Can Tata Motors catch and increase its market show in India through the introduction of Jaguar and Land Rover?
Introduction:
My commentary examines the recent acquisition of Tata Motors of two iconic brands- Jaguar and Land Rover from Ford Motors at a staggering amount of $2. 3 billion. Despite being well known brands, they can be suffering losses. After Tata Motors' dominate, these were strategizing to kick off the products in the Indian market which includes huge growth potential clients. The real problem was at these brands appealing to customers away from competitors in the Indian market. Concurrently Tata Motors has launched Tata Nano to fully capture the Indian market for small automobiles. This will likely be reinforced by starting light- weighted aluminium and cross types vehicles from Land Rover.
With help of SWOT, Ansoff Matrix and Asset led Marketing my commentary will take a look at how successful would be the start of Jaguar and Land Rover cars in India.
SWOT Research:
SWOT evaluation is a good decision-making tool that is used to assess the current and future situation of something, brand, company, proposal or decision. It considers both inside and external factors that are highly relevant to the problem under inspection. [1]
Strengths:
The acquisition of both global brands- Jaguar and Land Rover acts in a crucial way to increase and develop the brand reputation and the quality of products for Tata Motors. It offers plenty of possibility to the Indian consumer and the growing Indian vehicle market can also help the kick off of brands in the long-term. It could experience economies of range through component sourcing and low cost engineering.
Weakness:
With different product portfolios for both brands it will be a challenging job ahead to advertise the same in the purchase price hypersensitive Indian market. But this may be triumph over through proper market research. Another matter is the diminishing image due to the continued loss and a de determined work force because of the change in general management. With right training and incentives and proper marketing strategies the company can convert these negatives to talents.
Opportunities:
This launch is a great chance for the Indian customer and focus on the growing Indian market. Auto market is producing in India and put with start of Nano, Tata Motors will be in a good position take a larger show of the market.
Threats:
Increasing fuel costs coupled with global meltdown will be a challenge for the company to remain afloat and over come the losses. Furthermore the strong competition can threaten the expected sales of the business. However the inherent financial and managerial strength of the conglomerate should be able to allow company stand up to the difficulties and move ahead. A danger that remains is the fact with the new ownership international brand loyalties may change and customers may move towards other models on the market.
Ansoff Matrix:
The Ansoff Matrix is an analytical tool that helps professionals to devise their product and market growth strategies. It consists of four growth strategies specifically- Market penetration, Market Development under new and existing and markets AND Product development, Diversification under new and existing products. [2]
Diversification
It identifies the high risk growth strategy which involves a business marketing services in new marketplaces. Parent companies can reap the benefits of having a presence in a range of products and market segments in different parts of the globe. [6]
Market Penetration-
Tata could continue with the same strategy so it had implemented for the united kingdom for the rest of world. The property, coupe and available saloon models of Jaguar and the Freelander and Range Rover sport of Land Rover offering in the prevailing market segments UK can help them to get profits and upsurge in sales in other market segments because of the trustworthiness of the brands.
For the new models that are designed to release, promoting and advertising can be a good choice for the businesses to maintain their position in the market and to appeal to more consumers and build customer loyalty. Tata Indica and other commercial vehicles like Tata Ace are types of Tata's market penetration strategy that exist in the prevailing markets and remain gaining them great income.
Product Development-
Tata Motors are launching the tiniest car the famous Tata Nano in the Indian markets which really is a new product by the firm and launched in existing markets of India and other countries where Tata Motors operate. This car can be handy for the firm as they may easily generate profits through this product as well as their brand name. Also, the organization can compete with other businesses in the same market by using these products. Tata Starbus and Tata Xover are other new products which have been launched by Tata Motors in India and other existing marketplaces of Tata Motors.
Diversification-
The services organized by Tata Motors through the Jaguar and Land Rover brands can be classified in diversification. The company plans of manufacturing hybrid, electric and bio-fuels based mostly and environmental friendly cars by making use of most advanced technology through both these brands that can be useful in enhancing the brand image of the firm. Also, there could be an increase in the profits of the firm as the hybrid cars are said to be the future of automobiles to conserve the planet earth from pollution. These new products launched in the new marketplaces of India as well as others can be termed as varied strategy of the organization. Tata Nano can also be included in this strategy as it is also a new product and is prepared to be launched into new marketplaces of African and Asian countries.
Asset led marketing:
Asset led marketing is a strategy that is used by the business for the sales with their products or services. Here, the company uses its intangible property for introducing a fresh product on the market. Tata Motors is a well-established and well-known organization and an integral part of the parent or guardian company Tata and Sons. Thus, in order to launch its products in the market and start off with immediate profits, Tatas can use this which may even be suitable for launching the two vehicle brands. Tata Motors have been around in the news for past almost a year because of the kick off of the world's cheapest car in India- Tata Nano produced by their own company. All together starting two brands can help Tatas in getting a whole lot of customer attention and so a more substantial customer foundation. The more developed and beautiful brands with the massive prestige of Tata Motors can help the businesses in garnering huge amounts of gains and attaining control over their opponents.
Evaluation :
The biggest benefit of this acquisition would be that the organization might see a rise in sales of the automobiles scheduled to both organizations' worldwide luxury brand reputation and also due to the services and quality provided by the autos.
But at the same time, the number of competitors in the booming car market of India has increased and finding their way out to satisfy the clients with different marketing strategies can be very costly for the company.
Tata Motors can put into action various strategies such as advertising and also, various techniques can be utilized which assure consumer satisfaction and can also end up being an integral part of customer interest. These strategies can prove to be useful in increasing the brand image and the sales of the company as well.
Short- term problems confronted by the firm might be the recovering of the costs that has been put into the acquisition and the kick off of Jaguar and Land Rover automobiles. The high manufacturing costs of Tata Motors, Jaguar and Land Rover might prove to be another reason for the loss in the accounts of the Tata Motors. The long-term problems can be an increase in competition as the Indian car market is producing at a rapid rate. If the company suffers loss, then there might be the need for job redundancies, thus leading to worker de-motivation.
Conclusion:
To conclude, the acquisition of Jaguar and Land Rover brands may be high-risk due to the global slowdown but Tata Motors using its brand and established existence in India can flourish in the long term.
Tata Group, an enormous multinational large worldwide can capitalize through cross-subsidization. I feel that by promoting the products and starting it along with Tata Nano will be useful as each can be a back-up for the other in the foreseeable future. The labor force can be motivated through good learning experience as they could have access to the technology used in manufacturing these superior cars but at the same time, if the merchandise fail to generate a symbol on customers, the workers may feel insecure as job redundancies may be adopted by Tata Motors to struggle with their own financial portfolio.
Bibliography-
1. http://uk. reuters. com/article/idUKTRE55R0LK20090628?pageNumber=2&virtualBrandChannel=0
2. http://www. autoblogs. in/2009/06/tata-jaguar-land-rover-launch-india. html
3. http://free-sms-mms. blogspot. com/2009/06/tata-jaguar-land-rover-launched-in. html
4. http://www. zeenews. com/news542730. html
5. http://sify. com/finance/fullstory. php?id=14790692
6. http://www. businessworld. in/index. php/In-The-News/Rough-Roads-Ahead. html
7. http://business. outlookindia. com/inner. aspx?articleid=1225&subcatgid=611&editionid=36&catgid=44
8. http://www. tata. in/media/reports/inside. aspx?artid=r8CuZiHSZ2o=
9. http://money. rediff. com/companies/tata-motors-ltd/10510008/profit-and-loss
10. http://www. moneycontrol. com/financials/tatamotors/profit-loss/TM03
11. http://www. moneycontrol. com/financials/tatamotors/balance-sheet/TM03
12. http://www. moneycontrol. com/financials/tatamotors/ratios/TM03
13. http://en. wikipedia. org/wiki/Tata_Motors
Appendix-
SWOT:
Strengths-
Jaguar and Land Rover have a respected brand image in the global market segments because of their luxurious vehicles.
An excellent move for Tata Motors to get into the blissful luxury market.
A global visibility for who owns the company as a sprawling conglomerate.
Advantages from component sourcing, design services and low cost engineering.
An excellent learning experience for the individuals.
Weaknesses-
Both brands have a huge and another product collection.
Unavailability of premium auto parts at the Indian automobile parts suppliers and therefore, the necessity to import.
Diminished corporate and business image of the brands anticipated to massive losses before few years.
De-motivation of personnel credited to redundancies and job cuts
Opportunities-
Opportunity for the Indian customers to own near access for driving premium cars.
India is a growing automobile market and thus, a good step for the long term.
Simultaneous release of the Tata Nano and other models can make higher income and develop their control on both the upper and the low and middle income market.
Selection of products with different prices helps them to diversify.
Encouragement of globalization.
Threats-
Negative effect on the automobile sales of the brands anticipated to economic meltdown and global downturn.
Result in value-destruction scheduled to insufficient synergies and high-cost businesses.
Prohibition of building a stronger market platform and increasing sales because of the number of competitors such as Audi, Mercedes, Porsche, BMW, Lamborghini.
Increase in fuel costs.
Shifting brand loyalty anticipated to change in ownership
Ansoff Matrix-
Existing product
New product
Existing market
Market penetration
This strategy mainly can be applied for those businesses that give attention to reselling existing products in the prevailing markets. It is a low- risk strategy and helps to raise the market talk about of its' current products. [7]
Product development
This strategy entails businesses aiming to sell new products in existing market segments. This plan is also grounds for acquiring another company as the costs of starting another company can be kept and different types of customers can be catered. This strategy is also useful for businesses using brand enlargement strategies. [8]
New market
Market Development
This method assists for those businesses that apply the strategy of advertising existing products into newer markets. [9] Such techniques are being used by businesses that plan to grow their business and attain higher customer foundation.
It identifies the risky growth strategy that involves an enterprise marketing new products in new markets. Parent companies can reap the benefits of having a existence in a variety of products and market segments in different parts of the globe. [10]
MUMBAI (Reuters) - Tata Motors (TAMO. BO), India's greatest vehicles maker, on Sunday announced the unveiling in India of Jaguar and Land Rover vehicles, the marquee brands it bought from Ford Motors (F. N) this past year.
Saying it was a momentous occasion for the company, chairman Ratan Tata said, "This is in keeping with our desire to extend the penetration of the brands in India. "
The automobile firm, which control buttons about 60 percent of the world's fifth-biggest pickup truck and bus market, will soon also be rolling out the Nano, billed as the world's cheapest car.
Jaguar is starting the XF amd XK range of luxury coupes and convertibles in India starting at a price tag of 6. 3 million rupees (79, 000 pounds) and increasing to 9 million rupees.
Land Rover will initially be releasing three vehicles including the Range Rover Sport and Land Rover Finding 3, with prices also starting at 6. 3 million rupees but heading beyond 9 million.
"The blissful luxury car market in India is really small, but there's a huge opportunity there. It really is growing fast and we expect it to expand fast over another 5 to 10 years, " said David Smith, chief executive of Jaguar Land Rover.
"India can be an important part of your plans for the future, " said Mike Driscoll, controlling director of Jaguar.
The luxury car segment in India is less than 1 percent of the full total car market there. Continued. . .
On Friday Tata Motors placed its first loss in eight years at $520 million (315 million pounds) for the year to March 2009, using its Jaguar Land Rover product reporting a loss of 306 million pounds in the 10 months of the fiscal yr to March 2009, as a brutal global tough economy crippled car sales.
On the problem of loan promises for JLR, Tata said, "our company is in conversations with the U. K. government on the loan promises and hopefully we will find a solution for it. . . and our money plan for JLR will progress. "
The company is seeking guarantees for the 340 million pounds loan sanctioned by the European Investment Standard bank and other lending options from U. K. -based mostly commercial banks. It really is seeking these cash to build up new and more fuel efficient automobiles for enhancing its competitive position.
"Sustaining the downturn is very important to us. . . and finding a solution (for the loan warranties) is really important to us, " Tata said.
He also said that if there was a huge financial bundle from the U. K. federal for Jaguar and Land Rover then, "there should be commensurate level of representation from them, " which had to be negotiated and exercised.
An ill-fated, two decade-old strategy is going to end. When Ford hands over the secrets to Jaguar and Land Rover (J-LR), it'll end its troubled trip with the high-performance premium car brands, which have failed to yank in expected income despite large opportunities.
Tata Motors is likely to finalise a package for both companies for over $2 billion. However, recent accounts indicate that the price might be higher than previously thought. Tata Motors is reported to be looking for funding well worth $3 billion to invest in the offer. The Financial Times records that Tata Motors's advisors on the J-LR package, JP Morgan and Citigroup, have obtained instructions to set up for financing from banking companies.
What worries investors is that Tata Motors may be stretching itself. This is a critical year for the company. In January, Tata Motors created its ultra-cheap car - Nano - to heavy nationwide and global interest. It together launched a new platform for the Indica, its top selling passenger car. Later this season, it will also launch the World Truck, a task that has been under development with South Korean subsidiary, Tata Daewoo.
"Investors have not taken this package positively as it will put a lot of pressure on Tata Motors' highly leveraged balance sheet, " says Aniket Mhatre, an analyst with financial services company, Prabhudas Lilladher. "Also, the Nano won't be profitable for at least the first two-three years. The mixed effect is expected to put pressure on Tata Motor's margins and profitability. "
In January, shortly after Tata Motors was made the preferred bidder for J-LR, credit rating company Crisil downgraded the company's long-term debt scores to a 'negative watch'. It said that the deal would be challenging for Tata Motors as a significant portion of combined revenues would result from two newly purchased companies where Tata Motors possessed "yet to generate and show capabilities". The business's stock has slipped 7. 9 % to Rs 702. 65 per talk about on the year as of yet.
Future Strategy
What happens next will depend on how well Tata Motors can handle the acquisition and service the extensive debt it will assume.
The group may wthhold the services of the current management team after overtaking companies. That is exactly what happened when Tata acquired Spanish bus manufacturers Hispano Carrocera and South Korean truck designers Daewoo Commercial Vehicles. Tata professionals have likely already approached Jaguar's top management team to secure their services beyond the acquisition.
The Tata Group's reasoning is the fact that it avoids the trouble of new managers having to learn the ropes. Worker morale also remains high as staff stick to bosses they trust. Still, some Tata Motors executives will definitely be delivered to the UK to integrate the finance and business businesses of both companies.
Tata in addition has promised it will not tamper with Jaguar and Land Rovers' business strategies, created by Ford up to 2011-12. Which means that no worker will be terminated and no flower shut down, even if they are a financial burden.
Scheduled roll-outs for Jaguar and Land Rover are also likely to keep on. "Ford has strategies of launching a number of new models for the J-LR combine, " says Mhatre. "[These] are anticipated to prosper in their particular markets. It could provide the much needed raise to Jaguar's profitability in particular. "
Ford in addition has secured components from suppliers in the medium term. Tata Motors will love this profit as it will buy it time for you to integrate J-LR procedures into its own extensive community of lower-cost suppliers, which include around 20 vehicle design studios, steel units and different component producers.
Chairman Ratan Tata also guarantees that Jaguar and Land Rover will never be re-badged as Tata vehicles. Jaguar traders were disappointed when they realised that the once-legendary United kingdom brands would now be managed out of India. "For the Western european market, Tata Motors has a 'truck-manufacturer' image, " says Mhatre. "Consumers may consider shifting their brand loyalty to competitors in that scenario. "
That is why Tata's decision never to tamper with Jaguar and Land Rover's "character" will be important. It is also consistent with steps from previous acquisitions. Trucks bought from Daewoo's native South Korea do not endure the Tata badge. That emblem only shows up on vehicles where the Tata brand is more well-known than Daewoo, such as markets like South Asia or Africa.
BRAND Ability: Jaguar and Land Rover will never be re-badged as Tata vehicles
What Tata Benefits. . .
The most apparent profit for Tata Motors is the technology it'll now have access to. Both Jaguar and Land Rover use advanced technology and design and development techniques to churn out their vehicles. These include the use of lighter materials such as aluminium as well as considerably more advanced engine motor and transmission technologies. "Land Rover's SUV technology [in particular] could be ideal for the Tata's current products in the section, " says Yezdi Nagporewalla, National Industry Director (industrial markets) at KPMG.
Then there's green tech. At the ongoing Geneva Engine Show, Tata Group Chairman Ratan Tata said that he was considering producing green automobiles. "We are very keen and. . . are looking at working on vehicles that operate on biofuels, electric vehicles and hybrid fuels, " he told journalists. Land Rover already has one cross principle - the LRX - and says it could commit 700 million in the introduction of sustainable technology over another five years.
Finally, and perhaps most importantly, the two brands will give Tata Motors a foothold in the blissful luxury space. Which means that the company will have a readymade offering atlanta divorce attorneys car section from ultra-cheap (the Nano) to utilitarian (the Indica) to commercial vehicles (Ace, World Truck) to SUVs (Sumo, Safari and Land Rovers) and, finally, to premium, high-performance automobiles (Jaguar).
The simple fact that it can basically buy high grade brands off the shelf means that it won't have to get its own money and time to meet up with high-end technology. This is precisely what has put car designers such as Honda or Toyota at a downside in the high grade segment in marketplaces including the US.
For as soon as, it is unclear whether Tata's gamble will continue to work. $2 billion is a lot of money and, if the experts are right, Tata Motors might not exactly be in the best position to pay it all again. Still, the Tata group is arguably one of the very most professionally managed corporate and business houses in the united states, if anyone can yank it off, they can.
Bibliography- http://www. businessworld. in/index. php/In-The-News/Rough-Roads-Ahead. html
3. Tatas to establish Jaguar, Land Rover on June 28
Last kept up to date on: June 18, 200910:23 IST
India's [ Images ] tryst with luxury brands requires a new start June 28, when Tata Motors [ Get Quote ] unfurls its marquee brands, the Jaguar and Land Rover [ Images ], in its home market.
The vehicles will be launched just weeks before India's first global brand, the ultra-cheap Nano [ Images ], strikes the road in July.
Tata Motors acquired the luxury vehicles from Ford [ Images ] Engine Co for $2. 3 billion in March last year. This is actually the first time internationally that Jaguar and Land Rover will debut together.
After Mumbai [ Images ], the brought in cars will drive to Ludhiana and Bengaluru [ Images ].
The Jaguar will rotate out five models like the XJ, XX, and XF. Two types of the Land Rover will available. Tata Motors dropped to show the first year sales targets for its new offerings. But a senior Tata supervisor said they'll be number a few hundreds.
In the uk, the Jaguar typically sells four models: House, saloon, open-top and coupe. The hot advertising Land Rover brands abroad will be the Range Rover [ Images ], Defender, Finding and Freelander.
JLR will be the first luxury cars from the $83 billion Tata conglomerate although they had a joint venture with Mercedes [ Images ] practically ten years ago. While the Jaguar offers Tata Motors a toehold in India's high quality car portion, the Land Rover completes its SUV range which includes the Sumo.
The JLR unveiling comes at a time when India's luxury car market has belied the downturn. Global brands like the Rolls Royce, BMW [ Images ], Audi, Porsche, Lamborghini, Maybach and the Bentley have made India their sought after destination within the last couple of years.
Last season, Mercedes announced that it'll spend Rs 250 crore (Rs 2. 5 billion) to create its first fully-owned development center in India. Its first plant in Pune was leased from Tata Motors.
Even as small vehicles clog Indian roads and drive over two-thirds of the 1. 5 million vehicle market, the high margin luxury cars are a position symbol amongst India's rich. Ludhiana, for illustration, is the Mecca of luxury automobiles, auto designers say. India now has its very own luxury brands.
Tata's Takeover of Jaguar and Land Rover: Bumpy Highway or Smooth Trip?
Published: Apr 03, 2008 in India
Will the acquisition of Land Rover and Jaguar be considered a smooth drive for Tata Motors? This is the question that lots of observers have been requesting since the Tata Group and Ford released their $2. 3 billion deal by the end of March. The takeover has been greeted with jubilation, especially in India, as a result of prestige of these marquee brands. On the other hand, skeptics are also thinking about how this acquisition fits in with the Tata Group's overall strategy. What can the Tatas do in another way than Ford to ensure that the acquisition takes care of? What major issues will Tata Motors face in integration and marketing? To help with making sense of the issues, India spoke withJohn Paul MacDuffie, Wharton management professor and co-director of theInternational AUTOMOBILE Program, andHarbir Singh, Wharton management professor and co-director of theMack Center for Technology Invention.
An edited transcript of the talk follows:
:Let's start with the question that is on everyone's head. Does this offer make economic sense?
MacDuffie: It's a very fascinating deal. It's clearly not a deal that is trying to build economies of scale in only one business and reach into new markets. It's a significant differently motivated package. For Tata it's not the very first time that they've reached for a brandname with some prestige value within increasing their global visibility. THEREFORE I think considered an acquisition that they plan to learn a good deal from, it might very well make sense.
The coverage that the Tatas will have to the high end of the auto business, that they know very well at the domestic end, and to the managing of the very exclusive brand I believe could provide a lot of learning opportunities.
:Harbir, merely to follow up on the same issue, the Tatas possess the Indica, plus they also lately launched the Tata Nano, the famous one lakh rupee car, or the $2, 500 car. Do brands like the Jaguar and Land Rover really participate in that overall profile? What's your sense of the fit?
Singh: My sense is that the Tatas are trying to expand their portfolio in general and they are trying to provide [various brands]. I don't believe it's a question of the customer browsing Nano, and Jaguar and Land Rover as all offerings of the same company. It's much more a question of like Louis Moet Hennessy having a couple of brands and really doing the best you can for Land Rover and the best you can for Jaguar.
In terms of the economical sense of the deal, I think one other way of taking a look at it is: What's the alternative value of these brands, right? And plainly whatever price they pay is a lot less than the substitute value. Therefore the real obstacle here for them is to ensure they can enhance Jaguar in its own terms and enhance Land Rover in its terms.
:John Paul, can you agree?
MacDuffie: Yes. Ford of course sold the companies because the company is in deep financial stress and really needed cash now. There may be a dispute, I assume, about if the price is too much or too low, however the Tatas certainly paid significantly significantly less than Ford do for those brands. And by all counts Land Rover is profitable and Jaguar has made a solid comeback based on building capabilities, improving quality, they have some interesting services in the pipelines, therefore i do concur.
:Did the Tatas do get a good deal, or did they overpay because this is a higher price than the market expected?
MacDuffie: It certainly is very tough to learn exactly and there's always this type of speculation at that time. I think that Ford was certainly relying on increasing the quantities of these brands -- probably particularly Jaguar -- to a much higher level. And so at a certain point their attempts to greatly expand the volume, I think, probably injure them somewhat. These were introducing lower priced Jaguars that a lot of men and women didn't feel represent that brand very well. They were endeavoring to leverage their own Ford design parts from other models. I actually think handling it as a prestige brand from the bottom that Ford established should work well for the Tatas.
That is apparently their pattern with their acquisitions -- that they by and large permit the management to keep doing what it does and, as I said, look for opportunities to learn from these international acquisitions.
:Some critics have been saying that for the Tatas this was a deal determined more by the desire to acquire marquee or iconic brands, almost like past colonials acquiring the trappings of the past empire. Does indeed that criticism make sense?
MacDuffie: Who is aware of that drive? There's certainly a kind of interest, I believe, in the whole offer that comes partially from such organizations. Among the other Tata offers that's become some attention is the acquisition of Tetley Tea, another United kingdom brand, and also of Uk Steel, the remains of British Steel. And so clearly buying Britain has worked well for Indian companies.
There were fighting buyers, generally private equity sometimes together with other automobile companies. And both unions and the suppliers of Jaguar and Land Rover very much choose Tata. I think not because they're an Indian company but because of their track record in the way they've managed acquisitions. They by and large never have done wide-scale layoffs, they may have not done plenty of loan consolidation; they've focused on leveraging the talents and the features they have acquired.
Singh: I agree with everything John Paul says. My comment is that it is important for the Tatas never to get sidetracked by the nationalism and the ones kinds of things, which are all inevitable and natural. And I think it's good, the pleasure is well-placed. You know the delight in Tatas by Indian buyers and others is well placed. But fundamentally, this transaction has to perform because it's a big transaction. I believe there's a very good potential for performing. But I believe it important for them never to get twisted in the overlay of national pride and United kingdom colonialism and those things.
:Ford really experienced a tough time during the a long time that it held these brands. What could the Tatas do diversely to make sure that the acquisitions pay back?
Singh: It's appropriate that Ford battled quite somewhat with these deals. One of the issues that John Paul described previously was that Ford is at financial trouble. So if you were to take into account Tatas' method of all this, they could get a good price because from the distress sale.
I mentioned market replacement unit value and there is a good chance that the $2. 3 billion is well below replacement unit value because Ford bought Jaguar for a similar reason. They wanted that luxury nameplate. And Land Rover is a high-end nameplate. But we can also ask that predicated on these multiple bidders present, that that which you will get is kind of almost an auction-like value, right? Except that it'll, given that the bidders are all well-informed and they have had usage of the catalogs -- this is an exclusive transaction, it's not a public transaction -- I'd think that $2. 3 billion is probably a good market value. And I say that definitely without usage of the literature.
So looking in advance then, what can the Tatas do differently? I think the actual Tatas can do diversely is to control the supply string effectively and take good thing about their experience in controlling production companies in Britain and in European countries, specifically with Corus, they have got some experience with. And to preserve the sources of value where they can be and enhance them where they can be, they must try that rather than integrate quite just as much as Ford and Jaguar performed with the Jaguar X type and the Ford Lincoln counterpart.
:You may have looked at other mergers that the Tata Group has done. Is it your sense that Tata Motors will attempt to incorporate Jaguar and Land Rover with the other automotive procedures? And if so, what do you think will be the major challenges included?
Singh: Just talking about Tata's experience with M&A in general, they as an organization have shown boldness in going beyond national restrictions and making alternatively visible transactions. I believe each of the operating companies is very expertly run and I believe there is certainly some chance for learning across [organizations]. You know, what does the Tetley acquisition tell the Tata Group about cross-border acquisitions and what will the Corus experience recently tell them about manufacturing-based acquisitions? I think they are going to try to copy a few of that learning to Tata Motors. That'll be extremely effective.
:John Paul, what challenges might the Tatas face and how they should deal with them?
MacDuffie: After you think of other big mergers or M&A activity in the auto industry, this might think of for many people something like DaimlerChrysler in the sense that you had a high-end brand coupled with a set of more mass-market brands. At first people thought this meant that there was not going to be always a lot of conflict for both companies because they might operate in those different parts of the market. That quickly considered criticism that they weren't attaining synergies from the offer and toward the end of that slightly ill-fated union -- they were trying in simple fact to leverage more Daimler anatomist and parts into Chrysler vehicles. In the long run, of course, it fell apart and Chrysler was sold.
To me there may be such an enormous range between your Tata domestic products and these luxury brands. There is also the complete physical location of the resource chains and the creation facilities. I agree with Harbir that is probably a case where somewhat less actual integration activity but more focus on where experience in other acquisitions can be moved is the ideal solution.
Singh: Just to add to that comment, I would say that value anatomist may be very important. They will bring some value executive skills, that i think the Tatas definitely have.
Beyond that, I think it's a lot more a question of [whether] the price was right in relation to the value that the Tatas would get later on. That's going to be the key determining factor. Naturally, there are extensive ethnical issues we can also discuss.
:What cultural issues do you think will appear between Tata Motors and the new acquisitions?
Singh: John Paul discussed Daimler and Chrysler, right? A whole lot of [the problems] seemed like national cultural variations in addition to variations just in terms of how you create a very high-end vehicle and a medium-priced vehicle. Those ethnical issues, organizationally, began to play a significant role and became significant troubles.
What Tata needs to do is to avoid some of these dynamics. They have to avoid nationalism from rearing its brain, particularly in Jaguar/Land Rover, from their end because I don't believe it is successful to acquire that.
Secondly, they have to ensure that Land Rover and Jaguar achieve their potential and control them as though these were luxury manufacturers themselves -- do value engineering on the backend but give the resources essential for maintaining and enhancing the brands. That basically calls for the Tata professionals to kind of transform their thinking and bring into the luxury end or the higher-end price the value engineering plus some of the frugality that they might have an improved handle on. That is clearly a challenge.
MacDuffie: Thinking back again to the DaimlerChrysler situation, evidently a big factor from the beginning was a sense that the Chrysler management had that essentially it was a takeover, and control via Stuttgart really was the prominent factor. A lot of executive talent left in the early days. It already is apparently clear that a lot of the Jaguar and Land Rover management will stay set up. They appear to have already gotten those assurances, again [with] the good care with which Ratan Tata himself and his staff spoke with the Union and suppliers to ensure them continuity. I think they have already approached some of those challenges from the move very skillfully.
I also mentioned in just one press accounts of the way that Tata has used with some of the acquisitions, something that I have viewed as being extremely effective in, including the Renault/Nissan alliance, which is actually allowing a whole lot of decentralization. But getting in to the organizations for talent, sometimes reduce in the ranks, assembling task causes to focus on certain important tactical issues and then permitting their recommendations appear to a senior-level and striving to enact them quickly and providing resources for them. So again, based on very little information, my sense is that they are getting close this quite skillfully up to now.
Singh: Sometimes we think about these businesses as homogeneous entities. So Tata produces lower-priced or medium charged -- in producing countries -- automobiles. And Jaguar and Land Rover are luxury car manufacturers. I trust John Paul's point that when you break it down to the functional level, and the automobile design groups etc and so forth, the supply chain, there are a lot of commonalities in how you see the engineering of these automobiles. Also to try to develop task pushes that can find the best of both tactics and in truth transfer learning across organizational boundaries is entirely possible. Along with the Renault/Nissan example is a fantastic one where they actually went in and converted around Nissan. Everybody thought that it was very, very difficult to do. In order that was a concrete example that truly can be emulated in this setting. I think that's a great point.
:Apart from the operational and cultural issues, gleam marketing challenge that Tata will face. How will you think that should be tackled?
MacDuffie: Our basic stance is that the majority of management of those brands should probably continue without a lot of change. This is a new area for Tata to learn from. I recognized one offer from Shekhar Kapur, the director of two films about Queen Elizabeth, who lives in London. He talked about a sense of satisfaction that he believed at hearing concerning this acquisition. So there probably can be an opportunity. . . I wouldn't tell play to nationalism per se, or to this colonial reversal kind of viewpoint, but in reality to advertise to successful Indian expatriates across the world, and perhaps in India as well. But I believe particularly in countries about the world that is a desirable market and there are a few opportunities there.
Singh: I would trust that. I believe if you think about the prospective group all together, similarly the problems are that you don't want to dilute the nameplate of Jaguar and Land Rover with the lower-cost kind of imagery.
But Tata as an organization has promoted luxury products as well. I mean, they have a earrings division that's very successful. I'm not suggesting they use the jewelry kind of approach. However they certainly have the diversity of perspectives within the group to more than tolerate luxury products and other brands.
If you look at Tetley Tea, most people don't relate that with the Tata possession outside of India. And Tetley has thrived as a brand. I could see them replicating that kind of approach, where they keep the brand intact and keep carefully the management typically intact. And they may try to infuse knowledge where they think that is beneficial.
:Let me conclude by requesting one last question to you both. If Ratan Tata, mind of Tata Sons and Tata Motors, were in the area around right now, what advice might you give him?
MacDuffie: I believe I would emphasize two things that contain been topics here. Some may be focus rather than being distracted. There's a need to extract value from this and that will typically depend on being highly targeted at finding what must be done to make Jaguar and Land Rover be successful. Grander schemes that involve endeavoring to leverage these brands across the recovery of their profile I believe probably don't make a lot of sense at this time.
But second, the theme of learning. . . that already appears to be a thrust of a few of the emerging market multinationals, that when they acquire access to learning and the chance to develop new capabilities is really the motivation and not ways to get size or take cost away.
If they can stay centered on that, the companies that I have followed for many years in the auto industry that contain consistently been successful --Toyota especially --have kept that focus on learning and improvement at the forefront constantly in memories and bad. I'd urge that on Mr. Tata.
Singh: I would say three things. The first, of course, is I'd be honored to be in his occurrence and compliment him on his statesmanship. He has led an organization that already got a significant reputation but he has taken it to new levels.
The second thing is to say that he should trust the CEOs of his companies -- and he does indeed -- and observe how they can get the most value out of these transactions, not merely Tata Motors but also Tata Metallic and the other trades these companies are doing.
The third is to talk about sharing learning across the Tata Group. I believe each of the companies does that. The question is how to get the most out of transferring knowledge over the group. Linked to that is the point of finding a unique style that is befitting such business teams.
Here's what you think. . .
Total Responses: 1
#1Tata's Major Challenges
The major challenges for Tata are as follows:
1. Brand self confidence. It is necessary to instill assurance in vendors worldwide that the brands are in safe hands. The Tatas are there to include value rather than to spoil brand market value. It is necessary to get this done to keep present customers and develop new customers.
2. Workers' confidence in general management. Workers should believe that Tata is there to help them and not to minimize their careers.
3. Cost reduction. It's important to lessen costs in order to make the business profitable, especially with Jaguar. The target should be on adding impressive functions and using cheaper materials. Tata may use its experience especially with the Daewoo commercial vehicle. Tata has many companies that can help in reducing material costs. For instance, Corus can assist in arranging for steel.
The integration of civilizations is not a big concern, as Indians speak Uk British and know as well as practice the working design of the British.
By: Manish Godse, IIT Bombay
Sent: 09:54 AM Mon Apr. 07. 2008 - IN
Bibliography-
http://knowledge. wharton. upenn. edu/india/article. cfm?articleid=4275
[1] Business and Management, Paul Hoang, site 98
[2] Ibid, page 131
[3] Ibid, webpage 131
[4] Ibid, web page 132
[5] Ibid, webpage 132
[6] Ibid, site 132, 133
[7] Ibid, page 131
[8] Ibid, webpage 132
[9] Ibid, web page 132
[10] Ibid, webpage 132, 133
