Tranching Accounting Finances Discussion

BGEN 499-800: Mini-Case 5Tata Motors
Group 1: Rayan AlHarbi, Bradley Graves, Koreen Hyde, Mason Powell, Jeremy Williams
Date: April 26, 2023
Discovery
Tata Motors is a large corporation in Mumbai, India that manufactures different types of
passenger vehicles as well as commercial vehicles like buses and construction equipment. Their
current vision is to be at the forefront of Indian auto with an engaged workforce, superior
financials, and sustainable mobility options . In 2014, Tata Motors was named the 287th largest
corporation. They produce different luxury and basic models such as Venture, Xenon, Bolt,
Nano, Aria, and Safari. Their direct subsidiary company, Jaguar Land Rover, experienced a
substantial decline in net income of 49 percent for the quarter ending in June of 2015 in China.
Their sales in China also decreased by 33 percent for the same quarter. Tata Motors itself also
experienced a decline in revenue and share price as a result of a general dip in the market and a
saturation of local competition. Their revenue from light commercial vehicles in India decreased
by 5.7 percent, and sales of the Evoque sport utility vehicle decreased in China. As a result of
this decline, Tata Motors failed to meet their sales goals and decided to cut prices in their luxury
sector. In the last six months of 2015, Tata Motors stock was the second worst performer on the
S&P BSE Senex. Overall, Tata Motors has experienced a financial decline with their current
marketing techniques, target markets, and general diversification of income.
Dream
Tata’s vision statement reads it will be the “most aspirational Indian auto brand,
delivering superior financial results, sustainable mobility solutions, exceeding customer
expectations, and creating a highly engaged workforce”(Pearson, 2017). To become the most
1
BGEN 499-800: Mini-Case 5
Tata Motors
aspirational auto brand Tata’s stated goal is to produce new products, such as an electric fleet for
their regular and luxury lines to existing and potentially new customers and be globally
significant by 2025.
The brand name Tata and its luxury affiliates Jaguar and Land Rover is itself a
competitive advantage. Tata already has a competitive advantage with the needed knowledge and
technology resources to take their business to various areas of the world. It also has competitive
advantage by being in India with low-cost labor as well as various research and design centers
that specialize in engine efficiencies and design. They have come up with their least expensive
car called the Nano which is impressive with its low cost, technology and fuel efficiency.
90 percent of China’s and India’s populations do not own vehicles. This is partly due to
cars being expensive to buy and upkeep. The market for a low-priced vehicle is huge. This can
benefit Tata Motors because it currently produces the world’s cheapest car. Bringing this car and
other electrical car options to the rest of the world, including China will mean that more people
can afford to own cars. China’s government predicts that demand for cars will exceed 20 million
by 2020. With Tata having the cheapest car in the market, this will provide them with the
potential to significantly increase their market share and profits not just in China but over the
world.
Design
In order for Tata Motors to reach its goals and be a more successful business, it should
first try to have more of a market focus with its luxury Jaguar Land Rover (JLR). Rather than
selling these cars in markets where they’re struggling, China, they should hyper-focus their
2
BGEN 499-800: Mini-Case 5
Tata Motors
attention on selling where these cars do well. According to Tata Motors’ website, JLR is
Britain’s largest automotive manufacturer (Tata Motors, n.d.). So, they should shift their market
focus with these luxury cars to Britain and places like the United States, where these luxury
brands also thrive more than in China, to regain some profits. To be the most inspirational Indian
auto brand, like they stated they would like to be, they should also expand into the new market of
electric vehicles. A lot of automobile companies are making luxury electric vehicles, which Tata
should also follow, but not a lot of companies are making more affordable electric vehicles. With
India’s average income a year for its citizens being $2,150 (WorldData.info, 2021), creating a
more affordable electric vehicle could lead to more profits in India and other countries around
the world, while also achieving Tata Motors’ goal of being more sustainable.
Destiny
While Tata Motors has seen significant success in recent years, with the acquisition of
luxury brands like Jaguar and Land Rover, the company faces a number of challenges, including
intense competition and changing consumer preferences globally. The authors suggest that Tata
Motors must continue to innovate and adapt to remain competitive in the global market, and
must focus on developing sustainable and environmentally friendly vehicles to meet changing
consumer demands. Overall, the case study presents a distinct and complex view of Tata Motors’
future, highlighting both the company’s strengths and the challenges it must overcome to succeed
in a rapidly evolving industry.
3
BGEN 499-800: Mini-Case 5
Tata Motors
References
Tata Motors. (n.d.). Jaguar Land Rover. https://www.tata.com/business/jlr
WorldData.info. (2021). Average income around the world. https://www.worlddata.info/averageincome.php
David, Fred R., David, Forest R. (2017) Mini-Case on Tata Motors Limited
(TTM). In: Strategic Management, A Competitive Advantage Approach
Concepts and Cases, 16 th Ed. (pp.318-319). London: Pearson Education.
4