Growth & Internationalization: The Case of TATA Motors
2011; Volume: 47; Issue: 1 Linguagem: Inglês
ISSN
0019-5286
Autores Tópico(s)Indian Economic and Social Development
ResumoGrowth and internationalization go hand in hand. Internationalization has many risks like economy, technology, customer segments, competition intensity etc. In this paper the author has examined the growth of the Indian automobile giant TATA Motors, both domestically and internationally. The study relates to the period from the 1999 recession to the present and has used the strategic formulation steps. It tried to map the strategy and delineate the lessons learned in the process. The lessons were in the range of opportunity capitalization, cost reduction, and strategies of international business to product strategies and market selection. The theory of firm framework has been used in the analysis of growth. The Background The Indian economy has maintained a steady growth rate of 8-8.5 per cent. The Indian automobile industry has also grown by 13 per cent over the last few years. Pawan Goenka, President of the Society of Indian Automobile Industry (SLAM), said that the Indian automobile industry is expected to grow at the rate of 15 to 16 per cent in the coming years. According to a study by Booz & Company, a global management consulting organization, the Indian automobile industry will overtake the European market and is slated to become the world's fourth largest by 2015, selling almost 6 million units annually by 2020 (Automobile Updates LBEF 2011) Indian automobile growth can be divided in to three stages (IBEF Automobile Report 2011) First Stage: Pre-1983: The Indian Market was closed. The growth of market was limited by supply and the product models were outdated. Major players were: Hindustan Motors, Premier, Telco (later TATA Motors), Ashok Leyland and Mahindra & Mahindra. Second Stage: 1983-1993: Government of India (GOI) acted as a facilitator and started a JV with Suzuki to form Maruti Udyog Japanisation. From the first phase one name was added to the players' list viz. Maruti Udyog. Third Stage: 1993 to Present: De-licensing of sector in 1993. Global Original Equipment Manufactures like GM Ford, Honda and Hyundai started assembly in India. The present players' structure of the industry is as follows: * Global OEM: GM, Toyota, Ford, Hyundai, Maruti Suzuki, Honda, Skoda, Volvo, Mercedes. * Global Suppliers: Delphi, Visteon, Bosch, Denso, Valeo, and Thyssen Krupp * Indian OEM: TATA Motors, Mahindra & Mahindra, Bajaj Auto, TVS Motors, Hero Honda, Bajaj Tempo, Ashok Leyland. * Indian Suppliers: Bharat Forge, Sunderram Fasteners, Rane Group, Shriram Pistons, RICO Auto and Sona Koyo Steering. India as a Manufacturing Hub Even if the tax structure in India is highly comparable to other emerging economies, (Table 1) it is compensated by labor productivity (Table 2). Indian electric power cost is high as compared to in other emerging economies but it constitutes around 3 per cent of the over all cost structure and hence it is not a disadvantage. Indian automobile components manufactures have upgraded themselves to become more value added components suppliers. The reasons for the Indian automobile success story are: i) Trained and competitive cost manpower ii) Huge domestic market iii) Global standard of product development and support industries iv) Good relationship with regional trading blocks like EU, MESACOR and ASEAN (Salwan 2009). Competition Landscape: (IBEF Automobile Report 2011) The Indian Automobile Industry is broadly divided into three categories. A) passenger car, B) commercial vehicles and C) two and three wheelers. In this article we will be concentrating on passenger cars and commercial vehicle segments. Passenger Car Segment (PC): Te Indian PC segment constitutes 22% SUVs/MVs and 78% passenger cars. Maruti Udyog Ltd. has 46%, the largest share in the PC segment in 2008-09, followed by TATA Motors (15%), Hyundai Motors (14%), Mahindra & Mahindra (8%), Toyota (4%), and others (13%). …
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