Tata Motors Review Example

The Indian Automobile industryThe automotive sector is one of the core industries of the Indian economy, Continuous economic liberalization over the years by the government of India has resulted in making India as one of the prime business destination for many global automotive players. The automotive sector in India is growing at around 18 per cent per annum.

The cumulative annual growth rate of production of the automotive industry from the year 2000-2001 to 2005-2006 was 17 per cent. The cumulative annual growth rate of exports during the period 2000-01 to 2005-06 was 32.92 per cent. The production of the automotive industry is expected to achieve a growth rate of over 20 per cent in 2006-07 and about 15 per cent in 2007-08. The export during the same period is expected to grow over 20 per cent.

FDI in IndiaIndia is on the peak of the Foreign Direct Investment wave. FDI flows into India trebled from $6 billion in 2004-05 to $19 billion in 2006-07 and are to quadruple to $25 billion in 2007-08. By AT Kearney’s FDI Confidence Index 2006, India is the second most attractive FDI destination after China, pushing the US to the third position.

Tata MotorsTata motors is the flag bearer of the Indian manufacturing industry , being the first Indian manufacturing company to have its own indigenously manufactured passenger car and being the first to make forays into the global market . It is a showcase for the whole industry with world class process management techniques being incorporated .

But inspite of all this Tata motors have not been able to make a dent in the global market , neither in the passenger car market and nor in the heavy commercial vehicles market. Although it holds the 2nd position in the passenger car market in India, its increasingly feeling the heat from global competitors like Hyundai , Suzuki etc.in the domestic market too.

Strategies followed by Tata MotorsTata motors since inception has been growing organically and inorganically. They first collaborate with collaborated with Germany’s Daimler Benz in 1954 for 15 years to manufacture commercial vehicles and they opened there first R & D centre in the year in Jamshedpur in 1954 so they can innovate and produce the products that are cheap and suitable for the Indian roads, they also first one to start exports to the neighboring countries they then move to the heavy commercial vehicle in the year 1983 and light commercial vehicles in the 90’s.

They have various tie-ups with the different companies in its different stages of the life like start from Daimler to the latest acquisition of the Land rover and Jaguar. All the deals gave the tata motors edge with technology or the market access to the Tata motors .

It was the experience gain by the Daimler in the 1950’s that they give the Tata motors the contract to manufacture its high end cars for the Indian subcontinents that gave the great boost for the tata motors as a revenue generation. In 2004, Tata signed an investment agreement with Daewoo Commercial Vehicle Co. Ltd. and later acquired the company which opens the door of the Korean market. The new Tata Daewoo Company launched a heavy duty truck ‘Novus’ in Korean markets. It was also in 2004, that Tata Motors entered the US stock Markets. The also India’s first mini-truck, the Tata Ace was launched in 2005.

Host country linkages

The Tata motors being the true Indian company has been expanding its manufacturing and the R&D division in the country itself they are having manufacturing units in the different part of country and they are making the best of the cheap labor and the network they are having in the country so they can produce the product at the least possible cost and export the products from India itself it also.

Tata motor being the leading automobile industry in India bagged the Golden Peacock Award for the year 2004 for its valuable contribution towards economic, community developmeny and Corporate Social Responsibility. The initial work started with the well being of the company employees, their living condition, health and education which later turned to community well being through various Community Development Centers, Samities and Programmes.

Capability drivers

Tatas have been always initiators in the automobile section tats why they have a great experience and they collaborate with many industry experts and develop into many section of auto-mobile .They are the oldest auto mobile manufacturer that’s why they got the longest experience of developing and distribution channel and they are having the various oldest R&D centers in India that is been used to follow the trend of the Indian demand and it resulted in the success stories of the Tata Ace that is the India’s first mini truck and the $2500 nano.

They are operating not only in India but they also have R&D centers in the European countries so they can match up their condition and demand

Research & Development

The investment in the R&D is the The main reason for the success for the Tata motors.Research Centre at Jamshedpur regularly upgrades components and aggregates. A well-equipped torture track enables rigorous and exhaustive testing of modifications before they are used as regular fitments. With over 2,500 engineers and scientists, the company’s Engineering Research Centre, established in 1966, has enabled pioneering technologies and products.

The company today has R&D centres in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India’s first Sports Utility Vehicle and, in 1998, the Tata Indica, India’s first fully indigenous passenger car.the centre in Pune was setup in 1966 and is among the finest in the country. It has been honoured with two prestigious awards – ‘The DSIR National Award for R&D Effort in Industry – 1999’ and ‘National Award for Successful Commercialisation of Indigenous Technology by an Industrial Concern – 2000.

Financial IssuesTata is expanding globally so they needed finance for the Tata Motors has signed a share purchase agreement to acquire the business of Jaguar and Land Rover (JLR) in an all cash deal of US$ 2.3 bn. This includes the 3 manufacturing plants, 2 Advanced designed centers, located in UK and 26 national sales companies which make the tata motors a grip in the European market,but the share price premium paid by the tata motors are said to be very high and the price of shares of the tata motors went down on the same day.


Industry & corporate value chains

INDIA’S pharmaceutical giants like Ranbaxy Laboratories Ltd, Reddy’s Laboratories and Wockhardt, among others, are making moves to secure a bigger global presence, especially in markets like the US. Having developed a capability to reverse-engineer patented drugs, because the previous patents law in India protected only processes not products, they have trained their sights on the global generics market.

The strategy is simple enough: Wait patiently for drugs to go off patent and then flood the world market with cheaper generic versions. Ranbaxy’s revenues from the US generic business thus are expected to rise to $1.2 billion by 2008. In the generics business, margins are wafer-thin due to competitive conditions in the developed markets. They improve with branded generics and keep improving as one moves up the value chain to finally making patented drugs. Despite such constraints, however, Ranbaxy is moving up the value curve: from bulk drugs and intermediates to generics and conventional dosage forms.

Then on to value-added and branded generics and later to new drug delivery systems. Moving up such a curve improves the bottom-line as margins on bulk substances and intermediates do not exceed 10 per cent but go up to 100 per cent or more for new drug discoveries. The last-mentioned is the Holy Grail for Big Pharma but Ranbaxy does not have resources to produce new drug discoveries pegged at $800 million per drug.

There is no choice but to plough more resources into R&D and form strategic alliances with MNCs. Ranbaxy has had earlier alliances with Eli Lilly and its current development of an anti-malarial drug, Rbx11160, could be an exemplar for the future as the financial risk was absorbed by a Geneva-based non-profit organization, Medicines for Malaria Venture.

First mover advantage to RanbaxyThe an appetite for risk that catapulted us to become a top ranking global generics company. Time and again these attributes have helped us to establish a first mover advantage in carving out new business opportunities where none seemed apparent.

Building the human bridge and an integrated global team has been one of our biggest challenges. What worked in our favor is the strategy of locating and retaining local talent in the 49 nations we are present in. Today, they have a multi-ethnic work force close to 12,000 people representing 50 nationalities. It is no coincidence that many of the world’s most respected companies are those that continue to innovate, take risks and challenge existing thinking.The main positive point with them is the low cost with the world class facilities that is possible only in India

Acquisitions made by Ranbaxy

In May 2007, Ranbaxy made an acquisition of 13 established and well recognized brands of the dermatology segment from Bristol-Myers Squibb in the US. In October 2007, Ranbaxy and Zenotech Laboratories Limited, a Specialty Generic Injectables company with strong expertise in the area of Biotechnology, signed an agreement, for the global development and marketing of biotech products.

The acquisition of Terapia in Romania in 2006 was a giant leap for Ranbaxy in Europe, unleashing multiple synergies of business development, giving greater access to high-growth markets and creating a strong presence for the Company in the European Union (EU).

This approach of the Ranbaxy shows that they were growing globally as they were acquiring the companies any where in the world and also they were acquiring the companies which is having the potential that can give the edge over the competitors and also that is making Ranbaxy to enter into the new market with the local product name and make the drug successful and then make the drug global.

CSR done by Ranbaxy

As a global leader in pharmaceuticals we take pride not only in providing products that enable people to live healthier and fuller lives, but also in giving back to the society. At Ranbaxy, Corporate Social Responsibility and concern for Environment, Health and Safety are a part of the corporate DNA.

The Ranbaxy is in many CSR which is not done only in India but across the world and specially in the poor countries where the problem is grave and government are helpless in front of problem there the company is providing the helping hands to the people which help in making the positive image in the eyes of the people. ‘Ranbaxy Rural Development

Trust’ and health for all is the program used in helping the rural India and the people to fight the basic sanitation problem and the health problem. Ranbaxy Science foundation (RSF) is a non profit organization dedicated to promote scientific endeavors in the country by encouraging and rewarding and channeling national and international knowledge and expertise on subjects connected with treatment of diseases afflicting mankind. Ranbaxy, in its endeavor to make ARVs accessible to patients around the world, is leveraging its global network of offices, affiliates, joint ventures and alliances.

With Ranbaxy products being marketed in over 125 countries and ground operations in 49 countries, Ranbaxy provides pre & post sales support to institutions, NGOs, and Ministries of Health, making Ranbaxy ARVs available in their respective treatment programs Several humanitarian and government programmes have sourced ARVs from Ranbaxy.ARV if fighting Aids they are making people aware for the HIV virus and giving free drugs to fight against illness.

Acquisition of Ranbaxy

In 2008, Japan’s Daiichi Sankyo Co., agreed to take a majority (50.1%) stake in Ranbaxy, with a deal valued at about $4.6 billion. Ranbaxy responded in the positive way saying that it is the part of their strategy and they want to move toward the financial sectors like NBFS’s and the security companies like Religare which is upcoming and more profit generating.