Tata Motors Global Market Strategy

This assignment examines Tata Motors' global market strategy, considering factors like competition, economic conditions (including inflation and recession), and the impact of Brexit. It incorporates Porter's Diamond Theory to analyze competitive advantages and explores challenges faced by multinational corporations in international markets.

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Executive Summary
Multinational companies are the companies that operate their business in more than one country.
The culture of multinational corporations rises from the introduction of globalization (Florein
Wettstein 2009). Globalization is process in which a country starts doing business on an
international platform. Almost every country around the world is now globalized, and there is a
very large number of companies around the world that are now operating their business in
different countries (Rodrik 2010). Google, Microsoft, Fed-ex are some of the world’s top
multinational corporations. In this report we are going to discuss about the Tata group from
India. It is one of the world largest Multinational Corporation. This report has been prepared on
the business of Tata Motors, a part of Tata group. Tata Motors is an Indian multinational
corporation that is currently operating its business in countries like Argentina, Great Britain,
South Africa and Spain (Kapoor 2017). This report will focus the business of Tata Motors in
Great Britain. Tata is one of the top most trusted brands not only in India but in the world and
being rich in culture and other things Tata chose Great Britain as one of its manufacturing
country. It would not be wrong to say that multinational corporations are among the key players
in developing an economy (WikiPedia 2017).
Part- 1 Analysis of the Tata Motors
Tata Motors, earlier known as TELCO (Tata Engineering and Locomotive Company) is one of
the Businesses that the Tata group is into. Tata motors has it’s headquarter at Mumbai India and
it manufactures passenger cars, military vehicles, trucks, vans etc (Spokesperson 2016). Tata
Motors as said in the introduction paragraph owns manufacturing plants in Argentina, South
Africa, Spain and Great Britain. Tata Motors was the first Indian automobile company that
achieved the capability of developing a competitive indigenous automobile. Tata Motors has
ranked 226th place in the list of 500 top global fortune lists of biggest corporations of the world.
In 1998 Tata Motors launched its first ever fully indigenous vehicle Tata Indica, which created a
revolution in the Indian Automobile market (WikiPedia 2017). Till date Tata Motors has more
than 10 passenger vehicles in its squad. The Tata group was founded by Jamestji Tata and it was
Rattan Tata who took the Tata group to other heights of success by his dedication towards the
Tata Group in just a period of less than 20 years he made Tata a well established and a well
recognized organization at an international level (Shekar 2016).
Tata Motors believes in equality and friendship among all the nations. The theory of liberalism
suits and fits best to the development of the Tata Motors. The theory of liberalism states that
international business organizations are the one that plays a key role in making the relationships
better of different countries (Leonard 2016). The theory of liberalism states and believes that
International business organization can develop cooperation among various states and they can

solve any critical issues with non violent methods. Tata Motors believes in the same and works
towards the welfare of the society.
Part-2 Host Country Analysis
In this part of the report we are going to discuss about the various factors that are affecting the
firm’s growth or success in the host country. U.K is no doubt is the best foreign direct
investment destination for the Indians but there are other several factors that hinder the growth of
business in UK. We will discuss the Political factors first. There is political instability in UK as
there is an issue of Britain leaving the European Union (Hunt 2016). Most of the revenue of Tata
Motors comes from Jaguar Land Rover British luxury car, and if Britain exits from the European
Union then there will a huge pressure on the revenue of the Tata Motors (Wolf 2016). Most of
the Economists have even said that the exit of Britain from European Union will result in the fall
of the shares of Tata Motors to 12%. There will be huge crisis of workforce, and the economy
will surely fell apart, in addition to this there will be fiscal deficit all over (Markey 2017).
Another Major Factor that is affecting the Tata Motors in Britain is that, Recession is UK. In the
year 2010 the economy of Great Britain was hit by a great depression that lead to the loss of
millions of jobs in Europe. Since then UK has not recovered from that depression fully. Even
now the UK government has put several restrictions on the Visa applicants; they make thousands
of verifications and conditions if someone wants to visit Britain. This depression affected the
Indian Businesses operating in UK (Coppala 2015).
Inflation would be another adding factor in this discussion; UK has the highest rate of inflation
amongst the top world economies. The issue of exit from European union has pushed the rates to
rise, the standard of living of the peoples are falling as the rates are going so high that it is
becoming almost impossible for people to buy their daily needs products (Inflation. EU 2017).
Now if we talk about if it is actually profitable to operate or set up a Multinational firm in UK
then economical the answer would be a no. The reason being the already set up businesses in UK
earn profits but these profits never go to the home country, they remain in host country and the
owner use this profit in increasing the business in UK only, this is done to show the UK
government or general public a feeling of social welfare that is not at all good for the home
country (Prajapati 2009).
The porter’s diamond theory is best suited here; the theory shows that how a government can
make competitive advantage for itself by the factors available to them. This theory was created
by Michael Porter. The porter theory is largely based upon the four factors and these are firm
strategy, structure and rivalry, supporting industries and factor and demand conditions (Smith
2014). Firm strategy, structure and rivalry refer to the competition between the firms that leads to
the innovation and new ideas of creating products that are totally new for the market. Supporting
industries means that rise or fall with the rise or fall in the main industries that also leads to
innovation of new technology. Demand conditions refer to the customer base of the country or a

nation, the more the is the customer base the more will be the chances of new inventions and
creativity. According to the porter diamond theory factor condition is the most important
determinant in this theory. Factor conditions refers to the creation of those factors that the nation
can built itself such as world class technology, skilled labor, infrastructure etc. The Great Britain
has created the world class technology; they have skilled labor and the most powerful
infrastructure (Scoth 2010).
Part-3 Foreign Entry Strategies
Foreign entry strategies mean the medium through which the company entered the host country,
market to sell its products. There are several entry strategies such as joint ventures, franchise,
mergers, licensing etc (TradeStart 2017). Tata Motors used joint ventures entry strategy to touch
the European market. For an automobile firm it is very easy to enter an international market if
the organization joins its hand with the host organization. As the automobile market has so many
entry barriers that a single new entrant just can’t even think about entering the market alone.
Same was done by Tata Motors they slowly and steadily capture many companies by buying
significant shares in many automobiles of Europe and when the Tata Motors entered Europe they
bought the British luxurious car brand known as Jaguar Land Rover. UK was the most suitable
market for Tata Motors. SUV concept of cars came into light and its demand increased many
times in a small period, Tata Motors wanted to cover this market and for that it had 3 main
countries in its list these countries are US and Russia was also considered by the Tata Motors for
their business operations but US had high trade barriers it was not easy for Tata Motors to enter
the US automobile market all alone, plus the requirements in the SUV concept was so high that
Tata being new in that market was not able to produce such high tech cars. Whereas Russia had
many other restrictions, that were coming in the way of Tata Motors. UK, US & Russia when
compared together showed huge differences. UK was selected as it was the best destination for
the Tata Motors to set up their manufacturing plant. This was the best way for Tata Motors to
enter the Britain market (Leecooper 2013). As there are many advantages of this way entry,
likewise there are many disadvantages too. The disadvantages are that the already created public
image of the host companies, joint ventures sometimes ends up in huge losses that occur because
of disputes in the partners, conflicts in ideas and thoughts etc. These could be some of the major
disadvantages for the foreign entry strategies of a company.
Part-4 MNC & Its Impact
The multinational corporations have to face a number of challenges before setting up their
business operations in a host country. These challenges are sometimes so complex and hard to
face that few organizations leaves the race of setting up the business in most prominent countries
and they go for underdeveloped economies. The challenges that Tata Motors has faced while
setting up their business are, as under (Tayab 2013):

 Political Risk: One of the biggest issues that is faced by the Tata Motors is the issue of
political risk into their business in UK. The Exit of Britain from European Union has
become so important for Tata Motors that, if Britain exits from the European Union then
it will result in the fall of the shares of Tata Motors by almost 12%. This fall will result in
huge revenue losses and it might increase by the period of time as the political instability
in Britain doesn’t seem to end in near future. Tata being the owner of Jaguar Land Rover
a British Luxurious car brand wants to influence the international automobile market by
its overseas operation but the political instability in Great Britain is not Co-operating with
the Tata Motors, the most renowned economists of world has even said that the exit of
Britain from the European union will put a severe pressure on Jaguar Land Rover and it
might have to be closed (Rahman 2015).
 Currency Fluctuations: Another biggest challenge for a multinational company is that
of the currency fluctuations. The multinational corporations must prepare a strategy that
will deal with such fluctuations. Sometimes the companies are spending in US dollars
and earning in a currency which is comparatively low, hence such differences may occur
loss on the accounts of the organization.
United Nation has put the environmental issues at front and they want every multinational
organization to take it into their consideration. Every organization that is thinking of expanding
their business on an international level must consider the rules and regulation regarding
environmental issues of that country. A business organization must follow all the environmental
rules and regulations of the host company this will not only save the environment but will help
them to connect with more and more customers which will ultimately increase the profitability of
the organization. Tata Motor is a key global player that totally understand the problem of
environmental issues and this the area where they need to further work upon, however they are
already working and they put forefront all the environmental issues and have a dedicated team
that works on bettering the environment for the coming generation (Berg 2008).
Conclusion
At the end of this report a detailed and a concise conclusion is provided. Multinational
corporations are no doubts the organizations that are capable of influencing large economies,
however there are certain challenges that can easily affect the existence of the most renowned
multinational corporation. These challenges are sometimes so complex and difficult that most of
the so called Multinational Corporation winds up their business and go back to their country of
origin. So in order to cope up with these challenges a multinational organization must have the
resources that will provide them an unconditional support, in addition to this all the multinational
corporations are required to do research and analysis on the country that they wish to operate
their businesses in. This Analysis will not only give the organization a paper of stats but a true
and an actual condition of the various factors of that country that might affect the working of the
organization. All the Multinational organizations are bound to follow the guidelines setup by the
United Nations in regard to the environmental issues. Tata being a giant business organization

understands this fully and complies all its working with the guidelines set up by the United
Nations, There is no doubt that a business organization whether large or small if is operating on
an international level have to deal with various issues, same is in the case of Tata, However Tata
Motor in UK is doing well in its operation and its expected revenue for this year is around
30,000 crores. Last year Jaguar Land Rover seen a tremendous growth, which has never been
seen by BMW or AUDI. Hence Tata Motors is doing exceptionally well in International Market.
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