Tata Motors: International Business Strategy and Globalization Report

This report provides an executive summary of Tata Motors' international business operations, highlighting the company's expansion strategies and the impact of globalization. It explores the challenges faced by international businesses, emphasizing the importance of adapting to diverse consu...Read More

International Business
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Executive summary
International businesses are termed as the companies or organizations which operates in
more than one nation. At the time of carrying out their operations these companies are required
to deal with several issues and challenges. However, it can be argued that international business
can achieve higher rate of growth and success as compared to the business operation in local
market. The present report studied the contribution made by Tata Motors in terms of wealth and
social development.
Tata motors is an India based multinational organization which is one of the most
successful brand in the world which manufacture and sale automotive. Different approaches have
been followed by the organization for entering international markets. Best efforts were made by
Tata Motors to use the core strengths of Daewoo. Acquisition of business of Jaguar was one of
the biggest strategic move that was made by Tata motors. It has been identified that the major
problem which has been faced by international business is of exploring and satisfying needs of
different consumers in different markets.
The report concludes that efforts are required to be undertaken at a large level while
carrying out internationalization of business. Aggressive mergers and acquisitions have been
carried out by Tata Motors. These have made it as one of the most successful brands in the
international market.
It is recommended that Tata motors should conduct adequate market research before it
decides to enter foreign markets. Best advantage of internationalization can be gained by the
business by selecting those countries for expansion which are closer to its home country in terms
of geography and culture.
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TABLE OF CONTENTS
Introduction .....................................................................................................................................4
Main body .......................................................................................................................................4
References......................................................................................................................................11
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INTRODUCTION
In the modern era, every company strives for increasing sales, profits and market share.
In addition to this, due to limited opportunities of growth and development in domestic market,
businesses seeks for expanding their operations to international markets. In last few years,
BRICS (association formed by Brazil, Russia, India, China and South Africa) has developed as a
very potential association in international markets (Adler and Pouliot, 2011). The current
research report is prepared on Tata motors which is India based multinational organization.
Furthermore, it was found in the year 1945 and operates in different nations of the world. The
present research highlights the fact the contribution made by Tata motors in terms of wealth and
social development. On the other side of this, the study also contributes in getting aware of the
fact that how operations of Tata motors are affected by the concept of globalization.
MAIN BODY
Assessing the impact of globalisation on the operation and development of Tata motors
Globalization can be defined as the process or concept which encourages free flow of
different products, services and people from one nation to another. In the present scenario, the
concept of globalization has become a well know phenomenon among nations and businesses. It
can be stated that one of the most important benefit which globalization offer is that it provides
companies to operate freely in other international markets, enhance their sales and profits.
Today, many developing and developed nations has eliminated their respective barriers to trade
and encouraged businesses to have access of markets (Beamish, 2013). Another important
benefits which has been offered by the concept of globalization is that it leads to a successful
integration of different nations economies. This supports in development of better, health and
long term relationship among different countries. On the other side of this, theory of competitive
advantage can be termed as the base upon which the entire concept of globalization has been
developed (Buckley and Casson, 2010).
It can be expressed that Tata motors is one of the most renowned India based
multinational company which carry out its operations worldwide. Tata motors was formerly
known by the name of Tata Engineering and Locomotive Company. The multinational
organizations with manufacturing and sell of products such as trucks, cars, military vehicles,
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buses, construction equipments and vans. It was in the year 1969 when Tata motors expanded its
operations internationally and established itself in South Africa (Cavusgil, 2014). Furthermore,
in the year 1977, the multinational organization formed and introduced Tata Zambia. On the
other hand, it can be expressed that Tata motors has followed different approaches for entering
different international markets. This can be justified by the example that in South Africa it has
developed its own manufacturing plan whereas in international markets such as Korea, the brand
has adopted a strategy of acquisitions (Chang, Van Witteloostuijn and Eden, 2010). It can be
also stated that acquiring Daewoo in Korean market can be considered as one of the most
successful moves of Tata motors. The rationale behind this is that Daewoo was having an
effective product development strategy and its research and department team was also highly
skilled and competent.
The company made the best and most effective use of Daewoo's core strength and
developed world truck by using the same. In addition to this, the truck developed is marketed and
sold to different internationals and Tata motors home market. Another strategy of
internationalization which has been adopted by the Indian multinational company is of joint
venture which is used in order to expand its operations in Thailand (Conyers, 2013). Tata motors
formed a joint venture with Thonburi Automotive Plant with an objective to start operating in
Thailand. The reasons why Tata motors has chosen Thailand market is that it is one of the most
potential and second largest market in terms of pick-ups (Cui and Peng, 2014). Furthermore, the
brand has adopted internationalization strategy of alliance with Fiat in order to operate in Latin
America. Along with this, Tata motors has also formulated a joint venture with Iveco with a
purpose to set up an effective and potential network of distribution.
It can be asserted that carrying out international operations is not easy for companies as
they are required to deal with lots of issues and challenges. Furthermore, the multinational
company has encountered both negative and positive aspects because of globalization. As it has
been already discussed that globalization has encouraged free flow or movement of products and
services from one market to another. This has supported Tata motors in getting easy access to
other potential markets of the world (.De Wit and Meyer, 2010). It is only because of
globalization that from a domestic company, Tata motors has emerged as fourth largest truck
manufacture and 17th largest motor vehicle manufacturer in the world. Globalization has also
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supported the company in increasing sales, customers base and profits by expanding sales and
manufacturing plants to other countries of the world. On the other hand, it can be expressed that
the operations of Tata motors has also negatively affected by globalization. At the time of
carrying out its operations in different international markets, the multinational company needs to
adhere rules, legislations and regulations of different countries (Fischer, 2010). This has resulted
in making operations and management of Tata motors more complicated. Along with this, if the
laws and regulations are not followed, the company will need to pay heavy fines and penalties
which affect its entire brand image (Becker-Ritterspach and Bruche, 2012). Another negative
impact which has been faced by Tata motors because of globalization is that it has made the
competition of multinational company more intense(Folsom and et.al., 2012). The concept of
globalization has resulted in encouraging other big brands to introduce their operations in India.
In terms of heavy commercial vehicle the brand has started facing high degree of competitive in
home markets. This has affected entire sales, profits and market share of Tata motors in negative
sense.
Tata motors has always taken care of the fact that economies of world and local country
is also developed along with its development. This can be justified by the fact that by setting up
manufacturing units in different states and cities, it has resulted in creating different
opportunities for employment. It has further contributed in economic development of India by
playing a major in overall GDP development of the nation (Becker-Ritterspach and Bruche,
2012). Another major contribution which has been made by Tata motors in Indian economy is by
providing quality products it has supported in raising the overall living standard of people in the
country (Forsgren and Johanson, 2014). A present, the brand is giving very tough competition to
other market players in Indian market. In terms of international economy development, Tata
motors has also played a very important role in the same. This can be backed with justification
that by operating in markets such as Thailand and South Africa, it has contributed in
development of these nations by brining advance technology in and creating opportunities of
employment. Furthermore, its operations has also resulted in integration of different economies
of the world which has contributed a lot in overall development of international economy (Gong,
2013).
Different strategic theories and practices in an international context
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In the present scenario, the concept of internationalization has become very popular
among businesses operating in different locations of the world. The term internationalization can
be simply defined as the process which leads to expansion and involvement of a business
organization in other international markets. Due to limited opportunities of growth and
development present in home or local market, businesses put efforts and resources to expand
their operations internationally (Gong, 2015). In order to carry out the task of
internationalization, companies are made available with different models and theories. It can be
suggested that organizations should make use of theories as they provide right direction for
carrying out process of internationalization and also results in lowering down the risk associated
with international operations (Jones and et.al., 2015). In terms of different internationalization
theories available, it can be stated that Uppsala model can be used or implemented by
organizations. The theory or model lays emphasis on the fact that firms are required to make sure
that they posses adequate experience of home market operations before going for international
operations.
Along with this, Uppsala model suggest that the best advantage of internationalization
can be gained by businesses by selecting countries with are geographically close and are
somewhat same in terms of culture. The results of this is that companies are not required to put
intense efforts as the needs and culture of home country and host country gets similar. After
getting adequate experienced of international operations, businesses can move to other nations
which are far and culturally different from their home nations (Kolk and Van Tulder, 2010). It
can be criticised that Uppsala model promotes slow growth in international markets and thus its
use cannot be done in every situation and by every business enterprise. Along with this, some
companies which look forward to aggressive strategies for growth and development in
international markets cannot use this model as it is completely ineffective for them. Another
approach or theory which can be used in terms of internationalization is translation cost theory
(Lasserre, 2012). The use of this theory helps companies to figure out cost which they will be
required to bear in order to move their operations in international markets. It can be argued that
by getting aware of the cost, companies are able to make decision regrading the fact that whether
it is appropriate to enter international market or not.
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It can be expressed that the concept of globalization has been adopted by Tata Motors is
due to the fact that there were limited opportunities for growth and increase in market share
available in home country (India). This encouraged the multinational company to seek for better
and more potential growth opportunities in international market. However, it can be argued that
Tata Motors has always been an aggressive market player in terms of strategies for increasing
market share and attracting customers. The company has carried out back to back mergers and
acquisitions which has supported Tata Motors in making itself as one of the leading brands in the
world (Sturgeon and Kawakami, 2011). It was in the year 2005, when the company acquired
Hispano Carrocera (Spain) with an objective to increase its market share. Along with this, the
objective behind carrying the above mentioned acquisition was to enhance its overall
productivity and make its operations more effective. The acquisition was also carried out with
the purpose of developing new product and low down cost of operations in order to increase
sales and profits. The company also believed that the strategic move will strengthen its position
in global market and Spain with the help of global buses and coaches. However, it can be argued
that one of the biggest move which has been made by Tata Motors in terms of
internationalization is by acquiring the business of Jaguar and Land Rover by Ford Motor
Company (Warner and Nankervis, 2012). The deal was made for about $2.3 billion and it has
enhanced the overall image of the multinational company in the global marketplace. The
purchase of two iconic British brands has also resulted in strengthening the product line of Tata
Motors. Along with this, the company adopted a strategy of leaving these two brands as a
complete distinctive identity. Therefore, it can be stated that the concept of internationalizations
has provided several kinds of benefits to Tata Motors and it will also support in identifying better
opportunities for growth and development in the future.
Discussing the differences in expectations and purposes inherent in doing business in foreign
countries
Doing business in foreign countries is not an easy task for companies as it involves high
degree of risk and requires huge amount of efforts along with resources. The concept of
globalization has encouraged countries to manufacture and sell their products in other nations of
the world. This has benefited customers by making them available with wide variety of products
and services to choose from. Along with this, it has also resulted in making local businesses of
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particular nation more competent. In the modern era, the trade between nations is not a complex
task any more. Furthermore, it can be stated that both technology and communication has
improved to such as extent that it has resulted in smooth flow of labour, services and products
among nations (Welch and Paavilainen-Mäntymäki, 2011). On the other hand, it can be argued
that there are lot of differences in expectations and purpose inherent related to doing business in
any international market. One of the major or the most important difference is of the need and
demand of people in market. Businesses often fail in internationalization because they do not
carry adequate market research to become aware of the fact that what type of demand exist in the
international market where it is planning to operate. They enter market with same products and
services which are accepted in new markets because of different demand existing among
customers. Therefore, it is required by business enterprise to make sure that they have adequate
information regrading the nature of need and demand existing in the international market. In
addition to this, it is more beneficial if they enter market with modified or improved products
which match with the need of people (Yu and Li-Hua, 2010).
Another important element which needs to be taken into consideration for doing business
in international market is to examine political conditions which exists in a particular nation.
Organizations needs to make sure that the nation in which they are planning to operate is stable
politically and it has also developed good relationship with home country of the business
enterprise. It can be expressed that sometimes company's international operations fails because
of political uncertainties which exist in international markets (Wild, Wild and Han, 2014).
Furthermore, unstable government has always been a major thereat for businesses as it directly
results in creating several kinds of obstacles and barriers in growth ans success of a business
enterprise. It can be also argued that the entire process of internationalization is a complex task
which cannot be happened overnight. The process takes time to generate desired results and
therefore, it is required by companies to have patients (Yu and Li-Hua, 2010). Other key element
which leads to failure of internationalization is of language which varies from one nation to
another. In order to sale services and products in international country, businesses needs to carry
out strong marketing and promotion of their products. However, it can be argued that one of the
major problem here is that all activities needs to be carried out in language of home countries.
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It can be stated that the emergence of India and China completely represents extension to
the process of globalization. It has been discussed in the above carried out study that
globalization results in free flow of products and services among different nations. Furthermore,
in last one decade, India and China have emerged as one of the leading and fastest growing
economies of the world. Products and services developed in these two nations are being supplied
to almost every part of the world (Welch and Paavilainen-Mäntymäki, 2011). In context of
nation such as India, it can be expressed that the country was in complete isolation in terms of
doing trade or business with other nations until the year 1991. After this, liberalization took place
and boosted the Indian economy to a great extent. This resulted in encouraging free flow of
services and products within India and other countries. Nowadays, India has encouraged foreign
direct investment in its major sectors such as infrastructure, hospitality, banking etc.
Along with this, Indian companies are also encouraged to expand their operations in
global markets. Globalization in India has resulted in formulation of some biggest acquisitions
such as Tata Motors acquiring Daewoo (Korea) and Aditya Birla group acquiring Dashiqiao
chemicals of China. On the other side of this, it was in the middle of 20th century that
globalization in China began to carry out. After this, the country has invested large amount of
resources in sectors such copper, oil and platinum in other nations (Warner and Nankervis,
2012). In the present scenario, both India and China are providing outstanding contribution in the
process of globalization. Many multinational companies have established their operations and
manufacturing plants in these nations. The reason behind why these nations are attracting more
and more foreign investments is that they offer businesses with an opportunity to lower down
their cost of operations (Sturgeon and Kawakami, 2011). The rationale behind this is that these
countries provide resources such as land labour and capital at very low prices as compared to
other markets. Thus, by providing easy access to resources required, India and China are playing
an important role in expanding globalization.
On the other hand, these countries are witnessing high rate of economic growth.
Multinational companies are getting more and more attracted by these growth rates as it provides
them with adequate opportunities to increase their sales and profits. Government in India and
China is stable and always support local businesses in carrying out the task of international
expansion (Warner and Nankervis, 2012). Furthermore, government has encouraged foreign
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companies to carry out their operation in these nations. It can be stated that both businesses and
countries are getting benefits from such expansion. India and China are able to attract large
amount of foreign investments whereas companies are able to lower down their cost of
operations and perform in effective manner.
CONCLUSION
From the above study, it can be concluded that internationalization of businesses is not an
easy task for and efforts at large level are required. Tata Motors is one of the leading India based
multinational automotive company which is operating in different nations of the world. It can be
also inferred that before entering foreign markets, companies are required to carry out adequate
market research to become aware about need and demand of customers in new market. It can be
also concluded that aggressive mergers and acquisition strategy has resulted in making Tata
Motors as one of the most successful brands in international market.
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