Business Management Assignment Evaluating Organizational Environment of Tata Motors

Question

Task: To prepare this business management assignment, you are required to consider the automobile industry, select a brand and critically evaluate the challenges of their internal and external business environments. In your evaluation, you should reflect on the challenges they encounter in trading across the globe; your evaluation should be critical enough to address their SWOT, PESTLE utilizing Porter’s Five Forces, Value Chain, and their competitive advantages concerning their core values on sustainability.

Answer

Introduction:
Tata Motors Limited, selected to prepare this business management assignment, is one of the largest automobile companies in India. Tata Motors is recognized as the largest market capitalization as a commercial vehicle in India, and it is the second-largest in terms of passenger vehicles. In present days the company's market cap is 25.08 billion dollars. Across India, at the end of FY 2021, the total vehicles sold by Tata Motors were more than 241,000. Thus Tata Motors has taken first place among the most popular brands in India, with 78,906 employees (2021). The main dream and goal of this company are to occupy the best position in the compartment and to maintain the best product distribution strategy and achieve the first position in ethics as well as pricing system. However, the purpose of preparing this report is to do a critical analysis of Tata Motors' business environment as well as to discuss in detail SWOT, PESTLE, Porter's five forces model, value chain and competitive advantages. This report provides a comprehensive overview of the company's business successes, challenges, weaknesses and strengths, as outlined below.

• Business Environment: Every business has to face some challenges while expanding its business periphery. As the business moves out of its territory and into the overseas market, the company has to face some challenges. Several challenges were mentioned:

• Diversity: Every country has a different culture and different customs. Combining a diverse culture with a brand is the key to entering a new market.
• Custom Duty: Some countries have tariffs of up to 250% (such as Nepal). This makes Tata Motors' vehicles much more expensive than the Indian price. For example, the rate of a Tata Safari Storme VX 4X4 in India is Rs 16 lakhs, and when it sells in Nepal, it costs 40 Lakhs.
• Import Duties: Frequent and occasional instabilities in import duties create new challenges every few years (Mahajan, 2021). It also hinders the development of strategies for PV-IB. For example, Sri Lanka's import duty changes almost every year as it has changed seven times in the last four years.
• Political uncertainty: The government of any country is not stable. Governments have changed many times in Tata Motors' commercial countries. As a result, with the advent of the new government, new foreign trade policies are being changed and adapting to those policies is also a big challenge for Tata Motors
• Custom Shipping: The land / sea-land law requires full support for documentation. Fundamentally, the complexity of the supply chain is too much.
• Brand: Tata Motors has gained a lot of popularity in India as a brand name. In the international market, sometimes completely different stories can be noticed. The brand has the potential to be established from scratch.
• Product availability: It works according to the needs of a particular country. For example, Left Hand Drive (LHD) is 80% of the global market. For instance, it can be said that, according to Sri Lanka's current customs tariff regulations, which manufacturer has a car equipped with airbags, a car with less than one-litre engine, and ABS has an effective diagonal advantage.

International Business Engagement: It is important to understand the reasons for the expansion of Tata Motors. Although the companies have experienced many advantages in the international arena, they have to face many risks for international business (Srivastava, 2021). There are several notable reasons for Tata Motors to justify its international business activities: These are:

• Customer: Tata Motors wanted to continue serving its international customers as a reason for expanding its business internationally. They want to give the same feeling when customers are in the country (Kumar and Hallur, 2020).
• Export: They wanted to expand their business to the international market so as to increase their sales as well as attract new customers and create export opportunities (Raj, 2020).
• Sales: Tata Motors wanted to do business in a place where consumers have strong purchasing power in order to increase their car sales (Dutta and Snehvrat, 2021). They were also looking for industrial courtiers where there was a need or demand for heavy commercial vehicles.
• Marketing: Marketing is a process by which values are created for customers. Tata Motors is a company that puts customer trust first. They try to capture value by building customer relationships. They are also interested in creating product markets in different regions (Timokhina et al., 2021).

SWOT analysis: SWOT is one of the most effective analyzes for managing Tata Motors' giant business properly. The sections of this analysis play an important role in executing strategic planning. This analysis can be performed by any organization, group or individual (Sandhya, 2020). SWOT analysis is mainly used to monitor the impact and importance of both internal and external demand.

• Strengths: Tata Motors is recognized as a leading and popular market creator as well as dominates the largest segment of the automobile industry while maintaining a high-level market share (Thakur, 2021). It is known as an advanced employee-based company and highly productive. One of its biggest strengths is the production of low-fuel, low-cost cars known as Tata Nano. The production of such vehicles has resulted in an increase in the company's market as well as increased customer demand. This company is very strong in terms of development and research.
• Weaknesses: One of the weaknesses is that the cars of this company provide comparatively lower safety standards than the cars of other companies. Sales of Tata Motors products in the domestic market are not sufficient as India's annual sales are less than 1 million. This creates a serious problem for the company as to how the car will be sold if the buyers do not want to buy it.
• Opportunities: The biggest advantage of Tata Motors is the production of less expensive and affordable cars. Low prices and low fuel consumption can attract more markets. As a result, the opportunities for export to foreign countries also increase.
• Threats: Rising prices of raw materials, i.e. steel, plastics, aluminium, are a big threat to the company. Safety standards also matter a bit.

PESTLE analysis: Tata Motors' PESTLE analysis is very important for improving business mobility and quality. Here is the analysis-

• Political factors- Tata Motors is a limited automobile company that operates in an automated manner, so in more than a dozen countries, the company has managed to survive in their manner (Digalwar, Thomas and Rastogi, 2021). Some issues should be maintained with the utmost diligence, such as elimination of various impurities, adoption of various legal arrangements related to contracts and organizations, licensed security, evaluation guidelines and representative facilities, and increased security in the area of sale of goods.
• Economic factors- TATA engines have a 4 per cent market share in sales with CLSA, in the case of remote businesses, and in response to their call, costs are going up with powerless interest (HARIKRISHNA and Jayanthi, 2019). Tata Motors' business is heading for a cross-market crisis, with almost all businesses going down in this pandemic situation.
• Social factors- Tata Motors has often been instrumental in harnessing the common people in the neighbourhood and has been able to create a collaborative mindset among the people. Tata Motors continues to play a pivotal role in creating convenient vehicles for travellers. In addition to various social activities, they help more than 300 NGOs.
• Technological factors- At present, Tata Motors is working on the introduction of electric vehicles in the field of transportation. Along with everything else, technological advancement has also become a significant issue as people are becoming more and more dependent on technology.
• Legal factors- The company has to work according to some legal factors. The most important thing, in that case, is a worldwide business because one rule is applied in one country. So doing business in each country is like a challenge to adhere to the legal factors of that country.
• Environmental factors- These limited companies help in many programs to reduce pollution in the world. Recently, they are focusing more on electric vehicles to reduce air pollution.

Porter's five forces model:

1. Threats of newcomers- The drive to launch new products will not only attract new customers but will also give old customers a chance to deal with the company (AMAL-mohamedamal and Souza, A.G.R, 2019). When a new company launches, they lower the price first. In that case, if Tata provides this facility, then the customer will not shift. To maintain their value through research and development, new companies may not have much experience in the business at first, in which case the process will help them survive the competition.
2. Supplier's bargaining power- The supply chain needs to be improved through the implementation of more suppliers. Another important factor is innovation in the product through the use of different materials. Tata should do the same, just as Nike has improved supply with the help of third party manufacturing.
3. Buyers bargaining power- Customers will bargain less if it is possible to create a bigger base of customers. Bargains will decrease if offers and discounts are provided. Launch of new products also helps in this factor.
4. Threats of products- In addition to the product, they have to pay more attention to the service. They need to focus more on what kind of product the customer wants.
5. Rivalry and competition- A separate strategy should be devised for competition (Mishra, Khadse and Srivastava, 2021). Collaborating with enemies will reduce enemies and increase business.

Value Chain: Value chain analysis brings many benefits to Tata Motors, such as -

• Identity advantage sources- This company deals with various activities which are combined to an extent. Tata Motors Ltd is not able to trade all over the outside market (Malagihal, 2021). With this approach, a company can consider these actions as an economical source, and these activities are able to prevent new business companies from incurring higher costs.
• Complex interrelationship- To increase the value chain, Tata Motors has to deal with a lot of internal and external activity. The internal activity works with certain organization units, and external activity works with certain firms. It is possible to increase the value chain by verifying these relationships.
• A flaw of finance- Value chain enhances Tata's products, information and finance. As the company's information system improves, the number of external threats will decrease. In addition, it is very important to fill the important gap of the firm. Nowadays, customers prefer quick responses. If there is a delay in giving product information, it will disrupt the business.

Competitive advantages: Tata Motors has some advantages to survive in the global market competition. Those are -

• TATA- The name Tata is a big advantage; it is a strong point for any part of the Tata Group.
• Location- Its main centre is located in India, it is very profitable, because, in India, car parts are made at a much lower cost, the company makes a lot of profit by making cars with them and selling them at high prices in the world market(Jamaleh and Shukla, 2021). Also, the rules and business criteria of India are very good for business.
• Innovation, research and development- With the latest innovations, experiments, etc., Tata Motors has reached a top position. The Nano car made by them has not been made by any other company to date. Expensive models at low prices are also available here.
• Effective management system- TATA works with a strong workforce base, but it was restructured in June 2017, and then many workers were laid off (Manickam, M.V. and Selvarani, D.C., 2017). Changes in the work and position of employees are made for the purpose of refreshing the company. Employees are also given appropriate training to enhance their skills.

Conclusion: Tata Motors is the first automobile company in India to manufacture indigenous vehicles. With the first collaboration in 1954, input and with the help of other business companies, the company is now one of the top automobile companies in India and has a great place in the world automobile trade market. Tata's invented Tata Nano is currently the only affordable car in the world. Their business is spread all over the world, and they are still able to maintain their place in the world market through various implementations. Tata Motors ranks 250th in the list of top 500 automobile companies in the world published in 2019.

Reference:
AMAL-mohamedamal, M.O.H.A.M.E.D., de Vasconcellos, S.L. and Souza, A.G.R.,2019 Emerging Multinational Companies in the Era of De-Globalization. http://www.anpad.org.br/abrir_pdf.php?e=MjY1MTA

Digalwar, A.K., Thomas, R.G. and Rastogi, A., 2021. Evaluation of Factors for Sustainable Manufacturing of Electric Vehicles in India. Procedia CIRP, 98, pp.505-510. https://www.sciencedirect.com/science/article/pii/S2212827121001724/pdf?md5=8d60c2102080cc5e6ef41a09fe304ce0&pid=1-s2.0-S2212827121001724-main.pdf

Dutta, S.K. and Snehvrat, S., 2021. From paradoxes to trade-offs: metaroutine enabled multi level ambidexterity at Tata Motors, India. International Journal of Organizational Analysis. https://doi.org/10.1108/IJOA-06-2020-2276

HARISKRISHNA, R. and Jayanthi, M., 2019. A STUDY ON MOVEMENT OF GDP, BANK RATE& DOLLAR RATE AND THE SHARE PRICE OF TATA MOTORS LTD AND MARUTI SUZUKI INDIA LTD. CIKITUSI JOURNAL FOR MULTIDISCIPLINARY RESEARCH, 6(3), pp.375-385. http://ir.psgcas.ac.in/id/eprint/48/1/Jayanthi%2027.pdf Jamaleh, M. and Shukla, A., 2021. Financial internationalization of emerging country multinationals: evidence from India. Qualitative Research in Financial Markets. https://doi.org/10.1108/QRFM-12-2020-0229

Kumar, A. and Hallur, G.G., 2020. DRIVING THE ELECTRIC VEHICLE REVOLUTION IN INDIA: CASE STUDY OF TATA NEXON. PalArch's Journal of Archaeology of Egypt/Egyptology, 17(6), pp.4273-4287. https://archives.palarch.nl/index.php/jae/article/download/1683/1676
Mahajan, L.D.Y.P., 2021. An Analytical Study of Solvency, Liquidity and Bottom Line, of Listed Indian Automobile Companies. Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(9), pp.2615-2625. https://www.turcomat.org/index.php/turkbilmat/article/download/3751/3214
Malagihal, S.S., 2021. Strategic Options for Automobile OEMs of Indian Origin to have Sustained Competitive Advantage: A Case of Tata Motors. Business management assignmentInternational Journal of Global Business and Competitiveness, 16(2), pp.139-152. https://link.springer.com/article/10.1007/s42943-021-00029-5 Manickam, M.V. and Selvarani, D.C., 2017. The Drivers Of Change: A Study On Tata Motors Limited Mumbai, India. http://aayvagam.journal.thamizhagam.net/issues/2017/Feb%202017%205A/17%20Article%20Feb%202017%205A.pdf

Mishra, A., Khadse, M.A. and Srivastava, S.K., 2021. Tata Motors Marketing Strategies in Automobile Industries in India: A Study. Psychology and Education Journal, 58(1), pp.5836-5844. http://psychologyandeducation.net/pae/index.php/pae/article/download/3658/3239

Raj, V., 2020. Project of Functional Analysis in ERP Implementation in TATA MOTORS (Doctoral dissertation, InstytutOrganizacjiSystemówProdukcyjnych). https://repo.pw.edu.pl/info/master/WUT9e4b8ae3ea944faba2841f8e7ebf8418/ Sandhya, K., 2020. An Organization Study On Tata Motors Limited. http://203.201.63.46:8080/jspui/bitstream/123456789/5829/3/MR1800%20-%20KAMSALA%20SANDHYA_1CR19MBA35.pdf Srivastava, S., 2021. PERFORMANCE APPRAISAL IN TATA MOTORS. http://103.47.12.35/bitstream/handle/1/3853/Saumya%20Srivastava18GSOB1010301%20Project.pdf?sequence=1&isAllowed=y Thakur, S., 2021. A study of consumer behaviour towards pre owned cars. https://shodhgangotri.inflibnet.ac.in/jspui/bitstream/123456789/9295/2/synopsis%20sumit%20thakur_h12604.pdf

Timokhina, G., Shirochenskaya, I., Ivashkova, N., Murtuzalieva, T. and Shishkin, A.V., 2021. Improving the Company Competitiveness through the Development of Key Competencies: Marketing-Management Technologies and Practices. REVISTA GEINTEC-GESTAO INOVACAO E TECNOLOGIAS, 11(4), pp.917-934. https://www.revistageintec.net/index.php/revista/article/download/2157/1478