Case Study of Tata Motors

Presented by, Akansha Mer Amanpreet Singh Bhavana Agarwal Gaurav Bisht Yamesh Shah

Brief History of TATA MOTORS

Tata Motors started in the year of 1948, when Tata Motors acquired an eastern railway workshop to build boilers and steam locomotives for the railways. For the considerable period of time Tata had a collaborative agreement with Daimler Benz.

Introduction
Indian automobile industry has grown by
13% over the last few years. It can be divided into three stages: 1. Licensing pre 1983 2. Joint venture 3. Delicensing

VEHICLE SEGMENTATION
Tata Motors are generally involved in Passenger and commercial vehicles. 1. Passenger vehicle consist of SUVS, MUVS and Sedan and Hatchbacks. 2. The commercial vehicle consist of LCVS, HCVS, MHCVS.

CONTRIBUTION OF HRD IN TATA MOTORS

1.Trained and competitive cost of man power 2.Good relationship with reasonal trading blocks like EU , MESACOR and ASEAN 3.Globel suppliers GM, Toyota, Ford, Hundai, Maruti suzuki, Honda, Scoda, Volvo, Mercedes 4.Evaluating the external opportunities, the company again warmed its ties with Daimler Benz in India 1995. 5.To manage the above, company needs to have economy of scale, which is only possible if u internationalized

6.Technological upgrading 7.In 2001-02 Tata Motors started to evaluate the external environment and internal strength t0 develop a strategy for profitable growth. 8.A long term relationship developed and vendors became a part of the company. 9. Tata Motors access to strong R&D, access to technology and new market through strategic collaboration and became a fully integrated player.

Marketing strategy of Tata Motors

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Marketing strategies of Tata Motors since 1999

A Major change came after a heavy loss of Rs 550 cr by Tata motors in 1999. After that Tata re-aligned its marketing team and became more sensitized to customer needs. The revival strategy of Tata Motors had three phased business plan. 1) First, it focussed on the cost reduction initiatives for immediate turnaround. The in-house steel company acts as a shock absorber against steel price fluctuations. 2) Secondly, it focused on domestic and international growth through new products and improved sales and service. 3) Finally, it linked long term growth with increased business in Commercial Vehicles, new product segments and new geographies.

 This strategy have gone a long way with Tata Motors earning net profit of more than Rs 1000 cr even in a lean FY 2008-2009.
Tata Motors had the strength to exploit the opportunities like: 1) Access to strong Research and Development. 2) Access to technology and new markets through strategic collaborations. 3) Largest distribution and service network : Its distribution network includes operations in India, Nepal, Bhutan, Ghana, Italy, Poland , etc. It also has Assembly units at South Africa, Thailand, Bangladesh, Brazil apart from India. 4) It is also expanding its international business. Understanding the customer needs in high potential emerging markets.

Evaluation of external environment and internal strength to develop a strategy for profitable growth.
Strategy of Disruptive Innovation, wherein it has offered lower priced products and surpassed the market expectations. The two offerings have strengthened the Tata Motors position as a leading player ( Tata Ace launched in may 05 and Tata Nano launched in 08 has taken the world with awe). Relationship Management: The organization has maintained cordial relation with the suppliers, customers and all its stakeholders.

 Entry into the elite luxury cars: Tata Motors acquired Land Rover and Jaguar from Ford Motor Company in 2008. It also bought Daewoos truck manufacturing unit in South Korea, followed by the acquisition of the Hispano in South Africa.

Production strategy of TATA Motors

TATA the automobile giant in India producing passenger cars, heavy & medium commercials vehicles both for goods and passengers. For this huge production a huge quantity of raw material is required which incurs a large amount of cost. In order to reduce this cost TATA followed the following strategies.

Vendor rationalization program

Vendor rationalisation program means filtering the low quality raw material vendors who do not supply on time ;and generally cause unnecessary delays in supply. After the recession of 1999 TATA launched VRP in which a long term relationship was developed and vendor became the part of the company.

Price negotation and value engineering .

It means that the company will help and have control on quality and raw material purchase,implementation of best business practices,better supplies chain management and e-sourcing. for (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function. Raw material management constituted 65% of savings in cost and using internal cash for investment saved 25% of the cost and the remaining was variable cost savings.

FINANCIAL ASPECTS
Finance is the most important function of any organization. It helps us in decision making process. (raising of funds and usage of funds)

 In lieu of TATA Motors (started in 1948), requirement of capital was less. In 1981, Govt of India liberalized its licenses TATA motors at this time capitalised opportunities by entering lowest segment(LC) Another major role was of LPG policy. This time TATA Motors enhanced its investments and capital structure.

 In 1999, recession came and India faced downturns. TATA Motors has also faced the financial crunch. this led Ashok Leyland to use this opportunity. This recession led TATA Motors to do CVP analysis more effectively. Cost management and financial planning are inseparable parts of the automobile business.

 A question arised How is it possible for a company that experienced losses, totally transforms itself? In 2001-02, TATA Motors started to evaluate the external environment and internal strength, develop a strategy for profitable growth. TATA Motors also faced a tough competition from China.

 Due to this, TATA Motors Motors started cost cutting exercise from 2001-2004. In 2005, TATA Motors had 56% share of commercial vehicle market in India. In 2003 and 2004, the co. reduced the WC requirement by reducing debtor Collection Period and maintaining the EOQ level. This was a huge success.

 As process was going on, TATA Motors followed restructuring process. The cost of debt reduced to 5.5% from 12%. This helped co. to reduce its BEP level.

Inventory control
TATA motors decided to capitalise the market competetive dynamics through reducing the wprking capital requirements by cutting inventory levels. The company reduces its inventiry level from a peak 75 days of sales to around 35 days. Receivable days were reduced fron 90 days to 16 days.