Case Study of Tata Motors: Management Decision Making and Organizational Issues

This case study explores the management decision making process and organizational issues faced by Tata Motors in the UK. It discusses the types of decisions needed to deal with these issues, risk and impact analyses, and the challenges faced by managers in making decisions.

B12725
TATA MOTORS

Table of Contents
INTRODUCTION...........................................................................................................................3
Organization Introduction............................................................................................................3
Understanding of Management Decision Making...........................................................................3
Literature Review........................................................................................................................3
Organizational Issues.......................................................................................................................4
Types of decisions needed to deal with issues.................................................................................6
Risk and impact analyses.................................................................................................................8
Identification of decision making problems that would face by the managers in Tata Motors.......9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
This project consist detailed case study of international organization that has operations across
the globe. The selected company for case study is TATA MOTORS; report is made for popular
product of Tata Motors which is Range Rover and the selected country for secondary research is
United Kingdom. All analyses and focus of report is based on the operations of Tata Motors in
UK. It covers how efficiently company takes decisions to solve its organizational issues and risk-
impact analyses will explore the way how company tackle problems occurred from internal as
well as external environment.
Organization Introduction
Tata Motors is one of the leading brands all over the world; its main operational area is
manufacturing of automobiles. Company believes in manufacturing innovative mobility
solutions that meet customer’s expectations. The future plan of Tata Motors include introduction
of power trains and electric solutions with lowest life-cycle costs. Organization has six key
mobility drivers which are as follows; modular architecture, complexity reduction in
manufacturing, autonomous vehicles, clean drivelines, shared mobility and low total cost of
ownership. Company’s mission is to provide best vehicles and experiences to its global
customers at budgeted price (Mishra, Agnihotri and Mahindru, 2014).
The organizational structure of Tata Motors consists in the form of matrix having functional and
divisional organizational structures. Due to spread across the global; need to integrate various
divisions, including functional units are necessary. It’s basic product line categories into three
parts; operations, commercial vehicle business unit and passenger car business unit (Bowonder,
2004).
Understanding of Management Decision Making
Literature Review
Decision making means one choice among all options. It is basically a problem solver by nature.
Decision-making is closely related to policy-making, but is not one. A policy is comparative and

more comprehensive, affects many problems and is used repeatedly. Conversely, a decision
applies to a particular problem and is used in a non-continuous form (Slack and Cooke, 1984).
Classic thinkers neither planning, organization, coordination and control etc. like managerial
work nor decision making as a ubiquitous activity is not much importance. Classic theorists like
Fayol and Arvik were involved in decision-making only to the extent that it affects delegation
and authority, while Frederick W. Taylor pointed to the scientific method only as an ideal
approach to decision making. According to Simon, value grounds are concerned with the choice
of action goals, while factual bases are concerned with the choice of means of action.
The management decision is a choice of one of the possible options. The choice is made on the
basis of an analysis of the causes of the situation. Responsibility for them is the most important
function of management. Methods of decision making for development and management are
diverse and not identical to each other. The manager's task is to select the appropriate method
and implement it correctly (Morton, 1971).
The manager, before whom this or that problem arises, should not be hasty in solving it and
should not catch one thing or the other. Management decision-making processes and methods are
interlinked, however, when choosing any method, management recommends following several
steps in formulating principles and making choices. They can be divided into initial and final.
Organizational Issues
Organizational issues are the problems face by companies while applying strategic planning.
This problems can be occurred in two forms; externally and internally (Kondalkar, 2007).
Business diagnostics is a method of company evaluation that allows in-depth analysis of core
areas of management of a business. With a deep understanding of organization, it is possible to
solve problems in a practical way and direct what really matters and without spending time on
any relevant items. To analyze organizational problems; Porter’s five forces analysis has been
done below in the context of Tata Motors:
1. The threat of substitute products: Availability of lots of substitute products creates threat for
Tata Motors and it is also a big issue for the company. Ashok Leyland found to be strong
competitor of Tata Motors. But after research it was found that it only deals in commercial
vehicles and doesn’t do effective change in its cost; which gives advantage to Tata Motors.

The threat of substitute products is low for the company due to effective cost strategy, better
after sales services and innovative features.
2. Threat of entry of new competitors: In UK; government has put barrier on new entrants
though including economies of scale, huge capital requirements, preexisting customer’s
requirements, regulation, trademarks, patents, advanced technologies and quality products.
Tata Motors is a veteran firm which operates large scale operations and employees more
than 36,000 workers in UK; which gives it strategic advantage to have good terms with
government authorities and support for survival of business. Hence, this threat is also weak
for the company (Robbins, 2001).
3. Intensity of competitive rivalry: This threat could have huge impact if company fails to
respond to the changes like in regulations, technology, preference of consumers and
economic changes faster than its rival firms. The acquisition of range rover with jaguar gives
strategic advantage to Tata Motors in increasing its market share through differentiating
their product with their rival firm Ashok Leyland. Hence, the affect of this threat on Tata
Motors is high; due to competition from big organizations and minimum price sometimes
force company to sell its product at very low price; even at loss (McKenna, 2000).
4. Bargaining power of Customers: Tata Motors is not only automobile manufacturing
company in UK; other big organizations like Aston Martin, Bentley, Lotus, McLaren and
Rolls Royce which mark their presence more than 80 years gives strong competition to Tata
Motors. They also provide choices to customers to purchase vehicle at low price with better
features.
Some other external and internal issues affecting strategic plan of the company have been
discussed below:
 High Debt equity ratio: After doing performance appraisal it was found that debt equity ratio
of Tata Motors is 3.5:1; which show high risk for the company to become insolvent. From,
2016 to 2018; company able to maintain debt equity ratio of 2:1, which was best ratio for the
company to raise fund at low weighted average cost of capital. Now the current report shows
that company is not generating regular incomes due to crisis in the market. This has become
big problem to meet interest payment of its debts by company.

 Non Performance of small car segment: Maruti-Suzuki a strong competitor in small car
market becomes issue for the company. Because all public don’t have enough money to
purchase expensive vehicles (Kinney, 1999).
 Leadership challenges: Due to poor tactics and disability to cop up with rapid changes in
consumer demands; Tata Motor’s market share and finances have suffered. Two major
earnings product of the company; Jaguar range rover and commercial vehicles are part of
this challenge.
 Unexpected slowdown in economic rate: Tata Motor’s forecasted sale for Range rover has
affected due to slowdown in economic rate of UK. Strategy to increase sales and preplan
were failed due to this unexpected sale.
 Increasing return on investment: Company is still struggling to increase return on investment
due to high competition; which forces company to sell products at very low price and having
low margin profit left. This is main problem which company is facing for prolong period of
time.
 Technological advancements: Tesco Company is good enough in doing innovation and
creativity; because CEO always focuses on future changes, not on current customer
requirements. Such a company puts pressure on Tata Motors to keep itself update to remain
in the market. But firm don’t have enough resources and research lab where it can deliver
such a product.
 Selling directly to the customer: Due its huge size; Tata Motors have loosen the grip over its
customers. It’s big automobile manufacturing company which has well known brand. This is
the reason that company is not active on social sites, telephone marketing and email
marketing. Which cause relationship of organization and customer not that much strong.
Types of decisions needed to deal with issues
Some of the decisions which are essential for any organizations to take for resolving its issues
are discussed below:
1. Programmed and non-programmed decisions: Programmed decisions tackle repetitive and
routine problems in the organization. The lower level of management involves in such type
of decisions. For instance; in case of Tata Motors, daily bases problem such as less sales
revenue from daily sales, shortage of raw materials, wastage of resources during

production and Leadership challenges requires programmed decisions to solve problem.
On the other hand; non-programmed decisions concerned at the time of critical situations
like new branch opening, large employees turnover, expanding product line and strategy to
sell directly to the customer. This type of problem is tackle at higher level of management.
2. Routine and strategic decisions: Routine decisions are taken at low level of management
where not much evaluation and analysis required it is taken on general functioning bases of
organizations. Tata Motors takes these decisions for making staff shift, discount allowed
and select offer for customers. On the other hand; Strategic decisions concern for the
purpose of affecting objectives, organizational goals and making important policies for the
company (Porter and Kiremidjian, 2000).
3. Tactical and operational decisions: Tactical decisions are responsible for handle various
policy related issues. Top management takes such decisions which impact functioning of
organization for long term. For instance decisions like location of plant, volume of
production and channels of distribution comes under the scope of this decision. On the
other hand; operational decisions usually concern by middle and lower level managers like
for handling events such as employees bonus payment, leave allowed to workers and
calculation of overtime.
4. Organizational and personal decisions: Decisions taken by an executive in official capacity
comes under organizational decisions. For instance, if an executive decides to give
remuneration to customer for bad service comes under organizational decisions. On the
other hand, decisions taken by an executive in personal capacity known as personal
decisions. For instance, decision of leaving the organization; delegation of authority is
possible only in organizational decisions; not in personal decisions.
5. Major and minor decisions: Major Decisions concerns to be those decisions having huge
impact on organization and resources; for instance purchase of new factory, mergers and
acquisition and adding new product line. On the other hand; those decisions having not
much impact on organizational structure comes under minor decisions like purchase of
stationery for office.

Risk and impact analyses
Risk and impact analyses are the method of solving issues and problems of the organization. This
method works by analyzing risk occurred through problem and its end impact on organizational
structure. The major issue considered for risk and impact analyses is high dept equity ratio of
Tata Motors Range Rover.
Risk:
Tata Motors preferred 100% ownership by not taking any equity funding for Range Rover;
which has increased the risk for company to become insolvent. Company faces continuous down
in growth of business and unable to raise return on investment. Company doesn’t want to share
decision power with share holders, for this reason it adopts the strategy of 100% pure debt. The
continuous pressure from creditor and money lender on company makes the situation more
vulnerable (Becker-Ritterspach and Bruche, 2012).
Impact:
This risk has huge impact on organizational structure of Tata Motors. It can affect image and
reputation of the company if it not able to pay back to its money lenders. If organization fails in
making liquidation of fund or become insolvent then surrounding pressure will force firm to sell
its range rover unit and also lose confidence of customers in company. The estimated worth of
impact of this risk on company will be £1.5 billion.
Solution:
To solve this problem; there is only solution left with company; that is to take equity funding
from the market. This will lose company’s market share but can save £1.5 billion, which is huge
amount. Tata Motors can revert its market share through buy back its own share after
stabilization of range rover’s financial position. The second solution is to go for joint ventures or
merger with Jaguar Company for attaining strategic advantage in the market.

Identification of decision making problems that would face by the
managers in Tata Motors
Making decision is not an easy task; it requires lots of deep analyses and evaluation before reach
at final solutions. As every decision has its irreversible positive and negative impact on
organizational structure, it becomes necessary for managers to use his supervision and precision
skills to take right decisions for the company. Some of the decision making problems face by
managers of Tata Motors is discussed below:
1. Overload of information: Tata Motor is large having huge information’s and data belong to
daily transactions, other product lines and market analyses reports. It become difficult for
managers to sort important information’s which are helpful for decision making.
2. Non availability of alternatives: Sometimes sufficient alternatives are not available with
firm; for instance when country is hit by economic crisis then company is not left with any
alternatives except to bear loses. This situation also makes it difficult for employees to take
business decisions (Werhane, 1999).
3. Inaccuracy of data: Improper and inaccurate data amalgamates managers with proper
selection of alternatives. If data is not accurate then report reflected on the basis of
information become obsolete. Decision based on this data could impact organization
negatively and can result in huge market share.

CONCLUSION
So, on the basis of this project report; it can be concluded that company lies in cash cow position
where it requires market penetration for the growth of its market share. Tata Motors has
opportunity to enter into new field that is small personal vehicle to attract low budget customer
and increase its market share. Every decision depends on two grounds - the factual basis and the
value base. A fact is a statement of reality, whereas a value is an expression of priority. Any
factual basis can be seen and proved with measurable means. That is, its validity can be tested
empirically. On the other hand, a value base cannot be judged empirically, i.e. it can only be
considered subjectively valid.

REFERENCES
Books and Journals
Becker-Ritterspach, F. and Bruche, G., 2012. Capability creation and internationalization with business
group embeddedness–the case of Tata Motors in passenger cars. European Management
Journal, 30(3), pp.232-247.
Bowonder, B., 2004. Concurrent engineering in an Indian automobile firm: the experience of Tata
Motors. International journal of manufacturing technology and management, 6(3-4), pp.291-314.
Kinney, W.R., 1999. Information quality assurance and internal control for management decision
making. McGraw-Hill Professional.
Kondalkar, V.G., 2007. Organisational behaviour. New Age International Pvt. Ltd., Publishers,.
McKenna, E.F., 2000. Business psychology and organisational behaviour: a student's handbook.
Psychology Press.
Mishra, M.A., Agnihotri, M.V. and Mahindru, D.V., 2014. Application of maynard operation sequence
technique (MOST) at Tata motors and Adithya automotive application Pvt Ltd. Lucknow for
enhancement of productivity-A case study. Global Journal of Research In Engineering.
Morton, M.S.S., 1971. Management decision systems: computer-based support for decision making.
Division of Research, Graduate School of Business Administration, Harvard University.
Porter, K.A. and Kiremidjian, A.S., 2000. Assembly-based vulnerability of buildings and its uses in
seismic performance evaluation and risk-management decision-making. SPA Risk LLC.
Robbins, S.P., 2001. Organisational behaviour: global and Southern African perspectives. Pearson South
Africa.
Slack, N. and Cooke, S., 1984. Making management decision. Prentice-Hall International.
Werhane, P.H., 1999. Moral imagination and management decision-making. Oxford University Press,
USA.