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Managing People And Organizations

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Introduction

This reports aims to evaluate Tata motor and its new challenge X1. Moreover, after analysing domestic market, it estimates South Africa as a potential market for the new car X1. And finally, it recommends some solution for the company in marketing mix perspective.

Tata group overview

The Tata Group was established in the 19th century by Jamsetji Tata, and The Tata group is currently operating 93 companies in seven sectors: Information Systems and Communications; Engineering; Consumer Product; Materials; Services; Energy; and Chemicals. In addition, they have spread their operations in over 40 countries across six continents [Anon 2006(1)]. As a family company, they have quite a different management style compare to Western companies [Cateora 2006].

Tata motors and why go global

Established in 1945, Tata Motors is India's largest automobile company. And also, the company is the world's fifth largest medium and heavy commercial vehicle manufacturer. With an expanding global ambition, they market their commercial and heavy vehicles in several countries in Europe, Africa, the Middle East, Australia, South East Asia and South Asia. In 2004, the acquisition of Daewoo Commercial Vehicle Company enhanced the companyÐŽ¦s global expansion strategy. And it is worthwhile mentioning that the Tata Indica, produced India's first fully indigenous passenger car. Within two years of the launch, it became India's largest selling car in its segment [Anon 2006(2)].

TataÐŽ¦s global expansion ambition starts with Ratan Tata who has renovated the company from a crumbling, inward-looking family into a global firm with revenues of $15.3 billion. Currently, the company obtains 20 percent of total sales from other countries and it is wanted to reach to 30 percent within a few years. In addition, the major export revenue is coming from buses and trucks [Anon Aug 2005].

According to Ratan Tata, instability of the Indian economy is the main reason for the company to go global. Moreover, market potential in foreign countries, the companyÐŽ¦s competitive capability in the global market and enthusiasm of the management the other reasons, is forcing Tata Motors into a global market [Anon Oct 2005].

SWOT analysis of the company [Kotler 2003]

Strength

„X Tata Motors is well established and well respected company in India.

„X It has a good market share in Indian market.

„X Tata Group supports the company with 93 companies in seven different sectors.

„X It has a good new product development team [Anon 2006(2)].

„X It has support from government [Sridharan 2005].

„X It has joint ventures with big global companies such as; AT&T, IBM, Mercedes-Bens.

„X Tata group does capital allocation to member firms with in its network [Cateora 2006].

Weaknesses

„X There is no strong brand awareness in the global market [Anon 2006(3)]

„X Indian product has no image as international standard [Agrawal 2006]

Opportunities

„X Growing Indian economy.

„X Emerging middle Class in India [Anon 2004].

„X Growing demand of low cost car in the market [Bergevin 2004].

„X Acquisition of new companies [Anon 2006(2)].

Threats

„X Easy access to the Indian market [Leggett 2004].

„X Strong Competitors [Sridharan 2005].

New Challenge: X1

Currently, Tata Motors are pursuing a big project which may enhance the companyÐŽ¦s profitability and may create a new product segment in the automotive industry. They are about to make worldÐŽ¦s cheapest car which will be sold around $ 2.200 which is between a high-end two-wheeler and a low-end four-wheeler. In addition, it will be targeting some six million two-wheelers and a million passenger vehicles buyer in India annually [Sridharan 2005]. If it is considered that 70% of vehicles on the Indian roads are scooters, mopeds, or motorcycles and 7.6 million passenger cars, most are at least four years old, it is a big opportunity for Tata Motors. If everything goes according to plan in India, the rest of the developing countries will be another opportunity to expand the market [Srinivas 2004].

Even though the features of X1 are not certain yet there is some information how it is likely to be.

ENGINE: Most likely, it will be a 600-cc, two- or three-cylinder petrol engine, generating 25 to 30 bhp, mounted on the rear of the vehicle. There wonÐŽ¦t be any engine cooler. Therefore, hot climate countries may need product adaptation which increases the cost.

SEATING: It will be a four-seater. Doors may be replaced by curtains, at least in the base model

THE SKIN: It could either be steel or plastic. But vehicles with plastic body have not done well in India before. The styling is being done by Italy's IDEA, which also designed the Indica

DASHBOARD DIALS: Will be simple and functional.

TRANSMISSION: The car will be gearless [Sridharan 2005].

Tata Motors planning to distribute X1 in kit form and it will be assembled in all around the country by franchisees which will reduce the cost and create many local jobs. In addition, it will be easy to export X1 due to easy transportation as kits [Hirst 2005]. According to Tata, the potential market for such a small car is about one million a year. [Sridharan 2005].

Opportunities and risks in the market

The automotive industry is an important sector of the Indian economy and a major foreign exchange earner for the country. In addition, more than 400 corporate companies participate in the industry. Currently, the Indian government is encouraging small car manufacturers by reducing excise duty of small engine cars (below 1200cc). And companies believe that India can become the small car center in five to seven years which indicates a very competitive

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