Group No. 5

Business Policy

Group Members

Manasi PitaleJesal SanghviAnna JunoAshish AgrawalSwati SahaneAjay Chandel

Arun MishraAshay RaulSandeep SomaiyaDr. A. M. SaadAvinash Karade

Competitive Advantage

Competitive advantage is anything that gives a business any kind of advantage over its business rivals.

Types of competitive advantages:1)Cost advantage2)Differentiation advantage

Resources

DistinctiveCompetencies

Capabilities

Cost Advantageor

DifferentiationAdvantage

ValueCreation

A Model of Competitive Advantage

Strategy - Competitive Advantage

To analyze the competitive forces in an industry, Michael Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage.

The four strategies relate to the extent to which the scope of a business activities are narrow versus broad and the extent to which a business seeks to differentiate its products.

MICHAEL PORTER COMPETITIVE FORCES STRATEGY

Strategy - Differentiation

This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. Differentiation is about charging a premium price that more than covers the additional production costs. Giving customers clear reasons to prefer the product over other, less differentiated products.Examples: Mercedes cars - Benz

Strategy - Cost Leadership

The objective is to become the lowest-cost producer in the industry If the achieved selling price can at least equal the average for the market, then the lowest-cost producer will enjoy the best profits. Low-cost leader will also discount its product to maximize sales, if it has a significant cost advantage over the competition and thus can increase its market share.Examples: Nissan; Tesco; Dell Computers

Strategy - Differentiation Focus

A business aims to differentiate within just one or a small number of target market segments. There are opportunities to provide products that are clearly different from competitors who may be targeting a broader group of customers. The important issue for any business adopting this strategy is to ensure that customers really demands it.e.g. The Perfume Shop; or specialist holiday operator (e.g. Carrier)

Strategy - Cost Focus

The product will be basic - perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers. Such products are often called "me-too's".Many smaller retailers featuring own-label or discounted label products.

TATA GROUP

Tata Group is a multinational conglomerate founded by Jamsedji Tata in 1868.

The Tata Group has operations in more than 85 countries across six continents.

Its companies export products and services to 80 nations.

It Comprises 98 companies in seven business sectors, 27 of which are publicly listed.

65.8% of the ownership of Tata Group is held by the charitable trust of Tata.

Companies which form a major part of the group include Tata Steel, Corus Steel, Tata Motors, Tata Consultancy Services, Tata Tea, Titan Industries, Tata Power, Tata Communications and the Taj Hotels.

TATA MOTORSTata Motors Limited formerly known as TELCO (TATA Engineering and Locomotive Company) was established in 1945.

It is India's largest passenger automobile and commercial vehicle manufacturing company.

It is also the world's 5th largest commercial vehicle manufacturer.

Tata Motors was first listed on the New York Stock Exchange in 2004.

Tata Motors had created the wealth Rs. 320 billion during 2001-2006 and stood among top 10 wealth creators in India.

Tata Motors is India's only fully integrated automobile manufacturer with a portfolio

that covers trucks, buses, utility vehicles and passenger cars.

VISION:

To be best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.

Employees: 23000

Revenue: USD 8.8 Billion (2007-2008)

MILESTONES

1945 TATA Engineering &Locomotive CO LTD was established

1954 -1966 Collaboration with Dainler Benz Ag,GermanyResearch centre was set up at Pune

1971-1977Introduction of DI engines First commercial vehicle was rolled out from Pune

1985-86First hydraulic excavator collaboration with HitachiFirst light commercial vehicle was launched

1991-1998Joint venture agreement signed with Mercedes - Benz Joint venture agreement Cummins engines for high horsepower Tata Sumo, Tata Sierra Turbo ,Tata Safari , launched

2001Indica V2 , CNG Indica launched

2002Tata Engineering signed a product agreement with MG Rover of the UK

2003 Tata Engineering becomes Tata Motors

Limited.

2004completes acquisition of Daewoo Commercial Vehicle Company

2006-07Construction of Small Car plant at Singur, West Bengal

2008Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo

Tata Motors completes acquisition of Jaguar & Land Rover.

SWOT ANALYSIS

STRENGTHS

Brand Name.Strong Market Position.Cost Advantage.Distribution & Customer Care Networks.Human Resource & Advanced Technology Research & Development.Strong Auto Finance Operation &

Revenue Growth.

WEAKNESS

Overdependence on Indian Market.

OPPORTUNITIES

Liberalization Policy

Infrastructure Development

Market Expansion Strategies like Joint Ventures, Mergers & Acquisitions

Reduction in Excise Duty & Income Tax

THREATS

Global Competition.

Government Regulations.

Diesel Fuel Issues & Increase in prices of raw material.

TATA MOTORS ACQUISITION

(Jaguar Land Rover)

(Daimler, Lanchesterand Rover)

TATA MOTORSJOINT VENTURES

 

TATA MOTORS AND CUMMINS ENGINE CO.

Post liberalization, in order to expand rapidly, the company adopted the route to joint ventures. In 1993, it signed with Cummins Engine Co., Inc., for the manufacture of high horsepower and emission friendly diesel engines

TATA MOTORS AND DAIMLER-BENZ AG.

Tata Motors launched its first truck in collaboration with Mercedes-Benz commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz AG of Germany.

TATA MOTORS AND MARCOPOLO S.A.

Tata Motors has also formed a 51:49 joint venture with Marcopolo S.A., a Brazil-based global leader in bus body building The joint venture will absorb technology and expertise in chassis and aggregates from Tata Motors.Marcopolo will provide know-how in processes and systems for bodybuilding and bus body design.

TATA HOLSET LTD.

Furthering the trail of JVs it signed a joint venture agreement with Tata Holset Ltd., UK, for manufacturing turbochargers to be used on Cummins engines.

TATA MOTORS AND HITACHI

TCE is a joint venture between Tata Motors and Hitachi, which focuses on excavators and other construction equipment.

TATA MOTORS AND LUXEMBOURG

Tata Motors and Motor Development International of Luxembourg have jointly developed the world's first commercially-viable prototype of a compressed air car, named OneCAT.

TATA MOTORS AND HISPANO CARROCERA SA.

In 2005, sensing the huge opportunity in the fully built bus segment, Tata Motors acquired 21% stake in Hispano Carrocera SA, Aragonese bus manufacturing company and introduced its high-end inter-city buses in the country.

TATA MOTORS AND DAEWOO

Tata Motors bought Daewoo's truck manufacturing unit, now known as Tata Daewoo Commercial Vehicle, in South Korea.

TATA MOTORS AND FORD.

On March 26, 2008 Tata Motors agreed to purchase Jaguar Cars and Land Rover from Ford Motor in a deal worth $2.3bn (£1.15bn).Tata Motors has also acquired from Ford the rights to three other brand names: Daimler, Lanchester and Rover.

TATA MOTORS AND THONBURI

The company has formed a joint venture with Thailand’s Thonburi Company, an independent auto assembler, in which Tata Motors will hold a 70% stake.

TATA MOTORS AND STAR BUS.

On its journey to make an international foot print, it continued its expansion through the introduction of new products into the market range of buses (Starbus & Globus).

InnovationsThe innovations made by TATA group are:-

Tata Nano Popularly known as People’s car going to be launched

in 2008 Its safety performance exceeds regulatory

requirements in India. It has a lower pollution level than two-wheelers being

manufactured in India today. Fears created across the environmentalist is that

Mass motorization in India would result adverse effects on pollution and global warming.

Cont… Tata OneCAT Tata Motors and Motor Development International of

Luxembourg have jointly developed the world's first commercially-viable prototype of a compressed air car.

There are no gasoline costs and no fossil fuel emissions from the vehicle.

It is actually a dual fuel car but it is more efficient than any present Hybrid cars.

Case Study on Competitive Advantage of Tata Motors’

Rs. One - Lakh Car Project: Opportunities & Challenges

The Cheerleaders“The car is good to look at. There is a space in the market between two-wheelers and the 800cc(Maruti’s small car). It will be a success if they deliver what they promised. And I see no reason why they can’t.”

--Jagdish KhattarFormer M D Maruti

Suzuki“With The release of the world’s cheapest car, India’s Tata Motors has entered a space no other automobile manufacturer inhabits.”

--Forbes.com

The Indian Automobile industry Rethinks…after

NanoMaruti: Probably the worst affected. But it doesn’t agree that Nano might affect its sales. Strangely, neither is it launching any ultra cheap model nor is it bringing down 800’s cost. It recently showcased two compact concept cars SPLASH & A-STAR.

Bajaj: Highlighted its concept car LITE, which will be available in two forms- Passenger and commercial. The concept is a brainchild of Bajaj Auto and will be spearheading this project. But then it may partner with Renault and Nissan, if required. It can transform into four wheeler maker.

Market Reaction

The Indian Automobile industry Rethinks…after

Nano…… Honda: plans to launch a compact car, and showcased the Jazz. But launch date is yet to be finalised. It will soon be seen competing with current heavyweights in B+ segment, it will take on Swift, Getz, Skoda et al.

Skoda : It launched the Fabia, a premium compact hatchback and now it is mulling over plans to launch Roomster(multi purpose vehicle)and Yeti(sports utility vehicle)

Market Reaction

The Indian Automobile industry Rethinks…after

NanoHyundai: it has launched i10. the model, with its sibling Santro, can take its annual sales past the 200000 mark. It unveiled its SUV- santa fe. The SUV will use 2.2LCRDi engine.

GM: It has plans for major product launches in India. Apart from the regular Chevrolet range of small and mid-segment cars like Aveo and U-VA, it unveiled Captiva SUV.

Market Reaction

Possibilities for a Rs. One lakh car in India

Ratan Tata has graduated in different league altogether where it is not money that’s driving him(the Nano might not make any worthwhile money for him in any case)

What's driving him is a concept called as “Social Entrepreneurship”

The fact that for him promise is a promise.-it is possible(Ratan Tata)

Speculations

As many as 12.8 million households can be the buyers of Tata’s small car, Nano.

“Indians are savers, they are frugal, they are cost conscious” – Mckinsey report.

If Indica(diesel) changed the way an indian consumer thought, the Nano will force him/her to act(and now buy). And if the Nano becomes a big hit, it will make Tata a global super hero.

1-Challenges for Tata Nano

2-Technical Specification & Opportunities for Tata Nano

Material Cost

Has risen from 13% to 23% in last one year

Mass Motorization

Environmentalists are opposing the projectExtraordinary Low Cost – Mass Motorization

Environmental

pollution

Global

Warming

Singur Car Factory Land Dispute

Vs

Mamta Banerjee was expecting 400 acres land for farmers from Nano plant area

Competitors

Bajaj is going to launch a car in $2500 Fuel Efficiency > 30 kmpl

Make Tata

Model Tata NANO

Number of Doors

4

Seating Capacity

04 (Four)Length 3.1 meters

Width 1.5 meters

Height 1.6 meters

EngineAll-Aluminum, Rear

Mounted,

Capacity 623cc

Body All-Steel

AC Only in Deluxe Model

Body Type Sheet Metal

Versions Standard, Deluxe

Gearbox 4-speed manual

Weight 600kg

Technical Specification

SpeedTop speed will be 90

Km/hour.

Accelerations

0-70 km/h : 14 Sec

Colours Red, Yellow and Silver

City Mileage 20-25 kmpl

Highway Mileage

26 kmpl

Fuel Capacity 30 litres

Fuel TypePetrol (Diesel Version will

be later)

Cont…

Opportunities

CostIn 2007 top end price for bikes Were Rs 70,000-80,000Car priced Rs 1 lakh will be safer And perfect alternative

Unsaturated car MarketAs of 2006,Annual size of Global Car Market was 50 mill unitsAsian Car Market (Except Korea & Japan)was around 3 mill units

FUTURE PLANS

Plastic Car Production- Tata plans on producing a car that is made of nearly 100% plastic.

The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs. Besides product development, R&D is also focusing on environment-friendly technologies in emissions and alternative fuels.

SUMMARY

TATA Motors is trying to expand its market by using following strategies of Competitive advantage

1. Cost Advantage

2. Differentiation Advantage

Tata Nano: Cost Advantage

Strategy It is the least

expensive production car in the world.

Tata OneCAT: Differentiation

Advantage Compressed air car