marketing strategy of TATA motors - page 5
Keywords: marketing strategy
By finil on 15/05/2009
Level: Master's degree (MA, MBA, MSc, MEng, MRes, MPhil etc)
Page Number: 5 of 10 pages: 1 2 3 4 5 6 7 8 9 10
from direct competitors (public transport) cars compete with other transport services: air, rail and sea. The increasing importance of door-to-door transportation and environmental concerns decrease the current threat of other transportation means as substitutes. One of the major sources of substitute threat comes from the sales of second-hand cars. According to Mintel (2006) the steady accumulation of second-hand cars has become on of the major reasons of the dramatic fall of the sales of new cars.
Threat of New entrants
The high level of entry barriers (extremely consolidated industry, well-developed value-added chain, R&D capability, investment capability in promotions and new product development) minimises the threat of new entrants. Nevertheless, due to globalised nature of the industry the notion of new entrant is not that clear-cut, since existing players might enter new geographical markets. Datamonitor (2006) stresses the future potential of Chinese manufacturers to flood EU markets in case protectionist measures are not introduced by EU countries.
SWOT analysis
Assessing the external and internal environmental factors, the following picture can be drawn:
Strengths:
Strong revenue growth – According to company’s annual report (Tata Motors, 2006) the company registered strong operational growth of 32,5%, whereas the revenues from the international operations grew by 149%.
Diversified product portfolio – Company operates in different market segments including passenger cars, trucks, medium and heavy commercial vehicles, light commercial vehicles, utility vehicles and buses.
Weaknesses
High dependence on Indian market - over 80% of the company’s revenue stems from sales on Indian market.
Opportunities
The further expansion on the EU market;
The increase of global presence in SUV segment;
Threats
Further increase of competitive pressure on Indian market - At the moment the Indian market is already shared between such strong competitors as GM, Ford, Toyota, VW and Honda. These companies are expected (Datamonitor, 2006a) to increase their presence through licensing agreements, wholly owned subsidiaries and joint ventures. Datamonitor (2006a) envisage additional threat stemming from local automotive firms provided that they gain access to debt and equity financing.
Overall problem of liquidity – As the case study highlighted, Tata Group allocates significant investment flows in IT sector. The failure of this capital to be returned might put financial pressure on all business areas, including Tata Motors.
Slow pace of market entry – Due to the high competitive pressure of UK market, the market window for Tata Motors entry is narrow. The slow pace of entry and wrong timing decision might undermine the
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