Tata Motors

Topics: Tata Motors, Automotive industry, Strategic management Pages: 9 (2457 words) Published: September 15, 2010
Industry Overview3
Porter’s 5 Forces3
1.Bargaining Power of Suppliers3
2.Bargaining Power of Buyers4
3.Rivalry Among Competitors4
4.Barriers to Entry5
Barriers to Exit5
5.Threat of Substitutes6
Overall Industry Attractiveness6
Emerging Trends in the Industry7
Value Chain Analysis7
VRIO FRamework8
1.Design and technological capability8
2.Loyal vendor base8
3.Manufacturing synergies8
4.Sales and Distribution Network8
TATA Group9
Problem statement9
Core Competencies10
Challenges - Mid Size cars and Utility vehicles11
Improvements in Cars and UV vehicles11
Increased competition11
Evaluation of Recommendations12

Industry Overview
The Indian Passenger Vehicle Market has been growing at a CAGR of 12.6% over the last 7 years, with 15% of the growth concentrated in the Compact Car segment. Market forecasts indicate volumes to reach 3 million by 2015 with a CAGR of 8.6% over the next 5 years. With vehicle finance penetration facilitated by competition among banks and NBFCs, increase in disposable income and fuel efficiency vehicles will drive the demand for passenger cars. Porter’s 5 Forces

Bargaining Power of Suppliers
The number of suppliers and the industry’s importance to suppliers are quite high. So are the industry’s threat of backward integration and the supplier’s threat of forward integration. Contribution to cost by the suppliers and costs of switching between suppliers are low, so is contribution to quality. Availability of substitutes is moderately low. Therefore, on the whole, bargaining power of suppliers is moderate.

Porter’s 5 Forces: Bargaining Power of Suppliers

Bargaining Power of Buyers
The number of buyers and their contribution to cost and quality are very high, since the buyer is quite educated and informative. The buyer’s threat of backward integration is low and the industry’s threat of forward integration is very high. Availability of substitutes and switching cost are both moderate. Buyer’s profitability is high. Therefore bargaining power of buyers is low.

Porter’s 5 Forces: Bargaining Power of Buyers
Rivalry Among Competitors
The differentiation among competitors and the openness in terms of sale are very high. Industry growth is quite fast and excess capacity is moderate. So is the number of competitors and the switching cost. Strategic stakes are quite low. Hence rivalry among competitors is moderate, however, it is increasing.

Porter’s 5 Forces: Rivalry Among Competitors
Barriers to Entry
Capital requirements are quite high. So is the product differentiation and economies of scale. Brand identity is also very high. Access to technology and distribution channels is not easy while access to raw material is moderately easy. Switching costs are moderate and there is some amount of government protection. So the barriers to entry are high.

Porter’s 5 Forces: Barrier to Entry
* Barriers to Exit
Due to government restrictions on exit being high, with asset specialization and cost of exit being moderately high, barriers to exit are high.

Porter’s 5 Forces: Barrier to Exit
Threat of Substitutes
Since the availability of close substitutes is moderate, so is the substitute’s price-value, and the profitability from substitutes production is low. Coupled with the fact that the switching cost is moderately high, the threat of substitutes is moderately low.

Porter’s 5 Forces: Threat of Substitutes
* Overall Industry Attractiveness
Combining the Porter’s 5 forces, we find that the overall industry attractiveness is moderately high.

Porter’s 5 Forces: Overall Industry Attractiveness

Emerging Trends in the Industry
* Arrival of new Global Players, increased competition has led to further fragmentation in the passenger vehicle segment * Increasing focus on export market
* Gap between two...

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