In-Depth Market Analysis of Tata Motors: Challenges and Opportunities

This report provides a comprehensive market analysis of Tata Motors, examining its position within the global automobile industry. It discusses the economic characteristics of the industry, key success factors, and driving forces, particularly focusing on the period around 2014. The analysis includes an assessment of Tata Motors' financial situation, highlighting the impact of the Tata Nano project and its subsequent challenges. Despite the Nano's failure, the report concludes that Tata Motors maintains a strong position in the market, partly due to strategic acquisitions like Land Rover and Jaguar. The report uses financial data and market rankings to support its findings, offering insights into Tata Motors' resilience and strategic direction.

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1MARKET ANALYSIS OF TATA MOTORS
Executive Summary
The analysis of the report is based on the examination of the economic characteristics of the
global industry of automobiles. The ways with which the economic characteristics of this
industry influences the different companies is analysed in detail. The key success factors of
the industry are also analysed. The company that is taken into consideration for this analysis
is Tata Motors Limited. The company is analysed based on the Porter’s five forces analysis.
The financial condition of the company is also analysed in this report. The report is
concluded by the learning that the company has held its position even after the loss incurred
after the failure of the Tata Nano project.

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Table of Contents
Introduction....................................................................................................................3
Discussion of Tata Motors.............................................................................................3
Economic characteristics of the global motor industry..............................................3
The key success factors of the industry......................................................................4
The driving forces of the industry in the year 2014...................................................6
Assessment of the financial situation of Tata Motors................................................6
Position of the company in the industry.....................................................................7
Conclusion......................................................................................................................7
References......................................................................................................................8

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Introduction
Tata Motors limited is an Indian company that operates in the field of the manufacture
of automobiles and the company is also known as TELCO which is the short form for Tata
Engineering and Locomotive Company. The company has its headquarters in Mumbai, India
and it is multinational company which is a member of the Tata Group. The products
manufactured by this company include, trucks, coaches, vans, buses, construction related
equipment and sports cars. The company has its plants for manufacturing purposes in
Pantnagar, Lucknow, Pune, Dharwad and Sanand. Tata Motors has its plants in Great Britain,
Argentina and South Africa as well (Tatamotors.com 2017). This report is based on the
analysis of one of the dream projects of the company which is the Nano car. The car was
tagged as “the world’s cheapest car” and was launched in the year 2009. The was priced at
one lakh rupees which amounts to approximately two thousand US dollars. The analysis in
this report is based on the examination of the performance of Tata Nano in the market in the
last eight years. This will be based on the analysis of the economic characteristics of the
automobile industry and forces that drive this industry as well (Tatamotors.com 2017).
Discussion of Tata Motors
Economic characteristics of the global motor industry
The global industry of motor vehicles has gone through a tumultuous phase in the last
five years. The main factors that have affected the industry of motor vehicles are the price of
fuel and the changes of the preferences of consumers of cars. The preference of the car
consumers has shifted from the petrol and diesel driven ones to the electric cars. The focus of
the consumers has shifted from big cars to the small ones in the recent times due to the prices
of fuel (Amador, Cappariello and Stehrer 2015). The main factors that affect this industry
include, the pressure related to pricing, the spending trends of the consumers, the increase in

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the price of the commodities related to this industry, the volatility of the exchange rates. The
pressure related to pricing is one of the most important factors that affects the business of the
car industry. The consumers of the cars are another major part of the industry and the motor
companies need to constantly keep track about the preferences of the consumers and try get
competitive advantages over the other companies (Broy et al. 2013). The prices of the
commodities also affect the motor industry globally and these prices can control the sales of
the motor vehicles as well. The other factors that affect the motor industry include the
exchange rate of the currency between the countries. The exchange between the companies of
different countries plays an important role in the pricing of the cars.
The key success factors of the industry
The automobile industry is said to be one of the largest sectors of business in the
world. The sector employs thousands of people and thereby the products are created by the
companies for which the customers need to spend in a major way (Horn, Scheffler and
Schiele 2014). The major factors that are related to the success of this industry are as follows,
 The main factor for consideration regarding this industry is the image that the
particular company maintain in the business environment. The trust that vested
upon the company or the brand by the consumers affects the business
processes of the company (Liu, Chaminade and Asheim 2013). The decision
of the consumers regarding the purchase of the products of the particular brand
is the result of the image of the company in the market. The ways by which
the image of the company is affected in this process are, the advertising of the
company, the reviews of the experts and the positive rumour of the company
(Ponte and Sturgeon 2014).
 The other factor that influences the success of the company is the network of
distribution of the company. The network of the manufacturers and suppliers

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of the company has a major effect on the sales and profitability. The dealers of
the cars are also a major part of the distribution networks. The distribution
network of the companies plays an important role in the sales and profit of the
company (Schulze, Brojerdi and Krogh 2014).
 Another major factor related to the success of the company is the cash flow. If
the cash flow of the company is healthy. The discounts and lower prices of the
companies do not help its cash flow. The profit margins of the company can
be increased by keeping a check on the expenses and the costs related to the
operations of the company (Shende 2014). The costs related to the employees,
manufacture of the products and the prices of the raw materials is a major
factor that affects the profitability of the organizations.
 The next factor that is related to the success of the companies in this industry
is the compliance with the rules and regulations of the government and the
other organizations as well. The companies need to comply with the legal
aspects of the industry so that it can perform healthy business operations and
thereby gain profits as well (Wells 2013).
 The last factor related to the success of the companies is the flexibility of the
companies in that sector. The companies in this sector need to be flexible with
their operations and should update their operations based on the trends in the
market. The needs and wants of the customers related to this industry can
change on a continuous basis (Amador, Cappariello and Stehrer 2015). The
companies thereby need to bring changes in their products so that they keep
pace with the competition in the market.

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The driving forces of the industry in the year 2014
The global industry of automobiles has shown huge growth in the year 2014 and
2015. The profitability of the industry has increased a lot in the current year. The most
prominent challenge in the industry in the uneven global market. The uncertainty in the
macroeconomic environment will lead to many changes in the industry in the coming 10
years as well. The factors that drive the changes in the automobile industry are as discussed
further. The shifts in the demands of the consumers is the factor that drives the change in the
automobile industry (Cabigiosu, Zirpoli and Camuffo 2013). The major impact of this factor
is on the volume of sales of the company. The loyalty of the customers with the brands is a
driving force in this industry. The difference between the products of the different companies
or brands of the cars drives the changes in the demand of the consumers. The prices and the
regulations of the fuel economy of a country has become a driving force in the industry in the
year 2014. The availability of the information regarding the features of the cars and usage has
also acted as a driving force in the industry (Gao, Hensley and Zielke 2014). The data related
to the customers of this industry affects the value chain of this industry. The bargaining
power of the consumers have increased as accessibility of the information related to the
discounts, quality, process and the performance has also increased.
Assessment of the financial situation of Tata Motors
Tata Nano was a dream project for the company which had been brought in the
market so that the consumers who can only afford two wheelers can upgrade to cars for a
minimum price. The car was prices at 1 lakh to 1.5 lakh in the Indian currency. However, this
project has only led to loss for the company. As of now, or the year 2017 the company has
shifted its concentration towards other next generation products rather than concentrating
towards Nano (Hausman and Johnston 2014). The future and the production of Nano is also
uncertain for the financial year 2017-18. The sales of Nano have fallen in the month of May

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2017. The annual sales of the company have also decreased by 63% due to the decline of the
sales of Nano.
Figure 1 (Tatamotors.com 2017)
Figure 2 (Tatamotors.com 2017)

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Position of the company in the industry
Tata Motors has built its reputation in the industry of commercial vehicles for the year
2017. The company has been in the headlines recently due to its acquisition of Land Rover
and Jaguar from the company like Ford. The company has been ranked at the fifth position by
the business ranking institutes (Tatamotors.com 2017). Tata Motors hols the 226th position in
the Fortune 500 list in the year 2017.
Figure 3 (Tatamotors.com 2017)
Conclusion
The analysis in this report based on the market position of Tata Motors can be
concluded by stating that the company holds a strong position in the global automobile
market even after the failure of the dream project of the company. Tata Nano was launched in
the market for a specific group of consumers who can afford two wheelers and they can
upgrade to a car. The car was said to be the cheapest in the market. However, the project had
proven to be failure both in the local as well as the global market of the company. The

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company has however, has held its position in the automobile market after this failure. This
has been achieved by the company by the acquisition of different global car companies.

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References
Amador, J., Cappariello, R. and Stehrer, R., 2015. Global value chains: A view from the euro
area. Asian Economic Journal, 29(2), pp.99-120.
Broy, M., Kirstan, S., Krcmar, H., Schätz, B. and Zimmermann, J., 2013. What is the benefit
of a model-based design of embedded software systems in the car industry?. Software Design
and Development: Concepts, Methodologies, Tools, and Applications: Concepts,
Methodologies, Tools, and Applications, p.310.
Cabigiosu, A., Zirpoli, F. and Camuffo, A., 2013. Modularity, interfaces definition and the
integration of external sources of innovation in the automotive industry. Research
Policy, 42(3), pp.662-675.
Gao, P., Hensley, R. and Zielke, A., 2014. A road map to the future for the auto
industry. McKinsey Quarterly, Oct.
Hausman, A. and Johnston, W.J., 2014. The role of innovation in driving the economy:
Lessons from the global financial crisis. Journal of Business Research, 67(1), pp.2720-2726.
Horn, P., Scheffler, P. and Schiele, H., 2014. Internal integration as a pre-condition for
external integration in global sourcing: a social capital perspective. International Journal of
Production Economics, 153, pp.54-65.
Liu, J., Chaminade, C. and Asheim, B., 2013. The geography and structure of global
innovation networks: A knowledge base perspective. European Planning Studies, 21(9),
pp.1456-1473.
Ponte, S. and Sturgeon, T., 2014. Explaining governance in global value chains: A modular
theory-building effort. Review of International Political Economy, 21(1), pp.195-223.

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Schulze, A., Brojerdi, G. and Krogh, G., 2014. Those who know, do. Those who understand,
teach. Disseminative capability and knowledge transfer in the automotive industry. Journal
of Product Innovation Management, 31(1), pp.79-97.
Shende, V., 2014. Analysis of research in consumer behavior of automobile passenger car
customer. International Journal of Scientific and Research Publications, 4(2), p.1.
Tatamotors.com (2017). Overview | Tata Motors Limited. [online] Tatamotors.com.
Available at: http://www.tatamotors.com/about-us/ [Accessed 2 Dec. 2017].
Wells, P., 2013. Sustainable business models and the automotive industry: A
commentary. IIMB Management Review, 25(4), pp.228-239.