Tata Motors

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

Tata's 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 Tata's 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 father's small trading company. Thirty-five years later, that same boy was the owner of India's 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 India's GDP. In 2006, it is projecting its annual revenue to be around $24 billion. Figure 1 shows the breakdown of Tata's 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 world's 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 Tata's human resources department work to lead major changes across the vastly different cultures of the employees that exist within Tata as a whole group. Tata's management training center located in Pune serves as a corporate school to help Tata's 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 do's and don'ts 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