Tata motors Essay

Tata motors - Leading the Automobile Market

Tata motors is one of the leading companies in the automobile market in India and worldwide. Tata Motors, a division of the highly diversified company “TATA group,” is active in more than 80 nations and ranks first in India in terms of revenue, is the world’s fourth-largest bus and truck manufacturer, and produces the least expensive passenger automobile. According to Tata’s goal statement, “We innovate with passion, focusing on mobility solutions to improve quality.” The company’s operations virtually translate its mission.

Research and Development

Tata invests a sizable amount of money in ongoing research and development in order to create and preserve a sustainable competitive edge. The product portfolio of Tata motors is made up of a large assortment of product lines including passenger and commercial vehicles. Within each product line the company offers a very diversified assortment of vehicles. For example, the passenger vehicles include luxury cars and basic cheap cars (NANO). The company’s primary source of revenue is through manufacturing and selling cars and providing maintenance services and parts to broad market all over the world. This comprises the business model of Tata’s motor. In terms of the target market segments, Tata’s vehicles are offered to segments ranging from high-income segments (Jaguar and Land rover) to lower-income consumer segments (NANO). The company’s strategy entails achieving aggressive sales growth in the domestic market (India) and international market for both developed and developing economies. The company utilizes the low-cost strategy in most of its product lines (passenger and commercial vehicles) without compromising quality. The Nano car which is least expensive car ($2500) manufactured by TATA.

Challenges and Competition

TATA applies a different strategy when the product is targeted to the premium market. While Tata motors experienced a high growth in its revenues and profits from 2010 to 2012, the company is also facing strategic events that might affect its market position and sustainability of its competitive advantage. One of the most prominent events is the removing of diesel subsidies in India which might affect the sales of TATA’s diesel-powered vehicles. Moreover, the entry of competitors in the low-cost market for passenger vehicles imposes a threat to the newly introduced car, the NANO. The difficulty of introducing the NANO to developed market such as the U.S. is that the features the vehicle offers do not match with the needs and requirements of the U.S. market. This, in turn, limits the growth of international sales of the NANO vehicle.

Strategic Issue

TATA motors face critical challenges that might adversely affect the sales of one of its product lines. Specifically, finding an international market for Tata’s passenger vehicles in the developed countries. To illustrate this point, the features and quality of Tata’s passenger vehicles generally don’t fit with the markets’ needs and wants in the markets of the developed nations. In addition to that, there is intense competition in the car industry in the developed countries that adds more challenge to compete selling basic cars. This, in turn, may hinder the success of the already established strategy of expanding sales of passenger vehicles in the international market. The major challenge is related to the Nano car which is one of the Tata’s least expensive passenger vehicles. While Nano car is primarily targeted to the developing economies, the sales that come from this market are far less (60% less) than what is expected or required to cover the cost invested in developing the Nano and making a profit. Hence, the company started introducing the Nano to U.S market to increase the sales of Nano. However, the question here is “how can TATA motors make the Nano car fit into the U.S. market and compete effectively with the vigorous competition in the U.S car industry?”