Multiband Approach in the Global Automobile Industry
Tata Motors: Multiband Approach in the Global Automobile Industry
Along with the development of globalization, the world’s automobile industry is faced with more serious environmental and energy challenges. Several changes have happened to the competitive characteristics of this industry. First of all, after the financial crisis, the developed countries became recognized of the importance of real economy as well as the critical role of manufacturing industry for economically sustainable development. Thus, the auto industry is focused on consolidating the national comprehensive competitiveness. Secondly, the new development of electrification networked makes significant changes in technology and technical improvement, further leading to a more intensified professional competition. What’s more, profound changes have taken place in the form and content of competition in the motor vehicle market. On the one hand, multinational companies have started transverse expansion to shift the integration of industrial chain into a longitudinal dimension. On the other hand, multinational corporations now focus on cooperation in the aspects of cutting-edge technology and core resources strategies. Under this circumstance, the critical success factors for modern car producers are innovation and transformation, and consumers would only choose the products with the highest reliability as well as practical functions to meet their requirements.
The Tata Motors
With more than 70 years of development, Tata Motors today has grown into a mature business that aims at a global development as the company has made direct investment in more than one country. Considering the competitiveness environment in the international market, this strategy now is optimal for Tata. And during this process, Tata has gained experience in the interconnectedness of the world economies under the global regulation and law circumstances. If we look at the five forces related to the competitiveness of Tata, the most important factor is the competitiveness of the rivals in the industry, as the market now is led by innovative capability and any technological improvement or creation of products can guide the developing trend in the market.
In terms of the competitiveness perspective, Tata has both strengths and weaknesses. Due to the accumulation of business operation, Tata has obtained a stable consumer foundation, and its new services with appropriate improved technologies enable it to continuously producing new series and win the market share. What’s more, the joint ventures and cooperation partners allowed Tata to expand its business scope into many fields other than motor cars. As a result, the company has a higher capacity to handle the investment risks. However, According to the fiscal status released in the annual reports, the yearly profit of Tata has been declining dramatically since 2011, and the substantial portion of cash flow would hinder the capacity to fund its business operation. The financial problem is now the most important thing to be considered and solved because this fiscal downward is likely to continue in 2015.
As to the external developing environment, Tata is also faced with both opportunities and threats. In 2008, the company launched a new product known as Tata Nano, which is expected to be the cheapest car. This particular People’s Car has successfully caught up with the increasing demand for low-cost automobiles, bringing another developing direction for the company. At the same time, the infrastructure construction of public roads would bring growing demand for passenger cars, and it tends to be a good time for Tata to go further and gain more achievements in new emerging markets such as the BRIC countries. However, due to the downward pressure on the global economy, competition in the motor vehicle industry becomes even intensive. Even the domestic market in India now is shared by other powerful rivals such as Honda. Thus, Tata’s management team will be faced with challenges in final strides.
Recommendations for Tata’s Strategies
In order to gain further growth of business, Tata has to recognize its strengths and weaknesses, solving the fiscal problems as soon as possible. What’s more, several recommendations about business operation might be helpful. First of all, considering the increasing demand for cleaner vehicles and corresponding political supports, it is important for Tata to focus on new technologies, such as the engines and usage of cleaner fuels. In this process, the positioning strategy is as important as the product itself. The success of Nano has brought business development while it also puts a tag on Tata as the poor’s car. As a result, the company should make efforts to improve the brand reputation in order to provide a reliable product that attracts target consumers. At last, production concentration is crucial for the company to focus on the certain area, even though the extensive range of product portfolio can allow the company to attract more consumers, Tata should identify its core products because it will increase the company’s competitiveness directly and sustainably.
Overall, Tata had entered the world automobile industry in a violent fashion and now that it had taken a large share of the global market, it’s time for this great corporation to think like a big company and start focusing on the making practical changes to adopt this competitive market.