Tata Motors Entry Into the UK market.
Tata's market access.
Despite the worldwide trend decreased significantly for the sale of car Some of the car is growing dynamically. By Datamonitor (2006b) to sell commercial and utility vehicles. port is very healthy Windecker (2005) Effect of force in social and cultural forces that the setting up of more modern sports. SUV Car of high growth. SUVs are identified in the U.S. and UK
Focus on one market, Tata will be the United Kingdom. There are several reasons for choosing the UK, including the target market. These good standing of the Indian economy as well. Agent, UK Car market dynamics and potential similar language Other countries which are considered of interest may be. : USA – Market size of the largest in the world. Russia – emerging market with potential sales. U.S. markets option is rejected due to target high quality, and other non-tariff barriers. That made it difficult for new members entering the new market. In addition to this growing market and experience high levels of competitive pressure. With regards to Russia have many disadvantages. Factors that made it interesting but not England – The uncertainties of economic conditions and more barriers to high dealer network is not well developed.
Analysis of the external environment of the UK market.
There are several factors that may be incorporated into a pest analysis However limitations. (A limited time), factors that explain the majority will focus on several factors, sub-only. (The Pareto principle is likely that approximately 20% of the factors that shows 80% of its potential impact on business. (Wit & Meyer, 1998).
Political factors.
Political and legal factors in the role. Industrial development of These factors shape the rules of the competition costs of operations and supply chain needs.
Oil prices caused by international instability. – Special attention to oil prices and the resulting impact on the market demand. According to Mintel (2006) the increase in oil prices is likely to force a small engine. Hybrid engines and diesel engines. High oil prices increase the current stress on the sale of luxury premium cars and most are equipped with large engines. (More then two liters).
Management difficulties. (Quality control and operational requirements). (KPMG, 2004) – Administration Obstacles must be serious about the requirements. For safety and emissions levels may increase costs and reduce operating margins.
Car Law parc – by Mintel (2006) Experience UK The threat of overcapacity and high traffic road network too.
Political relations between countries in the operation. (Concentration of favourability protection) (Hills. 2002) – India and the United Kingdom with the regime of favourability. It demonstrates some benefits such as reducing taxes and non-tariff barriers.
Foreign ownership rules. (Expansion mode (Hill, 2002) – At this time, Britain is one of the country. pro – FDI in the EU. Many in the industry, including car One means of deregulated international rules for Foreign companies have the flexibility to choose between the possible entry and expansion mode
Economics
Choose one of the attractions is the current condition and future needs as they affect the potential growth rate and market pricing strategy and operating capabilities. Return on investment.
Size of the target market. – According to Mintel (2006) since 2001, growth of the market by size and value. Current UK car parc is about Accommodate 31 million unit market value is written by the growth of average prices. Current market value estimated level of £ 31000000000.
Maturity of the target market. – UK market has been viewed. (Mintel, 2006) is a large adult. Currently the cause of the problem. overcapacity and sales dropped significantly, especially car Group
Growth potential of the target market. – Total UK market experienced negative growth due to maturity. But car sales, some thin Has the potential to grow significantly due to the impact of social, cultural, and technology.
PDI – according to Mintel (2006) Growth of GDP (10% between 1998-2005) left personal income (PDI) (19%). And consumer costs (18%). Represents the confidence level of consumers. Mintel (2006) claim that in terms of buying a new car. Consumer confidence has dropped significantly. While the current UK consumer has been willing to issue new debt instead are choosing to pay existing debt. Level also. Withdrawal of mortgage has denied that shows that UK consumers are not asking for alternative products such as expensive cars.
Stability Currency – current status of the strong British pound and other currencies. Have created benefits for other consumers manufacturers operating in pounds as predictable performance and reduce the volatility of the currency. Risk.
Labor costs. – Is the trend of the automotive industry focus on cost factors and the ability of direct costs and become competitive in the treatment of issues. Advantage According to industry experts. (KPMG, 2004) One of the issues that affect the decision to perform the labor cost only. According to survey (KPMG, 2004) Industry experts put the main emphasis on labor, especially conservation In addition, 85% of respondents see the last five years will be key. Increased costs, especially labor (The pension and health care legal services). In the U.S. and the EU.
Growth. political and economic blocs are located. (EU) – the importance of following the latest expansion of the EU in the enlargement of the EU single market. In case of successful growth market in the UK Tata may consider extension in some The estimate of Nieuwenhuis and Wells (2003) The EU is attractive target market for car manufacturers is still high. They claim that the attractiveness of the EU target. Market will be maintained by an increase in market size and value as a result of the expansion of the EU zone However, the current market trends and excessive demands complete guide The share of Europe will decrease.
Social factors.
Population factors. – Factors Population is one of the major social factors. It affects lifestyle. Trends of consumer behavior. risk aversive and energy costs to customers. Status of population trends to help forecast of building a particular type of product. Current UK population. undermined sales of family cars.
Lifestyles – and changes in life habits are the direct costs of consumer For example, Mintel (2006) suggests an increase of the last set for the second car owner. Mintel (2006) added that the impact of lifestyle factors such as fashionability. And the setting is elegant. That took the impact of the oil market and in some car. Therefore, the total price SUVs and luxury car experience while growing sales. The other car had fallen significantly.
Technical factors.
Development of information technology – Development of the Internet now open The ability of a new transaction. Currimbhoy (2004) show that the continuous development of technology solutions, particularly in the areas of digital and communication technologies create new jobs. Opportunities such as new marketing channel mix buy new environment. (E – commerce) and new market research tool. According to Mintel (2006) of leading automotive supplier development. E-counter issue. overcapacity.
The impact of new technology on supply chain architecture. – Developing e signal exchange between the supply chain agents. Source of strategic advantage. (Currimbhoy, 2004) to create the ability to quickly meet market and the key to better quality control.
Review of micro factors affecting UK car business.
Bargaining powers' competition.
UK car market and a lot Associated with significant competitive Ford. GM (Vauxhall), VW, Renault, Peugeot, Toyota, BMW, Citroen and Honda. Having an effective competition by branding the threat of severe price. War and poses s strong demand for different products. According to Mintel (2006) competitive pressure difficult to increase promotional costs. overcapacity suggest significant price pressure is difficult current market conditions so that some manufacturers to close some facilities to reduce costs and survive in the market.
At this important competition. Improved supply chain strategy, new product development and meet the needs of emerging markets. (Mintel, 2006) new opportunities to a very high level. Response operations, and leaves little space to the market opportunities. leveraged by competitors.
Bargaining power 'purchase
Because of the high intensity of competition in global problems. overcapacity buy more bargaining power with large UK experience. According to Mintel (2006) the buyer has indicated a high level to – Find behavior.
Bargaining power 'Suppliers.
However, car production and a large enterprise can not make significant changes. The relationship of the bargaining power of manufacturers. – OEM by Veloso and Kumar (2002) included in the OEM sector is collectively the groups corresponding to different manufacturers. Partner Demand chain, auto dealers, especially big people do experience a lot of bargaining power the lights out. overcapacity at
Instead of threats of
Separately from direct competitors. (Public Transport) car competition with other transport services. Others: air, rail and sea. Increasing importance of transport door – to – door down and help protect the environment. Current threats and other transport. Including a replacement. One of the major sources of threat instead comes from the sale of second hand cars. According to Mintel (2006) Gross vehicle regularly used to cause major drama in the new car sales.
The threat of a new one.
High barriers of entry. (Including many industrial and developing value-added chain. R & D capabilities and ability to promote investment and new product development). To reduce the threat of new However, due to the nature of the industry worldwide concept of a new entrant is not clear because the existing players may enter new geographic markets. Datamonitor (2006) strong potential for the future of Chinese manufacturers flood the EU market if the measure sponsored religion tariff rate, not higher, led by European Union countries.
SWOT analysis
Evaluation. External and internal environment that can draw the following picture. .
Strength
• Strong revenue growth. – Following the company's annual report. To (Tata Motors, 2006) Company registered a strong expansion of 32.5%, while revenue from international operations increased. 149%.
• product range. – We operate in different markets, including heavy trucks and medium trucks. Light utility truck. Vehicles and buses.
Weakness
• high dependence on the Indian market. – More than 80% of revenues. Arising from the sale of the Indian market.
Chance
• The growth in the European market.
• increase in the global section SUV;
Threats.
• increase the competition Pressure in the Indian market – while the Indian market is shared between the competitors and the like GM, Ford, Toyota, VW and Honda, they are expected. (Datamonitor, 2006a) to enhance their performance through the license agreement. Subsidiaries and joint ventures. Datamonitor (2006a) ideas stem from additional threats. Automobile company in the country. They can access the debt and capital
• the overall problem of liquidity. – A case study focused on, Tata Group allocated a significant investment in the current. IT sector failure of this venture is to be financial pressures in all business areas, including Tata Motors.
• Slow pace in the market – due to high competition. Pressure of the market for the UK window market entry. Tata Motors will soon narrow the list of steps and decisions the wrong time could undermine its success. Companies in this market.
Key Success factors.
In terms of overall success. Tata Motors, environmental and educational factors identified in the following key elements.
• Fast market entry UK;
• operating strategies designed to protect the stock. Companies in the Indian market;
Prevention measures in the Indian market.
To protect market share and growth of severe competition. Companies need strategies for prevention. By Veloso and Kumar (2002) One of the forces available. Tools increase customer loyalty by offering value-added benefits such as cost credit terms of interest. Post purchase service Veloso and Kumar (2002) note. The maintenance vehicle may account over 70% of the total age of the car. The company will develop the service center network to increase the geographic and pre – empt entry of competitors.
Marketing strategy.
Choose one market
To increase the speed of transactions and reduce the risk of failure. Tata Motors should select the mode that has a quick access to customers. At the same time the security mode list some long-term benefits such as access to knowledge and markets. Development status of its new markets. To these requirements, a joint venture agreement has been selected as the best entry mode. Different from the subsidiary to use less. Investment, operation. (Hill, 2002) In addition to this mode of operation to suit facilities of partners and customers quick agreement. Other benefits of this mode. Market is limited to the possibility of transferring technology or knowledge.
Marketing mix.
Products.
Product benefits as a result "of new product development include Bachelor privilege not available to previous extent of customer satisfaction better than Relative quality and scope of new product innovation and solving customer problems better "(Craig. And Hart, 1992) is a useful product. The main difference between success and failure in the development of new products and services. Other similar companies to hit the market. Has produced a version of X1 is environmentally friendly. Utility vehicle mini – sport 5 speed automatic transmission and 140 HP 1,8 L hybrid engine with low oil consumption. [1] companies need to focus on the quality of the winner. Products to potential customers. SUV into a group decision is determined by the dynamic growth of between This 2003-2005 – 10% products are designed to meet the quality Setting the following customer segments. : People oriented fashion, 25-45 years more sports utility vehicle at appropriate
One of the key. Combining the developer offers to buy services. The Company will contract for developing relationships with networks of different Car Garage independent experts, such as quick fit Chain, mobile services and service customization and autocentres developed strong relationships with Kwik – Fit, Finelist and Halfords will increase interest in terms of product availability. Access to services and facilities.
Price
Mintel (2006) research illustrates the importance of the issue price for its customers. The owner requested a second car. Strategic pricing decision to try to attract customers purchase price. – £ 10 000 2,995 price is less than the price of one The best-selling car. – Daihatsu Terios of pricing as costs related to equipment, services and car Main focus will reduce costs by summary service conditions. Agreements with partners service and their low cost quality equipment and spare parts
Place
Distribution is important to accept the most And sales of new products on the market, it forced the availability of new products to our customers. (Calantone and Montoya – Weiss, 1993), it goes without saying that the distribution channels. Purchasing behavior have to choose the target market and allow maximum distribution in target markets. Channel selection may be added or the product's intended message. Market position. To increase product availability, Tata Motors is a partnership agreement with a strong network of distributors. In addition, strategic e – Available to perform. Ability to use this distribution channel.
Promotion
Decisions surrounding the promotion and communications equipment necessary to attract To raise awareness and purchase new sediment. (Lilly & Walters (1997).
Mintel (2006) study the following options for channel ad. .
– TV;
– Print advertising;
Internet advertising. -.
Mintel (2006) confirmed that the ATL (above the line). Spending accounts for major share of the total cost in Promotional activities, while the share of TV advertising may be over 50% of the total cost KPMG (2004). Added that promotional budgets often include 1% -2% of its sales expectations for That the first goal for Tata Motors to sell. 25,000 units in the first year of operation, the marketing budget. 3 £ 750 000 [2] also supports the same It is expected from the partnership agreement of Tata Motors. 50% of marketing budgets are allocated. advertisings TV, 25% – sales promotion in the car and magazines. Life style 25% – is allocated for the promotion. Activities and joint marketing activities. To increase the level of protection. The company will look for partners who can create interest and promote sales.
Conclusion
Paper suggest that Tata Motors entered the UK market. This country have been selected because of good business and environmental factors such as stability rather Barriers to market growth medium plus car and some potential for future growth within the EU while the UK may be used as a base for expansion. Factors found business. The importance of a fast mode of entry and developing relationships with UK contract market representation operations. Paper to resolve that. Companies should use this contract company A joint venture mode in the UK market. This strategic option is to Tata Motors has a market share of fast access to knowledge, the financial markets and stress reduction. Simultaneously Negative possibilities of this alternative should be. counterbalanced. Factor analysis found that the performance of The company is particularly based on the success of the operation. In the Indian market may be undermined, which increased the pressure to compete. To strengthen the strategic position of an aggressive competitor, Tata Motors instructions to focus on Building relationships with customers and marketing tool designed to increase the loyalty of customers.
Based on analysis of changes in the current market, Tata Motors at Should the SUV market with a model designed for people who focus on sports that are relatively more price-friendly environment. High quality car. Price will be one in Factors like price, especially for important people. The company will launch an ad campaign designed to build awareness about the advantages and soliciting customer communications vehicle. Places to buy for Mix. The company will be asked to cooperate with various auto dealers and the development of e-commerce facilities to increase the availability of product.
Reference
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Craig, A. and Hart, S. (1992), "this place in new product development research". European Journal of Marketing, vol 26, iss 11 pp,. 1-49.
Currimbhoy, Z. (2004), "The Outlook for E – Business in the automotive industry" Reuters. Business Insight – Strategic Management Report.
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** Source: http://www.study-aids.co.uk.
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