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Introduction

With the growing era of globalisation with the dependency of information technology, the world
has become very much interconnected. Businesses tend to be globalise not forgetting as well the
automotive industry. By being globalise has lead the automobile industry to factors of exploring
new foreign market, increasing competition, introduction of lean production and also encourage
foreign direct investment (Ding and E.M. Akoorie,2017). This has created a challenging industry
to the automotive players to have a competitive advantage.

Tata Motors is known as India largest and leading automotive industry, it was establish in 1945
and it’s a subsidiary of Tata Group of companies which was founded by late Jamsetji Tata back
in 1868. Tata Motors is known today as a USD 42 billion dollar global automobile manufacturer.
The company manufactures vehicle ranging from cars, sports vehicle, buses, trucks, and military
defence vehicle. Besides that, the company have also archived its global mark by expanding out
to 50 countries around the world and by acquiring few renowned brands like British Jaguar Land
Rover and South Korea Daewoo. This has contributed the company to be recognised globally
and able to be competing with the rest global automobile company (TATA Motors Limited,
2017). Being a subsidiary of Tata Group of companies which is known to be operating
businesses in diversify field has created a good support system for Tata Motors. One of the few
industries to be named that Tata group venture into is manufacturing, steel, distribution, services
and consultation

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2.0 Environmental Analysis of TATA Motors

2.1 Internal environment

Internal environment is known to constitute internal components within the organisation. This
includes the objectives and goals, vision, mission, processes, product, employees, resources and
leadership in place. The internal environment can be analyse by using the SWOT analysis by
identifying the Strength, weakness, the value chain analysis and VRIO framework. By analysing
the internal environment which is the management, marketing, finance and operation will very
much contribute to identify the organisation strength and weaknesses where it can be used to
compare among competitors in achieving the organisations competitive advantage (David, 2011).

2.1.1 Tata Motors Strength analysis.

By analysing the strength of Tata Motors it will help in identifying the advantage and what make
the organisation better than the others. As other company’s out there Tata Motors have their own
set of strength to make them unique. One of the strength that they poses are their financial
strength. Tata Motors have recorded an increased in turnover for pass 6 consecutive years. Based
on their 2016 financial account, Tata Motors have a total company revenue of USD 42 billion
(Rs Crores 275,561.11)(Tata Motors, 2017). This shows a strong portfolio of Tata Motors
financial capability. Hence by company having a strong flow of financial capacity allows them in
progressing further without having financial constraints, for example expanding, better decision
making, growth planning and buying of new machinery or assets(Finanscapes,2017).
Furthermore, this will also allow them to compete with global brands effectively with keeping up
to date with current processes.

Besides that, Tata Motors is a strong domestic car player industry in India and is known as India
largest automobile company.. Based on 2016 India commercial vehicle manufacturer sales, Tata

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motor hold 44.37% market share which is the highest comparing to other of its competitors. Tata
Motors have seen a drop of 2.86% from the previous year but somehow they grew 4.76% of unit
sold comparing the previous year (Bajad, 2017). Furthermore Tata Motors have global presence
with creating a marque in over 175 countries around the world. Besides that, by acquiring Jaguar
Land Rover a British well-known brand from Ford Motors in June 2008 for USD 23 billion has
brought the company to be recognised all over the world (Bajaj,2012).

2.1.2 Tata Motors Weakness analysis

There is few weakness that is being identified in Tata Motors, Even though having presence in
more than 175 countries, Tata Motor are not really known globally as how its competitors like
Honda and Toyota does. The reason behind this is because of its lack of technology of its
products, this can be due of Tata Motors main focus of creating economical car. According to
Amrit Raj (2016), Tata Motors have huge flaws in terms of quality, its design and service
responsiveness. The quality of Tata Motor does not meet customer expectations with bad chassis
and material used. Furthermore, speaking on the design, Amrit said that the design by Tata
doesn’t meet the current trend and their designs are classifies as unattractive. Tata Motors also
have flaws in after sales service and their service responsiveness mainly for waiting for spare
parts. This has caused a very negative effect on Tata Motors brand itself. Furthermore in
analysing the weaknesses, Tata Motor have a limited consumer base and smaller market share
globally which will make it impossible to compete with other automobile industry in the era of
globalisation.

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2.1.3 VRIO Framework.

VRIO framework is used to identify the internal strength and weakness of the organisation.

Value – Yes, Tata Motors have a value but it is known as a short term value. Tata Motor have a
strong financial capability but they have to maintain it so that they will hold the value. Besides
that, as India leading automobile company gives them a temporary competitive advantage as
their competitors can overcome them if they fail to be sustainable.

Rare – No, Tata Motors are not rare in the market as there are competitors who are more
successful than them and the automobile industry have a very strong competition with a lot of
close competitors.

Imitability, No, it is easy to for competitors to imitate Tata Motor product and technology with
reverse engineering. Automobile company closely benchmark each other to ensure that they
remain competitive in the industry. It is also easy to replicate the processes of Tata Motor.

Organisation

Yes, Tata Motors have a strong organisation culture and they higher professional to work with
them to ensure that they have the right people at the right place. There is a proper

2.2 External Environment Analysis.

External Environment or external audit is done to analyse the opportunity which can benefit the
organisation and threats which organisation should be prepared to avoid (David, 2011). External
describe by identifying the trends and events that’s beyond the control of the organisation in
achieving its strategy. For example of external environment are economic factors, social factors,
political, technological and industry competitive forces(David, 2011). The external analysis can
be done by using the SWOT analysis opportunity and threat sections and PEST analysis.

2.2.1 Tata Motor Opportunity

Tata Motors is looking into increasing its market share, with focusing on economy vehicle like
Tata Nano; Tata Motor can venture in new markets for example like third world country where
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customer purchasing power is low. Customer would prefer to purchase an economic vehicle
which will match with their economy standard.

Furthermore, by the acquisition of Jaguar Land Rover, Tata Motor can integrate its technology
and research and development in producing Tata Motor vehicle. Hence this will give opportunity
for Tata Motor to compete with other global competitors with the Jaguar Land Rover strategy
alliances (Hitesh, 2017)

2.2.1 Tata Motor Threats

Threats are seen as a dangerous component in a business where organisations have to pay more
attention to or they will be out of the market for example like Kodak and Nokia where they fail
to adopt the latest technology and trend. The increasing price in the global economy will pose a
threat to Tata Motor as the cost of raw material and suppliers may increase and cost uncertainty.
This will affect the production cost and the profit margins of Tata Motors (Hitesh, 2017). Tata
Motors should be adopt the lean manufacturing method which is the waste minimization method.

With the fast growing phase of technology has caused automobile company to fork out a large
amount of money on their R&D to remain competitive. With the high tech robotic manufacturing
will cost a bulk for the automobiles company especially the less competitive company like Tata.
Another huge technology factor automobiles company are facing is self-driving cars like Tesla
which require a large amount of R&D.

Furthermore, another threat that Tata Motor faces is intense competition. Larger brands like
Toyota and Honda are trying to maintain their market share where new and small players are left
backwards. With the presence of more automobiles player has cause a very competitive industry
(Hitesh, 2017)

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2.3 PEST analysis

The PEST analysis is the most common approach that is being used to analyse the external
environment. PEST analysis framework acronym stands for Political, Economy, Social and
Technology factors which help in analysing and monitor the macro environment which will
impact an organisation (Academic, 2017).

2.3.1 Political

Tata Motors operates its business in other countries across the world and they have to pay
attention to the political climate, rules and regulations. Tata Motor headquarter is located at
Mumbai, India and it operated and sell its vehicle across other countries like Europe, Africa, and
Asia. By ensuring that the operation adheres to the respective country regulation will ensure a
smooth operation process. Certain countries have different set of rules like Labour law, tax
matters, ownership rights, manufacturing regulations, and etc. There are also regulations
involving the products for example the carbon emission regulations where its strictly followed in
UK where the government aims in reducing the carbon emission (Certification Agency, 2017).
The headquarter should constantly monitor the political situation in country as the law may
change especially when a new party takes over.

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2.3.2 Economy

Operating in different countries would require Tata Motors to ensure a stable foreign exchange
rate and a positive economy situation in the country. Hence, to have a smooth process of
operation and profit making, the economy of the particular country should be stable and growing.
The countries that Tata Motor operating are in develop countries like Europe and developing
countries like Asia, middle east where the economy is also growing. By having a financial
instability will cause issues in purchasing of raw material where it also effect the increase of
production cost. Currency fluctuation in the particular country could also affect the demand of
the product in the particular country.

2.3.3 Social

Tata Motors have operation worldwide with overseas dealership and manufacturing plants in
different countries. Hence the social factor between each country may be different with the
different culture and belief. European tend to have a different lifestyle choice than the Asian.
Same goes to working culture in a particular country. For example in 2008 Jaguar Land Rover
acquisition, Tata Motor decided to remain and operate Jaguar Land Rover from England so that
the value remains as a British car maker. Furthermore it rehire the Acting CEO Mr Smith as the
new CEO of the business to maintain the company culture so that it would not any complication
in terms of company culture as it will affect the company overall as the adaptation process is
though(Tata Motors, 2008).

2.3.4 Technology

Tata Motor is seen not to integrate much technology in their vehicle and they do not meet the
benchmark of the larger brand in competing. Technology in automobile is seen to be much
advance rather than Tata. Moreover, Japanese car manufacturer are integrating high technology
manufacturing equipment’s and usage of lean manufacturing and kaizen method in lowering
their production cost

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2.4 Challenges faced by Tata Motors and recommendation

After analysing the internal and external factors of Tata Motors, there are few challenges that are
derived from it. Tata Motor faces a high level of competition from other larger automobile
company in having competitive advantage. They lack behind in building their brands to be
internationally known. Tata Motors should develop cars according to all segments which cater
the economy segment, the middle segment and the luxury segment. The designs of Tata Motors
aren’t seen to attract the consumer group as their designs couldn’t compete with the latest and
elegant design of their competitors. Tata Motor should focus more on their design of the vehicle
to meet customer satisfaction. Second due to increase of the globalisation factor, Tata Motor
should focus more on the taste of the overseas consumer and specifically designing it models
according to the country that its exporting.

Second main challenges that is faced by Tata Motors is Technology challenges, where they are
left back with producing vehicle with less technology feature. Tata Motors will not be able to
secure the young and innovative consumer as their vehicle are seen as out-dated. Based on the
challenges the recommendation that can be given is, Tata Motors should cooperate and work
with the competitor by benchmarking them or reverse engineering their competitors product. For
example, Toyota are producing economic cars together with technology and are able to
economically priced it. Tata Motor should focus more on their R&D of technology of their
vehicle or trying to integrate the R&D and technology of the acquired company like to expertise
of Jaguar Land Rover.

Third challenges that is faced are the challenges with small market share and Tata Motors are not
globally recognised. This will effect their company positioning especially when it comes in the
globalisation era where companies are competing among each other to remain as top brands.
This can be overcome with Tata Motors spending on their advertisement and campaigns in
promoting it in larger scale to create brand awareness. Furthermore, Tata Motor should look into
researching for more markets into selling their cars by setting up a dealership showrooms in
more market.

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3.0 Propose strategy for Tata Motors

Strategy Management helps an organisation in gaining a competitive advantage. Coming up with


a good strategy will help to generate advantage to an organisation. There are two objectives
when it comes in implementing strategy which is known as financial objective and strategic
objective. Financial objectives are implemented when an organisation wants to increase growth
in earning, improved cash flow and so on. Where else strategic objective focus on the non-
financial objectives like acquiring market share, having good products, technology and other
leading operation matter(Barney and Hesterly, 2015).

3.1 Corporate Level Strategy

The are 3 level of strategy when it comes to implementation of strategy, the first will be
Corporate Level strategy, this strategy focuses on the top management level in decision making
in bringing the company further in achieving the objective. This can be done by using the grand
strategy like growth, stable growth, turnaround and combination. The second strategy under
corporate level strategy will be the secondary level strategies which are known as Expanding,
integrating and diversifying. The last level for corporate level strategy will be tactical strategy
which is known to be organic and inorganic strategy (David, 2011).

3.1.1 Grand Strategy

The propose strategy for Tata Motor on the corporate level strategy will be the growth strategy.
Growth strategy is to increase the growth for the future year. Hence Tata Motor will be able to
increase their profit, sales and market share. By also using the growth strategy they will be able
to reduce the cost of production per unit as the quantity of their production will increase. This
will also allow them to grow in terms of organisation expansion.

3.1.2 Secondary Level Strategy

3.1.2.1 Expansion Strategy

The secondary level strategy that is proposed based on the growth strategy will be the expansion
strategy and integration strategy. Expansion strategy is known as to expand and increase the
operations to more market. By using this strategy Tata Motors will expand its operation to new

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regions for example South East Asia which is one of the fast emerging markets. By expanding to
more market will allow Tata Motor brand to acquire more market share and brand status.
Furthermore by expanding Tata Motors will be able to compete globally with large industry
player where they will be able to achieve competitive advantage more efficiently. Expansions are
also known as one of the effective way of promoting its brand globally. Tata Motor can also use
their existing product in their expansion to other markets with little customisation.

3.1.2.2 Integration Strategies

The next secondary level strategy will be the integration strategy, Integration is better known as
controlling the availability of resources and processes. Integration strategy is divided into two,
vertical integration and also horizontal integration. Vertical integration strategies allow the firm
to gain control of their distributor, suppliers and competitors. Vertical integration is break down
to two smaller segment which is forward and backward integration. Forward integration is
known as acquiring the distributor and retailers. In the case of Tata Motor, it can reduce the
dealership and start its own distribution to the export market by using franchising method which
even more efficient. This will allow Tata Motor to gain control of the customer experience.
Backward integration is known as acquiring suppliers of the raw material where the company
will increased their control of the raw materials supply. Moreover by using the backward
integration strategy will control the production of the quality of the raw material and the price
which fluctuate due to demand. This strategy will keep Tata Motor in ensuring that their raw
materials always meet their specification.

When we speak on horizontal integration is known when organisation acquires their competitors.
This can be done by buying over the small competitors or other large competitors. Tata Motor is
very much active and successful in the previous acquisition for example Daewoo and their recent
Jaguar Land Rover acquisition. This will allow them to use the existing capabilities of the
businesses that they acquire in increasing the brand image, technology development, and market
share of their competitors.

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3.1.3 Intensive Strategies

Intensive strategies are known as using strategies like market development, market penetration
and product development into achieving their competitive advantage. This is done by intensively
focusing on the factors above.

3.1.3.1 Market Penetration

Market penetration strategy are strategy that is used to increased market share in current
operating market, this is being done by using marketing strategies. Tata Motors can engage with
this strategy by increasing the marketing efforts with coming up with advertisement, promotions
and other offers to create brand visibility. By having a lucrative promotion will encourage and
attract the target audience on the existing market to explore the brand. Furthermore, Tata Motor
can come up with slogan and catchy marketing strategy and getting and engaging brand
ambassador will increase brand awareness. This strategy will contribute to the increase of the
grand strategy.

3.1.3.2 Market Development

Market development refers to expanding the product to a new market or geographic area. Tata
Motors can use this strategy in expanding to new markets with their existing product. To be
globally recognised and competitive, Tata Motors should expand to markets where their
competitors are acquiring. This will create opportunity for Tata Motors into tapping new market
and increasing their production capacity and reducing their production cost through economy of
scale theory.

3.1.3.3 Product Development

Product Development is a strategy that will increase sales by modifying and improvising their
existing products. Product development is important to ensure sustainability of the brand as all
brands has product life cycle and maturity period (David, 2011). By Tata Motor engaging in
product development, they will be able to compete with their competitors by producing up to
date products and localised product based on customer’s requirement in certain market. For
example heaters install in cars that will be imported to a winter country. Tata Motors should

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constantly invest in their R&D to ensure that their product meets customer expectations and are
able to compete with their competitor’s product.

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4.0 Strategy Evaluation Process

The strategic evaluation process consist of results in decision that to have long term
consequences. Hence it would be impossible to reverse back the decision which has been made.
Its compulsory for organisation to conduct strategy evaluation as strategy evaluation helps in
identifying problems before it becomes critical. There are few strategy evaluation methods which
is identifying the underlying bases of an organisation, comparing expected result and taking
collective actions. Based on Rumelt’s Criteria there are four methods in evaluating strategies
such as, 1.Consistency-as the goals and objective of the organisation should underline with the
strategies in place. 2.Consonents-which by evaluating internal and external trends and the
critical changes that incur and formulating strategies based on their outcome. 3.Feasibility-the
strategies are in place should be feasible with the firms capability to ensure that they are in place.
4.Advantage-the strategy should provide a competitive advantage in achieving its goal (David,
2011).

Strategy evaluation is becoming increasingly difficult with the globalisation era where business
operation strategy has changed dramatically in the past years. One of the few examples that can
be observed is domestic and world economy tend to be more stable in years ago, difficulty in
predicting product development cycle and product life cycle which used to be longer. Besides
that with the advancement of technology has caused a huge dilemma in organisation adaptation.
Furthermore, businesses tend to have fewer competitions than what is being observed now.

4.1 Strategy Reviewing Underline Process

By using the internal factor evaluation matrix and the external factor evaluation matrix would
help in identifying the internal and external factors involving the strategy effectiveness. This
would help to identify how competitors reacted to their organisation strategies and how their
strategies have changed (David, 2011).

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4.2 Measuring Organisation Performance

Measuring organisation performance is another important evaluation process. This evaluation


process compares expected results with the actual result, evaluating individual performance
examining progress in meeting firms objective. To evaluate strategies there should be a proper
measurable and easily verifiable process. This can be done by using quantitative analysis like
return on investment, return on equity, market share and qualitative analysis in identifying if
strategy is internally consistent, if the strategy is appropriate with the view of available resources
(David, 2011).

4.3 Taking Corrective Actions

Taking corrective actions based on the evaluation will help reposition the organisation to be
competitive in the future. This is been done by analysing the areas that need to be analyses and
corrected. This can be done revising the objective, the mission and vision of the company and
alter their strategies (David, 2011).

4.4 Strategy Evaluation Framework

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Conclusion

It’s important for an organisation to conduct strategy management, it will help to sustain the
business and the managers will know the trend on how the business is approaching. In this highly
competitive globalisation era have caused organisation to conduct strategy analysis twice a year
rather than years ago where the changes in business occur in a slower phase. For Tata Motor, it
have to develop globalisation strategy as their business tend to be only stronger in India domestic
market where larger players in the automobile industry can monopolised the industry .
Furthermore, Tata Motor should change their current strategy which is focusing on smaller
segment vehicle and commercial vehicle as being even more generally focus will give them the
competitive advantage in the automobile industry. Lastly, Tata Motor should work together with
their recently acquired Jaguar Land Rover with branding Tata Motor to be globally recognised
with more brand visibility.

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