Year Event

1989 Jaguar was acquired by Ford owing to the fact that the company was lacking of high-end luxury
model
=> their idea is to launch a new, less expensive line of Jaguar to target more people WITHOUT
diminishing Jaguar’s reputation
=> Jaguar images as classy and carries the spirit of racing heritage but the cars also faced huge
quality , manufacturing defects including :+Gears shifting issue
+Break failures
+Headlight lighting issues
And to manufacture on Jaguar car, it would take 110 hours whereas the competitors are Germen
luxury car makers and Japanese taking ONLY 80 and 20 hours respectively.
In the Ford invested $6 billion to improve Jaguar’s plant facilities and quality issues, and introduced
1990s several new vehicles such as Jaguar XK8, Jaguar E-type, Jaguar S-type
In 2001 “Baby Jaguar” – X type compact sports sedan introduced after a long-awaited
In 2002 The response from market was positive and X-type boosted the worldwide sales to 130,000
vehicles representing an increase of 29%. However, the company could not sustain for long
because Jaguar had been a symbolic to luxury with its design, racing heritage and its expensive
pricing is no longer considered as a luxury nameplate by those status and quality conscious buyer.
Ford had use the wrong marketing strategy in terms of target market. The introduction of
affordable Baby Jaguar is contradict to their brand positioning
In 2005 due to the pressure of the market and critics, Ford had decided to amend the marketing strategy
by moving it back to upmarket, focusing only on niche market. Therefore, the production of
“Baby Jaguar” was then discontinued.
In 2008 Tata Motors , part of India’s fast growing Tata Group, was buying Jaguar and Land Rover from
Ford Motor Company for $2.3 billion. Moreover, Tata Nano was launched with an initial price
approximately $2000 US at the time. It was considered the world’s least expensive cars because
of making a car that fit function in a small frame, have a affordable price and a safety was not
compromised. => Tata Motors wanted to make a car that provided a safer way for low income
and middle income Indian families.

Question 3: Tata Motors recently introduced the Nano, the world’s least expensive car. The
Nano fits Tata’s strategic goal of building a low-cost car for the Indian market. Can Tata succeed
in targeting both the very low end of the auto market as well as the high end?
Answer
To identify that Tata Motors could succeed in very low end of auto market I will be based on
+Demand: a huge need for an inexpensive car in India

Tata Motors came up with the idea of

“people’s car” or
“Nano,” which is positioned as an
affordable passenger vehicle designed
for the Indian
consumer for driving in the Indian
setting
It is a marketing decision
because there is a demand for an
affordable small car among middle-
class households
and an emotional decision because it
taps into national pride
It is a marketing decision
because there is a demand for an
affordable small car among middle-
class households
and an emotional decision because it
taps into national pride
It is a marketing decision
because there is a demand for an
affordable small car among middle-
class households
and an emotional decision because it
taps into national pride
Rising per capita Income and the changing demographic distribution are conducive for growth. India has
the highest proportion of population below 35 years, 70%, (potential buyers), which means that 130
million people will get added to the working population between 2003 and 2009. The trends indicate that
A new emerging middle class is starting to be able to trade two-wheelers in for four-wheelers ,small and
medium cars would remain dominant and a shift towards high end cars is expected at a faster rate.
(https://en.wikipedia.org/wiki/Luxury_car)
 Source:

https://datatopics.worldbank.org/world-development-indicators/stories/the-classification-of-
countries-by-income.html
 Source: https://www.ibef.org/download/Automotive_010709.pdf
+ More outstanding than the biggest competitor in the market (Maruti 800)
Factor Maruti 800 Tata Nano Which one is better?
Price $5000 $2000 Market share of passenger vehicles segment of Tata Motors was 15%,
which was the second highest after Maruti Udyog at 46%. The reason
for Maruti made up the highest market share in this segment because it
has dominated the Indian market for decades; its least expensive model
today sells for around $5,000 whereas the middle class only make
around $6,000 a year. Therefore, the appearance of Tata Nano (price at
$2000) was a competitive advantage for Tata Motors.

Power 37 BHP 33 BHP Nano engineers and partners looked at their target customers’ lives for
cost-cutting ideas. because more horsepower would be wasted in India’s
jam- packed cities, where the average speed is 10 to 20 miles per hour.
The car currently meets all Indian emission, pollution, and safety
standards
Weight 660 kg 580 kg
Power to 0.056 0.057 the feel of power of Tata Nano will be almost equal to Maruti 800’s feel
weight BHP/kg BHP/kg
ratio
Mileage delivers a delivers Better fuel efficiency than maruti 800)
mileage of approx. 20
approx. 15 to Km/Litre.
18 KM / litre
Design Nano offers more space and has better interiors.

+ first mover advantage in in the low-cost vehicle market: according to KPMG, is poised to grow
at 15% to 20% every year –
+the features of global crisis caused the fall spending from common public and the rapid
growing of middle class in India prefers to buy cars rather than use the public transportation
system. As the result, consumers tend to go for best quality product at nominal rate => The
launch of the Tata Nano automobile, the world cheapest item, would encourage consumers to
buy this car at a time of severe financial crisis.

+ The Another key advantage that the Indian car manufacturers have is cheap labor. This tends to
make India a very profitable venture to do business in for the rest of the world since it offers
such a large reduction in the costs of doing business when compared to any developed Western
nation. Therefore, the Indian automotive sector and Tata Motors had the potential to grow even
further and take a much bigger share in the global market.

+ Many attempts taken by the government to take control of the crisis : State Bank of India
greatly reduced the interest rates applied to automotive loans, which was used to boost the
purchasing power of local consumers in the Indian automotive sector

However, Tata Motor faced many challenges below:

+ The Tata Nano vehicle research and development (R&D) program had cost 20 billion rupees
while the overall profitability of budget car manufacturing. at such a low price it could take a
long time for Tata to recoup its investment in developing the world’s cheapest car.

+ Especially in times of prolonged economic crisis and rising gasoline and steel prices ,the price
of cars may have to be adjusted. However, Tata Nano was launched in the segment of being a
cost leader in the broad market to attract maximum number of the population.Therefore, Tata
Motor had to have a long-term plan to have a better idea of input costs, remain the market share
in India

 Conclusion: Tata Motor is able to gain high profit from this large target segment as there
are least competition for its market share. The company understand the need and the
demand for an inexpensive car in India .Tata Motors using market-penetration pricing
strategy which is setting the Nano at a relatively low price in order to attract a large
number of buyers and large market share. However, those advantages in the case study
 just illustrated that the Tata Motors would be successful in times of prolonged economic
crisis not in the long time. Tata must to make sure the quality besides the cheapest car
and having the better idea of input costs if it wants to remain the high market share of this
segment in Indian market in the long term.

 The high end segment

+ Why did Ford FAILED fail to make Jaguar & Land Rover profitable?

Firstly, The automotive industry crisis of 2008–2010 was a part of the financial crisis of
2007–2008 and the resulting Great Recession. The crisis affected European and Asian
automobile manufacturers, it made the pound fell 35%, 2 pounds were appromixately
equivalent to 1 USD. As a result, Jaguar car exports from England to the US almost
unprofitable.

Secondly, in the domestic market, the number of people who can buy a Jaguar a sharp
decline because of the increasing of oil prices

Thirdly, Ford's success depends on the Ford, Lincoln-Mercury, Mazda and Volvo brands,
not Land Rover or Jaguar

Fourthly, the next mistake of Ford is not grasping the need to use diesel cars in the UK
and Europe markets. At that time, most people preferred diesel cars because they were
more fuel efficient than gasoline cars and also cheaper oil.

Finally, Ford will have a lot of "headache" in the near future because the US and Europe
will continue to increase emissions standards. Both models use a highly polluting V-8
engine, making meeting new emissions standards requiring a great deal of investment in
technology and design.

Why I believe that Tata Motors buying Jaguar and Land Rover is a right decision?

Challenges:
 +Jaguar and Land rover có doanh thu đang giảm đặc biệt ở thị trường châu âu bởi sự ảnh
hưởng của cuộc khủng hoảng kinh tế 2008

+Ở ẤN ĐỘ, xe hạng sang lúc này chỉ chiếm 1% và ngay cả những thương hiệu lớn như
BMW cũng chỉ bán được 350 chiếc xe/year tại thị trường này.

+ Doanh thu của phần lớn các cá nhân ở đây là lower middle income, trong khi luxury
segment định vị high income

+Tata chưa hề có kinh nghiệm trong việc điều hành và phát triển một hãng xe loại sang,
đặc biệt Jaguar và Land Rover là hai loại xe có tiếg trong phân khúc luxury brand nên rất
khó để thay đổi phân khúc của 2 loại xe này sang trung hay thấp.

However, Let's put Ratan Tata's decision to buy JLR under the lens of logical reasoning
and business thinking. Tata Motors, a part of the Tata Group, established Jaguar Land
Rover Limited as a British-registered and wholly owned subsidiary. The company was to
be used as a holding company for the acquisition of the two businesses from Ford –
Jaguar Cars Limited and Land Rover.

Criteria to believe Tata Motor will be successful with JLR

a. Internal Strengths of Tata Motor
b. External Factors -> Opportunities of Tata Motor
c. Benefits of acquisition Jaguar and Land Rover
d. The potential development of luxury car segment
d.1 Jaguar and Land Rover positioning in the luxury car market BEFORE Tata
acquired JLR
d.2 Predicting the GROWTH of these brands based on its CAGR
e. Support from FORD to Tata Motor
=> Conclusion: from the demand, the support from buyer and the strengths of Tata to
make a conclusion

A. Internal Strengths of Tata Motor

Firstly, Tata Motor is a part of Tata Group : Tata Motors has a competitive advantage simply
because they are part of the larger Tata Group. Tata Group supplies Tata Motors with access to
knowledge, resources, technology and companies operating in many different industries
worldwide allowing innovation and easy availability to access other sources.
Secondly, Strong monetary base to invest .Tata Motors is India's leading super conglomerate
with annual pre-tax revenue of more than $ 100 billion and nearly 700,000 global employees. It
is a huge, private conglomerate with 98 operating companies in industries such as power
generation, chemicals, telecommunications and engineering => An Indian company whose
car experience has been mostly inexpensive, small cars, having lots of resources
and the money to invest in new products (they are well-funded

Thirdly, Talented management.

Secondly, Through this Acquisition of Jaguar Land Rover,TATA Motors has come of age and
join a league of World- wide Entities that operate in the premium Global Car Market.

Thirdly, it takes advantage of cheap financing to pursue its expansive M&A strategies from
Ford. When Ford costs $5.3 billion to own two brands, Tata Motors just costs $2.3 billion, less
than a half price of Ford.

Fourthly, As we know that mergers and acquisitions are strategic tools in the hands of
management to achieve greater efficiency by exploiting synergies and growth opportunities.
This Deal generates two synergies such as Cost Synergies and Revenue Synergies

+ Cost Synergy