Joint Venture Analysis of TATA Group

Submitted By
Group 12
Section A

Multinationals which choose joint ventures as their entry vehicle into India think that a local partner can better navigate
the markets complexities and manage regulatory issues.

Introduction

TATA-NTTDocomo

TATA-Motors JV

TATA - Starbucks

About Joint Ventures

About TATA group

A long-term participation of two or more companies in

an enterprise in which each party contributes with
assets, has equity participation and shares risk

Reasons for Joint Ventures

Interest of foreign investors to minimize capital outlays

or risks of entry by using the local partners assets
Lack of knowledge of the local institutional and legal
environment
In strategic sectors, the countrys laws may not allow
full ownership of operations by foreign nationals

Evaluation Metrics
Partner Interaction Parameters:
Satisfaction of partners, State of
organization
Customer & Product Dynamics: Increase
in product range, Customer satisfaction,
Market share
Financial Performance Measures:
Return on equity, Rate of return on capital
employed, P/E ratio
Company Turnover: Capacity expansion,
Exports as % of sales turnover, Sales
turnover

Challenges faced in JVs

Tata Group has over 100 operating companies with

each of them operating independently.
Perceived to be India's best-known global brand
within and outside the country as per an ASSOCHAM
survey.
The 2009, annual survey by the Reputation Institute
ranked Tata Group as the 11th most reputable
company in the world.

Overall Analysis

Introduction

TATA-NTTDocomo

Telecom Industry in 2008

TATA-Motors JV

TATA - Starbucks

Overall Analysis

Company Overview

Prior to 2002, TTSL provided basic

telephony services in major cities of
Karnataka, tamilnadu, delhi, and
Gujarat.
Predominant mobile phone operator in Japan
In March 2008, NTT DoCoMo had more than 50%
market share in Japans cellular market.

Reasons for JV
TATA TELESERVICES LTD.

NTT DOCOMO.

The company had a pan-India presence

in the CDMA technology
However the technology was not
picking up with the customers
It needed a collaborator with such core
competence

Prospect of a more focused source of

revenues from India
Appreciated the prospects for
increased revenue through licensing
fees when providing its Value Added
Services
To enter the Indian market, NTT
DoCoMo needed a Telecom License

NTTs main contributions were its 3G technology and financing. TTSLs contributions were its distribution network, its retail chain of over
3500 stores; it already possessed a pan-India license for GSM platform

TATA-NTTDocomo

TATA-Motors JV

Two way communication

Activation Platform CREATE
Unique Dive In stores
Pay per second Billing
BUDDY NET
Pay per site Initiative
Free Airtime Rollover

Overall Analysis

Analysis of JV

Total expenses
4000

2012

2011

2010

2008

2000
2007

TATA - Starbucks

Impact Post JV

Details of the JV

2009

Introduction

Toatl
expenses

Impact Post JV

Tata DoCoMo

profit/(loss)

Total revenue(cr)

2012

2011

2010

-500

2009

Total
revenue(cr)

2008

2000

2007

500
4000

profit/(loss)

-1000

Financial performance shows that Tata DoCoMo took advantage of technology from
NTTDoCoMo to expand its services across the country. They introduced various
services to attract customers but failed to convert into financial benefit of the
company.

Strength

Weakness

Flexible plans ,Good advertising

Price competition with BSNL and MTNL
High brand visibility
Service center issue
Youth appeal, assistance/ JV from
NTT Docomo (Japan), VAS
Similar and monotounous schemes
Ability to attract customers with
Untapped rural market
various plans
SWOT
ANALYSIS

Opportunities
Fast expanding cellular market
Latest and low cost technology
Untapped rural market
Value added services

Threats
Competitors low price offering
Saturation point in Basic
telephony service
Mobile Number Portability

Introduction

TATA-NTTDocomo

Industry Overview

TATA-Motors JV

TATA - Starbucks

MARCOPOLO

Brazilian bus manufacturer

Manufactures the bodies for a whole range
of coaches
It has four plants in Brazil and plants in
Argentina, Australia, Colombia, India,
Mexico, and South Africa

Details of the JV

Reasons for JV
Tata does not make buses;
they make just the chassis
Develop the market for fully
built buses in India
To make their presence felt
overseas and to strengthen its
heavy segment in India
Lacked connections in India
Had limited market knowledge
Extend its presence in the
high-potential markets of India
Strategy of international
expansion

Company Overview
TATA MOTORS

India's largest automobile company

The leader in commercial vehicles and
among the top three in passenger vehicles
World's fourth largest truck manufacturer,
the world's second largest bus
manufacturer

Overall Analysis

Marcopolo invested $395 million

Tata has 51 percent and Marcopolo have 49
percent equity
The aim of JV was to serve city and state
governments in their efforts to replace unsafe
and obsolete fleets of buses all over India

Impact- Post JV

Opportunity to leverage the distinct strengths of

both partner organizations.
Increased power over the activities and
principles guiding the JV's operations
Tata Motors gets access to latest technology
which would allow Tata to improve their core
products in India
This deal provided Tata an instant recognition
and credibility across globe
Latin American market strategically alliance
With the help of this JV, they were able to sweep
out Chinese competitors out of the Caribbean,
Central American and South American markets

Joint venture with Marcopolo led to product development and participation in mass transport opportunities in both
domestic and international markets. Tata Motors could successfully address the growing demand in India, as well as
relevant markets abroad

Introduction

TATA-NTTDocomo

Fiat came into existence on July 11, 1899

1stFiat car manufacturing facility was
opened in 1900 in Corso Dante, Italy.
By 1911 Fiat group diversified in the
production and marketing.
By 1925, it had entered the steel, railways,
power. Fiat groups auto division used mass
production

Reasons for JV

Failed to move from small segment cars to

larger segment cars.
Italians Government decision to withdraw
the concessions and subsidies given to the
company.
Give foreign auto companies free access to
the Italian market.
Demand for cars started falling in Italy and
European countries.
By 2002 Fiat had a loss of US$ 2.5 billion
and market share was down to 28 % in
Italy and 7% in Europe

Had excess plant capacity which it wanted

to utilize
Access to Fiats diesel engine technology

Details of the JV

FIAT

TATA - Starbucks

TATA MOTORS

Company Overview- FIAT

TATA-Motors JV

The two companies formerly also had a

distribution joint venture through which
Fiat products were sold in India through
joint Tata-Fiat dealerships
Tata Motors has taken its alliance with Fiat
to produce a new one-ton pick-up truck, for
Latin American markets from Fiat's facility
in Argentina
Access of global market to Tata Motors and
supplement of value chain to Fiat India.

Overall Analysis

Failure of the JV

Dealers tend to favor selling Tata vehicles, than

Fiat
Fiat has not been able to build an aspirational
value for its brands to pull more customers
Joint venture has reported a loss of 1,214 Cr
during2007-2010

Our Analysis

Impact- Post JV

Around 190,000 cars and 337,000

powertrains have been produced by the JV
from 2007 to 2012
Both Fiat and Tata cars are produced at the
Ranjangaon plant both the Indian and export
market

From Ansoff Matrix we infer that Tata motors wants to

leverage the technology of Marcopolo in bus
manufacturing and of Fiat in diesel engine
manufacturing to develop their products portfolio

In order to be successful in the large global footprint, TATA Motors will need to adopt a focused product offering, aggregates and technologies to
accommodate the local need, and will have to do it at the right price allowing to pursue the growth strategy in the domestic and international markets

Introduction
Industry Overview

TATA-NTTDocomo

TATA-Motors JV
Company Overview
More than 18,000 stores
in 62 countries
Broad appeal on
experience,
Purchases and roasts
coffees that it sells, along
with handcrafted coffee,
tea and other beverages
To broaden its
geographical positioning,
Starbucks also moved
into the tea business

Unites the beverage

interests of Tata under
one umbrella.
It signals their global
ambition, in evolution
from a history in
plantations to becoming
a brand focused
organization with a
portfolio of exciting
consumer brands

TATA - Starbucks

Overall Analysis

Reasons for JV
Maximum-maximum strategy
Minimum-Maximum strategy

Tata Global Beverages

Gainvastamountofknowledge
Bottled Himalayan water can be sold through
Starbucks outlets across the world
Opportunity to innovate in the retail space and bring
new beverage experiences to more consumers
Starbucks will work with Tata to support 'Swastha', a
school for children with special needs and aim to
increase its capacity and outreach into the rural
communities in the coffee growing region of
Karnataka

Starbucks
Knowledge and understanding of the Indian market
Benefit from TATA globals infrastructure
A step ahead of competitors due to alliance with
TATA group

India represents one of the most significant opportunities that we have in all of Starbucks. India should be one of the largest
markets in the world for Starbucks. I would say one of the top five over time," - Starbucks CEO Howard Schultz

Introduction

TATA-NTTDocomo

Details of the deal

TATA-Motors JV
Impact- Post JV

TATA - Starbucks

Overall Analysis

Our Analysis

Starbucks plans to enter India in 2007 failed

On 31 January 2012, Starbucks announced its
objective to open 50 outlets in India by the end
of 2012
The two partners invested a total of $80million
initially
The stores were decided to be cobranded
Starbucks Coffee: A Tata Alliance.
Cafes operate under the quick service
restaurant (QSR) category
On 19 October 2012, Starbucks opened its first
store in India, Elphinstone Building, Horniman
Circle, Mumbai.
Starbucks has 36 stores across 5 cities in India

The joint venture with Starbucks is in line with Tata Global Beverages' strategy of growing through inorganic growth focusing on
strategic alliances in addition to organic growth.

Introduction

TATA-NTTDocomo

TATA-Motors JV

TATA - Starbucks

Overall Analysis

TATA aims to learn and implement global best

practices in different sectors of operation

TATAs local expertise and knowledge which the

company has acquired over its long haul in the
country
SECURITY

INCORPORATE GLOBAL
PRACTICES
PRODUCT DEVELOPMENT
INORGANIC GROWTH
The TATA Group has followed an inorganic growth
strategy for increasing its global footprints. As
mentioned by many top TATA leadership members,
this is in line with the mission decided by them.

In all the industries, the Joint Ventures have been

done for product development, thus adding global
quality adages to its diverse portfolio.

TATAs local expertise and knowledge which the company has acquired over its long haul are factors that make TATA Group a
reliable and lucrative partner to venture with a new market. Hence, it can be said the companies chose TATA as a partner for the
purpose of market development in India.