Beruflich Dokumente
Kultur Dokumente
ON
MARKETING STRATEGY
OF TATA MOTORS
(II)
EXECUTIVE SUMMARY
As India celebrates its 50 years of independence, the passenger car industry celebrated a
centenary of its existence in India in 1998. Despite this head start, the industry has never quite
matched up to the performance of its counterparts in other parts of the world. The all-pervasive
atmosphere created by the government's license raj was primarily responsible for this situation.
The various layers of Acts sheltered the industry from external competition and smothered the
development of the Indian automobile industry. Moreover, the industry was considered low
priority as cars were considered to be an "unaffordable luxury."
Hence in the first part of the project I have taken up the strategic group analysis of TELCO as
this is one company whose indigenously manufactured cars like Tata mobile, Indica and Safari
have performed well on Indian Roads.
In the second part of the project I conducted a study on the consumer perception about small
cars. Firstly, I took three brands of small cars; Zen, Indica and Santro for a comparative study of
small car segment.
Later I went through the process of filling the questionnaires, to know exactly what the
customer’s of small cars perceived about their cars. A sample size of sixty respondents was
taken. Sample unit was a customer who owned a small car. Secondary data from various sources
like magazines, journals etc was also collected.
The findings showed that the consumer’s who owned small cars basically wanted good
performance, after sales service and a car at their budget, a less expensive one.
(III)
All the cars taken for the sample showed that the consumers perceived them as almost same in
all the attributes like safety, comfort and luxury. Respondents liked Indica more for its looks,
whereas Marti’s after sales service was perceived to be good.
But, at the end the research was limited due to small sample size, small sample area and time
constraints.
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TABLE OF CONTENTS
Page No.
ACKNOWLEDGEMENT (I)
CERTIFICATE (II)
EXECUTIVE SUMMARY (III)
CHAPTER - 1 INTRODUCTION 8
INDUSTRY
4.3 UNIVERSE 33
4.4SAMPLE DESIGN 33
DRIVERS
5.4 ANALYSIS 47
5.5 CONCLUSIONS 55
CHAPTER - 6 ANNEXURE 56
6.1 QUESTIONNAIRE 59
CHAPTER - 7 BIBLIOGRAPHY 61
5
CHAPTER-1
INTRODUCTION
Following India's growing openness, the arrival of new and existing models, easy availability of
finance at relatively low rate of interest and price discounts offered by the dealers and
manufacturers all have stirred the demand for vehicles and a strong growth of the Indian
automobile industry.
The data obtained from ministry of commerce and industry, shows high growth obtained since
2005- 06 in automobile production continuing in the first three quarters of the 2005-06. Annual
growth was 16.0 per cent in April-December, 2006; the growth rate in 2004-05 was 15.1 per cent
The automobile industry grew at a compound annual growth rate (CAGR) of 22 per cent
between 1992 and 1997.
With investment exceeding Rs. 50,000 crore, the turnover of the automobile industry exceeded
Rs. 59,518 crore in 2002-03. Including turnover of the auto-component sector, the automotive
industry's turnover, which was above Rs. 84,000 crore in 2004-05, is estimated to have exceeded
Rs.1,00,000 crore ( USD 22. 74 billion) in 2005-06.
• Eicher Motors
• Bajaj Auto
• Hero Motors
• Hindustan Motors
• Telco
• TVS Motors
• DC Designs
Government has liberalized the norms for foreign investment and import of technology and that
appears to have benefited the automobile sector. The production of total vehicles increased from
4.2 million in 1998- 99 to 7.3 million in 2005-06. It is likely that the production of such vehicles
will exceed 10 million in the next couple of years.
The industry has adopted the global standards and this was manifested in the increasing exports
of the sector. After a temporary slump during 1998- 99 and 1999-00, such exports registered
robust growth rates of well over 50 per cent in 2002-03 and 2003-04 each to exceed two and- a-
half times the export figure for 2001-02.
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CHAPTER-2
COMPANY PROFILE
Tata motors one of India's largest private sector companies with a turnover of over Rs 80 billion,
is the country's leading commercial vehicle manufacturer and has significant presence in the
multi-utility and passenger car segments.
Tata motors were established on September 1, 1945, originally for the manufacture of Steam
Locomotives at Jamshedpur. By 1954, the company had diversified into the manufacture of
commercial vehicles in collaboration with Daimler Benz, Germany. By the time their
collaboration ended in 1969, Tata motors had become an independent producer of Medium
Commercial Vehicles with a great degree of indigenization. It had also developed the capability
of designing, testing and manufacturing such vehicles.
The widely successful Tata Indica, an Euro 2 compliant vehicle, is the country’s first
indigenously designed, developed and manufactured passenger car. Tata Motors followed that up
with the Tata Indigo, a sedan that was launched in December 2002. The company also makes
several other passengers vehicles, including the Safari, Sumo and Sierra.
The company’s products have received wide acceptance not only in India but also in the Middle
East, Asia, Africa, Australia, Latin America and Europe.
2.1 Areas of business
The company manufactures medium, heavy and light commercial vehicles, multi-utility vehicles
and passenger cars. In the year ending March 2001, the company’s revenues from its four
manufacturing plants at three locations in India were Rs. 81.64 billion (US $ 1.73 billion). In
2000, they were Rs. 89.61 billion. (US $ 1.9 billion)
{The average exchange rate has been taken as Rs 47.0 to one US dollar.}
In the year ended 31 March 2001, the company’s total exports were worth about Rs 7.22 billion
(US $ 153.6 million), against about Rs 6.09 billion (US $ 129.5 million) in the previous year.
Locations
The company’s manufacturing plants in India are at Jamshedpur, Pimpri and Chinchwad near
Pune in Maharashtra, and Lucknow in Uttar Pradesh. Land has been acquired at Dharwad
(Karnataka) to build a fifth plant.
Collaborations
• Le Moteur Moderne, France, for the development of diesel and petrol engines for
passenger cars.
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Subsidiaries
• Tata Technologies Ltd.: It oversees the IT requirements of Tata Motors and provides
services for SAP implementation, CAD/CAM-based design, and e-commerce facilities to
customers in India and abroad.
• Telco Dadajee Dhakjee Ltd. (TDDL): It is an investment and finance company and
proposes to undertake activities pertaining to the sales and service of Tata Motors’s
vehicles and spare parts.
• Minicar (India) Ltd.: Formerly known as Mazda Industrial Chemicals Ltd., this
company was incorporated on January 18, 1972 and is currently engaged in the business
of automobile sales and services.
• HV Transmissions Ltd.: It was incorporated on March 13, 2000 with the objective of
acquiring the Heavy-Duty Gear Box Division of Tata Motors at Jamshedpur as a going
concern. It supplies transmissions and their parts to Tata Motors against purchase orders
raised by Tata Motors on HVTL.
• HV Axles Ltd.: It was incorporated on March 13, 2000 with the objective of acquiring
the Heavy-Duty Axle Division of Tata Motors at Jamshedpur as a going concern. It
supplies axles and their parts to Tata Motors against purchase orders raised by Tata
Motors on HVAL.
• Telco Automation Ltd.: It was incorporated on March 13, 2000 with the objective of
acquiring the Machine Tool and Growth Divisions of Tata Motors as a going concern.
As and when required, Tata Motors sources factory automation equipment from TAL.
• Tata Technologies, USA: It was incorporated on August22, 1994 and became a wholly
owned subsidiary of Tata Technologies Limited on December 22, 2000. The company is
engaged in the business of computer consultancy and related services.
Strategic alliances
Tata Motors has several joint ventures and alliances. These include:
• Tata Cummins Ltd., a joint-venture with Cummins Engine Company Inc., USA; makes
fuel-efficient, low emission, environment-friendly diesel engines;
• Tata Holset Ltd., a joint-venture with Holset Engineering Company, UK, makes
turbochargers for diesel engines manufactured by Tata Cummins Ltd. and other OEMs;
• Concorde Motors Ltd., a joint venture with Jardine International Motors (Mauritius) for
dealerships of passenger vehicles. Concorde has dealerships for Tata Motors passenger
vehicles in Delhi, Mumbai, Bangalore, Ludhiana, Hyderabad, Chennai and Lucknow.
• Tata Precision Industries Pvt. Ltd., Singapore, for the manufacture and sale of high
precision toolings as well as electronic and plastic components for the computer industry;
• Tata Motors Services Ltd., Singapore, for the sale of spare parts for Tata
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vehicles; and
• Nita Company Ltd., Bangladesh, for the assembly and sale of Tata commercial vehicles.
Tata Motors is highest selling car company in India and is the four wheeler manufacturer in the
world. As the case is every company has it strengths and weaknesses and Tata Motors is no
Exception: -
STRENGTHS
5Very strong brand image of making fuel efficient and reliable cars
6High product and brand recall among the customers infect Tata is the first choice among the
majority customers.
WEAKNESS
OPPORTUNITIES
1)It’s a growing market thus company has high growth potential in future
2)Premium segment is still not fully exploited with right product Tata Motors can do
wonders
THREATS
2)New companies entering in the car market will pose a considerable threat
3)Competitors becoming aggressive with new product launches and high marketing pitch
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LITERATURE REVIEW
TELCO:
Currently the largest automobile company in India, Tata Motors ranks among the top 10
commercial vehicle producers in the world.
The transition of Tata Motors from being a predominantly commercial vehicle manufacturer to a
complete automobile company began in the early 1990's with the launch of the first Sports
Utility vehicle from Tata- the Sierra and later the Tata Estate. The insights gained into customer
needs in these markets led to the development of another world-class Sports Utility Vehicle, the
Tata Safari, launched in 1998.
Soon after launching the Safari, Tata Motors made an aggressive foray into the mainline
passenger car market with its small car, the Tata Indica. The Indica fulfills the Tata Group
Chairman Ratan N Tata's vision of developing and manufacturing a truly Indian car that would
use modern technology and contemporary styling of the small car genre. It went on to set a
benchmark in terms of its value proposition in terms of best value for money in its segment and
internal spaciousness.
The overwhelming customer response that the Indica generated at its launch in early 1999 has
translated into its capturing more than 17% of the premium small car segment, and 8 % of the
entire passenger car market in India within a year.
Clearly identifying the core areas as R&D, manufacture of critical components and the final
vehicle assembly, the company continues to be open to global alliances to effectively enhance its
competitiveness in the fast globalizing Indian markets.
Business Sector
The Tata Group runs businesses in seven key industrial sectors, namely, Materials, Energy,
Chemicals, Consumer Products, Engineering, Communications and Information Systems, and
Services. TELCO is Tata’s flagship company in the Engineering sector.
Business Models
Business
TELCO is into the business of manufacturing and selling medium, heavy and light commercial
vehicles, multi utility vehicles and passenger cars.
Its major product line can be basically classified into three broad categories. There are various
sub-brands and products in these categories:
1.Passenger Cars
2.Utility Vehicles
3.Commercial Vehicles
TELCO currently has three products in its Passenger Car division namely,
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a. Tata Indica
b. Tata Indigo
c. Tata Safari
It is in the process of coming out with another member in the passenger car family, the all-new
Indica Sedan, set out to storm the Indian Mid-Size Passenger car segment, which would be
launched in the last quarter of 2002.
Confirming to International standards all these vehicles are available with various features such
as petrol & diesel versions, 2-wheel and 4-wheel drives etc.
TELCO currently has three products in its Multi-Utility vehicle division namely,
a.Tata Sumo
b.Telco Sport
All these vehicles come only in diesel-engine versions and are quite popular on the Indian roads,
especially on the highways and in the rural areas. They are known for their build quality,
reliability, ruggedness, and the various uses that they can be put at.
They are used as people carriers, as emergency vans, goods carriers, pick-up vehicles and so
many more uses.
The utility pick-up vans of Tata International are made for all kind of terrains and are facilitated
with features like 2 & 4 wheel drive, single & crew cabs etc.
TELCO is the undisputed leader as regards the Commercial Vehicle segment. It has a large
number of products in this segments classified as various types namely,
a. Buses
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b.Trucks
c.Tippers (3 models)
d.Tractors (3 models)
2.3 STRATEGIC GROUP MAPS
INTERNAL ANALYSIS
The basic premise is the Customer. So whenever a new product development plan comes into
picture, the idea is to look for ways to offer the customer the best value for his money. And the
way we define value, the word covers all the possible and not so possible ways to customer
satisfaction.
STRATEGIC INTENT
Purpose
Being a part of the Tata Group, Telco’s corporate purpose is to improve the quality of life of the
communities that it serves, through leadership in sectors of national economic significance, to
which the group brings a unique set of capabilities. This requires aggressive growth in its
focused areas of business.
The Tata Group’s heritage of returning to society what it earns evokes trust among consumers,
employees, shareholders and the community. Formalizing the high standards of behavior
expected from employees and companies continuously enriches this heritage.
The Tata name is a unique asset representing leadership with trust. Leveraging this asset to
enhance group synergy and becoming globally competitive is the route to its sustained growth
and long-term success.
5 Core Values
The Tata Group has always sought to be a value-driven organization. These values continue to
direct the group's growth and businesses. The five core Tata values underpinning the way it does
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business are:
1Integrity - we must conduct our business fairly, with honesty and transparency. Everything we
do must stand the test of public scrutiny.
2Understanding - we must be caring, show respect, compassion and humanity for our
colleagues and customers around the world and always work for the benefit of India.
3Excellence - we must constantly strive to achieve the highest possible standards in our day-to-
day work and in the quality of the goods and services we provide.
4Unity - we must work cohesively with our colleagues across the group and with our customers
and partners around the world, building strong relationships based on tolerance,
understanding and mutual cooperation.
Tata Motors owes its leading position in the Indian automobile industry to its strong focus on
indigenisation. This focus has driven the company to set up world-class manufacturing units with
state-of-the-art technology. Every stage of product evolution - design, development,
manufacturing, assembly and quality control, is carried out meticulously. Its manufacturing
plants are situated at Jamshedpur in the East, Pune in the West and Lucknow in the North.
Jamshedpur:
This was the first unit of the company established in 1945 and is spread over a area of 822 acres.
It consists of 3 divisions - Truck, Engine (including the Gear Box division) and Axle. The
divestments in March 2000 hived off the Axle and Engine plants into independent subsidiaries.
The Truck Division boasts of two assembly lines. The main assembly line, measuring 180 metres
in length, has 20 stations with a vehicle rolling out every 8 minutes while the other line is
dedicated to Special Purpose Vehicles (SPVs). State-of-the-art facilities like a Centralized Paint
and Press Shop with a set-up of a 5000 tonne Siempelkamp press line and a cut-to-length line for
strip preparation purchased from M/s. Kohler of Germany makes it a fairly advanced production
outfit.
This is supported by a fully equipped Foundry which supplies high-grade SG Iron castings for
automobile components and excavators and is rated as one of the cleaner, better and highly
automated foundries in the world. The Foundry has a sophisticated Kunkel Wagner high pressure
moulding line, which has a rated production capacity of 90 pairs of moulds every hour. The
Foundry has its own melting shop, core shop and sand plant. Other advanced facilities include
Channel Furnaces, Computerized Testing Equipment etc. In 1993, the Foundry was ISO 9002
certified by the Bureau Veritas Quality International and later followed it up with the more
stringent QS 9000 certification from the BVQI in the year 2000.
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The unit is also equipped with a semi-automated forging line, with 40,000 mkg Beche hammer
and state-of-the art presses from Kurimoto of Japan and is one of the most modern forging set-
ups in the country. It produces critical forging like crankshafts, front axle beams and steering
parts for the automobile plant. The new forging line, installed on April 20, 1984, has the
capability to forge front axle beams at 90 sec per piece and crankshafts at 120 sec per piece.
Mechanical presses help produce a variety of heavy forging. The sophisticated FIDIA Digit 165
CC graphite milling machine links shop floor machines to the design workstation. The Forge has
been certified as ISO 9002 and QS 9000 by the BVQI.
Pune:
The Pune unit is spread over 2 geographical regions Pimpri and Chinchwad and has a combined
area of around 510 acres. It was established in 1966 and has a Production Engineering Division,
which has one of the most versatile tools making facilities in the Indian sub-continent. It houses
a Vehicle manufacturing complex which is one of the most integrated automotive manufacturing
centers in the country producing a large variety of individual items and aggregates. It is engaged
in the design and manufacture of sophisticated press tools, jigs, fixtures, gauges, metal pattern
and special tools, as well as models for the development of new ranges of automobile products.
Its capabilities have enabled Tata Motors to introduce new products and improve existing ones
without resorting to imports of dies or fixtures.
Over the years, this division has developed expertise in design and manufacture of automated
dies, fixtures and welding equipment. Its large design group is fully conversant with state-of-the-
art CAD facilities and manufacturing facilities comprising of light and heavy CNC machine
shops, jigs boring room, plastic template shop, wood pattern and model pattern shop, five axis
precision machine tools and laser control machines. To cope with such a diverse range, four
assembly lines have been established, one each for MCVs and HCVs, LCVs, multi-utility
vehicles and one for Passenger Cars (Indica).
The Passenger Car Division in 'K' block executes the entire process of car manufacture over five
shops - the engine shop, the transmission shop, press and body shops, paint shop and the trim and
final assembly shop. The shops are fully automated ensuring that there is minimal chance for
error in the manufacturing processes. After the car is completely assembled, it goes through
several checks like wheel alignment, side slip test, brake test, shower test, and a short test run
before it is ready for dispatch.
All systems such as materials management, maintenance and other activities are computerized,
enabling smooth operations and minimum inventory needs.
The Electronics Division is engaged in the production of a wide variety of Machine Tool
Controllers, PLCs, and Test rig instrumentation, Servomotors, Proximity Switches. In addition, it
has developed a number of components such as flashers, horns, timers that are used in Tata
Motors vehicles.
Industry experts rate the fully automated Foundry at Chinchwad among the best, worldwide. The
Iron Foundry produces 16,000 tonnes of high precision castings per year with the help of 450
employees. These include Cylinder Blocks, Cylinder Heads, Gear Box Housing, etc. To dispense
with the need for outsourcing, an Aluminium Foundry with an annual capacity of 700 tonnes has
also been established.
Lucknow:
Lucknow Plant is the latest in Tata Motors 's manufacturing facilities. Established in 1991 and
covering an area of 600 acres, it was primarily started to assemble Medium
Commercial Vehicles (MCVs) to meet the demand in the Northern Indian market. However, in
1995, the unit started manufacturing bus chassis of Light Commercial Vehicles (LCVs) and
SUMO's. The unit is equipped with facilities to manufacture spare parts. Subsequently, G-16 and
G-18 Gear Parts were added in 1998. The plant started to assemble G -16 Gearboxes in 2000 to
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meet the in-house requirement for SUMO vehicles.
The segmentation of the passenger car market in India is vastly different from that in the
developed nations. In India, the economy segment accounts for the largest share of the cars sold,
as compared to mid-range segment in the mature markets. The economy and the premium
segment face the lowest competitive threats, while the premium segment will witness intense
competition due to lower volumes.
Traditionally, disposable income was perceived as the one critical factor that drove passenger car
demand. However, household income is no longer the single most important factor in
determining the demand for vehicles. Other critical factors are the mobility needs of people and
the availability of cheap finance. The top three income groups - middle, upper middle, and high -
have grown from 10% in 1986 to 17% of the population and covers over 52 million families. The
number of high-income households is growing very rapidly, more so in the rural areas. These
findings have revolutionary implications for the passenger car market. The development of the
used car market will also play a major role, as the customers will be encouraged to trade in their
old cars. The key to the growth of future markets is to make maintenance-free vehicles, to
improve the road infrastructure, and to reformulate fuels and lubricants so as to reduce vehicle-
operating costs.
PRICING
In any business, nothing is more dangerous than using money as the magnet for attracting
customsers. It kills loyalty, mangles margins, and encourages defections. But it is the Unique
Selling Price the only road to success in the intensely competitive automobiles business?
Those in the race for winning over the Rs. 7,500-crore small cars market seem to believe so.
In the small car segment, the only ‘P’ that, suddenly, seemed to matter was the second in the
Product-Price-Promotion-Place marketing-mix.
Evidently, features, technology, and service are secondary. And the only warhead is price.
According to the Research Analyst, Morgan Stanley, “Price is the most important ‘P’ in this
market because it is pyramidal in structure, with a huge base and a narrow apex”.
Everything else remaining constant, the purchase decision of the first-time buyer is influenced by
the 4 factors: Price, Price, Price and Price. The first is the price of acquisition. The second is the
price of finance, or the rate of interest on a loan to buy a car. Third is the price of maintenance,
25
which includes the cost of fuel, service, and spare parts. And the fourth is the price of disposal,
or the re-sale value of the car. The typical Indian car-buyer is obsessed with post-purchase
pricing. Which is, in effect, the cost of maintenance and the possible re-sale value. And
obviously, the lower the selling price of a second hand model, the less is the purchaser’s
incentive to opt for it.
However, not every company plays the price-card. Instead of cutting the price of Santro,
Hyundai Motors has launched an enhanced version with product fearures like power steering,
and product-plus features like better service and customer-care. Hyundai arrived at the pricing
strategy after a careful analysis. It does not believe in knee-jerk reactions to rival moves. It also
believes that when features are the USP, second P Marketing cannot help reinforce that position.
Strategic price marketing is a corporate weapon that must be applied in the context of an entire
portfolio of cars. Attempting to sell the lowest priced car in every segment will not enable a
company to survive.
Sure, the lower price will be an attraction to the first-time buyer who is, essentially, stretching
his budget to buy personal transportation. The less the stretch, the more is the likelihood of
actually buying a car instead of, say, a two-wheeler. So, even a drop of Rs.1000 in the small cars
segment could expand its size.
Go beyond the entry level – and the price-value equation will kick in immediately. Only if all
other things are perceived to be equal between competing brands will price be a decider. Once
incomes start rising again, there will emerge increasing numbers of upgrades as well as first-time
buyers who will not necessarily start at the lowest price-level. Thus, price will become less
important. Applied as a brand-level strategy, price may help the auto-marketers win over only
the entry-level customer.
However, only the lowest priced player will milk this segment. The rest of the low-price
aspirants will have to offer additional features as value to convince the budget-buyer to spend
more. As a corporate strategy, leading the charge through price may have a better pay-off. A low
–priced product will enable new entrants to gain entry into the consumer’s garage. The threat,
however, is that of a dangerous dilution of image.
Thus price can be a selling proposition for only one segment of customers. But a company that
seeks life-long customers, who progressively move up its product ladder, cannot rely on price
alone for success.
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CHAPTER – 3
Research Design is conceptual structure within which research is conducted. It constitutes the
blue print of collection, measurement and analysis of date. Research Design is needed because it
facilitates the smooth sailing of various research operations, thereby making research as efficient
as possible yielding maximum information with minimum time, effort and money. Research
Design stands for advance planning of methods to be used for collecting relevant data and
techniques to be used in the analysis .The design helps researcher to organize his ideas whereby
it will be possible for him to look for flaws and inadequacies.
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9. How will data be analyzed?
The major aim of the project was to analyze the Strategies of TELCO and to study the consumer-
buying behavior for small car customers.
For the first part secondary data was collected from various sources that included website of
TELCO and trade journal that were collected from TELCO’s Delhi Office.
Since a part of the research aims at finding the attitude of people towards the different brands of
cars, a conclusive research was conducted. The data collection form was designed in the form of
a standard questionnaire because it is more reliable than unstructured format.
By reducing the chance or the sample to influence results through different questions and
through different judgment of answers and what to record, the structured questionnaire produces
more reliable results i.e. if the research project is repeated in the same manner, similar results
will be obtained.
Most of the questions asked in the questionnaire were closed ended with a few open-ended
questions also, to know consumers general views. Some questions are designed for the purpose
of cross checking the sample genuineness in filling the questionnaire.
For the purpose of analysis, ranking scale is used to rank the preferences of attributes of the
customers. (Semantic differential scale is used to understand the images of brands of cars as
perceived by the consumers. This scale is used because it permits the development of descriptive
profiles that facilitates the comparison of competitive items.)
4.3 Universe: The universe is entire group of items the researchers wish to study and about
which they plan to generalize. For this, the universe consists of people of Delhi who own small
car. Selecting the sample: for this project, a probability sampling method is used. Probability
sampling method is those in which every item in the universe has a known chance of being
chosen in the sample. Here the sample size consists of 60 residents of Delhi. The probability
sampling is preferred because:
∗It is the only sampling method that provides essentially unbiased estimates having measurable
precision. If the investigator requires this level of objectivity, then some variant of
probability sampling is essential.
The probability sampling permits the researchers to evaluate in quantitative terms, the relative
efficiency of alternate sampling techniques in a given situation. Usually this is not possible in
non-probability sampling.
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CHAPTER-5
FINDINGS AND ANALYSIS
EXTERNAL ANALYSIS
The main purpose of this section is to have an insight into TELCO’s external environment. Here,
we shall be briefly looking at the factors influencing its external environment, its competitors
and the kind of competition it faces.
Competition
Competition leads to improvement on all fronts. If healthy, it brings the best out of an industry.
Newer and better technology, innovative and much better products and processes, user-friendly
and economical products providing maximum value to customers, and other such advantages, all
arise out of competition.
TELCO faces stiff competition in almost all its business segments but has emerged as the winner
when it comes to market success. Out of its three business segments namely, the Passenger Car
division, Utility vehicle division and the Commercial vehicle division, the Passenger Car
division is the area, which is seeing a lot of activity in the current period. And this activity is all
set to intensify with the launch of the all-new TATA Sedan in the later half of the current year.
TELCO currently has two products in the passenger car segment- the Indica and the Safari. It
faces direct competition from almost all the major automobile players in the passenger segment,
namely Maruti Suzuki, Hyundai, Fiat, Daewoo and Toyota.
S.I.A.M. (Society of Indian Automobile Manufacturers) has classified the Passenger Car segment
in India into further sub segments on the basis of their length,
TELCO currently has one offering in the Small Car segment- The Indica, and one offering in the
Sports Utility Vehicle segment - The Safari. The proposed offering, christened the TATA Sedan
shall compete in the entry-level Mid-Size Car segment.
TELCO also has plans to introduce another offering in the Luxury car segment code-named
‘Magna’. The Magna shall be launched some time during the later half of next year in 2003.
TELCO currently is tight-lipped about the Magna and has divulged no details regarding the car
but according to group Chairman Mr. Ratan Tata, the Magna shall be TELCO’s answer to the
Luxury Segment in India, which shall force the competitors to revamp their strategies. And if the
success of the Indica and the Safari is to be believed, these words are sure to see light in the near
future.
The Indica comes in both diesel and petrol variants. TELCO has redefined the rules of the game
by launching the all-new Indica V2, which has met with huge success in the recent months. It
has earned a lot of respect among all the small car manufacturers because of its quality and value
delivered to the customer, truly fulfilling its promise of More Car Per Car. TELCO, for the year
2002 had promised a product of great pedigree, and the Indica V2 has just delivered that.
The Indica is directly pitted against the Zen, Alto and Wagon-R from Maruti Udyog, the Santro
from Hyundai, the Palio and Uno from Fiat, and the Matiz from Daewoo.
CORE COMPETENCIES
The Core Competencies of is there capability to make the Indica globally competitive in terms of
cost. If Telco can find markets to sell 20,000 or 30,000 more Indica’s, then they are looking at a
33
very interesting set of numbers. If you add variants to those numbers, you’re looking at very
reasonable numbers. Then you are in the niche. And
if you focus on that niche, invest in technologies required to give that one platform all the
variants and changes that you need, you survive.
Telco has a design and engineering capabilities that are unmatched by its competitors in the
Indian market and the company also possesses an unmatched ability to create and integrate it.
This gives it the capability to compete with firms in the world market.
It also has a World-Class dealer base and alliances with these suppliers; this ensures the right
Inputs for the company and also helps to manage the Just in Time systems.
Smaller auto companies (globally) will have to look for market niche’s to operate. In the case of
Tata Motors, the niche may be the lower end car. The unfortunate part is that the lower end
market does not offer much by way of margins. But you need volumes and that kind of scale and
production processes that will give you those advantages. That is what Telco has to look for and
there they can even stand on their own if they find markets beyond the shores of India. All that
would come from having a niche product that is globally competitive
But there is still a long way to go before the company is able to make a mark in the world market
and compete with the world’s leading companies in well-developed markets like Europe, The
United States and Japan. For that to happen, it will take a more focussed approach from the
company towards quality and developing R&D and experience in such project. Though its efforts
towards Total Quality Management seem to be helping the company.
5.1 KEY FACTORS FOR SUCCESS
Having the right resources is very important for a company to succeed in any industry. The
resources which are most vital for success in an industry are called ‘Key factors for success in an
industry’, the key factors for the industries that Telco Operates in are:
The LCV & M&HCV segment are highly complicated sectors, the management not only
have to manage all the resources available to the company properly, but also have to be
highly professional in their approach.
The technological changes as per WTO specifications and Euro Emission norms need to be
followed for a company like Telco to sustain growth and Telco has been able to achieve all
this in all its products and services.
Human Resource
Industries like Telco have a high human element, it is very important for a company to have
For industries like Telco which manufacture equipment's that serve the infrastructure
industry, it is very important to have high standards in quality.
4.Managing Cost
It is becoming more and more important for companies to achieve competitive costs, the
company is planning to continue with is cost reduction program. Most of this would come
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from reducing fixed costs, operational efficiency an outsourcing.
RESOURCES
The resources of the company are similar for all the industries, many of the resources are
common for all the industries. But the Core Values like management capabilities are shared by
the entire organization.
1.Human Resource
Telco possesses a great Human Resource base, its in all its business are a people oriented
operation. The company takes great care to ensure that it has a good supply of HR, the values
and efforts to ensure good Human Resources are shared by the HR departments of each SBU.
2.Management
The management of the company has gained the reputation of being one of the most
professionally managed companies in India. The management of each SBU has a strong work
ethic with an aggressive approach to managing the company.
The company is known for its high level of sophistication when it comes to technology. And
it has great experience in projects with high levels of sophistication, which is very important
in a knowledge-based industry. It has a great R&D base; it invests a high amount every year
(compared to the average spent in the industry) on it for each department. The R&D
departments of each SBU have helped each other, for E.g. the revival of Indica is a success
story.
4.High Quality
The company has extremely high standards in quality; almost all Strategic Business Units are
technology leaders in their field of operation.
Thus it is clear that Telco has most of the resources that companies require to be successful
in the industries it operates in. Cost is the only resource that sometimes hampers its progress.
VALUE CHAIN
A large number of Telco's operations are different activities on the value chain for E.g. LCV.,
Utility Vehicles, HCV or others are used in different sectors, but all the vehicles have been the
leaders in their own segment.
This aspect not only allows the company to it to deliver tailor made products for other divisions
in the company, but also gives some divisions of the company a lot of business. And the
company is able to achieve lower costs than its competitors by procuring facilities from other
departments within the company, thus giving it an edge over the competition.
SYNERGY
The activities of the company give synergy to the company as a whole; this is due not only
because of the value chain, but also because the R&D from one division helps in the others. For
E.g. the R&D from the Engineering division helps the Production division. And in the future the
company wants to have synergy in all its activities to be highly successful.
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5.2 PEST ANALYSIS- IDENTIFICATION OF CHANGE
DRIVERS
The PEST analysis for Tata Motors and Locomotive Company Ltd. (TELCO):
Political
The political environment has been highly unstable over the past few years, but recently it has
settled down somewhat. As we know that Telco is the leader in the commercial vehicle segment
with 54% market share in Light Commercial Vehicle (LCV) and 63% market share in Medium
& Heavy Commercial (M & HCV). Telco has a market share of 221% in utility vehicle segment.
The company has also garnered a 9% market share in the passenger car industry in a very short
span. The decision of the government to ban diesel buses and give licenses to CNG buses has
been a boon for TELCO as it is the major supplier of buses to all State Transport Corporations.
Though only few state governments are stern in implementing this order but TELCO will remain
one of the major suppliers of buses and hence can plan expansion.
Economic
The availability of freight depends on the economic activity in the country. Therefore an increase
in economic activity broadly represented by growth in GDP helps in increasing the freight
availability. The GOI policy towards depreciation norms and excise duty etc will have a bearing
demand for MUV’s and CV’s. The implementation of infrastructure projects will have a positive
impact on demand of CV’s and MUV’s as they are extensively used in transportation of material
and people requirement of projects. The freight rates determine the revenue component of fleet
owners. The improvement in freight rates consistently over this period will add to business of
TELCO. Though oil prices have gone up but the shift in the oil sector companies towards a
positive pricing strategy will not affect Telco’s business plans & performance.
Socio-Cultural
In order to boost sales passenger car companies often look for a general upbeat environment. The
sales during festival times perk up because the environment all round is joyous and upbeat.
Another effect is because of is that of good monsoons which translates into a higher rural
demand especially for the MUV’s. Thus socio-cultural factors do not affect the Engineering
business too much, it does have an impact indirectly. Though the metropolitans have become
over-crowded and but Telco’s Indica V2 sales have picked up.
Technological
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5.3 STRATEGY IMPLEMENT
SEVEN S FRAMEWORK
The Boston Consultancy Group in the 1970s developed the ‘Seven S Framework’. It was
designed to build a cohesive strategy, and in turn integrate the 7S, these 7S are inter-related and
inter-dependent.
For the success of an organization the Seven S cannot work in isolation, they have to be brought
together.
For the Strategies to work at Telco, it is important that the company employs the framework. To
implement the framework the company should consider the following aspects-
STRATEGY
The strategies that the company needs to employ have been discussed in the previous section.
The strategies differ on the various levels, i.e. different for Corporate, Business, Operational and
International Levels. These strategies have to be aligned with the following elements.
STRUCTURE
When the company undertook the restructuring exercise, it was the first major restructuring the
Tata group had undertaken. The first phase of restructuring required some basic foundation
building. The group developed a common corporate identity for all group companies leveraging
the strengths of the Tata brand. The group companies were required to sign an agreement to use
the Tata brand, which entailed the compliance with the quality standards and business ethics that
we codified at that time. The company developed the Tata Business Excellence Model to
measure the quality and corporate performance of our companies, and required them to achieve
the specified level of performance in order to continue the Tata Brand.
The company instituted the business review committees (BRCS), which constituted the formal
interface between the group and the holding company. The BRCS reviews the strategic direction
of each company, and the executive committee of each board reviews the operations and the
budget of the company.
To oversee the entire restructuring exercise, the group created a central group, which they called
the Group Executive Office (GEO). Its primary task was to look at the strategic direction of each
of our companies, in the process of which it set some tasks for our company in terms of bottom-
line and top-line growth based on historical growth trends, as industry leadership in terms of
being number one, two, or three. Ultimately, the GEO takes a view on the figment of companies
within our group.
Telco has also decided to restructure its operations by reducing its level of vertical integration.
Towards this, the company has decided to hive off three of its ancillary divisions in Pune and
Jamshedpur. The company is at present on the look out for suitable alliances with international
majors.
The company has set up an independent retailing network for cars and also for other utility
vehicles. The strength of dealership for these now stands at 118.
SYSTEMS
Systems are the procedures that make the organization follow for everything from top-level
decision making to board meetings, from employee training and hiring to transportation. All the
company’s activities should have a particular system particular to the company.
The GEO as mentioned above has put in place certain important hooks such as a central HR and
central financial coordination with a view to standardize the MIS systems of Telco for financial
reporting to the holding company. The net result of all these initiatives has been that Telco now
operates more as a group than what they did in the past, but what this really meant was that each
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company had the stamp of its own CEO and went its own way, and if you remove the name o the
enterprise you could be looking at different companies with no connection to the Tata’s.
STYLE
Every company has its own management style, style also consists of the way a company operates
its business.
As mentioned above the company instituted the business review committees (BRCS), which
constituted the formal interface between the group and the holding company. The BRCS reviews
the strategic direction of each company, and the executive committee of each board reviews the
operations and the budget of the company.
STAFF
This aspect concerns itself with the pool of people who need to be developed.
Telco takes a lot of efforts to ensure the best trainee level talent, through campus recruitment
from the top institutes of the country. It then gives them the proper training and development,
giving them the opportunity to grow and improve.
The current chairman of the company Mr. Ratan Tata is a prime example, in the way he started at
the middle level management, and then made it to the top of the company
SKILLS
This aspect considers the fact that every organization needs certain skills for its success, but its
not just enough to have skills, an organization must have the right combination of skills that
complement each other.
The company works hard to ensure that it has the necessary skills to ensure its success. It trains
its employees, through a set of carefully designed programs, to give them the desired skills. Plus
it has also entered into a number of alliances with a number of companies, which help it to gain
the necessary experience and which can also help it improve its R&D.
SUPER-ORDINATE GOALS
These are goals on which the other elements and other goals of the organization should depend
upon. These are reflected in the thinking of the organization.
Globalize: With economies opening up, Tata companies are aiming for global benchmarks to
compete.
Build brands: Shift from selling commodities to marketing branded products and services that
not just differentiate but fetch a premium.
Leadership: To justify shareholder interest, Tata companies must be among the top three in their
industries.
Enhance Performance: Executives must pull their weight, and the best of them must get
opportunities across functions and group companies.
LEADERSHIP
Leadership is defined as “The art or the process of influencing people so that they will strive
willingly and enthusiastically towards achievement of the group’s mission”. Leadership is
something that greatly affects any company’s philosophy, culture, and in-turn the overall health
43
of the company.
Telco always has had a tradition of great leadership. One of its founders Jamshedji Tata has been
a hallmark of leadership.
That surge of electricity – not unnoticed by merchant bankers, now crawling all over Bombay
House, the group headquarters – is in fact the spark that the group is looking for to rocket itself
into a new orbit of growth. In 1991, when a shy and reclusive Ratan Tata took over the
chairmanship of the group from uncle J.R.D Tata, his priority was not new businesses or even
growth. It was something much more immediate – and arduous. It was to turn a loose
confederation of companies, controlled powerfully by powerful satraps, into a group that thought
and acted like one. The challenge however wasn’t merely of ousting powerful chieftains like
Russi Mody of Tatasteel, Ajit Kerkar (Indian Hotels) or Darbari Seth (Tata Chemicals). The
leadership in Telco has also had a big impact on the company, perhaps like any company its
entrepreneurs had the greatest impact on the company, and they defined its outlook, its
businesses and its philosophy in different situations.
Over the last the 10 years, Ratan Tata has quietly entered 15 new businesses, exited 11, and
herded the rebellious Tata companies into a cohesive group. Tata now wants to double revenues
every four years, and profits, every three. His secret weapon: branded products and services. He
wants to justify shareholder interest and wants Tata companies to be among the top three in their
industries.
5.4 ANALYSIS
Sample size – 60
Respondents:
Owners of Santro – 14
Owners of Zen -- 14
Owners of Indica – 14
Owners of 800 –9
800 OWNERS
ZEN OWNERS
INDICA OWNERS
SANTRO OWNERS
0 5 10 15 20 25 30
NO. OF RESPONDENTS
Most of the respondents are in an income bracket of Rs.20001 to Rs.25000 and above Rs.25000.
This indicates that most of the car owners belong to either upper of upper middle class segment.
Performance of a car clearly outweighs its style and cost on the consumer’s list of priorities to
buy a car. Performance be it engine make up, fuel efficiency in city conditions, smoothness, pick
up, derivability, is consumer’s first preference in their look out on attributes in making a
decisions for buying a car. Very few consumers surveyed gave style and cost as their priorities
to buy a car. A mere 25% of respondents gave style and 30% gave cost as their reasons to buy a
car. 85% of respondents i.e. 51 out of 60 respondents gave performance of a car as a factor for
making a purchase decision.
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.
Given the city conditions, the consumers needed a very good overall performance of cars, small
cars taking less space has no parking problems, easy derivability in heavy traffic conditions, easy
gear shifts and good fuel efficiency. The small car owners being mostly the professional class or
the upper middle class were very cost conscious and due to their busy life styles preferred low
maintenance in their cars.
The small car consumers are high search information seekers, most of them using at least 3
sources of seeking the information. They believe that extensive search is necessary to make a
good buy. Having owned fewest carts previously, they had very less information about the cars.
Most of these small car buyers being first time purchasers usually go for friends, automobile
magazines or other car owners to get information about the various products and brands in the
market to know the most favorable brand or products and later they seek further information
from dealers and other sources once they are through their choice process and have decided upon
a particular brand or brands to buy.
Most of the small car consumers are happy with their purchases. A probe into respondents’
satisfaction level, ranking from 1 to 5 where ‘1’ was full satisfaction and ‘5’ full dissatisfaction
with theirs cars, gave ‘1.79’ as an average figure of satisfaction level.
Out of a total of 60 respondents, 26 ranked their satisfaction level as ‘1’, 20 ranked ‘2’, 9 ranked
‘3’, 2 ranked ‘4’ and only one respondent showed null satisfaction. The main reasons which
were quoted for their satisfaction were driving comfort, good fuel efficiency, small is cute, easy
parking, less maintenance, good pick-up and a perfect car for a small family.
Again when the consumers were asked about their preference for any other car, the highest
number of respondents chose small cars, that are 20 out of 56 respondents preferred small cars,
midsize cars, 16 large size cars, 5 went for jeep models and 8 consumers luxury cars like BMW,
Mercedes, Ferrari, etc. The main reason again given for their preference was comfort of driving,
performance, good looks and fuel efficiency.
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FACTORS IMPORTANT IN A CAR PURCHASE
COST
3% 3% 7%
7% STYLE
18%
PERFORMANCE
PERFORMANCE AND
STYLE
PERFORMANCE AND
12%
COST
STYLE AND COST
50%
49
CREDIT FACILITY
PREFERENCE POINTS
SAFETY
BRAND NAME
LOW MAINTENANCE
COST
PERFORMANCE
When the consumers were asked to rank the factors, they consider to be important in buying a
car, ranking the factors from 1 to 7 where ‘1’ is the highest preference rank ‘7’, the lowest
preference rank, and performance of the car was ranked the highest on the preference scale.
Performance, on an average of 60 respondents was ranked ‘1.48’ showing that the consumers
sought performance in a car as the first important factor in making a purchase.
The car owners as the second most important factors ranking them 2.9 and 2.7 respectively
considered the cost and low maintenance of a car.
After sales service and brand name were the third and fourth preferences of the respondents with
3.4 and 3.86 as their respective rankings. Safety was ranked 4.35 on the preference scale and
credit facility stood at the car owners’ lowest preference with a rank of 6.43.
SOURCES OF INFORMATION
40
35
30
NUMBER OF RESPONDENTS
25 TELEVISION
MAGAZINE
FRIENDS
20
DEALERS
MECHANIC
15 OTHER CAR OWNERS
10
0
1
SOURCE OF INFORMATION
The survey showed that a highest number of consumers sought friends as a source of
information. Even as a majority of them went for magazines and other car owners as a source of
seeking information, a good number of consumers went to dealers for getting the information.
Television as a source of information was used by less number of consumers and a very few of
them went to mechanic’s in search of information
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INFLUENCING FACTORS IN DECISION MAKING
80
70
60
50
FRIENDS
PERCENTAGE OF
RESPONDENTS 40 FAMILY
MEDIA
30 OTHERS
20
10
0
1
INFLUENCERS
The survey showed that a highest number of consumers influenced by family in decision
making , friends other major factor in influencing the consumer’s decision ,then comes media &
other factors .
5.5 CONCLUSIONS
Consumers of small cars are seeking a very good overall performance in a car than any other
attributes. Most of the consumers prefer Small cars and mid sized cars for their good mileage,
good acceleration, easy derivability, requiring small rooms for parking. Good looks hardly count
for the buyers of small cars.
Again a good after sales service and low maintenance in a vehicle is a garnish on customer’s
delight. Safety and credit facilities are almost ignored factors in purchasing a small car.
Family wields the highest influencing power in making a purchase decision for an Indian
consumer. Friends and media also have a good impact on decision-making. A very few
consumers take a self-purchase decision.
Usually consumers get detailed information through friends, magazines, other car owners and
dealers whereas, they get the product information from the other sources like television,
hoardings etc.
The dream cars of the consumers are high luxury cars like Mercedes S-class, BMW, Ferrari,
Pajero, Rolls Royce, Jaguar, Porsche, the cars with a class apart when it comes to their brands
images, cars which flaunt status, style, wealth and attitude of the people owning them, cars
which are considered to the best on the globe.
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CHAPTER 6
ANNEXURE
PRODUCTION
January January
Category January'05 2006-2007 2005-2006 2004-2005
'07 '06
M&HCV 7,304 5,949 5,126 302 498 270 7,606 6,447 5,396
LCV 3,442 2,357 2,725 222 336 568 3,664 2,693 3,293
TOTAL 23,316 18,041 13,030 800 1,284 1,010 24,116 19,325 14,040
FOR THE YEAR
Category 2006-07 2005-06 2004-05 2007-06 2005-06 2004-05 2006-07 2005-06 2004-05
M&HCV 57,797 43,813 38,892 1,890 1,955 2,718 59,687 45,768 41,610
LCV 26,362 19,673 25,122 2,222 3,361 5,775 28,584 23,034 30,897
UTILITY 19,225 19,045 21,583 316 1,755 2,594 19,541 20,800 24,177
CARS 61,892 48,847 35,098 1,434 1,133 462 63,326 49,980 35,560
TOTAL 165,276 131,378 120,695 5,862 8,204 11,549 171,138 139,582 132,244
PRODUCTION
Category January '07 January '06 January '05 2006-2007 2005-2006 2004-2005
55
Domestic Exports Total
Category January January January '05 January January '6 January '05 January '04 January January
'07 '06 '07 '07 '06
M& HCV 9,686 7,258 5,949 405 348 498 10,091 7,606 6,447
2,693
LCV 4,807 3,362 2,357 713 302 336 5,520 3,664
2,521
UTILITY 3,614 2,589 2,370 194 25 151 3,808 2,614
7,664
CARS 11,084 9,933 7,365 1,336 299 299 12,420 10,232
19,325
TOTAL 29,191 23,142 18,041 2,648 974 **1284 31,839 24,116
Category 2006- 2005- 2004- 2006- 2005- 2004- 2006- 2005- 2004-
2007 2006 2005 2007 2006 2005 2007 2006 2005
M& HCV 80,271 57,286 43,813 3,496 2,385 1,955 83,767 59,671 45,768
LCV 38,898 25,919 19,673 4,840 2,678 3,361 43,738 28,597 23,034
UTILITY 24,615 19,176 19,045 1,852 355 1,755 26,467 19,531 20,800
CARS 87,302 61,776 48,847 7,468 1,550 1,133 94,770 63,326 49,980
TOTAL 231,086 164,157 131,378 17,656 6,968 **8204 248,742 171,125 139,582
6.1 QUESTIONNAIRE
A survey of consumer perception about small cars
Personal details:
Name:
6. Rate the following (I to II) attributes according to you preferences while buying a new car
Price
Style
Performance
Performance & Style
Performance & Cost
Style & Cost
Style , Performance& Cost
57
8. Comment on the following statements according top the tables given below
1 strongly agree
2- Agree
3-neither agree nor disagree
4-disagree
5- Strongly disagree
12. Why?
13. Comment on the following cars as to how can there be any improvements
Indica
Santro
Zen
CHAPTER-7
BIBLIOGRAPHY
Reference books:
Internet:
http://www.tata.com/0_careers/our_people/20020214_suman1.htm
http://www.tata.com/0_b_sectors/index.htm
http://www.cybersteering.com/auto_makers/telco/tata.html
http://www.tata.com/tata_engg/index.htm
http://www.tatainternational.com/automob_products.asp
http://www.tata.com/tata_engg/articles/index.htm
http://www.telcoindia.com/home.htm
http://www.tata.com/tata_engg/media/20020228.htm
http://www.tata.com/tata_engg/articles/2000106051indica2.htm
http://www.tata.com/tcs/articles/20011110_auto_engg_service(1).htm
www.marutiudyog.com
www.hyudaimotorindia.com
www.autoweb.com
Magazines:
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