Strategic Management of Tata Motors: Analysis and Recommendations

This article analyzes the strategic management of Tata Motors, including organizational structuring, sales of Tata Nano, and barriers to entry in international markets. It offers recommendations such as adopting a performance appraisal system, involving in joint ventures, and upgrading features for Nano.

Running head: STRATEGIC MANAGEMENT OF TATA MOTORS
STRATEGIC MANAGEMENT OF TATA MOTORS
Name of the Student:
Name of the University:
Authors Note:

1STRATEGIC MANAGEMENT OF TATA MOTORS
Table of Contents
1. Source Problem............................................................................................................................3
2. Secondary Problem:.....................................................................................................................3
2.1 Tata Motors- Organizational Structuring...............................................................................3
2.2 Tata Motors- Decrease in Sales Of Tata Nano......................................................................4
2.3 Barriers to Entry in International Market..............................................................................4
3. Analysis:......................................................................................................................................5
3.1 Tata Motors- Organizational Structuring...............................................................................5
3.2 Tata Motors- Sales Of Tata Nano..........................................................................................6
4. Alternative Strategies:.................................................................................................................6
4.1 Market Analysis.....................................................................................................................6
4.2 Performance Appraisal System.............................................................................................7
4.3 Enhanced Features For Nano.................................................................................................7
4.4 Effective Communication......................................................................................................7
5. Recommendations:......................................................................................................................8
5.1 Adopting Performance Appraisal System............................................................................8
5.2 Involving in Joint ventures..................................................................................................8
5.3 Innovative Features For Nano.............................................................................................8
6. Implementation, Control And Follow Up:...................................................................................9
References:....................................................................................................................................10

2STRATEGIC MANAGEMENT OF TATA MOTORS
Appendix:......................................................................................................................................12

3STRATEGIC MANAGEMENT OF TATA MOTORS
1. Source Problem
Tata Motors is an international conglomerate from India. Tata Group was founded by
Jamshedji Tata in 1868 and Tata Motors is a crucial part of Tata Group. Tata Motors should
develop its own strong product branding to be leading companies worldwide. over $35 billion
has been set aside by the Tata Group for investment for the next 3 years (Businessline.com
2012). By conducting in-depth and detailed market analysis and widening the perspectives for
innovation Tata Motor can attains it desired goal.
The strategy of Tata Group in its home market that is India differs to a great extent from
its overall international ventures. Tata group is extremely decentralized and have high autonomy
related to operations and strategy. With a turnover of more than $70 billion, it has wide range of
interests that involves steel, cars, chemicals, retailing, hotels and IT consultancy (Witze, 2010).
The acquisitions of steelmaker Corus in 2007 and in the following year Jaguar Land Rover were
very high-profile. Moreover, steel mines in Vietnam, Thailand and Singapore. Generally the
international ventures made by Ratan Tata consist of various takeovers and acquisitions
(Khandelwal, 2016). Many acquisitions were also made in Asia, North America and Europe.
Tata steel is growing globally therefore joint venture is one of the best options to build
relationship with the international companies as well as governments.
2. Secondary Problem:
2.1 Tata Motors- Organizational Structuring
Tata Motor should lay more focus in restructuring its organizational practices effectively
(Kolk, 2016). Since January 2107, employee turnover has rapidly increased as the company has

4STRATEGIC MANAGEMENT OF TATA MOTORS
planned to reduce its employees as a part of organizational restructuring. The number of white
collar workforce of Tata Motors has reduced up to by 1500 domestically (Madhukar, 2007).
This organizational change has created high uncertainty of employees that further leads to their
termination. The restructuring should be adequately done within the organization to retain its
loyal and trusted employees.
2.2 Tata Motors- Decrease in Sales Of Tata Nano
Tata Nano also known as the world’s cheapest car failed to conquer the market. launched
in the year 2009, Nano could never attain positive growth throughout it sales period (Ghosh,
2016). Tata Nano has unable to fulfill the consumer expectations despite the fact that is a low-
budget vehicle. Tata Motor has to re-model Nano to reposition itself in the market such as in the
form of electric and hybrid car to increase its market penetration
2.3 Barriers to Entry in International Market
Tata faces barrier to entry in certain business markets as well as adaption in few market
due to the critical emissions norms. The local taste and preferences in the international market is
also major factor that is difficult to understand and create a negative impact on global expansion
of the business Tata motors cannot afford to maintain its business solely connected to the
fortunes of a particular company to achieve growth. Strategic differences can occur as Tata is
designing most of its products and services for Indian exigencies that is comparatively different
from the increased speed and engineering excellence standards related to global companies
(Zander, McDougall-Covin & Rose, 2015). Most of the companies suppliers are mostly Indian
based and do not have enough potential or competencies to lead the company’s global expansion.

5STRATEGIC MANAGEMENT OF TATA MOTORS
3. Analysis:
3.1 Tata Motors- Organizational Structuring
The main purpose of restructuring the organization should be done to attain
accountability and ownership. As per the official report, the management has undergone a drastic
change in terms of requirements and roles to improve the leadership and performance efficiency.
Majority of employees has to resign and the affected individuals were given options of
resignation or voluntary retirement. Whereas, the selected staff were transferred to some other
departments. The employees that were remaining in the firm were confused with their roles and
highly de-motivated. While going through the process of organizational re-structuring, Tata
Motors was accountable for the loss of their majority of dedicated and capable staffs. This
further lowered the performance and productivity rate of the employees as well as the
organization. Tata Motors should implement an adequate rewarding system.
In future to minimize risks and grow globally Tata should plan joint venture is one of the
best options to build relationship with the international companies as well as governments. This
would leads to incorporation of highly integrative techniques to control the risks involving
foreign politics (Bettis et al., 2016). Tata rebrands it’s all of the acquisition as it helps in adding
value and increasing goodwill of the company. By joint venture there is huge possibility of
market expansion and growth opportunities in future (Sadowsky, 2013). Through conglomerate
itself, Tata holdings have been turned to be the most successful corporation in the global
business (Businessline.com, 2012). Hence, to attain wealth maximization and success, joint
venture is definitely essential for Tata as it would diversify its risks in future. Moreover, through
effective communication within the organization

6STRATEGIC MANAGEMENT OF TATA MOTORS
3.2 Tata Motors- Sales Of Tata Nano
Tata Nano also regarded as ‘The Cheapest Car’ amounts up to USD$2000 (Ghosh, 2016).
The potential audience or its target market involves the middle or lower class population of
India. They are usually the families involving families that are unable to afford car or travel on a
two-wheeler. Though the car price was affordable yet it could not penetrate into the market as
the sales kept on fluctuating. It was analyzed later it could be because of lower safety aspects as
it leads the car engines to catch fire and several quality issues as the car body is easily dented.
Moreover, in India vehicle safety is a major concern in the recent times due to uneven roads and
potholes. Tata Motors therefore should therefore come with appropriate solution and address the
concerns positively to promote Nano globally (Zander, McDougall-Covin & Rose,2015).
Tata Motors should re-evaluate its brand positioning as well as change the perceptions of
its customers. Due to its low cost label has made Tata Nano lost its value and desirability. Car is
generally the status symbol of an individual that conveys the individual’s social standing in the
community (Jackson, Schuler & Jiang, 2014). People often notice the person driving Nano- as
poor man car’s that simply depicts the person to be poor. Ratan Tata is still hopeful about Tata
Nano that will able to revive and believes it would become the best-selling car in the near future
(Engardio & Lakshman, 2007). Tata Nano has lost its value and desirability due to its low cost
label.
4. Alternative Strategies:
4.1 Market Analysis
Tata Motors should efficiently conduct a detailed and in-depth analysis of its business
market before making any new strategy. This can be done by conducting SWOT analysis and

7STRATEGIC MANAGEMENT OF TATA MOTORS
Porter five force’s model ( as shown in appendix) to ascertain the internal and external market
condition. By identifying the strengths and weaknesses Tata Group can avoid acquiring
inadequate brands in an inappropriate market industry.
4.2 Performance Appraisal System
Tata Motor can increase its productivity and efficiency rate by providing maximum
satisfaction to its employees. this can be obtained by implementing a Performance appraisal
system within the organization to motivate the employees (Trigeorgis & Reuer, 2017). this
would further help in monitoring the performance level and daily work of the employees.
4.3 Enhanced Features For Nano
Through upgraded and innovative features new version of Nano has recently been
launched as Nano GenX (Ghosh, 2016). The prices has although improved but it provides great
safety features to its customers with updated functions and appeal. Tata Motors should encourage
its users to monitor their car safety aspects and motivate them for regular maintenance of Tata
Nano
4.4 Effective Communication
Tata Motors can reach it desired goal through effective communication despite the
restructuring of its organization. By interacting with the employees Tata can identify the core
problem and its solution. Feedback is also essential as the employees are provided with an
opportunity to share their views (Terjesen, Hessels & Li, 2016).

8STRATEGIC MANAGEMENT OF TATA MOTORS
5. Recommendations:
5.1 Adopting Performance Appraisal System
Tata should encourage their employees by providing rewards and recognition. This would
help in raising their job satisfaction and retention level. Bonus and incentives should be
facilitated for the employees as per their performance. Furthermore, Tata Motor should introduce
development opportunities to encourage the employee’s growth.
5.2 Involving in Joint ventures
Tata’s should develop strategies to mitigate risks while going international by developing
dedicated marketing and sales team. This should also include the manufacturing facilities from
the given countries so that the local customer’s needs are fulfilled. The suppliers need to be more
innovative and creative in their approaches as it would save huge costs while acquiring the raw
materials. Tata holdings has a large network of dealers throughout the world therefore, it should
use technology related to efficient relation with the dealers. Tata can cut down its losses by
developing an effective business plan that would consider both the business environment and
political situation of the foreign company. Before the international expansion Tata should
recognize all the unavoidable risks through adequate market research and choose an alternative
plan.
5.3 Innovative Features For Nano
Tata Motor should upgrade the feature of Nano to increase its sales in the Indian as well
as global market. They should add safety features in the form of complementary check that is to
be done twice a year and stronger car body to ensure that the car works in a proper condition.

9STRATEGIC MANAGEMENT OF TATA MOTORS
Moreover, 3- year warranty could attract the potential customers for Tata Nano. It would allow
them to send their car for repairs if there is any suspicion of faulty parts.
6. Implementation, Control And Follow Up:
Tata Motors is one of the leading companies in the business market globally and to
maintain its position it has to continuously improve its market strategy. By implementing
adequate strategy in the form of performance appraisal system, adopting joint venture it can
achieved its mission and mitigate risks. Effective communication also plays a crucial role as this
cannot be possible without the efforts of the organization’s motivated employees.

10STRATEGIC MANAGEMENT OF TATA MOTORS
References:
Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating repeatable
cumulative knowledge in strategic management. Strategic Management Journal, 37(2),
257-261.
Businessline.com (2012). Tata Power to seek global markets to minimise risks. @businessline.
Retrieved 18 February 2018, from
https://www.thehindubusinessline.com/companies/Tata-Power-to-seek-global-markets-
to-minimise-risks/article20476090.ece
Engardio, P., & Lakshman, N. (2007). The last rajah. Business Week, 13, 46-51.
Ghosh, M. (2016). Ratan Tata Reveals The Reason Why Nano Failed!. Trak.in - Indian Business
of Tech, Mobile & Startups. Retrieved 20 February 2018, from
http://trak.in/tags/business/2013/11/30/ratan-tata-nano-failed/
Jackson, S. E., Schuler, R. S., & Jiang, K. (2014). An aspirational framework for strategic human
resource management. The Academy of Management Annals, 8(1), 1-56.
Khandelwal, T. (2016). 5 Leadership Lessons From Ratan Tata- SheThePeople
TV. SheThePeople TV. Retrieved 18 February 2018, from
https://www.shethepeople.tv/news/5-leadership-lessons-from-ratan-tata/
Kolk, A. (2016). The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1), 23-
34.

11STRATEGIC MANAGEMENT OF TATA MOTORS
Madhukar, S. (2007). Strategies that succeed via @tatacompanies. tata.com. Retrieved 20
February 2018, from
http://www.tata.com/article/inside/0IeM8buLA1U%3D/TLYVr3YPkMU%3D
Sadowsky, J. (2013). Ratan Tata: a shining example of business leadership in the third world -
John Sadowsky Leadership & Storytelling. John Sadowsky Leadership & Storytelling.
Retrieved 18 February 2018, from http://www.johnsadowsky.com/ratan-tata-a-shining-
example-of-business-leadership-in-the-third-world/
Terjesen, S., Hessels, J., & Li, D. (2016). Comparative international entrepreneurship: A review
and research agenda. Journal of Management, 42(1), 299-344.
Trigeorgis, L., & Reuer, J. J. (2017). Real options theory in strategic management. Strategic
Management Journal, 38(1), 42-63.
Witze, M. (2010). Case study: Tata. Ft.com. Retrieved 18 February 2018, from
https://www.ft.com/content/8e553742-136c-11e0-a367-00144feabdc0
Zander, I., McDougall-Covin, P., & Rose, E. L. (2015). Born globals and international business:
Evolution of a field of research. Journal of International Business Studies, 46(1), 27-35.

12STRATEGIC MANAGEMENT OF TATA MOTORS
Appendix:
Figure I: Tata Motor’s SWOT Analysis

13STRATEGIC MANAGEMENT OF TATA MOTORS
Figure II: Tata Motor’s Five Force’s Analysis