The development of Tata Motors Company in the United Kingdom and barriers faced
The development of Tata Motors Company in the United Kingdom and barriers faced
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Dissertation submitted in partial fulfilment for the degree of Master in
International Business
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Supervisor: Rachelle Andrews
Acknowledgement
My gratitude goes to all those who offered me assistance in the completion of this dissertation. More thanks to the departments of International Business for their great assistance and support during the writing of this dissertation without whose help, it would have been challenging completing the dissertation.
I am deeply indebted to my supervisor Rachelle Andrews whose assistance, stimulating suggestions and encouragements assisted me in all the search time and in the completion of this dissertation. She gave me the professional guidance and always inspired me; it is an appreciated that I gained many benefits from her guidance.
I would like to express my gratitude to my parent whose support and guidance enabled me to come to the United Kingdom to further my study. I would also like to appreciate my friends and classmates in the UK with shoe support and encouragements enabled me move forward even in hard times.
Lastly, I would also like to convey my special thanks and my appreciations to anyone whose advice, encouragement or support contributed to the successful completion of this dissertation.
Abstract
According to Armstrong 2003, as numerous firms and organization increase their market share and customer base, slowly and steadily, the use and conceptualization of both international and regional markets/marketing is gaining momentum (Armstrong, 2003). As a result of advanced and growth in Business-to-Business and Business-to-customer connections, many firms have thus been able to enter foreign markets and increase their market share. To be able to fully utilize the advantages of available global market as well as the local markets have propelled various firms to seek for fresh marketing strategies. The international and regional markets offer great opportunities for the businesses or organizations with products/services in high demand. To have the ability to assess the potentiality of the global/foreign markets, a firm has to identify the collective demand for a particular product/service.
The main aim of the paper is to determine the barriers development of Tata Motors Company in the United Kingdom and challenges the company faces in expansion into foreign markets. This study focuses on identifying the barriers that Tata Motor Company face in its expansion and development in UK (Maheswaran & Yi, 2006). It also explores the methods used by Tata Motor Company in overcoming the obstacles in UK. In so doing, the paper explores the challenges faced by Tata Motor Company in the UK regional and global markets, and provides recommendations for the company. The market barriers are thus identified.
To fulfill the objective, the dissertation follows a case study approach where the company under consideration is Tata Motors Company. The literature review examines both the micro and macro-environment of Tata Motors Company. The macro-environment analysis considers Political/Legal Issues, Economic issues, Social, Technological, Environmental, Cultural. On the contrary, the micro-environment analysis takes into account the past performance and internal analysis of the company.
The literature review further examines the barriers that Tata Motor Company has faced in the pats considering the management, the role of management in international expansion and Strategic management and Quality, Cost efficiency and competitiveness in Operations on Tata Company. This research relies on various researches undertaken on Tata Motor Company by various authors. The study mainly entails secondary data collected from journals, books, articles and online materials.
The research however, has its own limitations considering the collected data. Since the data used is secondary, and the available resources were limited the research might not fully explore the hypothesis. Furthermore, the available resources could not depict the current status and position of the firm. The findings are only applicant to Tata Motor Company since different firms have various marketing and management strategies. Further research will be appropriate in getting more information and understanding the barriers faced by firms in entering the global markets and expansions (Zola, 2002). It goes further presenting a conclusive summary of perceived merits of interring the global markets and using advanced marketing strategies. The research findings will be useful for the firm in determining its weaknesses and making adjustment on both the management and produced products and services.
Table of content
Acknowledgement
Abstract
Chapter one 1: Introduction
1.0 Introduction
1.1 Background of Tata Motor Company
1.2 Aims of the Research
1.3 Significance of the case study
Chapter 2: Literature review
Globalization and the Growth of Auto companies in International Markets
Technology such as Information Technology in the operations decision areas
Competitiveness in Operations
Quality, Cost efficiency and competitiveness in Operations
Performance measurement to satisfy various stakeholder groups
Increasing productivity and measuring customer service
Macro-Environment Analysis
Technological and Environmental
Industry-Environment Analysis Summary
Threats of New Entrants (Barriers)
Bargaining Powers of Suppliers
Bargaining Powers of Customers
Threats of Substitutes
Rivalry amongst Competitors
Micro-environmental analysis
Internal Analysis Summary
Industry Environment
Does Tata strategy match the Industry-Environment?
Industry-Environment Analysis
Operational flexibility
Technical superiority
Size and location of distribution
Threats of Substitutes from other products
Chapter 3: Research Methodology
Introduction
Research approach
Ethicality, Reliability and validity
Research Method and Design Appropriateness
Research Validity
Internal Validity
External Validity
Statistical data analysis
Collecting the information from past articles and company records
Chapter 4: Data Findings and Analysis
Identification of gaps from the analyses
Research outcome
Research outcomes
Stiff completion form other Companies
Customer Satisfaction and business expansion and development
SWOT Analysis relating to the research outcomes
Chapters 5: Conclusion and Recommendations
Financial resource of Tata Motors Company
Threats to Tata’s growth
Cultural diversity
Competitors’ barriers
Limitation and Future Research
Conclusion of the study based on objectives
Recommendations
References
Chapter 1: Introduction
1.0 Introduction
The number of multinational and transnational companies is on the rise due to changes in business dynamics and an increase in pressure on businesses to diversify their operations and make the most out of opportunities in far away nations. However, despite these changes businesses still feel immense pressure to ensure that they redesign their operations so as to make the most out of the available opportunities (Mizik & Jacobson 2009). The competition level faced by most UK automobile companies, Tata included has been high and this has resulted to increased emphasis on the approaches they use in improving their positioning in various market segments.
With increase in globalization and development of global trends, international companies play a vital role in shaping business dynamics within local environments. Though competition with local businesses is one of the reasons for the high levels of competition faced by international companies, both have an influence on the strategies that are adopted at national levels. Additionally, automobile companies are responsible for almost 65% of the regional trade volume and this means that their performance has a high probability of affecting UK economy and influence global economic trends (Halsall, 2008). It is therefore vital on businesses and researchers to come up with policies through which automobile companies like Tata Motor Company can strategize their operations in a way that they assist in the improvement of global perception and market share as well as regional markets.
The increased use of celebrity endorsements amongst businesses and strengthening of corporate social responsibility strategies are seen as direct efforts by local and international businesses aimed at improving and maintaining their brand images. Evidently, innovation plays an important role in determining the overall gains that an international business will make (Raggio & Leone, 2009). The multiple challenges faced by international businesses which include having to operate in different markets segments, varying cultures, complex business models and differing expectations by organizational stakeholders may hamper and complicate the brand development and branding processes (Nandan, 2005).
Background of Tata Motor Company
Tata Motor Company was established in 1945. Since then, Tata Motor company has produced over four million vehicles. The company has thus expanded by a great extent. For example, in India, the company has more than 2000 touch-points and this has ensured that they not only reach the clients but obtain the maximum form the clients. It thus became the India’s largest HYPERLINK “http://www.absoluteastronomy.com/topics/Automobile” automobile company and recorded revenue of 20 million dollars from 2009 to 2010. In the recent past, the company was ranked among the top 10 Indian companies with revenue of about 320 million Indian rupees (Armstrong, 2003). Tata Motors Company is not only the fourth largest truck manufacturer in the world but also the world’s second largest bus manufacturer with more than 24,000 employees (2009/2010). Through supplementary and associate companies, the company has operation in United Kingdom, South Korea, Spain and even Thailand. To date, Tata Company has being among the top three positions in the country in providing the high quality and preferred passenger vehicles. It is therefore the 4th biggest medium and heavy commercial vehicle’s producer, and the second biggest manufacturer of bus. The company has market in several countries in Europe, Africa, Southern Asia, Middle East, and South America.
1.2 Aims of the Research
The main aim of the research is to determine the development of Tata Motors Company in the United Kingdom and the barriers it faces in improving its market share and customer base. However, in achieving the objective, various management strategies, market perception and competition from other products will be considered.
The other secondary aim is to identify the strategies, management methods and other marketing related strategies used by the competitors in the market and so the SWOT analysis of the Company.
The following research questions will guide the study into finding out the challenges that local and international businesses (referring to Tata Motor Company in specific) face in branding; differences in challenges faced by local and international firms in brand development and branding and the requirements that local and international businesses should have in place to improve their brand development and branding initiatives?
1.3 Significance of the case study
Through the research, Tata Motor Company will be able to identify its competitive advantage. There are numerous merits of competitive advantage. It gives a Company an edge over its competitors and an ability to make more value for Company. Competitors find it hard to reduce the merit when competitive advantage is more sustainable. Competitive advantages ensure that an Organization gets more returns for longer period of time. The stock value is enhanced by increasing the life of an Organization (Green, 2007).
The strategic management used by Tata Motor Company, its effectiveness, and the possible changes.
Tata would be able to fully analysis its competitors. Knowing a company’s competitors is paramount as it allows one to identify a niche and develop better selling propositions. Both direct and indirect competitors are taken into account. Competitive intelligence is carefully keeping an eye on your competitor at wherever they may be in the market place. Your business rivals are your competitors with whom your fight for gaining a share of the market. Competitive intelligence entails looking in the future of both your business and that of your competitor (Armstrong, 2003). Through careful examination and analysis you are able to make good decisions and counteract your competitor’s strategies to have larger share of the market and also be able to expand. It is only through competitive intelligence that various firms and companies lay down business strategies to effectively deal with competition.
The effectual marketing and branding methods used by competitors would also be identified. Among the critical success factors for new product development are branding, effective marketing, and pricing. Major methods of advertisements have affected the purchase and consumptions of numerous products over the past and presently. Branding has also acted as marketing strategy. Effective marketing ensures that a good market share is captured.
Knowledge of the customer satisfaction factors is a strong backbone upon which an organization can base its customer retention by knowing the satisfaction drivers of the customers it has attracted. Furthermore, though there is a great significance of using customer opinions and attitudes in various fields, not many studies have specifically focused on assessing the attitudes of customers with respect to their satisfaction with the products offered especially in developing economic systems (Dewe and Cooper, 2007). The research will assists in determining the level of customer satisfaction with the local products and vehicles from Tata Motors Company.
This information will help the company to make the correct choice of specific wholesalers and retailers. They would also be in a position to decide on whom to offer incentives so as to motivate and help the grocery to reach and serve as many customers as possible to make profit (Dewe and Cooper, 2007).
Since all the above aims are related to the performance and expansion of Tata Motors Company, the development of Tata Motors Company in the United Kingdom can hence be studied. The aims will hence ensure that all aspects and areas are completely covered using the secondary data collection method.
Chapter 2: Literature review
Globalization and the Growth of Auto companies in International Markets
Social responsibility has a significant contribution in the corporate management. Hill 1991 defines social responsibility in terms of the obligations to be protected by the organization while enhancing them for the best interest of the society that the organization is entitled to offer services and products. Social responsibility is composed of a few components and it is the duty of the various business organizations to attend to the responsibilities demanded by the customers. Paramount of all is the provision of the of the highest possible product quality that should also be safe for use and environmentally friendly.
The effectiveness of the operation management of the organizations depends on their potential for interaction with the external environment. The environment incorporates the general, the specific task as well as the mega environments (Dewe and Cooper, 2007). Operation management should attend to the firm’s obligation for the purpose of enhancement of the societal conditions together with the interests of the management. The operation management should appreciate the their accountability to the six most significant groups of stakeholders namely; the shareholders, the customers, employees, the suppliers as well as creditors, the government and the entire society.
Operation managers should respond to the social responsiveness in an attempt of implementation of policies while participating in the activities that are beneficial to the society and the firm alike. In the measurement of the social responsiveness in the firm, the operation managers should consider the following. Contributions, diversity policies, recycling, direct investment, work life quality, consumer’s attention, as well as pollution control. The importance of the measurement of responsiveness is the key to social audits although they are not mandatory in a legal sense (Maheswaran & Yi, 2006). However they make a contribution in the demonstration of social responsibility in major firms.
Technology such as Information Technology in the operations decision areasMajority of automobile companies in UK are exposed to key challenges due to the acceleration of the global business dynamics in majority of the markets. This is due to the requirement of the maximum awareness as well as the flexibility required for the organization for the purpose of a quick adaptation of the approaches of the business in relation to the dynamic environment as well as requirements in automobile companies like Tata. To achieve success in addressing the challenges and achieve victory in the global that is currently competitive, there is a need for the operation managers to be more adaptive. This has the implication of the business processes, supporting technologies of information and the structures of the organization must be flexible as well as responsive to the changes for the purpose of assurance of sustained competitiveness.
The digital economy is especially important due to the preference of the real-time information and shorter cycles of business which are the driving forces of the improvement of the processes of business. The process of streamlining and optimizing of the processes of the business are based on process re-engineering of business organizations. It sometimes becomes efficient for outsourcing of the business processes in the organizations for the purpose of concentration on the most important business processes (Caldwell, 2003). The operations in business organization have been so dynamic due to evolution that is anticipated to terminate at Information Technology. IT has been the backbone of the modern operation management and it has been a source of revolution to an extent of making it inevitably amalgamated in to the process. The cost of the installation of the systems of IT has dramatically fallen. Their application in running the operations of a business organization has therefore been enabled and their investment is not demanding. Public sector based organizations are continuously adopting information technology to achieve compliance with central governments responsible for the modernization of the government agenda (Aidemark 2003, pp. 212-32).
Competitiveness in Operations on Tata Company
The major effort of company management is a focus on the objectives of the organization like the performance improvement, innovation, competitive advantage, continuous organizational improvements and sharing of the already learned lessons. There is an elaborate overlap between the efforts of knowledge management to the organizational learning. The distinguishing characteristic between the two is taking a greater focus on knowledge management as being a strategic asset hand in hand to a focus in the encouragement of knowledge sharing. The efforts of knowledge management are important in the facilitation of the individuals as well as groups in the sharing of the valuable insights of the organization for the purpose of the reduction of the redundant chores (Caldwell, 2003). This avoids a situation of the wheel re-invention per se and the reduction of the time required for the training of the new employees. The intellectual capital is therefore retained leading to the reduction of the turnover of the employees in the organization and a proper adaptation to the ever dynamic environment as well as market.
Knowledge is a very important tool of manipulation by the company’s operation management for the purpose the sustenance of a competitive edge. Information Technology has recently been applicable in the facilitation of the sharing of the knowledge in the prescripts of the organization. This has resulted to efficiency in the management of the organizational knowledge for the purpose of the improvement of performance in the business (Chua 2004, 254-65). Tata Motor Company offers a presentation of a model that facilitates the understanding of the creation of the intellectual value and the contribution of knowledge management with regard to the leveraging of the intellectual capital. Operation managers should be in a position of addressing the challenges posed to the organizations related to the establishment of the environment whereby knowledge sharing among workers is encouraged in as similar manner as their use as well as expansion based on existing knowledge. The production of innovations is responsible for the increment in the intellectual value. This does not lie entirely on the systems of technology but more on the management of human resources, the systems of knowledge management together with leadership.
Innovations play a vital contribution to the markets of today and they have the potential for dramatic transformation of the competitive position of the company. However, there are chances of risks associated with innovation management as a result of the high uncertainties in the adventures of the companies. This therefore implies that information and knowledge management in the organization re key parameters in the business that can aid in the reduction of innovation uncertainties. This consequently leads to the improvement of the possibility of new products implementation in a successful manner (Andrade, Ares, Garcia, Rodriguez, Silva & Suarez 2003, pp. 152-64).
For the purpose of offering support to innovation management, there is a need for the development of procedure that is properly thought and also structured that is based on the entire process of management (McKinlay, 2007). The methods as well as tools that are responsible for offering the support to the planning as well as decision make important contributions to the clear as well as efficient management processes. Although there has been a rapidly growing awareness in as far as corporate environment is concerned knowledge is of the same level to the intellectual capital that is necessary for the capturing, storage as well as sharing of the corporate knowledge. The issue of concepts implementation, the approaches as well as the tools with regard the knowledge management section of organizations is a common occurrence (Maheswaran & Yi, 2006).
Quality, Cost efficiency and competitiveness in OperationsThe concept of customer satisfaction in relation to the quality of goods and the rendered services is an important issue in today’s business world and also to Tata Motor Company. This is one of the factors that have highly been emphasized at Tata Motor Company. This incorporates the product and the service quality that is responsible for the total satisfaction of the needs of the customer in all possible respects based on continuity. More important to this is the quality of the processes, the information, the objectives of the system and the people (James, 2008). The business environment is surrounded by pressures such as globalization, new technology and deregulation among others. These pressures are responsible for business requirements for reorganization as well as restructuring for the sake of their survival and competitiveness in the market. Tata therefore need to develop and also adopt new models of performing their business aimed at the achievement of the capabilities of matching to the changing environment of manufacturing. This is a very important issue in the organization for the purpose of the achievement of success in the manufacturing business (Caldwell, 2003).
There is a requirement of the manufacturer to posses all the abilities for the production of multiple as well as diversified products and at the same time upgrading together with redesigning their products to comply with shorter life-cycles while executing the changeovers of efficient production in a simultaneous way (James, 2008). The potentials to face globalization pressures especially the shorter life cycle of the product and the manufacturing environments of over-supply, there is a need for the provision of services that are more value-added by the manufacturers in as far as their customers are concerned.
Performance measurement to satisfy various stakeholder groupsThe existent of organizations is exposed to high levels of uncertainties, dynamic environment, dynamic environment and new challenges together with problems that are continually confronting the organizations. Operation managers are therefore liable to identify solutions to the imminent challenges together with the problems, for the sake of the survival, prosperity and effective performance of Tata Motor Company (McKinlay, 2007). For the purpose of the achievement of the objectives, an investigation of the function of the organization becomes a necessity together with their effect to the environment.
There is a diversity of stakeholder groups in the organizations. A diversity of a multitude of people who work together with the intention of the achievement of a purpose in common is a fact of the existing organizations. All these people depend on the organization for the sake of coordination of their actions with the aim of achieving a desired and valued interest. The creation of value within the organization is a process undergoing three stages namely the input, the conversion and the output. Each of the stakeholders is in the process of identification of the best approaches meant at serving all of the constituencies at the same time.
Tata is duty bound to commit itself to the highest purposes for the purpose of meeting its duties as required by the stakeholders. The role of the organization is the provision of the much needed goods as well as services to the society that it is duty bound to render services to. The other responsibility is the provision of employment, the creation of wealth and the generation of profits in the organization (Donald, 2005).
Increasing productivity and measuring customer serviceCustomers today are exposed to a situation whereby they are in a position of acquiring the products from diverse outlets. The level of vehicle and other products competition in the current market from other automobile companies is very high. Due to the high level of competitiveness in the market, the services offered to the customers become a very critical differentiator of completion that faces business organizations. The extent of the retention of the customers is based on the on the level of productivity of the organization coupled with the overall experience of the in-store attendants. This is an important contribution to the higher levels of sales in as far as the organization is concerned (Donald, 2005). The improvement in the productivity aimed at the measurement of the services to the customer should be supported by the improvement of the service levels of the customers. It is also important to trim the cost of labor as well as the operating costs in the organization. This would be influential in its contribution to the day to day knowledge of value price that are the expectations of the customer. The involvement with personal interaction to the store associates is an important process that bears some influential impact on the loyalty of the customer alongside the bottom-line of the organization.
The liability of the organization with regard to the offering of quick and helpful response the merchandise related questions of the customers such as the pricing, location, availability, among others is a pre-liquisite duty of the operation management of the organization (Donald, 2005). The failure of the achievement of this objective is consequential to the frustrations of the customers, loss of sales at the current and in future and an erosion of the reputation of the organization. The skills, experience and the levels of education of the staff of the organization should be high enough to facilitate the provision of the solutions that are instrument to the perfection of the level of services to the customers (Ayas 1996, pp. 213-32).
The application of technology is in a position of bringing closer of the customer. The dilemma confronting the organizations is the adoption of a technique to attract the customers and influence them to buy the goods being offered by the organizations. The understanding of the valued things by the customers is the determinant of the course that the organization should take in their productivity (McKinlay, 2007). This incorporates the knowledge related to the brands, specific products and the services so that the organization can provide what is valued by the customers. This also facilitates the organizations to serve their customers in a better way.
Macro-Environment Analysis
The PESTEL type of analysis utilized expressed various issues relating to the positive and negative effects of each category associated with the industry that Tata resides in (UK). Such an analysis reveals the major trends that will affect the growth of the industry, the growth rates of the industry and how successful the organization will be within the immediate long term length of three to five years (Logan, 2001).
As actor in the automobile industry, Tata Motors Company is faced with different trends that definitely have to be taken into consideration in order to better understand the external environment and to deal with it in the most sensitive way. Before introducing the macro environment analysis, we first have to determine the industry we are talking about: to the large bikes, we also add the faster ‘scooter’ type bikes that enable us to analyse more broadly and to include important trends. The first issue to consider is the economy that is defined by a global increase in the cost of manufacture materials, a decrease in the purchasing power and increasing expensive public transports.
The technological advancements with Just in Time production and the use of systems such as CAD (Computer Aid Design) or CAE (Computer Aid Engineering) help to reduce production time and costs by providing more efficient product development. In addition, information technology and software use are a source of high performance and safety for the vehicles.
If these two first points are rather positive for the future of the industry, the political aspect is more tendentious (Logan, 2001). The automobile manufacturing industry is widely regulated by the government concerning issues such as safety, licensing, registration and circulation with fines against vehicles and other products. The biggest pr
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