tata steel, fmcg, tata motors, nano

8/8/2019 Tata Steel, FMCG, Tata Motors, Nano

http://slidepdf.com/reader/full/tata-steel-fmcg-tata-motors-nano 1/105



TATA STEEL Ankit Pawar(5)

FMCG INDUSTRY-Astha Savyasachi(7)

TATA MOTORS-Bandeep Jaswal(8)



y Tata Steel moves into its next target to become theworld's second largest steel company by 2012 with the

help of its most expensive bet worth $12.9 billion onCorus group.

- Business Standard



Introduction

y Tata Steel, formely known as TISCO.

y Worlds fifth largest steel company.

y Annual crude capacity of 32 million ton.y Tata Steel is also India's second largest and second-

most profitable company in private sector.

y Presence in over 50 developed markets of Europe and

Asia.



y Tata Steel`s Jamshedpur (India) Works has a saleablesteel capacity of 10.23 MTPA. The Company also has

proposed three Greenfield steel projects in the statesof Jharkhand, Orissa and Chhattisgarh in India withadditional capacity of 23 MTPA and a Greenfieldproject in Vietnam.



y Through investments in Corus, Millennium Steel(renamed Tata Steel Thailand) and NatSteel Holdings,

Singapore, Tata Steel has created a manufacturing andmarketing network in Europe, South East Asia and thepacific-rim countries.



GLOBAL STEEL INDUSTRYy The current boom driven by the growth in the

developing world, particularly China,India and

Brazil.y China is clearly the engine that has driven steel

consumption in the Asian region.

y Despite of so much growth, Steel industry is still

fragmented.



INDIAN STEEL INDUSTRYy Steel industry reforms of 1991-92 have led to strong

and sustainable growth in indias steel industry.

y The steel industry in India has grown by about 10 percent in the past two years, compared with the globalgrowth rate of about 6 per cent a year.

y Currently, India is the largest sponge iron producer in

the world and ranks fifth among steel-producingcountries.



Company Strategy:

value creationy The Tata Steel Group set itself a target of increasing

the return on invested capital of its existing assets to

30% by 2012-13 and to generate selective growth.y In order to increase the quality of earnings of its

existing assets, the Group will pursue the optimisationof its European assets, restructure low profitability

assets and continue to derive benefits throughcontinuous improvement and synergies across theGroup.



y In order to generate selective growth, the Group willpursue capacity expansions and securing access to raw

materials. The Group is increasing its capacity inIndia, through expansion of its current operations in Jamshedpur and through the construction of agreenfield site in Orissa, and assessment of rawmaterial investment opportunities as and when they arise



Corporate Citizenshipy Corporate citizenship involves providing a safe

working place, respecting the environment, caring forits communities and demonstrating high ethicalstandards.

y The Group wants to be a part of the climate changesolution and has set a target to reduce its CO2emission from the current 2.07 tonnes of CO2 per

tonne of liquid steel to 1.5 tonnes of CO2 per tonne of liquid steel by 2012 through process improvements,breakthrough technologies and development of newproducts and services.



Growth Strategyy Making the European operations competitive by

hastening the speed of the Weathering the Storm

and Fit for the Future program.y Quick completion of the expansion plans in India. The

3 mtpa project will be commissioned by 2011 and willadd significant value to the Group. Further expansion

in India through the Greenfield project in Orissa andChhattisgarh are ongoing and their commencing willdepend on ground realities and iron ore allocation.



y Investment in raw material assets to provide better rawmaterial security especially to our European

operations.y Vigourous pursuit of continuous improvement across

all our operations.



Present Strategic Issuesy Global Leader/presence both in means of Quality and

Quantity.

yEntering the new markets.

y Leadership crisis within the company.

y Security & procurement of raw materials.



Strategic f ocusy The strategic focus of the Company has been to

increase the steelmaking capacity in excess of 50

million tons by 2015 through organic and inorganicgrowth.



Strategic Business Unitsy Bearing division.

y Ferro alloys and mineral divisions.

y Agricon division.y Tata growth shop.

y Tubes division.

y Wire division.



Application of Business Strategy

Models to TATA Steely SWOT Analysis- SWOT analysis is done for a

company, to find out its overall Strengths, Weaknesses,

Threats and opportunities leading to gauging thecompetitive potential of the company. The SWOT Analysis enables company to recognize its marketstanding and adopt strategies accordingly.



STRENGTHS

y Tata Steels Indian operations are self-sufficient in the

case of its major raw material iron ore through itscaptive mines.

y Very advanced Research and Development wing whichis carrying out researches and experiments in the areas

of raw materials, blast furnace productivity, steelmaking, product development, process improvementetc.



y Tata had a strong retail and distribution network inIndia and SE Asia.

y

Upcoming greenfield and brownfield projects in various indian states.

y Tata Steel has been on a path of accelerated growth with foray into several geographies and markets

through aggressive mergers and acquisitions.



y Tata Steel addresses the risk of cyclicality of the Steelindustry by marinating rich product mix and higher

value added products whose volatility is lower.



WEAKNESS

y India's hard coal deposits are of low quality and the

prices of coking and non-coking coal are everincreasing.

y Raw materials for steel production are rapidly depleting and are nonrenewable; company has to

come up with sustainable methods in steel production.



y Steel production in India is also hampered by powershortages.

y

Insufficient freight capacity and transportinfrastructure impediments to hamper the growth of Indian steel industry.

y Low Labour Productivity.

y High Cost of Basic Inputs and Services.



OPPORTUNITIESy The biggest opportunity before Indian steel sector is

that there is enormous scope for increasing

consumption of steel in almost all sectors in India.y Unexplored Rural Market.

y It is estimated that world steel consumption willdouble in next 25 years.

y Corus acquisition bring in a tremendous technologicaladvantage by access to best practices in global steelindustry.



y Booming infrastructure has opened up high demandfor steel worldwide.



THREATSy In the developed world, industries have been facing

rising environmental costs due to the increased

concerns on Global Warming.y Steel industries are significant contibutors to man-

made greenhouse gases.

y High raw material input cost and scarcity of

nonrenewable raw materials are a threat to theindustry.



y Threat of Substitutes.



Porter Five Forces Modely Threats of new entrants.

y Intensity of rivalry among existing competitors.

y The bargaining power of suppliers.y The threat of substitute products.

y The bargaining power of buyers.



Entry barriers

y Huge capital requirement.

y Tata Steel has already made sufficient efforts tosafeguard itself in this regard.

y Economies of scale.

y Government policies.



Competition

y The steel industry is truly global in terms of

competition with large producing countries like Chinasignificantly influencing global prices throughaggressive exports.

y Steel, being a commodity it is, branding is not

common and there is little differentiation betweencompeting products.



y The 4 major domestic rivals are SAIL, JSW, ISPAT &ESSAR STEEL. Rest are all smallish mills which

together accounts for 30 % of the total market share.



Bargaining power of suppliersy Low quality cooking coal.

y Limited suppliers of raw materials globally.

y In order to safeguard itself from the high bargainingpower of the buyers, Tata Steel has forayed muchearlier into the strategy of Backward Integration.



Ownership of raw materials and a continuousimprovement in production have been the key to Tata

Steels profitability. In fact weve believed in owning rawmaterials for the past 100 years, said managingdirector B Muthuraman.



y Raw material security.

y It is also evaluating several other mineral projects in

Brazil and Australia.



Threat of substitutesy Plastics and composites pose a threat to Indian steel.

y Steel has already been replaced in some large volume

applications: railway sleepers (RCC sleepers), largediameter water pipes (RCC pipes), small diameterpipes (PVC pipes), and domestic water tanks (PVCtanks).



Bargaining power of Consumersy Some of the major steel consumption sectors like

automobiles, oil & gas, shipping, consumer durablesand power generation enjoy high bargaining powerand get favorable deals.

y Small and retail consumers who are scattered andconsume a significant part do not enjoy these benefits.



Fast Moving Consumer Goods

Industry.y Products which have a quick turnover, and relatively low

cost are known as Fast Moving Consumer Goods (FMCG).FMCG products are those that get replaced within a year.

y Examples of FMCG generally include a wide range of frequently purchased consumer products such as soap,cosmetics, tooth cleaning products, shaving products anddetergents, as well as other non-durables such as glassware,

bulbs, batteries, paper products, and plastic goods.y FMCG may also include pharmaceuticals, consumer

electronics, packaged food products, soft drinks, tissuepaper, and chocolate bars.



y White goods in FMCG refer to household electronicitems such as Refrigerators, T.Vs, Music Systems, etc.



Indian FMCG Sectory The Indian FMCG sector is the fourth largest in the

economy and has a market size of US$13.1 billion. Well-established distribution networks, as well as intensecompetition between the organised and unorganisedsegments are the characteristics of this sector. FMCGin India has a strong and competitive MNC presenceacross the entire value chain. It has been predicted

that the FMCG market will reach to US$ 33.4 billion in2015 .



y The middle class and the rural segments of the Indianpopulation are the most promising market for FMCG,and give brand makers the opportunity to convertthem to branded products.

y Most of the product categories like jams, toothpaste,skin care, shampoos, etc. in India, have low per capitaconsumption as well as low penetration level, but thepotential for growth is huge.



Top 10 Companies in FMCG sector1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries9. Procter & Gamble Hygiene and Health Care

10. Marico Industries



SWOT analysis of FMCG industry

Strengths1. Presence of established distributionnetworks in both urban and rural areas2. Presence of well-known brands3. In recent years, organized sector hasincreased its share in the market vis a

vis the unorganized sector.

Weaknesses1. Demand is seasonal and is highduring festive season2. Demand is dependent on goodmonsoons3. Poor government spending on

infrastructure4. Low purchasing power of consumers

Opportunities1. In India, the penetration level of white goods is lower as compared toother developing countries.

2. Unexploited rural market3. Rapid urbanization4. Increase in income levels, i.e.increase in purchasing power of consumers5. Easy availability of finance

Threats1. Higher import duties on raw

materials2. Cheap imports from Singapore,

China and other Asian countries



Michael Porters Model

Rivalry amongexisting

firms

Threat of new

entrants

Bargainingpower of buyers

Threat of substituteproducts

Bargainingpower of suppliers



Threat of New entrantsPossible entry barriers:

y Product differentiation :-Companies like P&G which

manufacture products like Tide , create high entry barrier through the high level of advertising andpromotion.

y Capital requirements:-The need to invest financial

resources for large distribution networks.y Access to distribution channels :Small companies find

difficulty in obtaining supermarket space for theirgoods since priority is given to established firms.



Rivalry among existing firmsy Number of competitors:- when the competitors are

roughly equal in size , they closely watch each other .

y

Product or Service characteristics:-The location of retail stores of various firms depend on the nature of product.

y Diversity of rivals:-Rivals that have very different ideas

of how to compete are likely to cross paths andchallenge each others position.



y Threats of substitutes:- They limit the potentialreturns of an industry by placing a ceiling on the pricesfirms in an industry can potentially charge.

y Bargaining power of buyers:- If the buyer purchases alarge proportion of the companys products.

y Bargaining power of suppliers:-If the substitutes arenot readily available.



ENVIORNMENTAL FACTORSy Political factor

y Economic factor

ySocial factor

y Technological factor

y Legal factor

y Demographic factor



GROWTH OF FMCG INDUSTRYy The Fast Moving Consumer Goods (FMCG) are likely to

make a major dent in Rural and Semi-Urban Segments by 2012 with their demand growing @ of about 60% to carry

forward its total market size to around Rs.1,23,363 crorefrom present level with a projected CAGR of 12%y The urban pockets which currently are the biggest market

size for all FMCG products, in next 4-5 years will switchover their consumption patterns for organic products tokeep better their health, thus making an erosion in theirpresent consumption patterns for FMCG products. Inurban pockets, the current demand for FMCG productsmay be stagnant by 2012 and force the FMCGmanufacturers to shift their supplies with assured qualitiestowards rural and semi-urban folks.



y The FMCG products like toothpaste, skin and hair wash, talcum,powder, branded Atta, dish wash, instant coffee, ketchups,deodorants, jams etc. which currently have less than 30%penetration out of 100 people in rural and semi-urban areas will

grow at least by 50% in next 5-7 years because of their demandon account of rising per capita income of rural and semi-urbanfolks. The per capita income of rural and semi-urban populace

will increase as the economic activities will grow their due togovernment focus for their industrialisation.

y Though the rural and semi-urban demand of FMCG products

will grow larger and higher, it will put a severe pressure on themargins of manufacturers of FMCG products because of cut-throat competition.

y The above data is in accordance with the ASSOCHAMs report oninvestments prospects in Indian economy(2008-09).



INCREASE IN RURAL DEMANDy The FMCG industry is set to grow 20-30 per cent in

2009-10, up from 10-20 per cent in 2008-09. Thegrowth would be driven by the launch of new productsand increasing rural consumption.

y The beverage industry in India is being estimated togrow at 17 per cent this year, Food and beveragessegment has not suffered despite the slowdown in theeconomy.



DURING THE PHASE OF RECESSIONy As the global economic crisis consumed nearly every

sphere of business, one industry held out against recessionthrough 2009 by promising to help Indians look fairer,

younger and their teeth whiter, kids stronger and taller.y Looks-conscious consumers propped up sales of FMCG

(fast moving consumer goods) companies, which in turnrewarded loyalty by not raising prices of fairness, anti-ageing creams, bathing bars and their likes, although input

costs rose in an economy ravaged by drought and thenfloods.

y Instead, they downsized the packaging to balance costs andmargins.



y Year 2009 also saw modern retail format stores andaggressive marketing helped home-grown FMCG firms

wrest market share from leader Hindustan UnileverLtd (HUL), according to market research firm ACNielsen.

y HULs share in the estimated Rs8,000 crore personalcare market fell to 44.5% from about half last year, asothers like ITC, Godrej and Wipro fought for space inmarkets like Uttar Pradesh, Bihar and Gujarat with arural push, says AC Nielsen.



y As for foods and beverages (F&B), the Indian marketproved to be the growth driver for worlds biggestplayers like Coca-Cola and PepsiCo, even as their USparents grappled with falling sales.

y PepsiCos optimism in the Indian market was reflectedin the global major holding its board meeting in Indiafor the first time this year.

y The company has stepped up investments by another$100 million, from the $500 million announced last

year for the next three years.



y Dabur and Emami completed consolidation andrestructuring post their respective acquisitions last year of Fem Care and Zandu Pharmaceuticals.

y While Wipro went premium with Yardley, FMCG firms went in for big push in rural areas, upbeat on thegovernments thrust on agriculture and increase inallocation for rural jobs.

y Overall, the prospects of the FMCG sector remain good. According to Ficci, it has grown consistently during the lastthree to four years. The sector is expected to grow at 12-15%over the next three to four years.



IMPACT OF MODERN RETAIL y SEVERAL BENEFITS: Modern retail can have many

benefits for different product categories, including greaterpenetration, wider product range, ability to display

products attractively, direct interaction with the consumer,and the ability to run specific promotions.

y RAPID EXPANSION: Many FMCG players have increasedtheir investments in modern retail. There is also greater

acceptance from the consumer. The top ten Indian playersalone are estimated to make an investment of $30 billion, while the rate of growth of FMCG modern retail is expectedto rise from a current 6 per cent to 25 per cent by 2018.



INDUSTRY SEEKS GST IMPLEMENTATIONy The Indian FMCG industry is primarily seeking the

implementation of the GST (Goods & Services Tax) by April 1, 2010 in the Union Budget. Industry captains expectfiscal measures that will spur growth of the FMCG sector inrural as well as urban India.

y According to a market strategy survey report by ICICISecurities, analysts are optimistic about the prospects of FMCG sector going forward. With the economy growing ata rapid pace and organized retailing making greater

inroads, analysts expect the domestic FMCG industry togarner huge benefits from the same.y The data is according to monthly economic analysis done

by Fortune in July, 2009.



OPPORTUNITIESy Economic factors:

1- Many FMCG players have increased their investments

in modern retail. There is also greater acceptance fromthe consumer.

2- Changes in the Personal Income Tax slabs are likely todrive higher consumption owing to rising disposable

income levels. This is a key positive for FMCGcompanies.

3- A cut in Corporate Tax rate to 25% will benefit mostFMCG companies which generally pay full tax rate.



y Demographic factors:

1-Untapped rural market: The Fast Moving Consumer

Goods (FMCG) are likely to make a major dent in Ruraland Semi-Urban Segments by 2012 .

2-Rising per capita income of rural and semi-urban folksdue to government focus.



y Cultural factors:

1-Change in consumer profile: The consumers arebecoming more inclined towards the green products.

2-Rapid urbanisation.

Technological factors:

The new FMCG businesses support thecompetitiveness, technology upgradation and marketreach of over 170 Small and Medium Enterprises(SMEs).



THREATSy Economic factors:

1- FMCG companies have a tough time in registering growthin earnings in the face of price cuts on products

2- A significantly higher spend on advertisement is yetanother common feature. Companies typically spend closeto 10 per cent of their revenues on advertisement. Thisproportion increased to around 13-14 per cent in theDecember quarter.

3- Rising food inflation is forcing consumers to down trade(i.e. shift from higher-priced product to a lower-pricedone).

4-Higher import duties on raw materials.



y Customer: The customers can switch from one productto another due to unavailability. Also,demand isseasonal and is high during festive season.

y Suppliers: If the suppliers are not providing thematerials at the right time.



STRENGTHS1- Presence of established distribution networks in both

urban and rural areas.

2. Presence of well-known brands.3. In recent years, organized sector has increased itsshare in the market vis a vis the unorganized sector

4- Intense advertising, price cuts, discounts and freebies.



CORPORATE SOCIAL RESPONSIBILITYy ITC:

1-ITCs businesses generate livelihoods for over 5 million

people.2-ITCs globally recognised e-Choupal initiative is the worlds largest rural digital infrastructure benefitingover 4 million farmers.

3-ITCs Social and Farm Forestry initiative has greenednearly 96,000 hectares, creating an estimated 43million person-days of employment among thedisadvantaged.



CADBURY:

y Pioneering cocoa cultivation in India.

y Non-formal school set up by Cadbury for children of

migrant workers in Baddi.y Cadbury in tie-up with Bharti-Walmart to support

education needs of underprivileged children.

y Cadbury India has partnered with Vatsalya Foundation, anNGO working with underprivileged street children inMumbai. Vatsalya's motto is to give the child a supportiveenvironment to live and study in and gain skills so that they become contributing members of society.



y MARICO INNOVATION FOUNDATION:

Spheres or processes which if strengthened enable business toprosper and uplift the status of the whole society. Setting up of

the Marico Innovation Foundation reflects on Marico's belief ininnovation as a process. The Foundation's objective is to fuelInnovation in India. Initiatives undertaken by the Foundationare:1-Researches in the areas of cutting edge innovations in theBusiness and Social Sectors.

2- A unique partnership between top Indian Business Schoolsand the corporate world in Applied Innovation .3- Innovation For India Awards to reward Business and SocialInnovation.



y Enviornmental:1-ITC has been Carbon Positive four years in a row ( storing twice

the amount of CO2 that the Company emits).2-Water Positive seven years in a row (creating two times more

Rainwater Harvesting potential than ITCs net consumption).y Technology Absorption:

Dabur has also made continuous efforts towards technology absorption and innovation, which have contributed towardspreserving natural resources. These efforts include:

1-Minimum use of water in process by pre-concentration of herbalextract and reduction in concentration time.2- Development of in-house technology to convert fruit waste into

organic manure.



WEAKNESSES1-Human resource and corporate planning :-If the goals

of the people in the organisation vary from the firmsgoal, the objective cannot be achieved. The corporateplanning should be done according to the capacity of firm and demand in the market.

2-Distribution channels: It is the most important area of FMCG industry and should be taken care off properly.



Contents Michael Porters Five Force Model

About Tata Motors

SWOT Analysis of Automotive Industry in India

SWOT Analysis of Tata Motors

TSEP Analysis of Tata Motors

Tata Motors Competitors

Application of Michael Porters 5 Force Model to Tata Nano



Michael Porters Five Force Model



History Tata Motorsy Tata Motors Limited is a part of Tata Group.

y Founder - Jamshedji Tata (TELCO).

y The company was established in 1945 as a locomotive

manuf acturing unit.

y It tied-up with Daimler-Benz and entered Commercial

vehicle segment in 1954.

y In 1992, it entered Small vehicle segment.



Manufacturing units are located at:

Jamshedpur, Pune, Lucknow, Uttarakhand

Research and Development: World-class automotiveresearch and development are key factors thatcontribute to the leadership of the Company.

Engineering Research Centre (ERC): Jamshedpur and Pune



Milestones Achieved Over the

Years: 1945 : Tata Engineering and Locomotive Co. Ltd. wasestablished to manufacture locomotives and otherengineering products.

1991 : Launch of the 1st indigenous passenger car TataSierra.

1994 : Launch of Tata Sumo - the multi utility vehicle.

1995 : Mercedes Benz car E220 launched. 1998 : Tata Safari - India's first sports utility vehicle

launched.



Milestones(Contd..) 1998 : Indica, India's first fully indigenous passenger

car launched.

1999 : 115,000 bookings for Indica registered againstfull payment within a week.

2000 : Launch of CNG buses.

2001 :

Indica V2 launched - 2nd generation Indica. 100,000th Indica wheeled out.

Launch of CNG Indica.



Milestones(Contd..) 2002 : Launch of the Tata Indigo.

2003 : Tata Engineering becomes Tata Motors Limited.

2004 : Tata Motors completes acquisition of Daewoo

Commercial Vehicle Company 2004 : Tata Motors lists on the NYSE

2005 :

Tata Motors acquires 21% stake in Hispano Carrocera

SA, Spanish bus manufacturing Company Tata Ace, India's first mini truck launched



Milestones(Contd..) 2005 : Tata Motors launches Indica V2 Turbo Diesel.

2005 : Indica V2 Xeta launched

2007 :

Construction of Small Car plant at Singur, WestBengal, begins on January 21

Launch of Magic, a comfortable, safe, four-wheeler

public transportation mode, developed on the Aceplatform

Launch of Winger, Indias only maxi-van



Milestones(Contd..)2008 :

Indica Vista the new generation Indica, is launched.

Tata Motors' new plant for Nano to come up inGujarat.

Indigo CS (Compact Sedan), worlds first sub four-metre sedan, launched.

Tata Motors completes acquisition of Jaguar LandRover.



Milestones(Contd..)2009 :

Tata Motors launches the next generation all-newIndigo MANZA

FREELANDER 2 launched in India

Tata Motors launches Nano - The People's Car

Launch of premium luxury vehicles - Jaguar XF, XFR

and XKR and Land Rover Discovery 3, Range Rover Sport and Range Rover from

Jaguar and Land Rover in India.



Product ProfilePassenger Cars & Utility vehicles

» Tata Sumo/Spacio

» Tata Saf ari

»Ta

ta

Indica

» Tata Indigo

» Tata Winger

» Tata Magic

»Ta

ta

Na

no» Tata Xenon XT

» Tata Xover (2009)

» Tata Manza (2009)

CommercialVehicles

» Tata Ace

» Tata Starbus

» Tata Globus

» Tata Marcopolo Bus

» Tata Novus

» Tata 407 EX

Military Vehicles

» Tata LSV

» Tata 407 Troop Carrier

» Tata Winger Passenger Mini Bus



Companys Sales and Growth in

2008-09 Tata Motors had a consolidated revenue of Rs.70,9 38.85 crores ($ 14 billion)

in 2008-09.

The Tata Motors Group global sales, comprising of Tata, Tata Daewoo andHispano Carrocera range of commercial vehicles, Tata passenger vehicles along

with distributed brands in India, and Jaguar and Land Rover for the fiscal(April November 2009) are 521,059, higher by 4% compared to thecorresponding period in 2008-09.

Growth of sales of commercial vehicles: 16 %

Tata passenger vehicle sales, including those distributed for the fiscal are160,405 nos, a growth of 16%.

Cumulative sales of Jaguar Land Rover for the fiscal are 115,844 nos., lower by 32%.



Companys Mergers and

Acquisitionsy In 2004, the acquisition of Daewoo Commercial Vehicle of South Korea.

y In 2005, Hispano Carrocera Spanish bus manuf acturing company.

y In 2006, TML has formed 51:49 Joint Venture with Marcopolo, Brazil-based

global leader in bus body building.

y In 2007, TML also formed a joint venture with Fiat.

y In 2008, the acquisition of British Jaguar Land Rover (JLR) business.

y

na ys s o u omo e



Industry Weakness:

Low labor productivity High interest costs and highoverheadsRising cost of productionLow investment in research and

Development

Opportunities :

Commercial Vehicles

Increase in income levelCut in excise dutiesRising rural demand

Threats:

Cut throat competition

Lack of technology for Indiancompanies

Strengths:

Large Domestic MarketSustainable labor cost advantageGovernment incentives formanufacturing plantsStrong Engineering skills in design



SWOT Analysis of Tata Motors Weakness:

Weak Presence in luxury segmentIn English the word 'tat' meansrubbishEmployee Productivity Revenue per

employee

Opportunities :

World's luxury car brand have been

added to its portfolio of brandsThe range of Super Milo fuel efficientbuses are powered by super-efficient,eco-friendly engines.Increasing Car Penetration in IndiaProduct Launches Tata nano,

Threats:

Sustainability and environmentalism

could mean extra costs for this low-costproducer.Rising prices in the global economy(prices of raw materials)Increasing Competition

Strengths:

Strategy in place for the next stage of its expansion.Intensive management developmentSuccessful Alliances and joint ventures (eg with fiat, jaguar)

Strong Market PositionRobust sales growthR & D Activities



TSEP AnalysisTechnology : Tata Motors and its parent company, the Tata Group, are ahead of the game in

the technology field.

The company today has R&D centres in Pune, Jamshedpur, Lucknow,Dharwad in India, and in South Korea, Spain, and the UK

Among Tatas firsts are the first indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India'sfirst fully indigenous passenger car, as well as the increasingly famous TataNano, which is projected to be the worlds cheapest production car (Tata), Tata Ace, India's first indigenously developed mini-truck.

Social:The beliefs, opinions, and general attitude of all the stakeholders in a company affects how well a company performs. Tata Motors uses an integration andrarely separation technique with foreign companies they acquire.



TSEP AnalysisEconomic:

Operating in numerous countries across the world, Tata Motors functions with a globaleconomic perspective while focusing on each individual market. They have experienceand resources from five continents across the globe, thus when any variable changes inthe market they can gather information and resources from all over the world to addressany issues. Tata Motors also has to pay close attention to shifts in currency ratesthroughout the world.

Political :Since Tata Motors operates in multiple countries across Europe, Africa, Asia, the MiddleEast, and Australia, it needs to pay close attention to the political climate of the region in

which it operates. Laws governing commerce, trade, growth, and investment aredependent on the local government . Tatas headquarters in Mumbai, India, strictly controls and regulates operations in all dealerships and subsidiaries, in addition toknowing and abiding by all labor laws in the multiple countries where they havemanufacturing plants it has to watch political change.



Tata Motors Competitorsy Mahindra and Mahindra: JV with ITEC, North American leader in heavy trucks. M&M

has formed a 51:49 JV called Mahindra International with ITEC, USA (parentNavistar International), to manufacture commercial vehicles and to bolster its position inthe CV business. ITEC is the leader in medium and heavy trucks and buses inNorth America, and is the world's largest manufacturer of medium-duty dieselengines. Mahindra International aims to have a presence across the CV market (6-

35 tonnes GVW) with variants of passenger transport, cargo and specialised loadapplications and is likely to start producing medium/heavy commercial vehicles fromFY09

y Force Motors Ltd: JV with MAN for manufacturing high-tonnage vehicles ForceMotors has paired up with MAN in a 70:30 JV to manufacture high-tonnage and specialty vehicles, such as long-haul trucks, tippers, tractor trailers and multi-axle vehicles in the16-32 tonne range at its Pithampur plant, with an initial capacity of 24,000 units

per annum and at an investment of Rs7bn. The JV plans to sell nearly half of itsproduction in the domestic market, while the rest is to be exported to the Middle East,Turkey, Russia, Asia and Africa. Further, the two companies have formed another JV to manufacture buses in India from end-2007



Tata Motors Competitors. Ashok Leyland: Acquisition of Czech Republic-based Avia.

Ashok Leyland (ALL) recently acquired the truck unit of Czech Republic-based Avia for US$35m. Avia manufactures6-9 tonne LCVs and has a capacity of 20,000 units per

annum. The acquisition has given ALL direct access to anentire range of Avia trucks, Avias press shop with dies andtools, welding lines, state-of-the-art paint shop and R&Dfacilities. ALL has also entered into technology agreements withHino Motors of Japan and ZF of Germany to complement itsin-house R&D efforts and developing complementary components and aggregates.

Suzuki: Suzuki through its subsidiary, Maruti Suzuki in theIndian market may also be alarming. Maruti has aggressively launched family cars to undermine the Tata models.



Environmental Analysis of Tata

NanoI observed families riding on two-wheelers - the fatherdriving the scooter, his young kid standing in front of him,his wife seated behind him holding a little baby. It led meto wonder whether one could conceive of a safe, affordable,

all-weather form of transport for such a family. RatanTata

This led to conceiving the dream and birth of one lakh car,Tata Nano



Michael Porters' 5 Force Model for

Tata Nano1. Threatof the Potential New Entrants:

Capital Requirements is high(plant, services, distribution, technology)

Economies of Scale : New Entrant needs to produce on a large scale

Product Differentiation and Cost Advantage

Government Policy : provided land and tax rebates to Tata Nano forplant setup.( Peoples Car)

Access to Distribution Channels

Cost Disadvantages : Experience, specialist expertise

High Switching Cost




Tata Nano2. Bargaining Po wer of Buyers:

Switching Costs

Number of customers/ Volume of sales

Brand Image

Differentiated Product: Low cost and high quality




Tata Nano3. Bargaining Po werof Suppliers:

Number and Size of Suppliers : Suppliers control priceof the car.

No substitutes for supplies

Suppliers prices form a large part of total costs of theorganization

' f




Tata Nano4. Threat of Substitutes

Price Band

Buyers willingness : Nano is a new product as against Maruti 800

5. Extent of Competitive Rivalry :

The small car market in India is very competitive with playerslike Maruti Suzuki, Hyundai which was earlier dominated solely by maruti.

Price Competition : slash rates of existing models and makenew models

Exit Barriers : Due to large amount of investment

Product Differentiation : Increasing rivalry



CONCLUSIONy Products which have a quick turnover, and relatively

low cost are known as Fast Moving Consumer Goods(FMCG). FMCG products are those that get replaced

within a year.y It has been predicted that the FMCG market will reach

to US$ 33.4 billion in 2015 .

y The middle class and the rural segments of the Indianpopulation are the most promising market for FMCG,and give brand makers the opportunity to convertthem to branded products.



y The FMCG industry is set to grow 20-30 per cent in2009-10, up from 10-20 per cent in 2008-09.

y Many FMCG players have increased their investmentsin modern retail. There is also greater acceptance fromthe consumer.



Strengths of automobile industry include large domestic market, sustainable labor costadvantage, government incentives. But the weaknesses include low labor productivity,rising cost of production and low investment in research and Development

Various opportunities of automobile industry include increase in income level and risingdemand. Whereas threats include fierce competition and lack of technology.

Strengths of Tata motors include strong Market Position, Robust sales growth, R & D Activities ,successful Alliances and joint ventures . Whereas the weaknesses include weekpresence in luxury segment and low employee productivity.

As far as TSEP analysis of Tata Motors is concerned, Tata Motors and its parent company,the Tata Group, are ahead of the game in the technology field. Tata motors usesintegration technique with their foreign alliances. They function with a global economicperspective while focusing on each individual market. Tatas headquarters in Mumbai,India, strictly controls and regulates operations in all dealerships and subsidiaries, inaddition to knowing and abiding by all labor laws in the multiple countries



Application of Michael Porter's to Tata Nano states that there is relatively little threat of new enterants due to economies of scale, high capital costs, high experience andexpertise of this leading automobile group, product differentiation and cost advantage.

Bargaining power of the buyer is low due to high switching costs, large number of buyers,strong brand image of Tata and due to differentiated product advantage

Bargaining power of the suppliers is high because of less number of suppliers, lessnumber of substitutes of the supplies,

Threat of substitutes is low and all depends of the price of the car. If it increase, threat of substitues is certainly there.

Extent of competitive rivalry is low as of now due to price competition, high exit barriersand due to product differentiation but the intensity of rivalry is in an increasing stagefacing competition from maruti and Hyundai.



ReferencesInternet References:

http://www.tatamotors.com/

http://en.wikipedia.org/wiki/Tata_Motorsnews.outlookindia.com/

www.autoindiaforum.com

Book References:

Strategic Management By Stephen P RobbinsMarketing Management By Kotler

Management by Stephen P Robbins



Business enviornment by Shaikh Saleem(2nd edition).

ASSOCHAMs report on investments prospects inIndian economy(2008-09).

Economic analysis report by Fortune, July 2009.

Weekly economic bulletin, June 16-22,2009.

www.livemint.com

www.economictimes.comBusiness Line



y http://www.tatasteel.com/newsroom/financial-result-09.pdf

y www.metaljunction.com

y http://www.tatasteel.com/investorrelations/main-q4-08-09.asp

y http://www.tatasteel.com/investorrelations/annual-report-2008-09/annual-report-2008-09.pdf

tata steel, fmcg, tata motors, nano

Documents