth status: FY 15 vs FY 14
Market Growth Tata Motors
54
.1%
5.8
%
49
.7%
5.3
%
COMMERCIA L V EHICLES PA SSENGER V EHICLES
MARKET SHARE: FY 15 VS FY 14
FY 14 FY 15
Market share in passenger vehicles has reduced from 16% to 6% in 10 years
Market share in commercial vehicles has reduced from 61% to 50% in 10 years
JLR – The SaviourTM
L &
oth
er
bra
nd
s
Jagu
ar L
and
Ro
ver
Tata Motors Consolidated
JLR – The Saviour
TML
& o
the
r b
ran
ds
Jagu
ar L
and
Ro
ver
Action Plan
Product related
• Launching new product lines – Passenger Cars
• Revamp / discontinue old models – All products
• Focus on CRM – Commercial Vehicles
Process related
• Increase operational efficiencies – All Tata brand plants
• Realign structure to match business segmentation
Product canvas
Tata Motors: Partnerships
Company name Country Relationship type Competency
MarcoPolo Brazil JV Designing buses and coaches
Jaguar Land Rover UK Acquisition (2008) Design and engineering capabilities
Daewoo South Korea Acquisition (2004) Heavy Commercial Vehicles
Tata Motors European Technical Centre
UK 100 % subsidiary Design and product development
Hispano Carrocera Spain 100 % Subsidiary Bus Manufacturing
Product canvas for TML
Passenger Cars
Commercial Vehicles
Buses
2nd in the
world
4th in the
world
17th in the
world
Passenger Vehicles
• Low switching cost
• Brand loyalty doesn’t impact much
• Advt and promotion
• Unorganized sector
• Option of contract labours
• Global suppliers
• Robust Public transport
• Rising fuel prices
• Hybrid and eco cars
• Favorable policies
• Big production facility
• Accessibility of raw material, vendors etc
Threat of new
entrant -High
Threat of substitute
- High
Buyer power -
High
Supplier Power –
Med
Industry Rivalry – Very highHigh number of competitors
Differentiation is minimalLow switching cost
Five Forces Model for Passenger Vehicles
Product Gap Analysis – Mass Cars India
Type B2 C1 C2 Utility A B1 D1 D2
Total sales 614,159 547,677 246,714 487,058 379,951 320,658 58,305 28,028
Tata Sales 8,160 48,182 8,282 12,144 22,356 37,158 260
YoY growth 8% 9% 12% -6% -4% 5% 14%
Market share 1% 9% 3% 2% 6% 12% 0% 0%
Model serving Bolt Zest Safari Sumo Nano Indica Aria
The required focus of Legend
Launch
Revamp
Product Gap Analysis – Premium Cars India
Ex show-
room Audi Mercedes BMW Jaguar
< 35 Lakhs 23% 3,105 22% 2,462 23% 1,585
35 - 50 Lakhs 27% 3,646 23% 3,105 23% 3,105 52% 1,503
50 L - 1Cr 41% 5,536 40% 5,401 47% 6,346 33% 954
1 Cr and
above 9% 1,215 15% 2,025 7% 945 15% 434
Total 100% 13,502 100% 11,192 100% 6,890 100% 2,891
Legend
Launch
Revamp & upgrade Nano
Youthful brand
Emerging markets
High density areas as ‘Traffic’
car
Buses
Tata Buses
2nd Largest Bus Manufacturer in the World.
Wide Variety
• Seat capacity wise- 12 to 67 seator
• Chassis – 4 tonne GVW (5 Mtrs) – 16 tonne GVW (12 mtrs)
• Catering to all segments
Growth Strategy = M&A
Tata’s Strength in Chassis &
Aggregates
Marco polo's strength in
body building & bus design
TATA MARCOPOLO
(TMML)
Tata’s Strength in Chassis & Aggregates
Hispano's strength in
body building & bus design of Luxury coaches
TATA Hispano Motors
Carrocera S.A.
Strengths
• Strong market presence
• Good regional presence in middle east, Africa, south Asia and south east Asia.
• Future ready
• Wide range of products
Weakness
• Low presence in Luxury Segment
• Losing market share in other sectors such as inter-city transport and city transport
Opportunities
• Potential markets in South Asian Markets Such as Vietnam, Thailand, Cambodia and African markets such as South Africa, Kenya, etc.
• Market penetration in the Luxury Bus segment via Divo Range.
Threat
• Losing market share in other sectors such as Inter city transport and city transport from 44% to 38%
Action Plan
Focus Penetration in Luxury & City Transport segment
FuelNEXT – The only aspect of HorizonNEXT relevant in this segment
Feature Collaborate with Govt. on Urban development like JNNURM to feature technologies like Hybrid & Fuel Cell for Green Initiatives
Approach Govt. for support and promote sale of such buses.
Consolidate On the present position by retiring old models.
Product lines of “SKOOL” , “STARBUS” and “Cityride” for volume business and enhancing market presence and .
Commercial Vehicles
- LCV, SCV, MCV & HCV
Tata Trucks
4th Largest Truck Manufacturer in the World
Wide Variety
• Prima- Heavy Transport Solutions TATA & TATA DAEWOO
• M&HCV – Transport & Municipal Solutions
• LCV – Transport Solutions
• SCV
Commercial Vehicle growth by segment
75 7398 82 71
244
328348
273
206
261
328
447
555
434
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Sales volume, '000 units
LCV M & HCV SCV
SCV
Small Commercial VehiclesSTRENGTHS
1. Tata Motors is a pioneer in the mini truck industry in the continues to be among the top 2 players in the country.
2. Tata Motors is the leader in sub 2 Ton market with the Ace family, and has more than 70% of the market share.
WEAKNESS
1. High delinquency rates
2. Lack of financing options: Drivers lack credible credit history and it becomes difficult for banks, etc., to give them loans
OPPORTUNITIES
1. Increasing urbanization and stringent traffic regulations
2. Preferred over smaller 3-Wheel vehicles primarily due to the higher profitability
3. Rise in demand of SCVs in the rural sector driven by rising income levels and further urbanization of tier 3/4 towns and cities
THREAT1. Faces tough competition from 3Ws .The price gap between SCV Passenger and 3W makes it difficult for 3W customers to graduate to 4W2. 2-3.5 ton pickup truck space, however, Mahindra is the leader with close to a 70% share
SWOTSub 2 Ton - Tata Ace : 70 % Market Share
2 - 3.5 TonMahindra Bolero and Genio : 70 % Market Share
Action Plan
Continuously develop new applications (gas cylinder distribution, waste disposal etc.) and also educate the customers on the usage to continue segment expansion
Liaise with the local government authorities in order to create more business opportunities further promote SCV customers
Develop drivers for this segment as majority of the end users belong to lower economic section of the society and most likely will be the first time users of any kind of automobile
L, M & HCV
Covering the entire spectrumSegment Product OfferingAgriculture UltraBox/Straight PrimaCar carrier NovusCatering truck Prima/ NovusCement mixer Prima - TATA DaewooDelivery van Tata AceDump truck Prima (4 Models)Flat-bed truck LPS RangeRefrigirated NovusStakebody LPT RangeStep van LPT RangeTank truck NovusTow truck Prima/ novusTruck tractor Prima (Heavy & Med load)
Tipper Prima/ Novus
• Tata has a product to cater to all the needs of customer
• No need to crowd the market with new entrants
• Need to revamp old models LPT & LPS range
Acquiring Synergy
Tata’s Strength in Chassis &
Aggregates
Daewoo's strength
R&D & body building
TATA DAEWOO
TATA & DAEWOO came together to create a mid size truck . Large Size with Medium Capacity
Strengths
• Strong Market Presence
• 58% market share (Domestic & 92 % export Foreign)
• 7.7% growth in the export market
• Good regional presence in middle east, Africa, south Asia and south east Asia.
• Strong Distribution Network 6,600 nos.
• Wide range of products
• Technologically strong
Weakness
• Low presence in Heavy end Segment
Opportunities
• Potential Markets in South Asian Markets Such as Vietnam, Thailand, Cambodia and African markets such as South Africa, Kenya, etc.
• Market Penetration in the Heavy end via Primo Model
Threat
• Losing market share in LCV sectors
SWOT
Action Plan : Focus area is not product but Customer Engagement
Customer engagement
Tata world
Telematics
Fleet management
Truck Race championship
After sales & Service
Tata Fleet-man
Tata Delight
Tata Genuine Parts
Key Account ManagersPublic
TransportationLogistics providers Schools / Colleges
Analysis of the organization
Production Capacity
Industry Production Capacity
Production 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Passenger Vehicles 23,57,411 29,82,772 31,46,069 32,31,058 30,87,973 32,20,172
Commercial Vehicles 5,67,556 7,60,735 9,29,136 8,32,649 6,99,035 6,97,083
Sales 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Passenger Vehicles 19,51,333 25,01,542 26,29,839 26,65,015 25,03,509 26,01,111
Commercial Vehicles 5,32,721 6,84,905 8,09,499 7,93,211 6,32,851 6,14,961
Installed capacity : 6.59 Mn units
Utilization is meager 66%
TML Production Capacity
Location Passenger VehiclesCommercial
Vehicles
India – 6 plants 350,000 767,725
Abroad (Korea, Spain & Thailand)
0 45,330
Total Installed Capacity 350,000 813,055
Sales FY 15 137,000 318,000
Capacity utilization 39% 39%
Action Plan - Operational efficiency
• Can’t increase plant utilization – low market demand
• Need to achieve operational efficiencies with low utilization
Low start-up time / cost for batch runs
Cut-down older product lines – Less no.of models Better efficiency
Revamp plant layout for new product lines
MQB Platform – Same setup for different models: ~ 20% savings in op. cost (Industry norms)
HR & Organization Structure
Investment in Personnel & Development
Accelerated development
• ESS program
• Special assignment
Result oriented assessment
• Domain Expertise
• Customer orientation
• Team performance
• Financial performance
• Learning & Growth
Employee engagement
• Design Challenge
• Performance awards
• Hobby clubs
• Sports events
Current
CEO – Cyrus Mystry
MD – Guenter Butschek
Exec Director –Commercial Vehicles
President – Passenger cars
Head CVBU
Head PCBU
Head Small car
Head Engineering Research
Chief Strategic sourcing
Head – Corporate planning
CFO
VP – HR
Chief Legal counsel
Chief Internal auditor
Head – Corporate communication
Sr General Manager –Govt affairs
Company Secretary
ProposedMD – Tata
Motors
Head –Commercial
Vehicles
Bus
Trucks
M&HCV
LCV & SCV
Defence
Head –Passenger Vehicles
Mass Market
Head –Passenger Vehicles
Luxury
Head – Design & Development
Product Teams
SpecialisationSections
Head – Sales & Marketing
Product development &
Launch
Sales & distribution
After sales / Service
CFO COO
Head – Quality
Operations & Planning
Plant Heads
Head - HR
• Matrix structure – Reporting to domain head & Business Head
• Garbage can model – Product Dvpt experts ::: Domain specialists
R&D
Focus on R&D
6 R&D centers
India
South Korea
Spain
UK
Technology Partnership
Thailand for Pick up trucks
South Korea for High end commercial vehicles
Italy for styling & design
Brazil for Buses
Investing in future technologies
Investment in research for hybrid / electric vehicles
Compressed air engines with MDI called Mini Cat
Eco car in Thailand
Indica EV in Norway
Investment in R&D
Tata Motors JLR
Cutting Edge Technology Available• Buses – CNG Hybrid & Fuel Cell Technology• Cars – Air compressed engines,Solar & battery• IT Systems
6% of revenue spent on R&D
Action Plan
Product related
• Launching new product lines – Passenger Cars
• Revamp / discontinue old models – All products
• Focus on CRM – Commercial Vehicles
Process related
• Increase operational efficiencies – All Tata brand plants
• Realign structure to match business segmentation