Case Study on TATA Motors

Type

Public company NSE: TATAMOTORS BSE: 500570 NYSE: TTM Automotive 1945 JRD Tata

Traded as

Industry Founded Founder(s)

Headquarters Mumbai, Maharashtra, India[1] Area served Worldwide Ratan Tata, Chairman Ravi Kant, Vice Chairman Carl Peter Forster, CEO Prakash Telang, MD (India Operations) Ravi Pisharody, President (CVBU) Automobiles Engines Outsourced Engineering and Design 123,133 crore (US$27.46 billion) (2011)[2]

Key people

Products

Services Revenue

Profit Total assets Total equity Employees Parent

9,274 crore (US$2.07 billion) (2011)[2] $23.131 billion (2011)[3] $4.683 billion (2011)[3] 53,151 (2011)[3] Tata Group Jaguar Land Rover TDCV Tata Hispano TataMotors.com

Subsidiaries

Website

Vision Of A Firm:
It is the vivid descriptive image of what a company wants to be 'or' wants to be known for; it preserves the core of future. Its a hallmark of an en-lighten forward looking organization.

Vision Of TATA Motors:

"Best in the manner in which we operate , best in the product we deliver, and best in our value systemand ethics."

Mission Of A Firm:
It is a statement of intent of what a company wants to create and though which type of business. It is a definition of the business. It is an answer to the question i. What business the firm is in;

ii. iii.

Why the firm is in this business; What could be the business if the firm was not in the existing business. It is process of legitimization for existence of the business. It reflects the culture, philosophy and grand design of the firm.

Mission Of TATA Motors:

" TATA Motors is committed in letter and spirit to Corporate Social Responsibility."

Countries where the organization operates, and Names of countries with major operations
We have subsidiary/associate companies outside of India as under: Tata Daewoo Commercial Vehicle Co. Ltd., Korea Nita Company Limited, Bangladesh Tata Precision Industries Pte. Ltd., Singapore Tata Technologies Limited, USA/UK TATA Motors European Technical Centre, UK TATA Motors (SA) Proprietary Limited, South Africa TATA Motors (Thailand) Limited, Thailand Hispano Carrocera S.A., Spain In addition to the above, we also have a liaison office in Dubai which caters to promoting our international business for the Middle East and Africa region.

Core values Of TATA Motors:

Tata has always been values-driven. These values continue to direct the growth and business of Tata companies. The five core Tata values underpinning the way we do business are:

Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny. Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve. Excellence: 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.

Unity: 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. Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.

Nature of ownership and legal form

TATA Motors Limited is a public limited company listed on 2 stock exchanges (Bombay Stock Exchange and National Stock Exchange of India Limited) in India. Companys Depositary Receipt Programme is listed on the New York Stock Exchange.

Markets served
TATA Motors has major operations in India with sales and marketing operations in more than 70countries. The scope of this report though, includes only Indian operations.

Joint Ventures & Acquisitions

In 2004, the acquisition of Daewoo Commercial Vehicle of South Korea. In 2005, Hispano Carrocera Spanish bus manufacturing company. In 2006, TML has formed 51:49 Joint Venture with Marcopolo, Brazil-based global leader in bus body building. In 2007, TML also formed a joint venture with Fiat. In 2008, the acquisition of British Jaguar Land Rover (JLR) business.

SWOT Analysis of TATA Motors:

Having presented the SWOT analysis of Ford Motor Company, we now analyze the SWOT framework of TATA Motors. As mentioned above, TATA Motors prioritizes opportunities and builds their competencies around them. Their announcement of Tata Nano is an excellent example where they have launched the model and opened bookings much ahead of building their manufacturing competencies to meet the demand not caring about the issue that they will end up accumulating a huge backlog of customer orders.

TATA Motors Strengths:

Excellent brand equity and strengths in Indian Market Legacy and Dignity of Tata brand heritage which is almost as old as Ford Motor Company Sound global recognition in light trucks and buses Sound fundamentals in turbo diesel engines that they developed in joint venture with Cummins Sound presence in Asian Markets Ownership of the heritage of British motor brands Land Rover and Jaguar Strategic tie up with Mercedes Benz which is one of the hottest cars in premium car market segment in India World class quality accreditations (ISO 9001, ISO 20000, ISO 14001) Excellent cost management framework (Ariba Spend Management) Excellent Supply Chain Management using the SAP framework Experienced, high quality, productive and low cost work force Ownership of some of the largest automobile manufacturing plants of the world Diversification strengths due to other large businesses of Tata Group Excellent financial strengths close to $10 Billion of annual revenues Sound Parent Group support Tata Group annual turnover is in excess of $30 Billion

TATA Motors Weaknesses:

Never done well in US, UK and European car markets (although done reasonably well in light trucks and buses) as presented earlier, they failed miserably in their City Rover launch in Europe Not yet prepared fundamentally to handle the global markets of Land Rover and Jaguar Weak technical competencies when compared to companies like Ford Motor Company Current Manufacturing capacities not adequate to meet the demands of Nano already taken a risk of over commitment and under delivery pertaining to the Tata Nano economy-car. Perceived as too Indianized it will take them a long time to establish a global branding Do not possess localization skills outside India markets this is one of the primary reasons for their failure in the City Rover venture Focus is more on cost thus their car models lack advanced features that are common in western markets

Opportunities for TATA Motors:

Gain control over UK and Europe markets by re-enforcing the heritage of Jaguar and Land Rover Deep roots of British style manufacturing processes given their own heritage of the British rule in India can help them do better with Jaguar and Land Rover

Introduce Asian variants of Jaguar and Land Rover by promoting their Power Icon branding this may work very well with Asian politicians, Capitalists and Bureaucrats Develop more joint ventures like Tata Mercedes Benz and introduce their cars in the Asian markets Tata Nano has taken the world by surprise whereby many economy car manufacturers of the world are yet to even think of such a cheap car Excellent test drives and experience reports of Tata Nano can invite attention of urban middle class at global level if they build their manufacturing and supply chain effectively, they have the opportunity to virtually capture the market segment which doesnt even exist in the world a market of $2500 cars (many bikes are more expensive than this car which is spacious enough to accommodate four six feet tall people.

Threats for TATA Motors:

Jaguar and Land Rover requires lot of funds initially which may strip down the company to cashless levels. The Singur crisis has already hit their manufacturing backbone for Tata Nano cars the company has not yet come out of the draining down of cash in excess of $300 Million. Urgency in shifting the Singur plant to alternate place has hit their supply chain very badly a large number of suppliers had established plants in Singur to support TATA Motors many of them may not be having enough cash to shift to new location of TATA Motors Nano plant. Many companies across the world are busy developing their own models of Economy Cars they may launch in competition with TATA Motors giving them tough time in the market that currently seem to be monopolistic in favor of TATA Motors.

Enterprise Process Model (EPM) - Process Management at TATA Motors

When TATA Motors made a huge loss of 500 crores in the year 2000-01, analysts had all but written off TATA Motors fortunes. But TML was determined to bounce back and hence started the process of serious introspection. Three key reasons were identified for the massive lossa) Lack of customer focus b) lack of process management c) lack of new products and variants. TML had decided the three elements in a systematic manner, the major emphasis being process management.

TATA Motors hence started to adopt the APQC 13 (American Productivity and Quality Center) processes and sub process and hence derive the Tata Business Excellence Model (TBEM, based on the Malcolm Baldrige National Quality Award Process), thus adopting a process oriented approach than merely people oriented approach. This practice minimized the influence of individual employees in running the operations. This also entailed the documentation of the processes, which brought about lot of clarity in terms of roles and responsibilities of process owners, inputs and outputs of the processes, in process and end process measures, entities involved and its linkage with the ISO and TS standard system.

The Enterprise Process Model has been depicted in the figure below.

Figure: Enterprise Process Model

Operations & Production Management

Inbound Logistics: Long term contract with service providers transporters and agents. Personnel at regional offices for over seeing the smooth transit of goods. Transparency and monitoring through deployment of IT all transactions through SAP. DTL supplies for critical high value items. Efficient storage facilities easy storage and retrieval.

Procurement: E procurement initiative. Global Sourcing Team China , a key destination for sourcing essential items like tires, power steering units etc., Steel procured from Belarus Long term relationships with a stable and loyal pool of suppliers. Technology driven procurement SAP and VCM. Strategic subsidiaries & JVs TACO group of companies , Tata Cummins Centralized Strategic Sourcing for key components FIPs, Steel etc. Group resources Tata Steel and Tata International . Localized supplier base at mfg. locations low inventory levels.

Vendor Management : In the Year 1997, TATA Motors promoted a company called Tata Autocompsystems Limited (TACO) . The main objective was to serve form joint ventures with international auto component manufacturers and streamlining the vendor management processes for the company. TATA Motors sources from vendors who focus on their own R & D to reduce cost. Most of the vendors develop products with TATA Motors itself and quite a few were given designs by TATA Motors. TML also helped the vendors find international partners to make products that would meet their requirements. Some of the vendors who supply to TATA Motors also did competitive buying of material from China and Thailand. Manufacturing: In an automotive industry, the main emphasis on quality would be on the manufacturing process. There would be about fifteen thousand accessories and component parts to assemble and activate while we manufacture a car. TATA Motors believes in the indigenous development of manufacturing process and development of technology. Unless many automobile companies, the strategy of the firm is not to blindly adopt any new successful technology. It believes in state-of-the-art technology. With reference to the product market matrix (with product development, market development, market penetration and diversification) which composes the merging of production and marketing strategies TATA Motors is seen to follow the diversification strategy wherein it produces new products and gets into new market to target with the product. Product development: New Product Development would involve idea generation, product screening, concept testing, Business and financial analysis, product development, test marketing and commercialization. An automobile product development cycle is said to be consisting of concept stage (where the car starts), Advance engineering (where the car takes shape), product engineering (where the

details are filled in), production engineering (where the car is worked out) and the manufacturing stage (where all comes together). TATA Motors Engineering Research Centre in Jamshedpur focuses in upgrading the components and parts with evolution of technology and also is one of the best in determining the needs of a customer and developing a new product to cater to the needs. Tata Nano is one such product from the stable of TATA Motors. Besides this centre the Research and development of TATA Motors has become international with centres in Spain, UK and South Korea also. Cost Cutting Techniques: After a rough fiscal year in 2001, TATA Motors realized that the only way to survive this market was to cut down on costs. They started practicing an entirely new way of procuring their supplies and hence gave rise to a unique way of managing supplier relationship. The earlier traditional method that TATA Motors gave the technical specifications to the supplier and the supplier who was successful in acquiring the bid filled up the orders. However under the new system TATA Motors simply provided the output they expected, and allowed the suppliers to be as creative and innovative with their designs, materials, and prices. In other words TATA Motors would simply describe the goal that they wanted to achieve with certain part and the suppliers would supply the parts according their own convenience. For example instead of giving technical specifications for the wind shield of Tata Indica, it would just describe the goal of cleaning the windshield, and let the suppliers come up with ideas to meet those goals in the most cost effective manner, without compromising on quality. This practice led to huge cost savings in raw materials and the Tatas could deliver the cheapest car of the world at just 2500$. Quality Management: The shifting of focus on TQM (Total Quality Management) and Six Sigma principles by TATA Motors has been a gradual one since the year 2000. One quarter of the work force undergo training to maintain and create high quality products every year. The personnel are even sent to foreign manufacturers locations, whenever a new machine would be imported, to undergo training. Operations: Capital Equipment Manufacturing division tooling development capabilities of global standard. Apprentice Trainee Course ensuring stable source of skilled manpower. Kaizen & TPM team continuous drive to improve efficiencies. Automated manufacturing processes. Distributed manufacturing Assembly units at South Africa, Thailand, Bangladesh, Brazil etc. Maintenance technical competence.

Capacity Utilization Mercedes Benz cars make use of TATA Motors paint shop facilities.

Outbound Logistics Stockyards, all across the country. Long term contracts with transporters higher volume of business to transporters ensures competitive price. Regional Sales Office and Vehicle Dispatch Section linked through SAP. Efficient security system for prevention of any kind of pilferage.

Sales & Marketing at TATA Motors

Product and Brand Strategy
TATA Motors follows a sub brand strategy. Although there is no separate Brand for TATA Motors as such but the TATA brand is used as a mother brand. All products of benefit from the association with the TATA brand, which in India stands for trust and reliability. TATA Motors products can be categorised into four major categories: Passenger cars, Utility vehicles, trucks and commercial passenger carriers. The product strategy in TATA Motors has been driven by two primary objectives Identifying the market need and creating new market segments. The success stories in the past two decades (Sumo, 207, Ace, Indica etc) have been able to fulfil these overall objectives. The strategy adopted behind these products also reflects the commitment of TATA Motors to customer needs and new product innovation. The company has also exported its vehicles after creating customised variants which have higher payload and engine capacity. It has also customised its domestic products by introducing passenger option, higher payloads, bigger engines etc. In broad terms the following sums up the TATA Motors marketing philosophy:
Identify Unmet Customer Needs Line Extension (By Variants and Enhanced Models)

Understand the nature of the Need

Create New Brand & Product

Create New Segment

Pricing
TATA Motors have a pricing advantage due to its low cost leans manufacturing abilities. The inhouse steel company acts as a shock absorber against steel price fluctuations. The pricing methodology adopted is that of a perceived value pricing. It was demonstrated by the Rs 1 Lakh price of TATA Nano, where the cost of producing the car left a very small margin for TATA.

Promotion
TATA Motors uses extensive promotion for its passenger car segment. The Utility vehicle and commercial passenger carrier follow this segment based on Share of Voice.

Distribution
TATA Motors has a large network of dealers and Stockyards, all across the globe and uses the DMS technology for efficient cooperation between these dealers. Its distribution network includes operations in India, Nepal, Bhutan, Ghana, Italy, Poland, South Africa, Spain, Sri Lanka and Turkey. The company's dealership, sales, services and spare parts network comprises over 3500 touch points. Apart from the wide distribution network TATA Motors also has Distributed manufacturing it has Assembly units at South Africa, Thailand, Bangladesh, Brazil apart from India. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka). To augment the scarce resources, it has a joint venture with Fiat wherein Fiat sells its vehicles through Tata dealerships and in return TATA Motors has access to Fiats technology and unutilized capacity Over the years, one of the major success factors of TATA Motors is their supply chain excellence. To keep their distribution costs to the minimum they have outsourced the logistics and distribution part of their business to TATA Motors Ltd. Distribution Company (TDCL), a wholly owned subsidiary of TATA Motors Ltd. Through this arrangement, TATA Motors is able to reduce its logistical costs by at least 1% and to focus more on the core business. This in turn has provided flexibility to TATA Motors in terms of delivering the right product at the right time at the right place. Therefore, today, TATA Motors is a fully integrated automobile manufacturer with a portfolio which covers trucks, buses, utility vehicles & passenger vehicles/cars. The dealers and suppliers are bound by a Supplier Relationship Management Program and Dealer Management System. These programs are reviewed from time to time. The efficiency of transactions within the organization and also supplier coverage are given importance. Suppliers day, Vendors meets, Channel partner meets are organised wherein the Board members can interact with suppliers to share ideas and thoughts.

MIS in TATA Motors

In TATA Motors MIS is mainly used in the following areas; Supplier Relationship Management Integrated Production Management Customer Relationship Management Product Life-Cycle Management

Enterprise Resource Planning

Prior to the SAP implementation TML has a host of legacy applications which had been developed and maintained over a period of time. Thus the underlying technologies and platforms were diverse along with diversity in functions and locations. This led to redundancy, inconsistency and inefficiency in data management. A unified real time database with an IT infrastructure that was integrated across the functions, locations and even businesses was the need of the hour, in order to cut costs and manufacturing cycle times and also serve the customers more efficiently.

Why SAP?
SAP was the business leader in ERP solutions space. SAP offered strategic fit to TMLs TO-BE stage process mapping. SAP was able to integrate various functions across geographies yet maintaining real time data updates. TMLs business processes were rationalized across all manufacturing units using the power of SAPs ERP infrastructure. The existing environment prior to SAP implementation was Oracle database solutions, Unix as operating system and predominantly IBM for hardware support. The implementation of SAP ERP solution (Version 3.1H) started in about 1998 and was finished by 2000 for about 3500 users. Later in 2003 TML moved to version 4.6C on a single server platform. The major benefits from implementation included enterprise integration, reduction of inventories, better control over receivables, easier financial consolidation, single unified database, improved efficiency by reducing redundancy and inconsistency, reduced response time to customers and reduction of operational costs.

Benefits of SAP-ERP in TATA Motors

Enterprise integration Financial benefits of reducing inventories Better control of receivables Significant reduction in time taken for financial consolidation A single unified database