INFLEXION

POINT

Y
G
E
T
A
R

T
S HORIZONEX

Presented by
Deekshita K Kotian
Deepak lal C K
Pilvina Pais
Swathi Shetty
3rd Semester
Department of
MBA-2014

Mangalore institute of Technology

And Engineering
Moodabidre, Mangalore
Karnataka

Facts of the case:

Tata motors unveiled its new customer focused strategy to put its passenger

vehicle business back on track.

The new strategy is horizonext.
To infuse growth and excitement in its passenger vehicle business where sales fell
35% in 2012-2013.
Horizon next will be their next step, in which they will be re-launching their
entire passenger vehicle business.
Plan of 8 new launches across 5 brands.
Along with passenger vehicles they are also launching 11 service programmes.
Product portfolio planned till 2020.

Inflexion point.
The time of transition of company's competitive position that
requires the company change the current path and adapt to the
new situation or risk declining profits.

 Tata Motors is the Indias largest automobile company.

The company is the fourth largest truck manufacturer and the second

largest bus manufacturer.

Tata motors is one of the largest automobile company established in 1945
.
It delivered its first model on roads of India in 1954.
Now it is present all over the country.

Review of the company, products,

markets and customers

 The

companys manufacturing base in India is spread

across Jamshedpur (Jharkhand), Pune (Maharashtra),
Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand),
Sanand (Gujarat) and Dharwad (Karnataka).

The

company is establishing new plant in Sanand in

Gujarat. Over 5.9 million vehicles are running on Indian
roads.

Tata Motors the first company from Indias engineering

sector to be listed in New York stock exchange in 2004.

In 2008 it acquired Jaguar Landrover, in the same year

it from Ford motors and in the same year it launched

Nano, peoples car.

 In

2004 it acquired Daewoo Commercial Vehicles South

Koreas second largest truck maker

Tata

Motors developed the first indigenously light

commercial vehicle, Sports Utility Vehicle and in 1998, the
Tata Indica, Indias first fully indigenous passenger car.

Within two years of launch, Tata became Indias largest car

in its segment.

The

companys dealership, sales, services and spare spats

network comprises over 3500 communication points.

 Tata Motors is equally focussed on environment-friendly

technologies in emissions and alternative fuels.

It has developed electric and hybrid vehicles both for
personal and public transportation.
It has also been implementing several environmentfriendly technologies in manufacturing processes.
The companys support on education and employability
is focused on youth and women.
. The company has won several awards recognising its
training programmes.

PRODUCTS AND SERVICES

Passenger cars:
The range comprises Tata Indica(compact car), Tata
Indigo(Sedan), Tata Indigo Marina(Station-Wagon), and Tata
Nano(small car).
Utility Vehicles:
A range comprising of Tata Aria(Crossover), Tata Safari(SUV),
Tata Xenon(Lifestyle- Pickup) and Tata Sumo Grande MK II,
Tata Sumo Range and Tata Venture(People carriers).

Commercial Vehicles for Goods

Transportation:
Commercial Vehicles: Tata Ace Indias first indigenous Mini-truck.
Light Commercial Vehicles: Pick-Ups and trucks ranging from 2T Small to
7.5T .
Commercial Vehicles for Transportation
Tata and Tata Marcopolo range of light, medium and heavy buses from 2T
onwards.
Multi-purpose vehicles:
Tata Magic, Tata Magic Iris, Tata Winger and Tata
transportation

Venture for urban and rural

Subsidiary
Companies

Competitors

Jaguar Land Rover

Tata Macropolo Motors
Tata Daewoo
Hispano Carrocera
Tata Motors( Thailand)
Telcon
Tata Motors European Technical Care
Tata Technologies
TAL Manufacturing Solutions
HV Transmission and HV Axles
Tata Auto comp
TML Distribution.Co
Tata Motor Finance

Ford
Toyota
Hyundai
Maruti Suzuki
Honda
Chevrolet
Fiat

Market and Positioning

STP
Segment

Hatchback, sedan & SUV

segment

Structure and Leadership

Tata Motors is having relatively Flat structure, it helps them in

easy interaction between various level in structure which

improves knowledge and ideas sharing with an Organisation.
All the departments of Tata Motors are interconnected with
intra networking system, as well as the divisions are
connected with inter networking system.

 In

2012, Mr. Cyrus Mistry was appointed as the

chairman of Tata Sons.
In addition, he is also chairman of all major Tata
companies including Tata Industries,Tata Steel,Tata
Motors,Tata Consultancy Services, Tata Power,Tata
Teleservices,
Indian
Hotels,Tata
Global
BeveragesandTata Chemicals.
Under his leadership Tata motors is taking up the
turnaround strategy by adapting the horizon next
Strategy, in which they will be re-launching their entire
passenger vehicle business.

Does the company have its formal

structure for Strategy ? What is its
strategy making hierarchy?

Corporate
strategy ?

Business level
strategy (competitive
strategy)
?

Corporate level strategy (directional

strategy)
Growth
Stability
Diversification

Business level strategy

(competitive strategy)
Cost leadership
Differentiation (product)

Functional
level
strategy

Marketing strategy (4 ps)

Financial strategy (sources of finance)
R&D strategy (technological leader, innovation)
Operation strategy (production strategy)

Effectiveness in Strategy
implementation

new internationalization strategy, the company has decided to focus on a

narrow base of 14-15 countries where market conditions are similar to

that of India
In these countries, Tata Motors now has dedicated manufacturing
facilities, marketing teams and sales teams
The company evaluates locations on the basis of market opportunities
and labour skills.
In the framework pertaining to international expansion strategies, Tata
Motors can be identified as an Extender, and is focusing on expanding
into markets similar to those of the home base, using competencies
developed at home

 Sustainable competitive advantage lies not in

one, but a combination of multiple resources,

each of which individually need not
necessarily be the best
Tata Motors, the combination of resources
providing it competitive superiority on a
weighted average basis includes:
Product Reliability
Service Network
Channel Reach

Contingency Plans

Mass customization has its own shortcomings. Hence

They propose that the sales of the customized

vehicles be closely tracked and in case sales
achieved within a reasonable timeframe do not merit
the additional resource outlay, then the company
should
revert
to
the
original
multipurpose
positioning.
In the background of rupee appreciation, exports will
become costly. Hence it is prudent to open
integrated production plants in other countries rather
than just concentrating on exports.

The strategically relevant components of

the companys external environment

PEST Analysis of TATA motors

Pest is abbreviation for Political, Economic,
Social, Technological factors
Its scan of an organisations external
environment
The purpose of Pest is to identify factors that
may impact on the services, customers (or
Patients), products, markets, staff,
profitability, etc. of the organisation.

POLITICAL ANALYSIS.

The foundation of the companys growth

internationally is a deep understand of economic

stimulation, customer needs, and individual
government regulations and laws
Laws governing commerce, trade, growth, and
investment are dependent on the local
government as well as how successful local
markets and economies will be due to regional,
national and local influence
Tata Motors operates in multiple countries across
Europe, Africa, Asia, the Middle East, and
Australia, it needs to pay close attention to the
political climate. On March 26, 2008, Tata Motors
reached an agreement with Ford to purchase
Jaguar and Land Rover

 Tatas

headquarters in Mumbai, India, strictly

controls and regulates operations in all
dealerships and subsidiaries, in addition to
knowing and abiding by all labour laws in the
multiple
countries
where
they
have
manufacturing plants it has to watch political
change
By all labour laws in the multiple countries where
they have manufacturing plants it has to watch
political change

ECONOMIC FACTORS

Tata is in a rapid growth period, expanding or forming a

joint venture in over five countries world-wide since 2004
a global approach enables Tata Motors to adapt and learn
from the many different regions within the whole automotive
industry.
The company's dealership, sales, services and spare parts
network comprises over 3,500 touch points; Tata Motors also
distributes and markets Fiat branded cars in India.

SOCIAL FACTORS.

Social factors include the cultural aspects and include

health consciousness, population growth rate, age

distribution, career attitudes and emphasis on safety.
Undoubtedly, the beliefs, opinions, and general
attitude of all the stakeholders in a company will
affect how well a company performs.
Tata Motors tends to use an integration and rarely
separation technique with foreign companies they
acquire

 On the other hand, some economic issues that Tata Motors face

must also be looked at from a more localized perspective. For

instance, the market in India for cars is much different than the
market for cars in Italy
For one, India has over one billion more people than Italy does,
thus the market is much larger or not as limited. Second, you
must also take into effect the demographics and the average
income of each market.
Italians have a higher average income per capita than Indians
and Italian citizens tend to drive larger and fancier cars. For this
reason, the Tata Nano might not do so well in the Italian market.

TECHNICAL ANALYSIS:

Tata

Motors and its parent company, the Tata Group, are

ahead of the game in the technology field. The Tata Group as
a whole has over 20 publicly listed enterprises and operates
in more than 80 countries world-wide. This equates to Tata
Motors having lots of experience and resources to draw from
for research and development purposes
Tata recognizes this and dedicates lots of resources and time
into research and development to be even with or preferably
ahead of other competitors, global trends, and changing
economies

 Tata

Motors European Technical Centre (TMETC) was set up in

2005, which is primarily involved in design engineering and
development of products, supporting Tata Motors skill sets.
Approximately 2% of the annual profits of the company invested
in research and development. On May 11th of every year,
Technology Day organized across all Tata plant locations
Tata motors should give more importance to R&D in order to
develop highly efficient automotive technology at an optimal cost

What are the driving forces which impact the

company ? what are the KSFs?
Driving Forces which impact the company are
Emerging new internet capabilities and applications
Increasing globalisation
Changes in who buys the product and how they use it

Product innovation
Technological change and manufacturing process innovation
Marketing innovation
Entry or exit of new firms
Changes in cost and efficiency
Changing societal concerns, attitudes and lifestyles
Regulatory influences and govt. policy changes.

Key success factors of Tata

motors are
There could be number of factors that contribute to the success
of the company. But the key factors for the success of Tata
include:
Quality
Innovation
Distribution channel
Brand image
Variety of products
Promotion
Product attributes

Application of Porters 5 force Model

Threats from new entrants

Its not only the existing players in an industry pose threat to each other, a new
entrant can also affect the competition. The factors that
can limit threat of new entrant are called as Barriers to Entry.
Following are some barriers to entry:

Economies of scale:
Demand side benefit of scale
Customer switching cost
Capital requirements

Threat of Substitutes
Substitute products are different goods are services from outside a given
industry that perform similar or the same function as a product that the
industry produces.
If we talk about the substitute for automobile then there are mainly two
substitutes are:
Railways
Airlines

Bargaining Power of Suppliers

A company to manufacture its products require raw material labour etc. This
creates buyer-supplier relationship in an industry. To manufacture a vehicle
number of inputs is used like steel, seat covers, technology, and tyre etc.
Bargaining Power of Buyers
The bargaining power of buyer is very high as there are lot of choice available
to the buyer and service do not vary from one service provider to the other.
When automobile company can go for backward integration in that case
buyer have the high bargaining power. Like Tata which have its own steel
plants so can face the problem of shortage of raw material. When buyer
power is strong, the buyer is the one who sets the price in the market.
.

Industry Rivalry
This describes the competition between the existing firms in
an industry.
Greater the competitive rivalry, lesser are the profit margin.
Rivals
Maruthi
Hyundai
GM and others

Swot Analysis
STRENGTHS:
1.One of the most established company in automobile sector
2. Distribution Network
3. Good market penetration
4. Expert service professionals available
5. International presence
6. Dedicated engineering and R&D department
7. More than 60,000 employees
8. Highly diversified product portfolio

WEAKNESS
1.Limited international presence
2. Sometimes faces alleged quality and durability issues
3. Limited consumer base
OPPORTUNITY:
1. Expanding automobile market and Augmenting the
distribution and service network in various countries
2. Increasing per capita income and purchasing
capability of potential customer base
3. Leveraging customer engagement experience to
acquire new customers
4. Leveraging mergers and acquisitions to acquire
newer technology


THREATS:
1. Increasing fuel costs
2. Competition from other big automobile giants
3. Competitive products offering same level features at a lesser price
4. New entrants

MULTI COMPANY OPERATIONS

Through subsidiaries and associate companies, Tata Motors has operations in

the UK, South Korea, Thailand, Spain, South Africa and Indonesia. Among
them is Jaguar Land Rover, the business comprising the two iconic British
brands.
Tata Motors, the first company from India's engineering sector to be listed in
the New York Stock Exchange (September 2004), has also emerged as an
international automobile company.

 In 2005, Tata Motors acquired a 21% stake in Hispanso Carrocera,

a reputed Spanish bus and coach manufacturer, and subsequently

the remaining stake in 2009.
,
In 2006, Tata Motors formed a joint venture with the
Brazil-based Marcopolo, a global leader in bodybuilding for buses and coaches to manufacture fully
built buses and coaches for India and select
international markets.
Tata Motors is also expanding its international
footprint, established through exports since 1961.
The company's commercial and passenger vehicles
are already being marketed in several countries all
over the world.

Financial Highlights

Market Capitalisation (as on March 31, 2014) 1,18,777 crores

2,33,662 crores
Total Revenue
18,869 crores
Consolidated profit before tax
EBITDA margin 16.1%
Quarter ended 30 June 2014
Total Income 7,61,289.00
PBT 39,365.00
Net Profit 39,365.00
EPS Rs.1.21

(in lakhs)

Strategic group map.

Astrategic groupis a concept used

instrategic managementthat groups

companies within an industry that have
similarbusiness modelsor similar
combinations of strategies..

*Approximate market share

Skoda/V
W
Ford
Toyota/Ho
nda

BMW

Tata/ma
hindra

Price

Maruthi/
Hyundai

sales volume
for passenger
car vehicles

Outlook for the industry offering the company

prospects
with
profitability
and
growth
Tata
Motors has
never
had it so good.
Today
the company is the

undisputed
market leader in the commercial vehicles industry
in India and is gradually emerging as one of the key players
internationally too.
It has been forging ahead on a number of fronts in an attempt
to further entrench its position as a market leader. In the SUV
segment, the company has witnessed unprecedented success
with the launch of the pioneering Tata ACE.
In the M and HUV segment, the company has been taking
determined steps to further consolidate its position. The
company enjoys a number of key strengths that enable it to
present a unique value proposition to its customers.
However this success is far from being a given. The company
must focus on combining its unique strengths, as it endeavours

Stars
Safari dicor,indica
vista, Tata
ace,magic, tata
prima, star bus,
winger other lcvs

High

QUESTION MARKS
Venture,
Other new
inventions, nano,
versa, essota

Growth
Cash cow
Safari,
manza,sumo,
indigo cs, indigo xl

Dog.
Sedan, sierra,
estate

Low

High

Market Share

Low

The company strategy and business modelIs the strategy focused and is its business
model working? Does it display
strategic intent.

 Abusiness

modeldescribes
therationaleof
how
anorganizationcreates, delivers, and captures value,
in economic, social, cultural or other contexts.

In

theory and practice, the termbusiness modelis

used for a broad range of informal and formal
descriptions to represent core aspects of abusiness,
including purpose,business process, target customers,
offerings, strategies, infrastructure, organizational
structures,
trading
practices,
and
operational
processes and policies

Horizonext strategy

 In their Horizon next journey towards great products

that exceed customer needs, Connect Next is one of

the key Next pillars personifying the connect of
theircars with customers and their environment.
HORIZONEXT, a four-pronged customer-focused
strategy, provides the best customer .
Experience from best vehicle experience to
superlative purchase experience and followed by
technology intense after-market service support.

The four pillars horizonext

strategy

Intense product focus

Focus on world-class manufacturing practices
Enriched customer purchase experience
Consistent quality of service

A few pointers on what Tata Motors

ought not to do are captured below

Compete on price because proportion of individual players is

low.

Engage in rapid capital expansion given the high debt to

equity ratio.

Focus on rapid acquisitions and instead focus on consolidation

in the foreign market.

Lose focus on the 'Value for Money' positioning, especially in
the soon to be launched offering in the Ultra Heavy
Commercial Vehicle segment

Conclusion
Tata

Motors is an overall strong company that has found strength and

expansion through its parent company, Tata Group, but also through its
numerous acquisitions and mergers. Although Tata Motors stock prices have
fallen since the start of the 2008 year due to suggestions that Tata Motors is
overreaching by adding luxury brands to pair with the Nano, the world's
cheapest car.

The future presents challenges and opportunities for the company in equal
measure both domestically and internationally. While pitfalls are many, Tata
Motors looks well positioned indeed to capitalize on these opportunities and
take on the world.

Thank you