Tata Motors International Acquisition Strategy

Topics: Tata Motors, Tata Daewoo Commercial Vehicle, Truck Pages: 7 (2162 words) Published: February 7, 2011

ACAD GROUP 27 - good effort, stock trend could be simpler and thus effective- 19.6 Bhawna Jain PGP-09-110
Chetan Mehta PGP-09-111
Ranjan Singh PGP-09-154
Shounak Parida PGP-09-163
Vimina Bt PGP-09-177
Visram R PGP-09-179

Company Profile
TATA Motors is the flagship company of the TATA group & is India's largest automobile player with consolidated revenues of USD 14 billion in 2008-09. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. TATA Motors was listed on the New York Stock Exchange in 2004. Established in 1945; over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. Prior to launch of Indica (1998), India's first fully indigenous passenger car, Tata Motor’s main product line was commercial truck followed by buses. CVs are an important source of transportation of both goods and passengers. According to NHAI estimates, 85% of the passenger traffic and 70% of freight traffic in India is carried by the roads with the balance being carried by the railways. So entering the passenger vehicle segment was a major diversification for the automobile maker. Diversification strategy - F-E-R approach– Focus on core, Expand beyond core, Rediscover new core

Post entry into passenger vehicle segment Tata’s continued their diversification into mainly related fields which basically provided three main benefits: New markets (geographies) – primarily European and North American markets New and better products- which help to serve existing markets as well as serve new markets better Lower costs by means of complementing strengths and sharing assets In order to further the expansion and diversification strategy, during the course of this text, we will consider Acquisition of Daewoo (Truck division) S Korea and Hispano (Spain) for Commercial Vehicles ok Tata Fiat Joint Venture and acquisition of Jaguar Land Rover for Passenger vehicle with emphasis on overseas expansion and acquisitions. First we will try and understand the business reasons and later measure performance on account of these moves. With Tata enjoying majority market share in home market, especially a strong position in heavy vehicle (Trucks) segment, acquisitions were done basically to expand the geographic foot prints, gain technologies that help serve existing markets better , prepare against incoming competition and expand product portfolio. 1.Daewoo Commercial Vehicle (South Korea 2004 –Acquisition) Tata Motors agreed to buy Daewoo Commercial Vehicle, the truck-making arm of bankrupt South Korean chaebol Daewoo Motors. The total value of the deal was $102m. DWCV, with a capacity 20,000 units, was the second largest manufacturer of heavy trucks in South Korea with 25% market share. Tata group chairman Ratan Tata said “This is indeed a major step for Tata Motors and a milestone for the group in its quest for globalization. I am confident that both companies will derive considerable benefits from this agreement.” fine Post acquisition, Tata motors did not bring about any major change in the management or the workforce but concentrated more on developing new products and focusing on export markets. Within two years, the company has recovered 30 per cent of its investment in the acquisition. As workforce remained same and scope is mainly geographic and horizontal, CAGE framework is not being used analyzing where. The strategy needs to be viewed with the ADDING Value Scorecard method. ParameterRemark

Increasing volumesDWCV, with a capacity 20,000 units, is the second largest manufacturer of heavy trucks in South Korea with 25% market share. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo Decreasing costs Common product development. Tata motors and Daewoo are now working on...
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