Tata Nano & China: A Perfect Opportunity - Essay Example

? TATA NANO & CHINA A PERFECT OPPORTUNITY Table of Contents: Introduction: 3 PESTEL Analysis of China: 4 a)Political: 4 b)Economic: 4 c)Social: 5 d)Technology: 5 e)Environmental: 5 f)Legal: 6 a)Strength: 6 b)Weakness: 7 c)Opportunity: 7 d)Threat: 7 Marketing Plan: 7 Recommendation: 9 Reference 10 Introduction: Globalisation is the need of the hour for companies who are looking for growth prospects outside their country as there should always be a Plan B ready before Plan A’s time period is over. Globalisation has made world look so small by making a product of a company available across different continents. Companies across the globe are coming out of their closet and venturing into different environments to gain an edge over their counterparts. Tata motors are one such company which has its presence in different parts of the world and still expanding. Over the years the company has ventured into different countries and has also acquired international brands like Land Rover & Jaguar. Established in 1945 in India Tata motors have been the pioneer in the field of automobile industry and are the number one ranked company in India with its manufacturing units in various parts of India and offshore in places like UK, South Korea, Thailand etc. It is slowly creating its footprints in major offshore markets and has so far been successful in doing so by reaching to the figures of USD 27 billion as its revenue for the fiscal year of 2010-2011. Tata motors has successful launched its people’s car Tata Nano 2012 and has already received overwhelming response across the continents. After launching it in India and being on the road to success Tata motors should now plan to expand its Nano project to country like China where it can further boost its revenue as China is a huge market for car makers (Tata Motors, 2011). China, a country with vast population and geographical area is also the country which tops the list of countries where companies want to expand their business. China has grown globally at a tremendous pace and currently stands at second position in terms of world’s largest economy overtaking Japan. China since opening its gates for the international market has been the prime destination for every renowned company worldwide. But without twist a story is never entertaining and it is true in case of companies as well because every company wanting to be a part of the Chinese economy has to know about China as a country, what are its norms and regulations? What are the environmental factors? Is China a politically stable country? Moreover a PESTEL analysis of the country is what can make things simpler for the companies who plan to setup business in China. PESTEL Analysis of China: a) Political: China on the political ground is a single party company and a communist country. On the other hand China despite being a communist state has always been preferred as the most sought after destination for companies. The reason behind it is the stability in China in political terms; China’s single party government decides on every move that the country takes in every sphere of business, politics, and growth factors. This in returns makes situation favourable for the companies as there would be no one to oppose its move if it’s a green signal from the government. b) Economic: China is taking long strides towards growth and has turned out to become a strong economic zone. With its robust growth economically it is bound to attract more players who will further contribute towards it ever growing economy. When companies plan to operate in China what are the factors that can make them vouch for China as the destination must be the first question to strike them. The huge labour force, inexpensive physical entity, and availability of land for manufacturing units, low inflation rates in China will help a company to prosper in business. c) Social: Socially China is a different country unlike western destinations where the culture is of same genre and companies find less difficulty to communicate and understand the culture. Any company launching a product have to think in terms of Chinese people, what is their opinion? How they rate the product? Competition may also be one factor with the local companies who would have an edge over the company trying to step its foot in China. Also a company needs to see in terms of the advantages it can gain from investing in China such as huge labour force which are inexpensive and through them understanding and knowing the culture would be simpler. A company should also need to have patience to enter into the profit books as of different culture and social life. d) Technology: China is still a developing country with technology still not at par with its western counterparts, but, companies should not see it a point of stepping back because China is growing and so is its technology. With more and more companies venturing into China and setting up manufacturing units are bringing the latest technology with them. This in return helps China to be technologically sounder and ultimately the companies operating in China would be beneficial. e) Environmental: Environmental factors also hold a key role for any company to think before entering a new market. China’s growth has also increased it carbon release in the environment as it stands out as the world’s largest exporting country of goods. With more and more companies seeking an opportunity in Chinese market they would also have to be responsible in terms of their company helping to curb the pollution for a better tomorrow. f) Legal: China has strict norms and regulations and it is advisable for every company to stick to these norms to operate hassle free. The problem for the company arises in the form of China changing its labour laws or gas emission laws etc. Sometimes it becomes difficult to adhere to such laws but with companies preferring to greener energy can make them most welcome guests of the country (Baumann, 2010, p. 2-3). Tata motors as a company and Nano as its product are two different sides of the same coin. Tata motors is a big name and is already planning to setup manufacturing unit for its Jaguar and Land Rover cars in China but Nano feels left out despite being globally acclaimed and China being a huge market for cars. To make Nano globally appealing as an inexpensive family car Tata motors needs to strategise in a different manner as Nano going global would reinvent Tata motors image in a whole new dimension as a innovative company. A SWOT analysis for Tata motors product can be a valuable tool to analyse if Nano being launched in China with a manufacturing unit will be viable for the company in terms of its revenue and profitability. a) Strength: Tata motors is a renowned name in the automobile section worldwide with the fact that Tata motors is the 4th largest truck manufacturing company in the world. The biggest strength for Tata motors is its innovation, technology, quality and strong brand equity. b) Weakness: Tata motors weakness can be in terms of different socio-culture, communication barrier that it may face in China. But these weaknesses can be converted into opportunity by leading from the front as an ambassador which has planned to act globally but to think locally. c) Opportunity: China can be termed as a place of opportunity for many companies in today’s scenario as how the market around the world is shifting its base and China eventually emerging as torch bearer in terms of economic growth followed by India and Brazil. Tata motors can also grab this opportunity and contribute towards the growth of the company in different horizons. d) Threat: China is a huge market both for exporters and importers and also for companies who are planning to enter the Chinese market with new launches. But threat also welcomes along with opportunity as China being a country which has companies who are already in car market business with low price can hamper the market of Tata Nano. Tata motors needs to strategise in a way that these threat are turned in opportunity and finally strength. This can be possible only by being unique, innovative and thinking out of the box (studymarketing.org, n.d). Marketing Plan: Tata motors plan of launching its pride possession Tata Nano in China can be possible through a well defined marketing plan which can be drawn on the basis of SWOT analysis of Tata motors and PESTEL analysis of China. Tata motors marketing plan should be based on certain important elements such as- marketing objective, target market, promotional activities, diversification, correct strategic approach and finally the budget determination. A proper study and approach to all the above mentioned parts of marketing plan adopted by the company can lead Tata motors to being a front runner in China as well in the coming years. Tata motors should decide as how it wants to set its objective, what are going to be its promotional activities in a diverse culture. Also the most important aspect of the marketing plan is the budget determination for the company. The company has to draw a graph as to how it will be going ahead with the marketing plan and what will be the budget required for the promotional mix and other activities and thus accordingly should design the marketing plan for a successful launch of Tata Nano in China (planonline.org, 2001). In addition to the SWOT analysis and marketing plan, there are other elements which need to be talked about if a company is to expand into different territory. Tata motors has to adhere to the rules set by the major institutions both global based and state based. These global and regional institutions such as WTO, UNCITRAL, UNIDROIT, MOFCOM and other judiciaries and banks are all present to make the expansion of business smooth for the companies in their quest to expand in different territories either through acquisition, merger, franchisee or starting afresh (ialsnet.org, n.d). Tata motors in its global context have to be more transparent because there is a difference between globalisation & internationalisation. Globalisation stands for being globally active across borders without any trade barrier and having footprints everywhere. But internationalisation means a company is doing trade in different horizon but its focus is still its state. In that context Tata motors have to be a global player and not just an international player. Going global may bring in some risks as well such as political risks but then these risks can be overcome with proper understanding of the legal system of the country, in this case China. Nano launch should not only mean a business expansion but also should be a process in which two different cultures come together and create a friendly working environment and so as to create a good human resource management which is globally practiced. International HR management is something which is not only for recruiting or utilising human resource but also managing diversified human culture with being able to avoid any culture risks and thereby balancing HR based activities in overseas territory. By doing this Tata motors will face minimal problem or no problem and also with its balanced act between two different cultures and countries can help to exchange management policies which can come in handy as Tata motors plans expand its market in China (Buckley, P. J, 2003, p. 2-4) Recommendation: Tata motors have to adopt a different mantra for its success in China unlike India for its Nano car. A perfect launch of Nano in China would be possible through proper segmentation of its market, and then by targeting the specified segment of consumers and finally positioning the product on the basis of marketing mix i.e. Product, Price, Place and Promotion. A good advertising campaign can further help in establishing a strong ground for Tata Nano by depicting Nano as small family car which is fuel efficient and adheres to all the safety norms. Contrary to this China’s diverse consumer market with different taste for product can make STP marketing less useful tool as at times advertising campaigns only attracts a certain segment of people and cannot be targeted to get notice of everyone. But, if the company reframes its strategy to enunciate about its business plan and uses STP marketing to its full use by zeroing on the segment that it wants to target and accordingly create advertisements and position its product. This can do wonders for the company like Tata motors and Nano can be a road runner in Chinese market with the tag intact as “People’s Car” (O’Guinn, Allen & Semenik, 2011,p. 211-215). Reference Tata Motors. (2011). Company profile. [online]. Available at: http://www.tatamotors.com/know-us/company-profile.php. 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Available at http://www.planonline.org/planning/marketing/mkplanformat.htm. [Accessed on February 27, 2012] Read More