Table of Contents
Strategic and Economic Aspects behind the Acquisition5
Strengths of Daewoo Motors7
The major potential synergies from the deal: Realisation of the same11
This report will look into the case of Tata motors and Daewoo Commercial Vehicle to understand the various factors in a cross border acquisition. The report would also look into the reasons for this acquisition, the integration processes and the synergies achieved after the acquisition process.
The story of Tata group started back in the year 1868 with the establishment of a Textile Mill at Nagpur by Jamsetji Tata. Starting from there, the company has emerged as one of the leading business group in India with more than 90 business operations in seven different business sectors. Tata group has its operations in over 80 countries in some six continents. Moreover, the companies export their products and services in around 85 countries, which have enabled the group to earn revenue of $67.4 billion in the financial year of 2009-10. Around 57 % of this revenue was earned from the operation outside India. The group has employed more than 395,000 people across its businesses, worldwide (Tata Sons Ltd, 2011).
Tata Motors is the leading automobile manufacturer in India and is among the leading commercial vehicle companies across the globe with revenue of $20 million in the last financial year. The company has also emerged as the one among the top four truck manufacturers as well as top two bus manufacturer across the globe. Established back in the year 1945, the company now employs more than 24000 employees with a vision to be the best in its operation and to be in compliance to its value systems and ethics. Tata Motors has also got the pride to be the first in the Indian engineering sector to be listed on the New York Stock Exchange; that happened back in September, 2004. Through its subsidiaries and some associate companies, this leading automobile firm has its operation spread in Thailand, UK, Spain and Thailand (Tata Motors, 2011). The company is still chasing the opportunities to expand its business further to other location across the globe.
Similar to Tata group, this group also started off in 1967 with a textile business by Kim Woo Choong (Koontz & Weihrich, 2006, p.206). In the 70’d and 80’s, the group has experienced a considerable growth with its diversification into several business. Later on in the early period of 1990s, the Group has expanded overseas and emerged as the largest conglomerate across the globe with around 24 companies under its shield. Back in the year 1978, the group has entered into the automobile industry by the acquisition of 50 % stake in the Sachan motor company while the rest was owned by another automobile giant, General Motors. The venture was later renamed as Daewoo Motor Company. In 1992, the Daewoo group acquired remaining 50 % of the stake with the withdrawal of partnership by GM. Later on after the bankruptcy of Daewoo, GM and some other companies have shown their interest to acquire its assets. Daewoo Commercial Vehicle, previously a vertical of Daewoo, did not come under the bid and established itself as a separate company in the year 2002.
Strategic and Economic Aspects behind the Acquisition
Tata Motors had been one of the oldest players in the automobile industry of India. After expanding its dominance all over the economy, the company aimed at expanding its business all over the globe which made it adopt tie-up strategies with automobile companies in some of the major emerging markets of the world. The automobile industry is generally characterised by a large number of units and the commercial vehicles vertical in it...