ASSIGNMENT

SUSTAINABLE OPERATIONS MANAGEMENT

TATA MOTORS
By
Ashutosh Choudhary
(00116603921)
MBA (G) – AB

Introduction

Tata Motors Limited, a USD 34 billion organisation, is a leading global automobile manufacturer with a
portfolio that covers a wide range of cars, SUVs, buses, trucks, pickups and defence vehicles. Tata Motors,
which is one of the globally recognized automobile producers, was established in 1945. Its main offices are
located in India. Tata is the world’s fourth-largest truck maker and second-biggest bus producer. Tata
Motors has segments that are tailored to serve commercial, service, automobile, and commuter markets
around the globe. In addition, the company has joint ventures with Cummins, Fiat, and Daimler Benz. In
2008, it acquired Land Rover and Jaguar brands. This decision is presented as a bad move due to the
predicament it brought to the company. Regarding the company’s ownership structure, Tata Sons have
approximately 27% stake while Tata Consultancy Services Limited and Tata Investment Corporation hold
shares of about 73% and 68% respectively (Anand, 2016). The company operates in different geographical
areas, including Europe and America.

Vision, Mission and Core Values of tata motors

Vision:
1
By FY 2024, we will become the most aspirational
Indian auto brand, consistently winning, by
• delivering superior financial returns
• driving sustainable mobility solutions
• exceeding customer expectations, and
• creating a highly engaged work force

Mission
We innovate mobility solutions with passion to enhance the quality
of life, To be the most reliable global network for customers and suppliers, that delivers value through
products and services. To be a responsible value creator for all our stakeholders.

Values

• Pioneering
We will be bold and agile, courageously taking on challenges, using deep customer insight to develop
innovative solutions.
• Integrity
We will be fair, honest, transparent and ethical in our conduct; everything we do must stand the test of
public scrutiny.
• Excellence
We will be passionate about achieving the highest standards of quality, always promoting meritocracy.
• Unity
We will invest in our people and partners, enable continuous learning, and build caring and collaborative
relationships based on trust and mutual respect.
• Responsibility
We will integrate environmental and social principles in our businesses, ensuring that what comes from the
people goes back to the people many times over.

Corporate Strategy

Tata Motors has constantly strived to be a low cost leader in the automobile market. Thus by employing
“Low cost strategy”, it has made its presence felt especially in the untapped and developing markets like

2
India. The most evident example is that of the ultra-low cost Nano. However, with increasing interest rates,
raw material and fuel prices the company may not be able to sustain this strategy in the long run.

Nevertheless, macro environment analysis suggests that economic growth and rising disposable incomes
may increase the potential luxury vehicle buyers. Thus, TATA’s acquisitions of Jaguar Land Rover seem to
be a sound decision. Also, the ever-increasing competition in the industry requires Tata to implement
“Differentiation strategy”. In accordance to this strategy, the company must focus on providing unique
goods and services to win over the market from the rivalry players. This would allow the company to enjoy
a premium price that the customers would willingly pay for the added value to the product.

Implementation of this strategy can be a piece of cake for Tata Motors if it duly considers the following-

Strategy execution

Indulge in aggressive R&D to ensure innovations that can add value to the product at minimum cost. This
will include designing sophisticated eye-catching models.

Adopt sustainable practices and maintain healthy relations with all the members of the value chain and
constantly upgrade their knowledge by encouraging a learning environment.

Conduct surveys to keep the company updated with the current demands of the buyers and meet them much
before the rivals.

Rising awareness about global warming and ever increasing fuel prices will see a growth in the green car
sector. Thus adding super-efficient engine and eco-friendly vehicles to the company’s portfolio will win a
greater market.

Improving the budget

Regardless of the growing profits, the company must focus on getting rid of the substantial debts and avoid
deals that may degrade their creditworthiness.

Focus on improving global sales for speedy recovery of fixed cost.

Outsourcing

3
Outsourcing of trivial operations is worth the expenditure as it allows the company to concentrate on vital
jobs required to stimulate differentiation.

Ensuring Improvement

The company must encourage interaction between the supply chain members for constant up gradation of
the market demand and quicker delivery, thereby directing efforts towards the improvement of production
time cycle.

Promoting customization, where buyers can customize their vehicles as per their desire, can be an attraction
for experimenters.

Capturing greater chunk of market by launching altered models with varied prices for each segment.

Strategy Suggestions & Implementation

Capitalize on young population

As mentioned before, India has a very large population under the age of 25. These young people do not want
to be living in the last generation, they want what is new and current. Tata’s lack of modern design is hurting
their sales among the next generation. My suggestion is to hire a new team of designers and engineers to
work together and reduce a new line of products with a focus on sleek design and attracting the younger
demographic. After the initial designs are complete, the team should survey a sample of the young
population to get their feedback on the designs before following through to production. In addition, Tata
should commit to a new marketing campaign to try and instill brand loyalty and recognition at an early age.
By doing this, Tata will help secure their future market and the longevity of the company.

Increase demand for automobiles in developing countries.

There are many developing nations where Tata Motors could establish their brand and profit as the nations
continue to build upon their economy and infrastructure. The problem in many of these countries is the lack
of roads which translates to less demand for automobiles. One way to implement this strategy is by forming
an alliance with foreign
Governments. This alliance is strengthened by the two parties sharing the same goal: building more roads.
The tricky part will be managing the agreements between the two parties and establishing the terms of the
agreement. I recommend assigning a negotiating team to handle these agreements who have explored the

4
options for making this deal attractive for the governments’ to accept. Since these deals could lead to a
significant financial gain for Tata, the CFO should consider the maximum investment they could make in
collaboration with the government to be able to profit off the expected increased demand. Some suggestions
to attract the cooperation of foreign nations may include: offering access to Tata Group Resources, agreeing
to a higher tax rate for a certain number of years, offering steep discounts on Tata Motors’ products for
government use (e.g. vans for transporting government officials.

Take advantage of resources of Tata Group.

There are a number of ways collaboration between Tata Group and Tata Motors could be beneficial. One
example is the bundling of insurance with automobiles. The way it would work is as follows: at the
dealership, customers would be able to choose whether or not they wanted to buy insurance with the
automobile. Say the vehicle normally costs $10,000 and outside insurance would cost $2,000. Tata could
instead bundle Tata Group’s insurance with the vehicle and sell it for less, say $10,500 for both; $9,250 for
car and $1,250 for insurance. Tata Group and Motors could both afford the discount because it will translate
into a higher volume of sales.

Separation of JLR and Tata Motors

Jaguar and Land Rover (JLR) was a key acquisition for Tata Motors to excel in the luxury car market. JLR
brings a lot of revenue for Tata Motors and their vehicles have high profit margins, characteristic of the
luxury car sector. JLR is significantly different than Tata Motors on many levels including prestige,
reputation, market share and more. I suggest JLR should remain as separate from Tata Motors as possible as
to not damage their reputation. At first, some may think it would be wise for the two to be associated
because then Tata Motors reputation will strengthen, however it is too big of a risk and quite likely to occur
that JLR’s reputation will weaken. Rather than trying to fix one brand image by using another, Tata should
work on fixing its own reputation without the help of JLR. JLR is the key to Tata’s luxury success and
jeopardizing their reputation in hopes to strengthen a damaged reputation is not a wise decision. In
summary, I think it is best for Tata Motors to keep JLR’s marketing, distribution and all of the value chain
separate from Tata’s main business.