In 2008 Tata Motors, an Indian automaker wanted to expand its product portfolio and diversify its market base. It acquired the two iconic British brands Jaguar and Land Rover from the American automaker Ford Motor Corporation. This acquisition gave the company access to premium cars, a chance to add two iconic luxury brands to its stable and a global footprint. It gave struggling Ford a chance to rid itself of two loss-making vehicle units. The deal was transformational. It catapulted Tata Motors from a commercial vehicle and small-car manufacturer to a global player with marquee brands in its portfolio. The scale of the acquisition also was large relative to the size of Tata Motors. The purchase especially that of Jaguar, by an Indian company was viewed as toppling of the world order and many critics expressed doubts about Tata’s ability to retain the quality and standard of Jaguar Land Rover. Continue reading
Business Strategies
Porter’s Generic Strategies – Focus Strategy
Focus Strategy is the strategy which believes in concentrating on a small segment defined in terms of customer segment or geographical territory. A focus strategy means carefully choosing the arena to compete in and narrowing the competitive scope. By selecting carefully a segment and meeting the needs of that segment better than competitors who target more broadly defined segments, companies can gain competitive advantage. A focus strategy takes advantage of the differences between the target segments and other segments in the industry. It is these differences that result in a segment being poorly served by the broad-scope competitor. The firm that focuses on cost may be able to outperform the broad-based firm through its ability to strip out frills not valued by the segment. Alternatively, the product or service can be differentiated, taking into account the unique needs of the segment. A focus strategy can be pursued using either a Continue reading
Methods of Corporate Restructuring
The important methods of Corporate Restructuring are: Joint ventures Sell off and spin off Divestitures Equity carve out (ECO) Leveraged buy outs (LBO) Management buy outs Master limited partnerships Employee stock ownership plans (ESOP) 1. Joint Ventures Joint ventures are new enterprises owned by two or more participants. They are typically formed for special purposes for a limited duration. It is a combination of subsets of assets contributed by two (or more) business entities for a specific business purpose and a limited duration. Each of the venture partners continues to exist as a separate firm, and the joint venture represents a new business enterprise. It is a contract to work together for a period of time each participant expects to gain from the activity but also must make a contribution. For Example: GM-Toyota JV: GM hoped to gain new experience in the management techniques of the Japanese in building high-quality, Continue reading
Case Study: Dell’s Competitive Advantage
Dell Computer is a leader in the e-commerce computer hardware market. It is an established brand that leads personal computer manufacturers both in U.S. sales and overall online sales. Its trademark method of selling products to customers, corporate and individual consumers, originates from the Dell Direct model, a Web-enabled infrastructure that allows customers to customize their PCs and order other products they need or desire. This virtual integration structure eliminates the need to manufacture everything, and instead uses the power of the Internet to share and exchange information with suppliers and vendors to build a truly superior supply chain that keeps inventory turnover low and costs to a minimum. The primary method Dell uses in order to achieve and sustain their competitive advantage is a unique, direct to customer business model. The model is known as Dell Direct, referring to the relationship between the company and its customers as being Continue reading
Role of Environmental Analysis in Strategy Formulation
A great deal must be learned about an organization so that strategy formulation decisions can be based upon appropriate information. It almost goes without saying that strategists must understand all there is to know about the internal operations of an organization before strategy can be effectively formulated and implemented. The external influences acting on the firm also must be analyzed, documented, and understood to mange and implement the strategies effectively. An organization’s environment consists of two parts: The industry within which it operates (for multi-business firms, the industry is usually considered the activity’ in which the firm generates the majority of its revenue), and other environmental dimensions–economic, political/legal, social and technological. Very often financial analysis will bring to light several financial strengths and weakness that are indicative of strategic or operating capabilities and problems within the various strategy levels and within functional areas. Financial analysis is typically followed by internal Continue reading
Case study: Tata Motor’s Acquisition of Jaguar and Land Rover
Tata Motors is the largest multi-holding automobile company in India and it is the fourth largest truck producer in the world. In addition, Tata Motors is also the second largest bus producer in the world, with the revenues of US$ 8.8 billion in the financial year 2008. Since its establishment in 1945, Tata Motors has grown significantly in the past 60years with the strategies of joint venture, acquisition and launched new products in different market segments (i.e. passenger cars, commercial vehicles and utility vehicles). A significant breakthrough for Tata was the development and commercialization of the truly Indian cars and they are Tata Indica (1998) and Tata Indigo (2002). Tata Motors has experienced many joint ventures with Daimler Benz, Cummis Engine Co. Inc., and Fiat. In the year 2008, there were two most significant events which have had a momentous impact on the scale of the Company’s operations and its Continue reading