The rise of Tata motors.
Updated: Nov 30, 2018
How does a business redefine itself and make customers take notice of it? Read on to find out how Tata Mototors succeeded in doing that.
The TATA group has been a formidable force in the business ecosystem of India. Celebrating 150 years of their existence TATA group is one of the most respected business conglomerates of India and is respected throughout the world. They pioneered and laid foundations of multiple industries in the country- they realized very early on the importance of having an indigenously developed automobile and having the ecosystem to support indigenously developed vehicles for the Indian market.
THE STRUGGLES FACED BY TATA Motors:
Despite being an old player in the automobile industry of India, Tata Indica was their only major commercially successful model. Yes they were the undisputed leaders in the commercial vehicle segment but their cars didn’t enjoy the kind of commercial success that their competitors like Maruti and Hyundai were enjoying. The struggle was real for Tata motors and it can be attributed to the following factors:
The cost of being the undisputed leader in the commercial vehicle segment came at a cost, the brand image of Tata being a trusted truck builder was so strong that they weren’t able to shake off that identity as customer always associated Tata with trucks and heavy vehicles.
Lack of a defined Product strategy: Tata until very recently had a stagnant and limited product lineup of Indicas, Indigos and the Safaris. Though these models had takers in the market but were not able to match the kind of success Maruti and Hyundai were enjoying. Due to lack of a competitive product strategy and line up, they could not lure the middle class buyer to buy their cars.
Poor ownership experience:
Their vertically integrated manufacturing process which helped them create the first indigenously built hatchback Indica, was indirectly responsible for the poor ownership experience of the customers. Few of the part and component manufacturing units within the company were having quality issues and were underperforming. Because of these faulty components and parts customer had to repair or replace them very often which resulted in high maintenance costs of the vehicle.
Right acquisitions done at the wrong time:
Tata motors by now had realized the importance of having a proper product strategy and was exploring opportunities to improve their product offerings and lineups. This was when the opportunity of acquiring JLR came through; JLR catered to the exact opposite customer segment than that of Tata. JLR’s quality management processes and product design capability was something Tata wanted to capitalize on but alas 2008 global recession hit at the same time. Tata motors again had to redo their numbers and refinance their purchase of JLR. This, Coupled with the failure of Tata Nano, made them go through some tough times for years to come.
THE COME BACK :
When the odds were all stacked against them, Tata motors stood tall and firm against the test of time. When faced with a similar situation other business’ conglomerates would sell off their under-performing businesses but not the Tata’s. Though being a family run conglomerate one thing that separates Tata’s from others is their firm belief in letting the best person run the show than letting the family heirs take over. With cars like the Harrier, bolt and e-vision which are winning hearts of the customers- Tata motors now seem to be a legend back in the fight. The renewed success can be attributed to the following factors:
Spotting and nurturing Leadership:
Finding and nurturing globally competent executives to head businesses is something Tata has mastered over the years. Be it the recently crowned chairman of the Tata group N.Chandrasekharan or the current CEO of Tata motors Guenter Butschek, Tata’s have always ensured that their leadership positions are taken up by executives who have proven themselves on a global level.
Right product diversification:
With a renewed product strategy and focus on building multiple modular platforms, Tata motors is now moving aggressively to get more customers under it’s brand. With the new cars like the Nexon which was sold in record numbers during it’s launch and the recent launch of Harrier SUV, customers to be loving these products. We will be seeing a lot more models and variants from the Tata house in the coming days, as the modular platforms would enable Tata to offer a diversified products lineup without taking a toll on their current production capacities.
Patience and persistence:
After the troubled acquisition of the JLR group, Tata motors didn’t give up on it’s decisions to stay put with JLR. And the wait has paid off handsomely. JLR now contributes a giant share in the profits of the Tata motors. With the demand in the american and european markets drying up, pivoting towards markets like China, India and other asian countries at the right time proved to be a very beneficial move indeed. The Range Rover Evoque, which was the first product development exercise since the acquisition was sold in record numbers in the developing markets thereby attesting the arrival of better times for the JLR and Tata group.
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