2016

Analysis of Strategic Management issues of TATA Motors with a special

emphasis on its Inorganic growth strategy
Under the guidance of Prof. Brajaraj Mohanty

Group 4
Girija Prasad Nanda
Nitika Nath
Sibasis Mohapatra
0 | Page

Sukrit Dhup

UM15079
UM15093
UM15111
UM15115

Swayam Prakash Rout UM15118

Contents
1

Executive Summary............................................................................................................................................................... 3

Industry Overview.................................................................................................................................................................. 4

2.1

Nature and Size of the Industry...................................................................................................................................... 4

2.2

Key Growth drivers for the Industry................................................................................................................................ 5

2.3

Identification of Critical Success Factors (CSF)............................................................................................................... 5

2.4

Market Analysis based on CSFs...................................................................................................................................... 6

2.5

Industry Benchmarks...................................................................................................................................................... 7

2.6

PESTEL Analysis............................................................................................................................................................ 11

2.7

Porters Five Forces Analysis......................................................................................................................................... 13

2.8

Strategic Group Mapping.............................................................................................................................................. 15

2.9

Competitive Landscape................................................................................................................................................ 18

2.10

Market Segmentation................................................................................................................................................... 19

2.11

Buying Criteria Analysis of the Industry....................................................................................................................... 22

2.12

Key trends and future developments............................................................................................................................ 25

Company Overview.............................................................................................................................................................. 28
3.1

Company background................................................................................................................................................... 28

3.2

Timeline with key milestones and their strategic impact............................................................................................. 29

3.3

Vision, Mission, Goals, and Strategic Themes............................................................................................................... 30

3.4

Key Product and Service Portfolio................................................................................................................................. 31

3.5

Core Competencies TATA Motors.................................................................................................................................. 32

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3.6

Business Model of the organization.............................................................................................................................. 34

3.7

Balanced Scorecard till 2020:- VMCDF Model of TATA Motors...................................................................................... 37

3.8

SWOT Analysis.............................................................................................................................................................. 39

3.9

Competitor Analysis (identify competitors).................................................................................................................. 40

3.9.1 Based on Critical Success factors(JLR)...................................................................................................................... 40

3.9.2 Based on Financial indicators.................................................................................................................................... 43
4

Future Growth Strategy........................................................................................................................................................ 45

4.1

Product Portfolio Range:-.............................................................................................................................................. 46

4.2

Companys Strategic Roadmap for future..................................................................................................................... 49

4.3

Product Market Investment Strategy............................................................................................................................ 50

4.4

Re-imagining the Organization with the transformed business model or Use-case based on SMAC and IOE...............51

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1 Executive Summary
With the increase in per capita income around the world especially emerging economies (growing at average >5%)the overall
automobile sector is set to grow at 14% CAGR. TATA Motors limited operates in Passenger vehicle, commercial vehicle,
Defence & Municipal purpose vehicle and luxury vehicles ( Jaguar Land Rover) segments. From our analysis we found out the
following derivations that the passenger vehicle segment is set to grow at 23% CAGR, Commercial vehicle at 7.6% CAGR,
Defence & Municipal purpose vehicle at 16% CAGR and the luxury car segment at 20% in developed economies and 45% in
emerging economies. As the industry grows the competition get tougher to own a portion f the pie. Digital transformation ,
sustainable technologies ,fuel efficient engines , quality, versatility , hybrid fuel powered vehicles ,lean SCM, & OEM , IOE, 3D
printing will be the need of the future to sustain in growing markets
TATA Motors over the years with their inorganic growth strategy, innovation have survived since 1945 and have been able to
increase their revenue from 37000 Cr INR in 2006 to 265000Cr INR in 2015 an increase of 618%.But in recent time their they
have faced problems like losing 15 % market share in commercial vehicle segment, losing about 50 % market share in
passenger vehicle segment. In order to analyse all the problem we tried to analyse the entire strategic process applied in TML
, , their market segment analysis, financial analysis , competitor analysis, key core competencies, product mix, value chain
analysis etc. And based on all this analysis we have tried to chalk out the future development strategy fir TML which will help
them achieve competitive advantage over other players and help them sustain in the market in future.
The major goals which TML should try and achieve is 75% market share in Commercial vehicle segments , 10% share in
passenger vehicles and try to generate about 9000 Cr revenue from defence and municipal purpose vehicle segment. JLR
should maintain its 14% CAGR growth rate and try to tap the highly rising luxury car segment and provide sustainable
solutions through its Fleet business programme. Apart from this TML should try increase customer and dealer satisfaction
indices beyond 900/1000. It should try and launch the new vehicle planned under NEXUS and KITE series by 2020 to regain
market share and fulfil the target of selling 50million vehicles. Further it should implement AMP and VAVE programmes to cut
down costs
Here we have also analysed how TML has been able to grow inorganically through its superior management skills by
analysing the TATA JLR acquisition case to thrust on the fact how merger & acquisitions have been a major strategic initiative
for TML

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2 Industry Overview
2.1 Nature and Size of the Industry
Guidelines

Brief Description of the industry segment or sub segment

History and Evolution of the Industry
Position of Industry depending on Industry Life Cycle (Introduction, Growth, maturity, decline)
Size (% of National GDP) of the industry

History and Evolution of the industry

Key Consumers of this industry and

their changing needs

Stage in the Industry Life cycle

Total Available Market Size (National
and Global)
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In 1768, the first steam powered automobile capable of human transportation was built
by Nicolas-Joseph Cugnot.In 1807, Franois Isaac de Rivaz designed the first car
powered by an internal combustion engine fueled by hydrogen.In 1886 the first petrol
or gasoline powered automobile the Benz Patent-Motorwagen was invented by Karl
Benz.This is also considered to be the first "production" vehicle as Benz made several
other identical copies.At the turn of the 20th century electrically powered automobiles
appeared but only occupied a niche market until the turn of the 21st century.

Key consumers of the industry are: businesses, Car rental companies (fleet sales) and
Consumers. Among these, Consumer sales form the major source of revenue.

Automotive market is a matured market.

620 billion Euros (as per 2014-2015 data)

Total Serviceable Market Size (National

and Global)

110 billion Euros (as per 2014-2015 data)

2.2 Key Growth drivers for the Industry

Key Growth drivers

Vehicle penetration

Economic segment

Rationale
Vehicle penetration is still low. Only 18/1000 people own vehicle in India. But, with the
changing economic scenario, the numbers have a great potential for improvement.
Indian population is likely to move up the income curve. There has been a mass exodus
of population from lower middle class group to upper middle class. Thus, implying that
buying power has increased.

2.3 Identification of Critical Success Factors (CSF)

Critical Success Factor identified

Rationale

CSF 1: operational efficiency

Given the highly competitive landscape of the industry, operational efficiency is key for
this industry. Efficient operation translates into competitive advantage in the market, as
can be seen from the Japanese auto giant, Toyota.

CSF 2 :Constant innovation

The consumer preference changes rapidly in this industry. Therefore, its imperative for
the company to constantly reinvent itself. Product development thus, is of prime
importance and models need to be renewed regularly.

CSF 3: Flexibility, mergers & joint

ventures

In the emerging market, companies need to adapt to localization and flexibility to gain
market share.

CSF 4: Distribution network

As automobiles are not sold directly to customers, auto manufacturers rely on

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franchised dealerships to provide local showrooms. These dealers must be

knowledgeable and reputable to sell cars, which is essential for the automaker.

2.4 Market Analysis based on CSFs

Region

CSF 1

CSF 2

CSF 3

CSF 4

High

High

High

Medium

North

High

High

High

High

South

medium

high

high

high

East

high

low

medium

high

West

high

high

high

high

North-East

low

low

low

high

Central

low

low

low

high

Global

India

Note: Use data for the year 2013-14

*North: Haryana & Uttarakhand while are hub for heavy vehicles,( which demand better distribution and operational
efficiency), Delhi is the hub of light vehicles (demanding constant innovation, flexibility, and mix of other factors too)
*South: South is home to more light vehicle manufacturing as compared to heavy vehicles. So, innovation and
flexibility (due to large customer base) will be high. Owing to the strong competition, proper dedicated distribution
network will also be essential.
*East: Its home to mostly heavy vehicle manufacturing. So distribution and operational efficiency will be critical
*west: the west zone is similar to north, with a mix of heavy and light vehicle manufacturing.
*north-east India: it doesnt have many manufacturing plants. So, for companies in this place, distribution network will
be of utmost importance.
* Central India: This zone also doesnt host cluster of automobile plants. So, they also need effective distribution
network to sustain.
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*In the global scenario, we need extreme operational efficiency, constant innovation, high flexibility. On the other hand,
distribution network comparatively would be less important.

2.5 Industry Benchmarks

Size of industry:

Category

Industry Level
(National)

Indicator

Industry Average of Top 5 Firms or

players serving 75-80% of the market
201112

201213

201314

2014-15
(till Q3)

201112

2012-13

201314

2014-15
(till Q3)

18
million
units

20.3 mil
units

20.5 mil
units

21.2 mil
units

750008

661282

397298

407739

Size as % of
GDP

5%

7-8%

7.1%

10%
0.208%

0.244%

0.138%

0.192%

Inventory
turnover

13.0766
7

Market Size

Asset
turnover
Activity Ratios

12.07

12.3733
3

12.07

6.46

5.92

5.68

5.64

1.47333
3

1.48666
7

1.47333
3

1.516667

1.28

1.17

1.15

1.15

1.11

1.13333
3

1.25

1.176667

0.9

0.87

1.05

0.87

0.89

0.99666
7

0.923333

0.65

0.62

0.75

0.71

1.37333
3

3.74333
3

0.24

8.613333

0.5

0.38

0.41

0.47

Current ratio
Liquidity Ratios
Quick ratio
Cash ratio

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Market Leader

Category

Solvency Ratios

Profitability Ratios

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Indicator

Industry Average of Top 5 Firms or

players serving 75-80% of the market

Market Leader

201112

201213

201314

2014-15
(till Q3)

201112

2012-13

201314

2014-15
(till Q3)

Debt-toassets ratio

0.18333
3

0.16333
3

0.16666
7

0.156667

0.2

0.2

0.21

0.23

Debt-toequity ratio

0.97333
3

0.91666
7

0.73333
3

0.84

1.55

1.53

0.99

1.36

Interest
coverage
ratio

45.4566
7

71.28

81.8933
3

95.45333

1.99

1.58

1.39

5.32

Gross profit
margin

33.9366
7

35.5033
3

35.1833
3

36.19333

34.41

36.55

38.3

39.23

Operating
profit margin

7.86

7.35

7.40666
7

9.183333

4.67

3.41

3.15

9.82

Net profit
margin

7.40333
3

6.52

6.73666
7

6.086667

6.86

4.68

5.58

5.31

Return on
assets (ROA)

11.8966
7

10.6533
3

10.63

10.66

8.8

5.48

6.42

6.1

Return on
equity (ROE)

40.73

29.99

27.66

24.93

40.54

24.46

25.09

23.74

Price to
Earnings
(P/E)

14.2966
7

12.03

14.8633
3

19.81667

11.95

8.65

10.07

13.71

PEG Ratio =
(P/E Ratio) /

17.8935
5

17.0766
2

25.0673
6

30.5453

3.42406
9

3.46

3.08895
7

3.985465

Category

Valuation Ratios or
Price Ratios

Indicator

Industry Average of Top 5 Firms or

players serving 75-80% of the market
201112

201213

201314

2014-15
(till Q3)

201112

2012-13

201314

2014-15
(till Q3)

Price to Cash
Flow

11.3066
7

14.31

11.0233
3

26.61333

11.06

18.93

10.62

24.44

Price to Book
(P/B)

2.63

2.29

2.22

3.39

2.63

2.29

2.22

3.39

1.11

0.83333
3

1.05666
7

1.19

0.87

0.43

0.55

0.63

Dividend
Pay-out Ratio

0.11

0.12

0.03

0.04

0.11

0.12

0.03

0.04

Enterprise
value (EV is
market
capitalisation
plus debt
minus cash)/
EBITDA

1.28

0.90333
3

1.12666
7

1.293333

1.18

0.45

0.6

0.68

27.363
%

20.288
%

23.374
%

23.244%

14.508
%

14.508%

14.508
%

14.508%

Projected
Annual
Growth in
Earnings per
Share

Price to Sales

Depreciation
as
percentage
9 | Page

Market Leader

Category

Indicator

Industry Average of Top 5 Firms or

players serving 75-80% of the market
201112

201213

201314

1.23277

1.30019
5

Market Leader

2014-15
(till Q3)

201112

1.341127

1.29552
1

2012-13

201314

2014-15
(till Q3)

1.40479
4

1.512021

of Sales
Fixed Assets
to Sales
Revenue
Advertising
as
percentage
of Sales

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1.49102
6

1.316342

2.6 PESTEL Analysis

Category

Description

Political
Describes the
political
scenario in
which firm
operates.
Economic

Key factors for analysis

Laws

Governmental policies

Economic health

Economic factor, at the beginning of the

simulation the economy were in good conditions,
GDP growth were projected to raise from 1% to
1.5% in period 1 and inflation to decline from
2,5% to 1.5% these were fluctuation hence
economy decline at end of simulation.

Social implications

Social Factors, cars is one of agent which pollute

environments due to emission of Co2 and noise,
large cities, has affected with these emission and
lead to diseases related to breath and skin. Much
traffic jams which are time consuming, and
increasing road accidents. The impact
automobiles exert on the society also affect the
overall environment.

Technological
proficiency

Technological factors, Cars manufactures are

starting to introduce Alternative Energy Vehicles,

Describes the
environment
and its
implications for
the firm.

Social

Technological
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Describes the
social impact
the firm
exhibits.

Rationale
The firm should be aware with all rules and
regulation governing the production of cars, such
as fuel efficiency cars which are highly
emphasized, vehicle emissions, safety and
standard issues should be given priority.

Describes the
technological
stature.

Environmental

Operational excellence

which are using electricity only (rechargeable

batteries), fuel cell, hydrogen, solar or hybrid.
Despite of its expensiveness it will be solution to
energy efficiency and lowering pollution, but
during simulation we were not accessed to
develop purely cars, or hybrid models despite of
its existence.

Environmental
regulations

Environmental factors, Environment pollution, is

one of challenging issues threating the world, car
manufactures should pay attention in it issues,
by transforming their technology into alternative
energy vehicles, reduce emissions

Adherence to laws &

regulations

Legal Factors, the firm should comply with all

laws and regulation with its operations, such as
gas emission laws, safety and standard issues,
vehicles regulations, compatibility spares
manufactures

Describes the
environmental
impacts of the
firm.

Legal
Depicts the law
conditions.

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2.7 Porters Five Forces Analysis

Porters Five Forces

Description

Buyer Power

While
consumers are
very price
sensitive, they
don't have
much buying
power as they
never purchase
huge volumes
of cars.

Volume of purchase

Customer preference

The suppliers
are extremely
susceptible to
the demands
and
requirements of
the automobile
manufacturer
and hold very
little power.

Business scenario

Manufacturer dominance

Highly
competitive
industries but
with low returns
as the cost of
competition is
high.

Total No of firms (Listed as well

as Unlisted)
No of large firms

There isnt

Supplier Power

Existing Competition

Threat to new
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Key factors for analysis

Entry/ Exit barriers and costs

Rationale
Historically, the bargaining power of
automakers went unchallenged. However,
with the increase in product variety,
consume became disenchanted with many of
the products being offered by certain
automakers and began looking for
alternatives, namely foreign cars. But, still
due to low purchase volume, they didnt
have much say on the price.
The automobile supply business is quite
fragmented (there are many firms). Many
suppliers rely on one or two automakers to
buy a majority of their products. If an
automaker decided to switch suppliers, it
could be devastating to the previous
supplier's business. Therefore, the suppliers
are mostly at the dispense of manufacturers.

There are around 353 automobile

manufacturing companies in the
world. The leader being Toyota.

There are majorly 15 largest firms in

the world, and 10 tough competitors.
In India, Tata Motors is the leader.

With globalisation, the world has become a

entrants

extensive
entry/exit
barriers in this
industry

Threat to substitutes

The higher the

cost of
operating, the
more likely
people will seek
alternative
transportation
options.

Gasoline price

convenience

Complementors
survive well in
this industry.

diversification

Effect of
Complementors

2.8 Strategic Group Mapping

HIGH
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JLR

AUDI
BMW

unified market.
The emergence of global competitors with
the capital, required technologies and
management skills is gradually reducing the
threat to new entrants.
Trucks and sport utility vehicles have higher
profit margins, but they also guzzle gas
compared to smaller sedans and light trucks.
We also need to consider time, money,
personal preference and convenience in the
auto travel industry. With the go-green
trend, public transports may be witnessing
an upsurge, but this maynt pose a big threat
to the industry.
Apart from automobile manufacturing, this
industry also hosts complementing industries
like Servicing & repair, spare parts
manufacturing etc. Which not only diversify
the business, but generate a lot of revenue
too.

MEDIU

TML
Maruti
suzuki

LOW

DISTRIBUTION CHANNEL IN EMERGING

ECONOMIES

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HIGH

PRICE
HIGH

AUDI
BMW
TML + JLR

MEDIU
Maruti
suzuki
LOW

DISTRIBUTION CHANNEL IN EMERGING

ECONOMIES

16 | P a g e

HIGH

PRICE
AUDI

HIGH
TML + JLR

BMW

MEDIU
Maruti
LOW

Suzuki

MARKET SHARE IN DEVELOPED ECONOMIES

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HIGH

PRICE
HIGH

JLR

AUDI
BMW

MEDIU
TML

Maruti
suzuki

LOW

MARKET SHARE IN DEVELOPED ECONOMIES

HIGH

2.9 Competitive Landscape

Value propositions ( Low Cost, Differentiation, Niche)

o Tata motors offers value proposition on lines of socio-economic group.
The value proposition it offers to the first group, the low income individuals and families, is to offer a line of
vehicles that are affordable while still being safe. This value proposition was clearly evident and communicated
when the Nano was announced for release in 2009.
o The other market segment Tata Motors targets are the wealthy individuals and families looking to buy a luxury
car. These offerings are represented by their Land Rover and Jaguar lines (Tata Group). The value proposition
offered to this segment is to provide automobiles that consumers can trust and depend upon while giving them
a sense of high-class self-satisfaction.

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Competitive Strength Assessment (Normal and Weighted)

o The secret lies in following an economic approach like liberalisation with a social glue which binds its
constituents.
o Productivity is a key success factor in these older industries, and the new IT and Internet-related technologies
provide an important means to improve productivity. Tata motors follow this approach, by adapting itself to the
latest technology. And, this helps it harvest the opportunity.
o On examining productivity issues or new ways of doing business online, the processes depend on people, their
mindsets. Productivity, in Tata motors is determined by two basic things one, the capital assets and
technology embedded in them, which can improve speeds and quality; and, two, the people who use any given
technology and the way in which they are organised.

2.10 Market Segmentation

Key Products and/or Services/Price
Range

Micro car segment(Length < 3.2 Meter)

Mini Car segment (3.2 < L <3.6 meter)

Compact car segment(3.6 < L <4.0

Meter)
19 | P a g e

Regions/ Key Features

Lowest cost segment with only one car Tata Nano

Cheapest car in this segment but had serious quality issues which tarnished
the reputation of the company

High price sensitive

Few players like Maruti, Hyundai, Tata are the key players

Consumers of this segment are normally first time buyer

High price sensitive market

Largest passenger car sub segment having close to 45% market share

More than 13 plyers and nearly 20 products are in this segment

Tata was 3rd major player in this segment but Honda overtook Tata because

of its high brand equity and competitive pricing

Super compact(4.0 < L < 4.25 Meter)

and
Mid size Segment(4.25 < L <4.5 Meter)

20 | P a g e

Swift, i10, Jazz, Vista, Beat, Figo, Polo, Micra, Liva, Vibe, Punto, Pulse etc. are the cars
from this segment

Super Compact, the largest sub-segment, is comprised of sedans and marks the
beginning of 3 box cars in the segment

Middle class families prefer this segment

Entry level sedans are the main products of this segment

Swift Dezire, Tata indigo etc are the most successful cars in this segment

The choice of car in this segment is driven by income. In this segment customers first
preference is for safety, driving & Seating comfort and brand, second most preference is
for after sales service, price, power and pickup, mileage whereas maximum speed is of
lowest preference

Also this segment requires value for money, best features, and customer friendly vehicle

Executive(4.5 < L <4.7 Meter) and

Premium Class Segment(4.7 < L < 5.0
Meter)

This is an executive and premium class segment

Most of these owners tend to have purchased a car previously

The customer has potentially developed an attitude towards car

In this segment attitude becomes an evaluating judgment

Customers preference is for attractive styling, brand image, best product performance in
terms of acceleration, max speed and higher horse power

These customers seek to show personality, leadership from brand of car as most of the
customers prefer this segment for business purpose

Car price, fuel efficiency, spares cost are of secondary importance. Car interiors styling
such as IP shape & finish, all customer touch points, seat, steering door handle etc. are
of high importance. Also exterior styling, overall look, paint finish and safety & driving
comforts are of prime importance

This segment is of high end luxury cars such as Audi, BMW, Jaguar, Mercedes, Lexus,
Porsche, Rolls-Royce, as these brands are considered luxury

Average car price of this segment cars is more than Rs. 35 Lakh and is growing at an
average rate of 20% Y-O-Y

High net worth individuals like celebrities, business leaders, and corporate honchos,
politicians from urban and rural India are the customers of this segment. Their attitudes
are Got it? Flaunt it, Power Show, Image and Uniqueness

High social status from perceived brand image is the common driving factor of this
segment. Superior functionality, best in class quality and high end & customized
features are the most preferred parameters of this segment

Luxury and Coupe sub-segment

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This segment is actually utility segment further segmented into UV1, UV2, UV3 and UV4
based on length and price parameter

Economy segment UVs are Sumo, Safari, Aarya, Bolero, Scorpio, XUV500, Xylo,
Innova. Whereas high end UV market is very limited and dominated by Fortuner, Prado,
Landcrusier, Pajero etc

The main driving factor of this segment is fun, road presence, ego centric relationship

SUV & MUV Segment

2.11 Buying Criteria Analysis of the Industry

Parameter

Road Infrastructure

Competition in the
market(Options available)

Monthly Income

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Details

End-user Segments

Significance Attached (Low,

Medium, High)

It is the road condition which

decides the type of vehicle a
person wants to buy.
e.g. for long drive people
prefer SUV. For medium
distance people prefer sedan.
When then is competition in
the market people tend to
buy the vehicle which is
available at lower price
provided the vehicle should
satisfy their all requirements.
While applying the card the
bank checks peoples salary
and people having higher
monthly salary generally get
high loan amount and buy
bigger car than the people
who get lower monthly salary.

Individual customer
Corporate
SMEs
HNI

High
High
High
High

Individual

High

Individual

High

Disposable income

People having more

disposable income generally
buy big cars like SUV,
Sedans.

Individual
HNI
Corporate
Politicians

High
High
High
Low

Easy loan Availability, Interest

of loan

People normally buy vehicles

when the interest is low and
bank provides loans easily.

Individual

High

Government Policies

When government changes

its policies e.g. when govt.
increases the tax rate on
vehicle or increases the road
tax or increases the import
duty then the price of the
vehicle changes which affects
the sales of the vehicle
Before buying the vehicle
people always make analysis
of different aspects of the
vehicle. e.g. People normally
buy vehicles having good fuel
efficiency, reliable,
acceleration, pick up.
People having multiple source
of income seen to but more
vehicle than people having
single source of income

Individual

High

Individual
Corporate
HNI

High
High
High

Individual
Salaried Individual
Politicians
HNI

High
High
High
High

Fuel efficiency, Exteriors,

Interiors, Vehicle
performance, Pickup,
Acceleration, Engine
Capacity, Comfort
Source of income

23 | P a g e

Occupation

Occupation plays a vital role

in choosing the vehicle

Individual

High

Opinions, Values

Before buying the vehicles

people normally seen
consulting people who have
similar vehicle which they
want to buy. Feedback plays
an important role in deciding
a vehicle

Individual
HNI

High
Medium

The impact of the buying criteria is graded on the basis of the intensity and duration of their impact on the current market
landscape. The magnitude of the impact has been categorized as described below:

Low - Negligible or no impact on the market landscape

Medium - Medium-level impact on the market
High - Very high impact with radical influence on the growth of the market
Based on the analysis and as shown in below figure, it is evident that, increase in disposable income seems to be the
most important reason for buying a car. This trend is reflected in the growth of the per capita income and consequently
the growth of the Indian Automobile Industry. Similarly, the growing family needs like working partners, increasing
family size, status, etc. add to the motives of buying a car. At the same time affordability of car price is the most
important factors for purchasing a particular segment car.

2.12 Key trends and future developments

24 | P a g e

Key Trend

Impact on Industry (Low, Medium, High)

Certainty of Impact (Low probability,

medium probability, high probability)

Development of more sustainable

technologies
Growth in per capita income
Increase in ease of Foreign Investments
High CAGR of GDP in emerging nations

High

Medium probability

High
Medium
High

High probability
High probability
Medium probability

Analysis of Trends with High Impact and High Certainty to be carried out
Impact on strategies or business models to be highlighted

The good news for the industry is that all segments are predicted to increase in volume. Within the next two years,
global vehicle sales will pass the magical 100 million mark and continue to rise until

the end of this decade, on the back of increasing demand in emerging markets like China.

Yet, as the next page shows, the majority of auto executives cling to the expectation of growth of small and basic
vehicles so-called budget cars based upon a historical preference for such automobiles in developing countries.
Formal forecasts for light vehicle sales present a different picture compared to that of many of the executives involved
in our survey, with small and basic cars not predicted to increase their market share, which is set to remain at just six
percent.

Conversely, the compact-sized, pick-up & SUV and sports segments are forecast to outpace overall market growth
rates up to 2020, with compact-sized being the real success story. Almost one-third of all vehicles sold worldwide are
expected to come from this segment in 2020. This puts the spotlight on recent efforts by global OEMs to invest in small
budget cars in the BRICs and other high-growth territories, with a question mark hanging over the long-term sales
volume and margin potential for this segment.

25 | P a g e

Despite the promise of new, cleaner technologies, automotive executives still believe downsizing the traditional
internal combustion engine is likely to yield the best results in the short-to-medium-term.

When it comes to alternatives, fuel cells have moved ahead of battery electric systems to become the number two
priority for investments until 2020.

26 | P a g e

Growth rate of various sectors in automobile sector:-

27 | P a g e

3 Company Overview
3.1 Company background
Tata Motors have quite the spanning from the company's foundation in 1945 as an auto maker to various other endeavours.
Tata Motors is one part of the business group Tata, formerly known as TELCO (Tata Engineering and Locomotive Company),
which also includes other ventures, for example, a steel making plant and even a tea producing company.
Tata got into the motors business in 1954 when it started producing heavy trucks in a JV with Daimler-Benz AG. So, in 1960,
the first truck rolled out of the plant's door in Pune, India, a copy of a German Daimler truck. Tata began exporting heavy-duty
trucks, but for the in-house market, they had to come up with lighter versions because of the infrastructure of the nation. The
first LCV (Light Commercial Vehicle) model, the Tata 407, began production in 1986.
At the beginning of the 90s, the organization thought to advance and expand into the car market, and it started to make
more efficient diesel engines in a collaboration with Cummins Engine Company. Their first car was the Tata Indica, a model
that enjoyed an surprising success both in India and in other European markets, regardless of the fact that car analysts gave
it bad reviews.
The Indica was popular among people due to it's low fuel consumption and powerful engine. It was so successful that Rover
started selling it in the UK with the name of CityRover. The second era of Indica, the V2, was significantly more successful.
Indica's significant achievement gave Tata Motors the monetary power to take over Daewoo Motors in 2004, in a push to take
their image more global. Other astounding acquisitions by the Tata Group include Jaguar and Land Rover which took place on
March 26th, 2008 for a net 2 billion US dollars. Of late, Tata has made it's aggressiveness known when it comes to the issue
of gaining exposure and acquiring new brands.
Tata Motors' financial force comes from the way that its labour costs add up to just 9% of the benefit, an explanation behind
which numerous other auto makers, including Volvo chose to move operations to India. Another vital variable in Tata's
prosperity is the fact that the group holds several machine tools and metal (steel) producing plants, further decreasing
production costs.
28 | P a g e

Apart from all this, Tata is not behind when it comes to show the innovative spirit, bringing to the world the compressed air
car and the least expensive model ever produced, introduced at the 2008 Geneva auto show, Tata Nano, a car which will just
cost and set you back some $2,500. Also, Tata has expressed their wish to come up with a car made 100% out of plastic, with
an end goal to battle increasing expenses for metal creation.

3.2 Timeline with key milestones and their strategic impact

Milestones
1945
1993
1994

Tata Engineering and Locomotive Co. Ltd. was established to manufacture locomotives and other
engineering products.
Joint venture agreement signed with Cummins Engine Co. Inc. for the manufacture of high horsepower and
emission friendly diesel engines.

Joint venture agreement signed with M/s Daimler Benz / Mercedes Benz for manufacture of
Mercedes Benz passenger cars in India.

2001

Joint venture agreement signed with Tata Holset Ltd., UK for manufacturing turbochargers to be used
on Cummins engines.
Exits joint venture with Daimler Chrysler.

2002

Tata Engineering signed a product agreement with MG Rover of the UK.

2003

On 29th July, J. R. D. Tata's birth anniversary, Tata Engineering becomes Tata Motors Limited.

2004

Tata Motors completes acquisition of Daewoo Commercial Vehicle Company

2005

2006

Tata Motors lists on the NYSE

Branded buses and coaches Starbus and Globus launched Tata Motors acquires 21% stake in
Hispano Carrocera SA, Spanish bus manufacturing Company
Tata Motors vehicle sales in India cross four million mark

29 | P a g e

Marcopolo, Brazil, announce joint venture to manufacture fully built buses & coaches for India &
markets abroad

2007

(Thonburi), announce formation of a joint venture company in Thailand to manufacture, assemble and
market pickup trucks.

2008

Fiat Group and Tata Motors announce establishment of Joint Venture in India
Tata Motors signs definitive agreement with Ford Motor Company to purchase Jaguar and Land Rover.

2010

Tata Motors completes acquisition of Jaguar Land Rover.

Tata Ace becomes India's first 1lakh brand in goods commercial vehicles.

2011

Tata Motors completes 50 years of its International Business

2012

Tata Ace races through the onemillion mark in just 2,680 days

Tata Motors enters into distribution agreement in Myanmar

3.3 Vision, Mission, Goals, and Strategic Themes

Vision: Most admired by our customers, employees, business partners and shareholders, for the experience and value they
enjoy from being with us.
Mission: To be passionate in anticipating and providing the best vehicles and experiences that excite our consumers globally.
Values: Inclusion, integrity, accountability, customer, innovation, concern for environment, passion for excellence, agility

3.4 Key Product and Service Portfolio

TATA Motors

30 | P a g e

31 | P a g e

3.5 Core Competencies TATA Motors

Core Competencies of JLR

32 | P a g e

3.6 Business Model of the organization

33 | P a g e

Key Partners

Key
Activities

Value
Propositions

Customer
Relationship
s

Customer
Segments

34 | P a g e

Fiat, Hitachi,Hispano,Marcopolo
Bosch, GE, Steel producers
Procurement of flat steel,
Engines, Electronic systems, &
other parts
Inbound Logistic
Operations
Outbound Logistics
Marketing
Service
TATA Motors:
Value for money
Quality,Service,Dependabilty
Fuel Efficient & powerful
engine at affordable price
Best Services at lowest price
JLR:
Quality , Safety, Dependability
Create sustainable mobility
Solutions
Give customers high class selfSatisfaction
To top automobile industry in
customer satisfaction
Understand product/service
feedback; redress complaints;
suggestions development
TATA Motors:
For middle and upper middle
Income group people

Motivations for partnerships

Optimization and economy
Reduction of risk and uncertainty
Acquisition of particular resources and activities
Expansion into a different/Newmarket
Categories
Supply chain from Suppliers to plants
Manufacturing and machine maintenance
Supply chain up to dealers
Sales of Vehicles
CRM and DMS
Characteristics
Performance and service network
Customization
Inside Vehicle space utilisation
Design
Price
Cost Reduction
Brand/Status
Risk Reduction
Newness
Premiumisation in product and service
Innovative solutions for to meet customer requirements
Online common CRM platform for real time feedback from
customers & channel partners
To triple sales/service network
Customer First Strategy of JLR

Diversified Market segment as it is involved in both B2C ,B2C

and government sector business
Targets middle Income group High Income group

Key
Resources

Channels

JLR:
For high income group people
R&D Scientists and other
Human resource. Raw
Materials, Plant OEM, SCM &
Dealership, Financial( Huge
retained profit and market
Cap) for Capex
TML:- TDCV ,TMLD,Concorde
JLR:- National Sales
Companies,JLR export services
CRM-DMS Services
TV Ads , Social Media ,
Dealership network, Special
promotional Events
Dealership Network and Social
Media
Social Media , Customised Web
Sites

Cost
Structure

35 | P a g e

Raw Materials, Human

resource, Logistics, R&D,
Services (Dealership network,
Warranty service etc.)
Raw Materials
Logistics, Plant operations ,
R&D

Types of resources
Physical
Intellectual (brand patents, copyrights, data)
Human
Financial( Market and Retained profit)

Channel phases
1. Awareness
TV Ads , Social Media , Dealership network, Special promotional Events
2. Evaluation
Customer Satisfaction Index + JD Survey
3. Purchase
Customised website , Highly trained Sales persons in dealership
network
4. Delivery
1115 dealers of JLR and 1459 dealers of TML
5. After sales
After sales services of TML by TDCV, TMLD, Concorde Motors. JLR
provides in collaboration with Cherry services and National Sales
Companies
Business is both
TATA Motors
Cost Driven (leanest cost structure, low price value proposition,
maximum automation, extensive outsourcing)
JLR
Value Driven (focused on value creation, premium value proposition)
Sample characteristics
Fixed Costs (salaries, rents, utilities)

Variable costs
Economies of scale
Economies of scope( Sustainable Mobility Solutions)
Revenue
Streams

36 | P a g e

Customers pay for:TML:Quality, dependability, Fuel

Efficiency , After sales service,
Very high Utility ,Durability
JLR:Dependability, Quality,
Services, Versatility.
Refinement
How are they currently paying?
How would they prefer to pay?
TML:Passenger Vehicle-15%
Commercial Vehicles-70%
Defence/Military -10%
After Sales , Concorde, TATA
Finance,TDCV ,Export services5%
JLR:Jaguar- 34%
Land Rover -62%
Services -4%

Fixed pricing
List Price
Product feature dependent
Customer segment
dependent
Volume dependent

3.7 Balanced Scorecard till 2020:- VMCDF Model of TATA Motors

Objectives

Measures

To sell 0.5 million units by

2020

Monthly wholesale sells

in units

Initiatives
46000

Jaguar XE and Land rover

discovery launch
TATA Nexon series in SUV

Volume

Strategic Priorities

TATA Kite sedan & Hatch

back series
Internationalisation of
Commercial Vehicles
segment

Market Share

To consolidate the pole

position in Commercial
vehicle segment
To be within top three
passenger vehicle player
by 2020

75%

10%

60%
To be the leader in defence
sector

37 | P a g e

Percentage share of
market segment

Customisation of HCV, LCV

sector. Increased focus on
better designs & fuel
efficiency. Investment on
ULTRA & PRIMA segment
Launch of new products,
improved dealership
network, AMP Architecture
Cumulative investment of
2000cr/year into the
prospective 100bn$
industry in terms of R&D
and manufacturing
facilities

Financial

Dealers

Customers

To top the automobile

industry in terms of
customer satisfaction
Understand product/service
feedback; redress
complaints; suggestions on
product development
Building capacity and
technical know-how;
improving and delivering
better response to
customers

Customer
Satisfaction Index

920/1000

JD work survey

To triple sales/service
network
Dealer satisfaction
Index

Improve from 756 to

900/100

To reduce trade receivables

% decrease

10%

ROCE

Percentage

30%

Profitability

Operating Margin

15%

Asset utilization

Total Asset turnover

ratio

4.5

Inventory turnover

To integrate all dealers

into CRM-DMS.Better
support from TDCL
Better support from TML
staff, training facilities,
improved warranty and
after sales services

To do better than industry

avg. of 827/1000

Operating profit per share

Online common CRM

platform for real time
feedback from customers
& channel partners

INR/share
Inventory turnover ratio

300
10

VAVE programme to cut

down cost of 500cr in FY
2016 and 900cr in FY2017
Application of lean
systems in SCM and
process engineering
Cost reduction via proper
sourcing of materials &
economies of scale
Proper quality
management system

38 | P a g e

3.8 SWOT Analysis

Opportunities

Strengths:
Tatas strong management
capability
Strong monetary base to invest
Synergy due to Corus, TACO and
TCS
Experience in growing market like
India
New product development and
brand building experience

39 | P a g e

Rising appetite for luxury

automobiles in growing markets
like India and China
Established European brands
available at affordable investment
Support from Jaguar in
Technology, Engine, IT,
Accounting
Complete product line with
addition of luxury brands
Access to European and American
Market
JLR would give TAMO an in-house
R&D and designing capabilities
Better utilization of cash reserves
available with TAMO
Reduce production cost of JLR by
synergizing better with other TATA
cos like Corus

Threats

Volatility in market driven by new

products
Strong presence of competitors
like Mercedes, BMW, Lexus and
Infinity
Receding sales and brand image
Downturn making Investment
riskier and costlier
90% of TAMO revenues comes
from one market alone-India
Acquisitions like JLR will help
TAMO in competing with brands
like Merc. etc.
Proven Management and brand
building capabilities would
facilitate faster JLR turnaround
Strong financial muscle will help
TAMO to invest in R&D and
produce new better products
Improve risk profile of TAMO with
diversification in different markets

Weakness
Inexperience in Handling luxury
automobile brand
Inexperience in turning around
loss making company
R & D and designing capabilities

JLR experience and designing

capability would help TAMO in
improving their existing products
in Indian markets.
JLRs strong brand image will ease
acceptance of TAMO in
international markets
Keeping the existing
management team of JLR make
turning around

Leverage experience gained with

Tetley and Corus in allaying
market apprehensions about
acquisition
Make Jaguar design center as
their global design HQ
Use Jaguar channel to distribute
TAMO brands without merging the
brands

easier

3.9 Competitor Analysis (identify competitors)

3.9.1 Based on Critical Success factors(JLR)
Mercedes Benz
Strength

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1. Strong brand value

2. Leader in premium
car segment
3. No capital
constraint
4. Leader in
Innovation (Diesel
car and ABS
invented by this
company)
5. High R&D cost
6. Wide presence of
industry
7. Large no of patent

BMW
1. Innovation
2. Wide product line
3. Integrated
functionality which
connects all the
functions of the car
(IDrive in car
infotainment)
4. Attractive design
5. Diversified
Business
6. High production
rate

Audi
1. Available in
multiple fuel
options
2. Wide range of cars
starting from suvs
to hatch back
3. Advanced
technology used in
cars
4. Attractive style
5. Latest technology
like Quattro and
FSI provide refined
and efficient
engine
performance

Aston Martin
1. High brand equity
2. Strong customer
connect
3. Ultimate luxury
with cutting edge
& innovative
technological
features
4. Strong marketing
and branding
through
advertising

Weakness

1. Cost of
maintenance Is
very high

Opportunities

1. New technology
like hybrid car, fuel
efficient car
development
2. Opportunity in
Emerging market
to create a global
presence
3. Luxury automobile
sector is growing
and the income is
also increasing

Threats

1. Government
policies for
automobile sector
2. Increasing fuel
price
3. High competition
among different
brands

41 | P a g e

1. High competition
for market share
2. Minor
controversies
hamper the
reputation of the
brand as this is a
popular brand.
1. Expansion of
automobile market
2. Increase in product
range
3. Reputation earned
over years can be
used to attract the
customers
4. Customers attract
towards
international
brands
5. More marketing
channels

1. Cost of
maintenance Is
very high
2. Limited presence
in emerging
market

1. Increasing fuel
price
2. New innovation by
other brands

1. Limitation due to
Government
policies for
automobile sector
2. Increasing fuel
price
3. Competition
among different
brands

1. Expansion of
automobile market
2. Increase in product
range
3. Reputation earned
over years can be
used to attract the
customers
4. Entering into the
low cost car
segment.
5. Increasing
manufacturing
capability.

1. Unable to
penetrate into the
international
market
2. Labour strike leads
to problem in
managing the
company
1. Expansion of
automobile market
2. Increase in product
range
3. Reputation earned
over years can be
used to attract the
customers
4. Availability of
service and spare
parts

1. Global fuel price

hike
2. Innovation in
automobile
industry
3. High price of
vehicles

TATA MOTERS
Maruti Suzuki
Strengths

Weakness

Opportunities

Threats

42 | P a g e

Hyundai

Nissan

1. Largest passenger car

company in india
2. High employee
strength
3. Wide range of products
4. Large distribution
network
5. High Resale value of
the car
6. Diversified business
1. Unable to penetrate
into the global market
2. Employee strike and
wage problem
1. Fast growing
automobile market
2. New product
innovation like hybrid
and fuel efficient cars
3. Increase in purchasing
power of people

1. Around 75,000 persons

around the world.
2. World wide presence
3. Hyundai sells over 1.5
million vehicles per
year
4. Strong brand value and
attractive
advertisement

1. Developing hybrid cars

and fuel efficient cars
for the future
2. Tapping emerging
markets
3. Fast growing
automobile market

1. Increase in potential
market
2. Fuel efficient car and
eclectic car innovation

1. Ever changing
government policies
2. Increase in fuel price
3. Availability of
alternative brands

1. Ever changing
government policies
2. Increase in fuel price
3. Alternative transport
medium availability

1. Ever changing
government policies
2. Increase in fuel price
3. Strong competition and
less designs availability

1. No car In ultra
premium segment

1. Global presenece
2. Over 1.5 million
employee present
globally
3. Output capacity of
around 4 million units
4. Pioneer in electric car
segment
5. Global manufacturing
presence
1. Less market capture in
emerging markets like
India.

3.9.2 Based on Financial indicators

Revenue and PAT Comparison of major domestic and global competitors:- ( All units in US bn $)

43 | P a g e

Luxury Segment Comparision with JLR:-

44 | P a g e

45 | P a g e

Future Growth Strategy

46 | P a g e

4.1 Product Portfolio Range:BUSINESS SEGMENT

PASSENGER VEHICLE
SEGMENT

PRODUCT RANGE
Hatchback

Sedans

Cargo
COMMERCIAL VEHICLE
SEGMENT

Passenger carriers

SCV
MUNICIPAL URPOSE
VEHICLES

LCV
ICV
MHCV

MILITARY PURPOSE
VEHICLES
47 | P a g e

LOGISTICS

BRAND/TYPE
Bolt
Tiago
GenX Nano
Indica
Zest
Indigo
Prima
M&HCV Truck
Light Trucks
M&HCVCargo
Ultra
Xenon pickup
Ace
Buses
Winger
Venture
Magic
Ace Hopper Tripper
Ace Box Tripper
Suction Machine
SK 407 tripper
LPK 407 tripper
LPK 909-5 tripper
LPT 1613 Refuse compactor
LPT 1613 Refuse compactor
LPK 2518 tripper
TATA LPT series
TATA SFC Series

TACTICAL
ARMOURED
BUSES

JAGUAR

JLR

LAND ROVER

4.1.1 BCG Matrix:-

HIGH
48 | P a g e

B
U
SI
N
E
S
S
G
R
O
W
T
H
R
AT
E

LOW

TATA LPA sries

TATA SA series
TATA SE series
TATA LPTA high mobility series
TATA LSV
TATA Armoured vehicles
TATA LP series
XE
XF
XJ
XX
F-type
F-Pace
Range Rover
Range Rover Sport
Range Rover Evoque
Discovery
New Discovery Sport
Special Vehicle Operations
Defender

Jaguar Land Rover

Passenger Vehicles

Municipal Solutions Vehicles (Trippers etc.)

Defence Solutions Vehicles

HCV

Nano

MHCV
LCV
Truck & Buses
HIGH

49 | P a g e

MARKET SHARE

LOW

4.2 Companys Strategic Roadmap for future

Near Term (<- 2 years)

Mid Term (2-5 years)

Long Term (5-10 years)

Growth Areas

Passenger Vehicle segment

Commercial Vehicle Segment

Defence/Municipal purpose
Vehicles

Hybrid fuel powered Vehicles

High Level Tasks

Design & launch of NEXUS

series SUVs and KITE series
Hatchbacks and cars
Customisation &
Internationalisation of MHCV
& LCV brands
Jaguar XE and Land Rover
Discovery launch
Increase in sells of Passenger
& Commercial Vehicles
Increase in export of
Commercial Vehicles
Market share growth of JLR

Capex investment of 900 cr

INR /Year
Target order bookings of
6000cr INR/year
3.5bn$ investment in JLR
Launch of JLRs Global Fleet
Strategy
AMP & VAVE Strategy
TML will tap into 100bn$
defence sector in India
Increased production and
improvement marketing
channel for JLR
Cost reduction(Operations)
30-40% revenue from
defence segment
JLR sale will increase from
17% to 25%
Cost reduction to the tune of
900cr INR

Design of phase 2 of oneCAT

Vehicle
Final design and launch of
SIGNA range of commercial
vehicles

Increased competition
Economic slowdown in Brazil,
China and Europe
Improved design & service in
defence sector

Investments are huge

Exact timeline of market need
not guaranteed
Collaborative R&D b/w TML &
JLR

Potential Benefits to be
achieved

Rewards

Risks
Key Success Factors
50 | P a g e

Increase of market share in

passenger vehicle segment
from 5.7 to 10%
Consolidation of top position
in Passenger vehicle segment
at 75%
Increase of JLR sales by 17%
Increased competition
Economic slowdown in Brazil,
China and Europe
Improved dealership and
services network to push

More investment towards

sustainable development

First mover advantage in this

sector
1st ever company to launch a
vehicle powered by Air

sales of new products

Agile product strategy team

4.3

Robust supply network to

cater to global fleet demand
of JLR

Product Market Investment Strategy

Country of
Investment

Category of
Investment

Industry
Reward to
Risk Ratio (A)

Country
Reward to Risk
Ratio (B)

Risk Adjusted
Rewards
( 0.65A +
0.35B)

Product Market
Investment Strategy

Investment
Rationale

United
Kingdom

Luxury Autos

69.45

73.64

70.91

Acquisition

Italy

Autos

61.3

68.43

63.9

Strategic alliance for

engine supply

New market
creation
Product
diversificatio
n into
premium
segment
Heavy
addition to
top line
Cost
efficiency

Spain

HCV Autos

58.36

68.47

61.9

Acquisition

Ratio calculations based on reward and risk ratings from Business Monitor International Report March 2014

51 | P a g e

Entry into
new market

4.4 Re-imagining the Organization with the transformed business model or Use-case based on SMAC and
IOE
Key
Stakeholder

Cloud
PI

Tier 1 Suppliers

New Product
Development

Supply Chain

Manufacturing
Operations

Mobility
UC

PI

UC

PI

UC
NA

Crowd
Sourcing
Design

NA

Predict Supply
Chain
disruption

NA

Predictive
Quality &
Reliability

NA

Predictive
Service &
Warranties

Green Listening
Post
Track
Perceptions on
Product
Performance
Assessment
Public Pulse;
Dealer
Satisfaction

Consumption
Patterns & End
Use Analysis;
Buying
propensity
based
segmentation

Real Time
Collaboratio
n

Lean Systems
on the cloud
Real
Time
Supplier & 3 PL
Collaboration
Machine to
Machine
Communication
s
Multi channel
Collaboration

Network
Visualizatio
n

Real Time
Monitoring of
Plant Vitals &
EHS
Sales
Configurators

Next Gen
Dealer & NSC
Systems on the
Cloud

Telematics driven
services

National Sales
Companies (NSCs)
&
Distributors,
Dealers

Collaborate on
the move

Connected Cars
& Infotainment

TATAs acquisition of Jaguar Land Rover:-

Analyze product M / L
performance
feedback
High
Performance
Computing for
Simulation &
Design
Logistics
Optimizatio
n

UC

Overall
Impact

M/L

PI

Connected / Digital
Marketing
PI

Reduce Cost
of Business
Systems

UC

Social Media

Sense the
market
pulse

Customer
Experience
Management
Sales, Service,
Parts &
Warranties

52 | P a g e

Big Data &

Advanced Analytics

Rapid Customer
Service
Response to
market buzz

Product
Launch
Campaigns

Direct
Marketing

Background:In June 2008, India-based Tata Motors Ltd. announced that it had completed the acquisition of the two iconic British brands
Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion. Forming a part of the purchase consideration
were JLR's manufacturing plants, two advanced design centres in the UK, national sales companies spanning across the
world, and also licenses of all necessary intellectual property rights.
Rationale: Tata wanted to make a global impact and it thinks that buying these brands at a lower rate now, will give
better value later on.
This acquisition also eases the entry of Tata in European market which it has been eyeing for long.
Reduce the company dependence on the Indian market which accounted for 90% of its sales
Opportunity to spread its business across different customer segment
At the price staring from 63 lakh and going up to 93 lakh, it seems Tata has just got the right place to
compete with the current market leaders in luxury brands BMW, Audi, Mercedes
Publicity on an international scale
Access to large distribution network
JLR had many new models lined up for next 3 years, so no much work just profits
Strong R & D culture and facilities

Valuation of Strategy & Synergy:Bidder

53 | P a g e

Target

A+B: No
synergy

A+B
(Synergy)

Free Cashflow to
Equity
Growth rate for first 5
years
Growth rate after five
years
Beta
Req. rate of return
Riskfree
Rate

$587.6
0

$12.76

$600.36

$600.36

12%

20%

12.17%

20.00%

10%

7%

9.91%

7.00%

1.83

1.25

1.81

1.81

16.07%

12.88%

15.96%

15.96%

6.00%
Term Val
(A)

FCF (B)

Term. Val
(B)

FCF (A+B)

Weighted by present values of A and

B

FCF (A)

$658.11

$15.31

$673.42

$720.43

$737.08

$18.37

$755.45

$864.51

$825.53

$22.05

$847.58

$1,037.42

$924.60

$26.46

$951.05

$1,035.55

PRESENT VALUE

$18,781.
58
$11,560.
48

$31.75

$392.50

Gains from synergy =

Most that bidder firm can bid
for target =
% Premium over the market
price =

Valuation in 2008 = 276.71*50 = 13835.5 cr INR = 2.7 bn $

Financing:54 | P a g e

$578.20

$1,067.29

TV (A+B)

FCF
(A+B:S)

YEAR

$19,359.7
8
$11,954.3
6

($115.7
9)
$276.71
-29.50%

$1,244.90
$1,493.88

TV
(A+B:S)

17839.340
5
$11,838.5
7

Impact:Impact:JLR

55 | P a g e

References
http://www.mbaskool.com/brandguide/automobiles/1087-jaguar.html
http://comparison.jaguar.co.uk/home?kee=199453

http://www.ukessays.com/essays/marketing/dissertation-report-on-mergers-and-acquisitionmarketing-essay.php
http://www.ukessays.com/essays/marketing/dissertation-report-on-mergers-and-acquisitionmarketing-essay.php
http://www.tatamotors.com/investors/pdf/2008/Jaguar-Land-Rover-Acquisition-Part-1.pdf
https://www.worldwidejournals.com/ijar/file.php?val=December_2012_1357020806_becca_31.pdf
http://www.ukessays.com/essays/marketing/strategic-position-of-jaguar-cars-limited-marketingessay.php
http://www.tata.com/article/inside/vhx9W!$$$$!fY8yE=/TLYVr3YPkMU=
http://economictimes.indiatimes.com/industry/auto/news/passenger-vehicle/cars/tata-motors-looks-to-regain-market-share-inpassenger-vehicles-segment-by-2020/articleshow/49367194.cms
http://www.tatamotors.com/

56 | P a g e

RELATIVE POSITION (Market Share)