Executive Summary

Tata Motors’ current situation is understandable through the analysis of its internal and external environments. The internal exploration identifies the strengths and weaknesses while the external evaluation deals with opportunities and threats. The strengths include the excellent performing Land Rover and Jaguar brands and access to technologies from other businesses from the Tata Group. The corporation’s weakness is its excessive focus on the Indian market. Its global strategy is not optimal because it cannot satisfy the current needs of its potential clients. From the external environment’s analysis, competition and economic conditions impact the global motor vehicle industry. The success factors for the industry are exchange rates, consumer spending trends, pricing pressures and changes in commodity prices. The threats to Tata Motor’s success include competition and globalization of markets. Although Tata Motors can compete globally, it lacks the proper understanding of the international trade, which has led to an unstable financial condition. The two most critical strategic issues include the Land Rover and Jaguar division and the Tata Nano market. The company should expand the Land Rover and Jaguar market first, and then develop standard Tata Nano vehicles for both domestic and global markets.

Introduction

Tata Motors in 2014

Tata Motors Company is among the top corporations that manufacture automobiles in India. Despite the company’s past success, it has recently experienced reduced revenues and profitability because of external and internal factors. The challenges that the company is experiencing come from poor strategies, economic factors, and competition. This essay will analyze the company’s plans, its competitive environment, the industry in which it operates and offer recommendations on the way forward.

Internal Factors Affecting the Company’s Success

The first strength that Tata can utilize to remain competitive is the Jaguar Land Rover division. Both the Jaguar and Land Rover command respect and attracts profitability in the premium market segment. Secondly, Tata Motors belong to the Tata Group, which consists of other businesses. Some of the businesses under Tata group deal with technology, which is vital in developing safety features and products utilizing alternative fuels. As such, having access to such technologies is a competency that other competitors may not have. The main weakness for the company is its overreliance on the Indian market.

Tata Motors uses a global and not a multi-national strategy because it does not have business units that operate independently in foreign countries. Its current strategies include establishing manufacturing capabilities abroad, which will be under the company’s management and culture. If the company had businesses in other countries that had their cultures and management approaches, it would constitute a multi-national strategy. Its global strategy is not optimal because it has a few manufacturing locations that do not have the capacity to serve its potential global clients. Optimizing the strategy would ensure stability, which it lacks currently. The company has an unstable financial condition as indicated by the fluctuating profits from 2011 to 2014.

External Market Conditions Influencing Tata’s Success

The market conditions that impact the global motor vehicle industry include competitive and economic conditions. The economic features that affect the industry are fuel prices and global economic meltdown. The industry is highly competitive with large multi-national corporations competing for the existing market share.

The critical success factors in the industry include the rates fluctuations, consumer spending trends, pricing pressures and changes in commodity prices. The volatility of the exchange rates creates a disparity between currencies in different countries, which may reduce the amount of profits a manufacturer gets. Changes in consumer purchase behavior affect their demands for the automobiles. When the consumers are sensitive to price increases, producers feel the pressure to reduce the costs to appeal to the clients. When the prices of raw materials rise, the organizations may not provide the highest quality products at affordable prices, which negatively affect their success.

Tata’s main threat is the competition from other manufacturers such as General Motors, Ford, and Volkswagen. Secondly, the globalization of the markets has made it possible for international corporations to operate in India at the same level as Tata. As such, the company’s success is not guaranteed as before when it enjoyed a near monopoly status. The principal opportunity for Tata Corporation includes the expansion of its market for the Land Rover and the Jaguar. The driving forces in the global motor vehicle industry include fierce competition and technological innovations. Among Porters’ five forces, the intensity of competitive rivalry reigns supreme, followed by threats of substitute products.

Although Tata has capabilities to compete with other companies, it seems to lack the understanding to be a global player. The failure of its numerous strategies to yield the intended results is a sign that the corporation does not understand the interconnectedness of world economics, markets, global regulations, laws and multi-cultural challenges.

Recommendations

For Tata to address its strategic issues, it needs to develop new markets for the Jaguar and the Land Rover first. Among all its ventures, the two products are the only ones that the company seems to have mastered. Since they have been generating revenues increasingly over the years, they should be the priority to stabilize the company’s financial situation. Tata should form strategic alliances with other firms in developed countries to gain access to their premium markets. Since the market segment is not price-sensitive, Tata can utilize its cutting-edge technology to offer novel experiences at high prices. Making the Jaguar and Land Rover products a short-term priority is essential because it will provide the company with cash flow to run its operations while focusing on the long-term goals.

The second priority should be the development of the Tata Nano car with standard features for all the markets. The Tata Nano project should be long-term. Creating a standard car will reduce the costs of production and lead to the gaining of economies of scale. Since the Tata Nano made for the Indian market cannot be sold in the United States, the company is forced to manufacture two different models, which is not cost effective. Ensuring the basic features such as safety requirements are standard, Tata Motors can mass-produce the vehicles for the low-income earners at affordable prices because it can transfer the cost benefits to them. The Standardization will overcome the Indian market clients’ perception that the Tata Nano is for the poor and encourage them to purchase it. The move will improve the corporation’s domestic market performance while expanding its customer base globally.

Conclusion

Tata Motors’ strengths include a premium brand and access to affordable technology. The primary weakness is the overdependence on the Indian market. The threats that Tata faces include competition and market globalization. The essential opportunity for the corporation is the expansion of the Jaguar and Land Rover brands. Tata uses a global and not a multi-national strategy. The conditions that impact the industry include competition and economic conditions. Critical success factors for the motor vehicle industry include exchange rates, clients’ spending trends, commodity prices and pricing pressures.