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TATA Motors
International Business Term Paper
March 31, 2006
Table of Contents
Executive Summary ii
Tata Group of Industries 1
National Culture of India 2
Tatas Corporate Culture 3
Indian Business Environment 4
Company Profile 6
Entry into South Africa 8
Economy of South Africa 10
Investing in South Africa 11
Automotive Industry in South Africa 12
Market Share in India 13
Market Share in South Africa 14
Comparative Competitor Analysis 15
SWOT: Tata 17
Ford Motor Company 20
SWOT: Ford 21
Conclusions and Recommendations 23
Executive Summary
This written project is an analysis of the international business expansion of Tata Motors,
and its ability to maintain its growth in the global market. This study has lasted over two
months and will conclude with this formal paper written for the MBA 602 course. This
report has the information required to conduct an analysis of the company, the markets, the
industry, its competitors, and give recommendations for Tatas future.
As a group, it is recommended that Tata Motors continue its operation in South Africa and
attempt the same strategy in other potential markets around the world. Tata has already
mastered its domestic market and has gained a large market share in other countries in a
short period of time. Tata now operates in foreign countries such as Pakistan, Russia,
Korea, and China and it should continue to expand its business to other potential markets.
Tata has recently entered into alliances with competitors such as Fiat and Daewoo, making
it easier to enter new markets. The operation is already established and customers are
aware of its brand, Tata is responsible for marketing and selling the product, while gaining
access to design technology and an increased bottom line. Tata has been in business for
many years and is continuing success outside of its domestic India and we support its
foreign ventures.
Tata Group of Industries
The story of Tata begins in 1868 when a young boy named Jamsetji Tata joined his fathers
small trading company. Thirty-five years later, that same boy was the owner of Indias
largest textile company, Tata Textile. Over the last century, Tata has excelled in many
different business sectors including Materials (Steel and Mining), Agriculture, Energy,
Consumer Products, Information Technology, Consultancy, Finance, Automobiles,
Chemicals, Engineering and Hospitality. Tata Group of Industries reported $17.6 billion in
revenues in 2005, which is equivalent to 2.8 percent of Indias GDP. In 2006, it is
projecting its annual revenue to be around $24 billion. Figure 1 shows the breakdown of
Tatas revenues for the fiscal year 2004-05 between the separate business sectors and how
much it contributed to Tata as a whole. Tata is one of the worlds largest employers, and is
the largest private employer in India with about 222,000 employees. India is known to
many as a very diverse country; there are 26 states in India and the culture of each is
extremely different from the others in language and lifestyle. This diverse culture within
India makes Tatas human resources department work to lead major changes across the
vastly different cultures of the employees that exist within Tata as a whole group. Tatas
management training center located in Pune serves as a corporate school to help Tatas
managers learn how to lead such a diverse workforce.
National Culture of India
There are several issues that need to be addressed before entering a new country expecting
to maximize profits. One such issue is the culture of the country where the firm wants to
enter, as there are many differences in the culture of business practices and the way things
are generally done. Doing business internationally is affected by the way a society
functions on the macro level with factors including the size of economy, wealth of the
citizens, religion, race, etc. There has to be a detailed analysis that addresses the
differences between the two different cultures of the host country and parent company. For
example, a US company operating in the Middle East will have to allow regular breaks for
praying during work hours in accordance with its employees religion. Tata is the largest
Indian employer and has to accommodate a variety of employees who come from different
backgrounds. These accommodations are only provided because Tata has a deep
understanding of the culture and customs of its employees giving it a competitive edge
over others.
In India, the culture is based on a mixed ideology of collectivism and individualism. The
career of an employee is their life and how they earn a living usually dictates what kind of
personality and lifestyle they will have in their social class system. This view is applied in
many other cultures in the saying, "money, power, and respect." These three levels of
success come from how well one is living and what type of career the employee has. A
multinational enterprise conducting business internationally must understand how the
social class system works in the host country and what dos and donts exist there.
In India, the level of education and productivity are the two most important factors that
determine the success of a person in their career. "When one considers that India is a
hierarchical society, the encouragement of workers as teachers provides an opportunity for
increased status." Indian culture requires that employees go above and beyond what is
asked of them because they can be replaced at anytime by a large surplus of available
workers.
Tatas Corporate Culture
For Tata as a whole conglomerate, it has a unique corporate culture unlike any other
business in India. Tata has a very strict and bribe free culture and have always valued its
employees in the highest regard. Tata has a very different state of labor relations, for
example, Tata steel, one of the oldest industries of Tata, has gone seventy-five years
without a strike. This fact is extremely impressive in a country like India, where workers
go on strike quite frequently. Also, in order to cut down heavy losses, Tata steel had to lay
off more than half of its work force over the last 15 years. This strategic decision made
Tata competitive in one of the most brutal industries. However, it didnt damage the laid off
workforce as Tata promised to pay them full salary until retirement and there after, pension
benefits. "When an organization functions as a global citizen through its corporate social
responsibility initiatives, this often boosts its reputation externally." Tata has been built on
a strong reputation not only within the home country, but in different locations around the
globe.
For over 130 years, Tatas mission has always been to develop India as a great industrial
power. Tata truly believes the development of a nation lies in the hands of the business
owners. Tata has done a great deal in developing the infrastructure of India, especially in
Jamshedpur, the city where Tata originated. Jamsetji Tata turned Jamshedpur from a jungle
to the one of the largest industrial sectors of India. There he opened factories, schools,
churches, parks and hospitals for Tata employees that showed his commitment to all the
stakeholders that would be a part of Tata. Tata was the first one to introduce an eight hour
work day concept in India and offered medical benefits to employees, which even today is
unknown to many employers in India. After the death of Jamsetji Tata in 1991, his son
Ratan Tata took over as the new leader. Tata steel industries were facing heavy losses at the
time and Ratan Tata was advised by many experts to exit the dying steel business.
However, Jamshedpur followed his fathers beliefs of building Indian industry and
continued the steel business.
Indian Business Environment
Deregulation is the process in which governments remove selected regulations off of
businesses in order to encourage the efficient operation of markets. The theory of this
subject believes that fewer regulations will lead to a raised level of competitiveness,
therefore higher productivity, more efficiency and lower prices for the overall economy.
Conducting business internationally can have major impacts depending on what type of
process the country follows, whether or not there are many government-imposed
regulations. The United States has been a strong success story for economic deregulation,
which has had a great effect on the economy. Another country that has seen the enormous
benefits from economic deregulation on its economy is India. This country has had
extensive economic deregulation in the late half of the 20th century, especially after 1991
where the government took a large step towards helping their economy grow with leaps
and bounds. The reason that India segregated itself from the global business environment
and foreign direct investments coming into the country is because India had been under
British rule for over 200 hundreds years until 1947. India became a colony of Great Britain
through the Dutch East India Company when it originally came over to conduct import and
export business. India placed a rigid belief on not allowing foreign entities to conduct
business in India. They felt that it should become self-dependent for the economic growth
of the country, but after forty years of struggling to attain economic prosperity it was time
for India to open the doors and welcome with open arms the global companies.
The government of India has accomplished major economic restructuring by moving
