Strategy and International Management: Benefits of Foreign Entry for Tata Group in Mexico

This paper analyzes the benefits and advantages of foreign entry for Tata Group in Mexico. It explains how Tata Group uses differentiation, leadership, and other strategies to enter the Mexico market. The paper also outlines the various benefits of entering the foreign market and discusses the SWOT analysis, PESTLE analysis, and Porter's Five Forces analysis used by the firm to gain competitive benefits in the Mexico market.

Running head: Strategy and international management
Strategy and international management

Strategy and international management
The main aim of this task is to explain and analyze the benefits and advantages of foreign
entry. Tata group has been selected in the task which is leading organization in the world. The
firm was founded in 1868 in India and it operates business independently under the guidance and
supervision of its own board of directors. Furthermore, the group is obtaining various unique and
attractive strategies’ in the Mexico market to gain various benefits. The paper explains that how
Tata group uses differentiation, leadership and other strategies to enter in the Mexico market.
Tata group is the biggest private corporate group in India. Along with this, the paper outlines that
how the company attains benefits by initiating business in Mexico. The paper also explains the
various benefits for entering in the foreign market. More detail of the task has been discussed
below.
Tata group is an Indian multinational conglomerate holding company with its headquarter
is located in Mumbai, Maharashtra India. It is incorporated in 1868 By Jamshedji Tata. It is one
of the biggest conglomerates in India (Rothaermel, 2015). There are approx 695,699 employees
employed in the company. Airlines, consumer goods, chemicals and automotive are included in
the list of Tata group products and services. Along with this, the firm follows effective code of
conducts and values to expand and flourish the business operations and activities widely
(Verbeke, 2013). Tata group operates and manages its business activities in various countries
including Africa, Australia, Europe, North America and South America. It uses effective and
unique strategies and policies to overcome the competitors worldwide. Now the company has
decided to expand its business activities in Mexico to maximize the profitability globally (Tata,
2018).
Mexico is a country between the United States and Central America that is known for its
Pacific and gulf of Mexico beaches and its diverse landscape of mountains. Apart from this,
Mexico ranks among the different countries for doing business in Latin America (Grant, 2016). It
is the sixth easiest country to conduct business activities successfully and effectively. In this
way, if the Tata group starts its activities in Mexico, it can gain various competitive advantages
and increase outputs in the global market. Expanding globally is one of the biggest strategies of
Tata group which helps to generate more and more revenue in Mexico. Recently, the firm is
acquiring and acting other companies in various countries. Tata group shows its interest in the
automobile, telecom, information technology, steel and energy sectors. This is now a new and
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Strategy and international management
ongoing strategy of the firm. One of the significant strategies of Tata group is diversification
which helps to beat the competitors in the market. Under diversification strategy, the firm sells
new and innovative products and services to the customers. This is very risky strategy in the
organization. The firm manufacturers diversified products to attract and retain the consumer’s
worldwide (Chari, 2013). This strategy can be beneficial for the organization to explore the
business in Mexico because marketing research is done by the firm under this strategy.
Furthermore, Tata group also uses market penetration strategy to increase the number of
customers in Mexico. A market penetration strategy focuses and identifies the existing customers
to sale the new and innovative products and services in order to gain higher market share. In
Mexico, there is a little differentiation among the product and service therefore lower price may
help Tata group to maximize its share in the market. In this way, the company is able to stay in
the competitive market. It shall be stated that Tata group also focuses on the STP (segmentation,
targeting and positioning) strategies to analyze the tastes, preferences and desires of the target
market. Feedback is also collected by the top management and seniors to improve and enhance
the quality and features of the products. If the firm conducts business in Mexico, effective
workforce is needed to perform tasks and duties therefore, sustainable human resource
management is maintained to appoint skilled and potential candidates in international market.
Differentiation is one of the ongoing strategies of Tata group to flourish the business in
foreign market. This strategy helps in differentiating the products from the competitor’s products
and services that could lead more profitability and revenue in Mexico. By initiating this strategy,
the firm can make a good and financial position in the international market (Grant and Jordan,
2015). Along with this, leadership strategy is also used by the organization to direct and assist
the business smoothly. Leadership is one of the attractive and effective strategies to render more
and more profit globally. It shall be noted that no company can survive and grow its business
without effective leadership (Barbera, 2014). To maintain an effective control over the workers,
leadership strategies are being implemented within the organization. One of the significant
benefits of leadership strategies is to encourage and motivate the employees towards their goals
and objectives. Apart from this, it increases and maximizes the productivity and returns of Tata
group to initiate the new business in Mexico. Leadership strategy is essential to guide the
workers in foreign market. Motivating employees perform their tasks and duties successfully in
Mexico market. The firm can easily analyze and identify the plans, policies and strategies of the
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Strategy and international management
rivalries in such market (Cuervo-Cazurra and Ramamurti, 2014). If the company conducts its
business in foreign market, then there are various issues such as culture, custom and language
issues are raised at the workplace. It is stated that the firm can easily provide cross cultural
training to the employees who from different countries by using effective and dynamic
leadership strategy. Spanish language is spoken by the people in the country. Therefore, dynamic
and unique leadership help in reducing and eliminating the culture and language issues within the
organization. Now it is assumed that leadership strategy plays an empirical role in Tata group in
Mexico (Doh et al, 2014). In addition, SWOT analysis is done by the Tata group to analyze and
identify the opportunities and threats of the competitors in the foreign market. Moreover, there is
no state religion in Mexico, almost 90% of the population is catholic and 5% are protestant.
Hence, the firm uses cross cultural dimension model to reduce and avert the cross cultural issues
in the international market. It also helps in understanding and analyzing the culture, norms and
values of Mexico (Sammut‐Bonnici and Galea, 2015). It shall be noted that the company needs
to understand and identify the opportunities and threats of the competitors therefore; SWOT
analysis is done by the firm in the Mexico that have been stated below.
Strengths
 Tata group is one of the most effective and established companies in automobile sector in
India.
 It provides wide and extensive distribution network to the customers across the world.
 There is an effective and dynamic penetration in the rental and taxi segment.
 Dedicated and unique engineering and research and development teams have been
appointed by Tata group within the organization.
 It uses highly diversified product portfolio in the company.
Weaknesses
 Limited international presence as compared to the international car manufactures. It could
affect the growth and sustainability of the firm in Mexico adversely.
 Apart from this, controversies such as Singur plant for Nano etc hurt the image of the
Tata motors in the world.
Opportunities
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Strategy and international management
 Expanding and flourishing automobile market can be a boon for Tata group.
 Leveraging mergers and acquisitions to obtain newer technology. Purchasing capability
of potential customers and increasing per capital income is also a biggest opportunity for
Tata group to beat the competitors worldwide.
Threats
 Increasing fuel costs is one of the significant threats for Tata group in Mexico.
 Immense and high competition exists in the market.
 Furthermore, competitors offer products in same features at a lesser price.
Apart from this, corporate level strategies, and business level strategies used by the firm to
gain various rivalries benefits worldwide (Aithal, 2017). It has been evaluated that Tata group
also uses stability strategy to reach its optimum level of market. This approach requires leaders
to monitor on customers retention in the global market. By using this strategy, Tata group is able
to retain customers in Mexico for maximizing the outputs and revenue. In addition, Tata group
uses pestle analysis to measure and identify the marketing risks and opportunities that have been
detailed below (Hillson and Murray-Webster, 2017).
Political factors: Political section provides understanding about the political system and key
figures related to the business in the country. The governments of the Mexico can influence the
success and growth of Tata group adversely. The main cause of the poverty in Mexico is political
economy that has a direct impact on the growth and progress of the company. In this way, the
country is not strong in terms of political factors. It shall be noted that the company needs to
focus on the political system of the country to enhance and encourage the business (Almond and
Verba, 2015).
Economic factors: There are various economic factors exist in the country that could influence
the profitability of the company positively as well as negatively. The GDP of the country is
8201.31 USD and inflation rate is 3.76% in the country. Along with this, the country is the
second biggest export market and third biggest trading partner in the world as it can provide
several benefits to Tata group while conducting business activities and actions in such country.
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Strategy and international management
Social factors: The social factors include customs, values, beliefs, religion and genders have a
direct impact on the business of the company adversely and positively as well. The country is
most populous Spanish speaking country across the world. The socio-cultural factors of the
country affect the ability and potential of the company in which the company operates and
manages. The firm needs to focus on these factors before initiating the business in Mexico
(Nevitte, 2017).
Technological factors: Changing in technology and strategies also affect the sustainability of
the firm. Technology can change the buying behavior and lifestyle of the consumers. Along with
this, technology also changes production process and approach in the market. In this way, Tata
group should focus on the technological factors to introduce new and innovative technologies
within the organization (Nevitte, 2017).
Legal factors: The rules, regulations and norms that have been decided by the Mexico
government have a direct impact on the company’s productivity and efficiency. The Mexico
regulatory agencies include Securities and Exchange Commission and environmental protection
agency.
Environmental factors: There are numerous environmental issues caused by rapid growth,
industrialization and urbanization. All these issues affect the sustainability and progress of the
firm. Tata group should also monitor on the pollution and other environmental issues (Hamosh
and Goldman, 2012). Along with this, globalization is one of serious issues in Mexico which
could affect the position of Tata Group Company. The company should concern about the ways
to reduce and prevent the global warming in the Mexico.
Apart from this, the organization also uses porter five forces analysis to gain competitive benefits
in the Mexico market. One of the vital strategies of Tata group is porter five forces analysis that
may influence the competition globally (Aithal, 2017). The porter five forces analysis has been
stated below.
Barriers to entry: Time and cost of entry affects the growth of Tata group in the country
because time is most important to launch a product in foreign country. Knowledge, technology,
government policy and product differentiation also affect the sustainability of the organization.
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Strategy and international management
Bargaining power of buyers: This force includes switching costs, number of customers and
brand image. The firm focuses on the number of buyers in foreign country to maximize the more
and more clients in Mexico. The company analyzes and evaluates needs, requirements and
desires of buyers to increase the sale and revenue (Cascio and Boudreau, 2012).
Bargaining power of suppliers: It includes number and size of the suppliers, unique products
and services and ability to substitute that may affect the position of the firm in the global market.
Threats of substitutes: Price brand, substitutes performance and buyer willingness are included
in threats of substitutes. It can be a biggest challenge and issues in the international market.
Therefore, the firm should focus on the substitute’s products and services to make a good image
in the market.
Competitive rivalry: This force encompasses diversity of competitor, exit barriers and price
competition. It shall be noted that Tata group should measure and identify the rivalries in Mexico
market to stand out against the competitors in such market (Doolittle, 2011).
Tata group also uses advertisement and promotional strategies’ to promote and encourage
the products and services. With the help of advertisement and promotional strategies, the firm
can attract maximum number of customers in the market. All these strategies are initiated by
Tata group while carrying business activities in Mexico (Luo, Sun and Wang, 2011).
The main motive behind foreign entry is to maximize sales and revenue in the
international market. Apart from this, the company wants to promote innovation and advanced
technology to gain long term growth and success therefore, foreign entry mode is initiated by
Tata group. Foreign entry is excellent and dynamic way to expand and explore business in
Mexico. Furthermore, the organization can increase and boost capital potential by entering in the
foreign market widely. Another motive to doing business in Mexico is that fact that most
consumers in Mexico are very familiar with products and services. The consumers of the country
are following American culture. In addition, the firm can increase revenue and profitability in
Mexico by initiating the business activities and operations in such country. Along with this,
optimum utilization of resources can be done by using foreign entry mode. By entering in the
foreign market, the organization has been able to help more people by providing innovative
automobile products. Along with this, it can utilize the skills and knowledge of multitalented
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Strategy and international management
people because if the firm operates its business in foreign market then it has an opportunity to
appoint large workforce who from different countries and backgrounds. Thus, the company can
attain long term advantages in the Mexico (Cascio and Boudreau, 2012).
On the above mentioned study, it can be concluded that Tata group is one of significant
and leading brands in the world. It provides enormous automobile products to the customers
across the world. Now the firm has decided to enter in the foreign market to reach maximum
level of outputs and minimize risks and challenges of the market. In this process, various
strategies and policies are initiated by the company while carrying business activities in foreign
market. In this way, the organization has been able to maintain a good reputation in the Mexico.
Furthermore, here is the discussion about the motives and benefits of entry mode. It is
recommended that Tata group should focus on the corporate level strategies and intensive growth
strategies’ to overcome the rivalries in such market. It should also monitor on the intensive
growth strategies to maximize the growth of the firm.
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