Tata Daewoo Deal
(i) Examine the market implications of acquiring the Daewoo plant by Tata Motors
Tata Motors inked an investment agreement in February 2004 to acquire the South Korean truck-major Daewoo Commercial Vehicle for $102 million. The acquisition marks the beginning of Tata Motors global expansion trail and is expected to help the company make headway in a number of other markets.
Tata Motors is the largest company of the Tata Group of companies. Poised at a Global growth mission where it aspires that in long term basis major revenue of the organization will be achieved from overseas market. Tata Daewoo marks a significant milestone to achieve such ambitious mission.
The Global Tata Motors
The most important advantage is that Tata's top line and bottom line will go up. International business accounted for less than Rs 400 crore of Tata's turnovers in fiscal 2003. Meanwhile Daewoo itself recorded a turnover of Rs 1200 crore in the fiscal year 2003 and is a profit-making company. Daewoo's manufacturing plant was operating at only a quarter of its capacity, yet it commanded a 22 per cent market domestic share in the 8-tonne-plus segment. This will be further strengthen to 25% and increase it by another 5% to 7%.
Tata's have set a goal where overseas revenues will account for 25 per cent of turnover in three years. After identification of four key markets, India, China, Latin America and Western Europe, which are at different stages of growth and maturity. Tata's with there current competencies, including the Daewoo CV, are equipped to enter the stage I and II markets.
Cyclic Nature of Commercial Vehicle Business:
Commercial Vehicle (CV) business is cyclic in nature. The larger the market share of a company the more severe is the cyclical impact; also the more liberal the markets, the more pronounced is the cyclical impact.
By the global operations of Tata Motors this cyclical phase is lagged across different geographies. Spreading the business to
Tata Motors inked an investment agreement in February 2004 to acquire the South Korean truck-major Daewoo Commercial Vehicle for $102 million. The acquisition marks the beginning of Tata Motors global expansion trail and is expected to help the company make headway in a number of other markets.
Tata Motors is the largest company of the Tata Group of companies. Poised at a Global growth mission where it aspires that in long term basis major revenue of the organization will be achieved from overseas market. Tata Daewoo marks a significant milestone to achieve such ambitious mission.
The Global Tata Motors
The most important advantage is that Tata's top line and bottom line will go up. International business accounted for less than Rs 400 crore of Tata's turnovers in fiscal 2003. Meanwhile Daewoo itself recorded a turnover of Rs 1200 crore in the fiscal year 2003 and is a profit-making company. Daewoo's manufacturing plant was operating at only a quarter of its capacity, yet it commanded a 22 per cent market domestic share in the 8-tonne-plus segment. This will be further strengthen to 25% and increase it by another 5% to 7%.
Tata's have set a goal where overseas revenues will account for 25 per cent of turnover in three years. After identification of four key markets, India, China, Latin America and Western Europe, which are at different stages of growth and maturity. Tata's with there current competencies, including the Daewoo CV, are equipped to enter the stage I and II markets.
Cyclic Nature of Commercial Vehicle Business:
Commercial Vehicle (CV) business is cyclic in nature. The larger the market share of a company the more severe is the cyclical impact; also the more liberal the markets, the more pronounced is the cyclical impact.
By the global operations of Tata Motors this cyclical phase is lagged across different geographies. Spreading the business to