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TEACHING NOTE
CASE 18
Tata Motors in 2014
Overview
Tata Motors, Ltd. is a subsidiary of the Tata Group, headquartered in Mumbai, India. Founded in 1868 by
Jamsetji Tata, the Tata Group is India’s largest business group, owning more than 100 operating companies
spanning seven business sectors (chemicals, information technology & communications, consumer
products, engineering, materials, services, and energy). The company has operations in over 100 countries across
six continents, and in 2013–2014, had gross revenue of $103.27 billion (USD), 67.2% coming from international
operations. The Tata Group is a powerful symbol of India’s emergence as a world economic power. Tata is
India’s largest private sector employer, and employs over 581,470 people worldwide. Brand Finance plc, the
world’s leading brand valuation company, calculates the Tata brand as the 34th most valuable brand in the world,
with a value of $21.1 billion (USD). In the 3rd quarter of 2011, Tata had 32 publicly listed companies, with a
shareholder base of 3.9 million, and combined market capitalization of approximately $141.02 billion (USD).
Tata Motors, Ltd. was India’s largest automobile company, with consolidated revenues of $38.9 billion. It was the
leading commercial vehicle manufacturer in each segment and third largest passenger car manufacturer in 2012.
It is the fifth largest truck and fourth largest bus manufacturer in the world. Tata Motors manufactures vehicles
in India, Spain, South Korea, the U.K., Thailand, Morocco, and South Africa. The company has been a very
successful competitor in its domestic market, and in many international markets; however, poor macroeconomic
conditions and increasing competition have taken a toll. Tata manufactures a large line of diesel vehicles, which
had sold well because the Indian government subsidized diesel; however, the diesel subsidy has now been phased
out and demand has shifted to gasoline cars. The company needs to expand its commercial vehicle market.
Another pressing issue is the new Tata Nano, presently the lowest priced four-wheel car in the world. Tata
invested millions in the development of the Nano, but to date, sales have been very disappointing. Tata purchased
the iconic British Jaguar and Land Rover in 2008, and that purchase has proven to be the : the company needs to
capture the benefits of that purchase.
Suggestions for Using the Case
Students find this a fascinating case because of their familiarity with the Jaguar and Land Rover brands, and
because of the sizeable but, to most students, largely unknown global power that is Tata Motors, Ltd. This
case is most suited to be assigned with Chapter 7, Strategies for Competing in International Markets, or in the
module on business strategy. Students will have the opportunity to address global versus transnational versus
multi domestic international strategies in automobile manufacturing, explore the benefits of international joint
ventures and acquisitions, and strategic options for entering foreign markets. You may also find this case useful
for helping students improve their analytical skills with the tools presented in chapters 3 and 4.
Tata Motors (and Tata Group) has an excellent, easily navigated, up-to-date website that provides students access
to the most recent data, as well as historical data, on all the Tata Motor products as well as the company. The Tata
Motors website is one of the best to provide exhaustive information in a user-friendly format.
: Its Multibrand
Approach to Competing in the
Global Automobile Industry*
*This teaching note reflects the thinking and analysis of the case author, David L. Turnipseed, University of South Alabama. We
are most grateful for his insight, analysis and contributions to how the case can be taught successfully.
Case 18 Teaching Note Tata Motors in 2014
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The Tata case provides the information for students to examine issues such as:
nDetermining and evaluating the nature of a firm’s international strategy
nPreparing an industry and competitive analysis of firms competing internationally.
nIdentifying and assessing the unique problems and opportunities associated with a company doing business
in the global marketplace.
Video for Use with the Tata Motors in 2014 case. There is a 1:52 Bloomberg Businessweek video entitled
“Jaguar Land Rover Boost Tata Motors’ Profits” that would be best viewed after students have read the case
and become familiar with the industry. You may prefer to have students watch the video on their own. It can
be accessed at http://www.businessweek.com/videos/2013-11-10/jaguar-land-rover-boosts-tata-motors-
profits.
The assignment questions and teaching outline presented below reflect our thinking and suggestions about
how to conduct the class discussion and what aspects to emphasize.
To give students guidance in what to think about and what analytical tools to utilize in preparing the Tata Motors
case for class discussion, we strongly recommend providing class members with a set of study questions and
insisting that they prepare good notes/answers to these questions in preparing for class discussion of the case.
To facilitate your use of study questions and making them available to students, we have posted a file of the
assignment questions contained in this teaching note for the Tata Motors case on the instructor resources
section of the Connect Library.
You may also find it beneficial to have your class read the Guide to Case Analysis that immediately follows Case
31 in the text. Students will find the content of this Guide particularly helpful if this is their first experience with
cases and they are unsure about the mechanics of how to prepare a case for class discussion, oral presentation,
or written analysis.
The Connect-based Exercise for the Tata Motors case. The auto-graded exercise for the Tata Motors
case requires that students answer a series of multiple choice questions related to Assignment Questions 1-7.
Questions 8 and 9 are left as open-ended questions that allows students to fully discuss recommendations for
addressing strategic issues confronted by the company.
It should take class members roughly 35–45 minutes to complete the exercise, assuming they have done a
conscientious job of reading the case and absorbing the information it contains. All 7 questions in the Tata
Motors case exercise on Connect are automatically graded and entered in your electronic grade book that is
part of the Connect platform, which makes it easy for you to evaluate each class member’s ability to utilize the
associated analytical methods.
Tata Motors is an appropriate case for an in-class presentation or a written assignment; however, due to the high
level of student interest, it is best suited for an in-class presentation. Students are fascinated by the company that
manufactures the lowest priced car in the world, along with Jaguar and Land Rover.
If you decide to use the case for a written assignment, we suggest three questions:
1. The Board of Tata Motors has enlisted you as a consultant. The company is concerned about the sales of
its Nano automobile. Although it is the lowest priced four-wheel automobile in the world, sales have not
lived up to expectations. Tata invested a significant sum in development of the Nano, and a corollary of
n
Case 18 Teaching Note Tata Motors in 2014
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2. Your consulting company has taken a job with Tata Motors. The company’s top management and the Board
3. You have been hired as a consultant for Tata Motors. The company has requested that you evaluate their
Nano model automobile. What could the company have done better in the initial design and production
of the Nano? Based on the state of the global motor vehicle industry, and the present condition of Tata
Assignment Questions
1. Describe the economic characteristics of the global motor vehicle industry.
2. What are the key success factors for a successful firm in the global motor vehicle industry?
3. What are Tata Motors’ internal strengths and weaknesses? Identify competencies and capabilities that the
company’s major competitors are lacking. What market opportunities does the company have and what
threats can you identify that may negatively impact the company’s future?
4. Would you describe Tata Motors international strategy as a global, transnational, or multidomestic strategy?
Explain your answer.
5. What are the driving forces in the global motor vehicle industry?
6. How strong are the competitive forces confronting automobile manufacturers? Do a five-forces analysis to
support your answer.
7. What is the financial condition of Tata Motors as indicated from case Exhibits 3 and 4? What is its ability to
meet short-term obligations? What advice can you offer Tata’s management based on the information in the
financial statement?
8. What do you consider to be the most important problems and issues facing Tata Motors, based on your
analysis of the company and the global motor vehicle industry? Prioritize these problems and issues
beginning with the most important.
9. What actions would you suggest to Mr. Tata and his management team to help Tata Motors sustain or
improve its competitive position in the domestic market and global markets, and its long–term financial
performance?
Teaching Outline and Analysis
1. Describe economic characteristics of the global motor vehicle industry.
Market Size and Growth Rate
nThe global motor vehicle industry is a growth industry. In some more- developed countries, the growth
nThe growth rate of commercial vehicle sales was 22% from 2010 to 2011 in India, compared to 13% in
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nIndia had the world’s second largest population which results in a huge market. Disposable income for
Characteristics of Buyers
nBuyers for Tata Motors’ vehicles range from the Indian middle class buyers (whose household income
started at about $4,500 US in 2007) who are the customers for the Nano, to the affluent buyers attracted
Number of Rivals
nThere is constant change in the number of rivals in the industry, as existing companies are merging
(Mercedes Benz-Chrysler, in 1998), being acquired (Jaguar and Land Rover by Tata Motors), splitting
Scope of Competitive Rivalry
nAlmost all manufacturers compete on the international level.
Degree of Product Differentiation
nDifferentiation is a very important marketing feature for motor vehicles.
nManufacturers differentiate by style, color, performance, quality, and features such as integrated
Innovation
nThe motor vehicle industry is characterized by fairly short life cycles and rapid product innovation. The
nAlmost each model year has a few changes and improvements over the prior year, and major body style
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nMarketing is very important, and aimed at creating awareness of the quality, performance, and features
nThere are opportunities to overtake rivals in the motor vehicle industry by being first to market with
Supply/Demand Relationship
nThere is excess supply in the consumer automobile segment of the industry; although for specific
nAggregate demand in the automobile industry is increasing; however, there are many manufacturers that
nThere is sufficient manufacturing capacity in the industry to meet buyer demand for the foreseeable
Technological Change
nAdvancing technology is a driving force in the industry. There is a constant push to increase fuel
nTechnology is a key contributor to product differentiation in the form of performance, quality, and high-
Concentrated Market
nA small number (11) of very large firms from Germany, the U. S., and Japan have tremendous strength
Economies of Scale
nEconomies of scale are important in the global motor vehicle industry. The manufacturing facilities are
very large and expensive, and attaining economies of scale is vital to a company to be able to sell at a
nThe largest manufacturers do not necessarily gain a competitive advantage with low cost production due
Vertical Integration
nMost companies produce very few of the parts used in their cars, trucks and busses. For example, Tata
Motors produces some transmissions, axels, and gear boxes through a subsidiary, and GM manufactures
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Learning/Experience Curve Effects
nThe learning/experience curve is large in the global motor vehicle industry.
2. What are the key success factors for a successful firm in the global motor vehicle
industry?
nHigh quality—Successful firms in this industry must be able to produce quality vehicles that offer
nExcellent advertising—Manufacturers must have excellent marketing campaigns.
nStrong balance sheet and access to financial capital.
3. Prepare a SWOT analysis: what are the internal strengths and weaknesses of Tata
Motors? Identify competencies and capabilities that the company’s major competitors
are lacking. What market opportunities does the company have and what threats can
you identify that may negatively impact the company’s future?
Strengths and Competitive Capabilities:
nIndia has a huge, educated, very low-cost labor pool.
nTata Motors has a broad product line, including subcompact, compact, mid-size and with the Jaguar and
Land Rover brands, full-size, luxury, and performance.
Weaknesses and Competitive Deficiencies:
nTata is domiciled in one of the largest, fastest-growing markets on earth.
nVery high-risk area with significant friction with Pakistan (risks include nuclear weapons in Pakistan).