Business-Level Strategy: Tata Motors Limited - Research Paper Example

? Tata Motors Limited Business-Level Strategy and Corporate-Level Strategy s 19th May Introduction This present research paper mainly focus on the concept of strategy, which was described by Kim and Mauborgne (2005) as “a plan of action or policy that is designed to achieve the set goals either on a personal or organizational level.” In particular, the research paper will focus on two types of strategies that include the business-level strategies and the corporate level strategies. The study will employ the use of a case study to analyze these two types of strategies and in this regard, the research will use Tata Motors Limited to answer research questions that pertain to these two forms of strategies. The research paper will commence by analyzing the business-level strategy of Tata Motors Limited after which it will analyze the corporate level strategy of the company and then stipulate which of the strategies applied by the firm is the most essential for the long-term success of the company. The third section of the paper will analyze the competitive environment of Tata Motors Limited and then determine the company’s main competitors and their strategies at each level. The fourth section would seek to determine whether the strategies for the long-term success of the competitors would differ in slow-cycle and fast-cycle markets. Tata Motors Limited Tata Motors Limited is a publicly traded corporation within the motor industry, and according to Witzel (2010), the company is a multinational car manufacturer whose headquarters is located in Mumbai, India and it is a subsidiary of the Tata Group Plc. Tata Motors Limited was formed in 1945 and specializes in the production of automotive parts and automobiles that comprise of vans, trucks, buses, coaches, passenger cars, and military vehicles. Perhaps among the most widely known products of Tata Motors Limited include the Tata Nano, Tata Daewoo, Jaguar Land Rover, and Tata Ace. Additionally, the company also offers services that include vehicle service and vehicle leasing (Witzel, 2010). Tata Motors Limited has established an international presence that is supported by the manufacturing and assembling plants that are located across various regions within India, and other countries such as the United Kingdom, Argentina, Thailand, and South Africa. Additionally, the company also has various research and development centers in India as well as in the United Kingdom, Spain, and South Korea (Witzel, 2010). In the ranking of Tata Motors Limited, Witzel (2010) stated that the company is listed in three key stock markets that include the New York Stock Exchange, the National Stock Exchange of India, and the Bombay Stock Exchange. The company was ranked at position 314 in the 2012 Fortune Global 500 list of world’s biggest corporations whose profit in the last financial year was $2.28 billion. Tata Motors’ business-level strategy With reference to the writings by Kim and Mauborgne (2005), they wrote that it is through business-level strategies that organizations are able to meet the needs as well as the expectations of their customers and hence post good returns. According to Hiriyappa (2010), business-level strategies stipulate on actions, which can gave value to customers and enable a business organization to gain competitive advantage through the effective utilization of core competences in service or product markets. Additionally, Hiriyappa (2010) stated that business level strategy mainly focus on a company’s position within the industry in relation to the five market forces and even the competitors. Kim and Mauborgne (2005) stated that there are four key business-level strategies that are commonly used to provide organizations with a competitive edge in the market and they include cost leadership, differentiation, focused differentiation, and an integrated low-cost-differentiation strategy. With reference to the business model of Tata Motors Limited and the writings by Witzel (2010), it is correct to assert that the company applies two key business-level strategies that include cost leadership and differentiation strategy. In regards to cost-leadership, it can be easily noted that company has been able to gain a competitive advantage in the motor industry by manufacturing and selling low cost motor vehicles. For instance, the company manufactures the most inexpensive car in the world, which is the Tata Nano and even the Tata Ace, which is among the cheapest mini-tracks in the world, additionally; the company also manufactures the Swach, which is the cheapest water filter in the world. This business-level strategy has enabled the company to gain competitive advantage in the motor industry and win over a large market share that is majorly composed of budget or low-end customers. The other strategy applied by the company is the differentiation strategy, which is evident in the company’s products that are particular different from those of other car manufacturers in terms of design, size, and even materials of manufacturer. For instance, the Aria and the new 2011 Safari have unique designs and features that other car companies have not yet replicated on their products. For the long-term success of the company, it will be necessary for Tata Motors to maintain the integrated low-cost-differentiation strategy. This is because these two strategies will enable the company to maintain its own market niche, which is unsaturated and unrivaled, more so in the low budget market segment. According to Hiriyappa (2010), the integrated strategy is essential for long-term success of the company because consumers are increasingly opting for quality products that are in the low price range. Tata Motors’ corporate level strategy In the studies conducted by Kim and Mauborgne (2005), he described corporate-level strategy as a plan that indicates the markets or industries that a business organization intends to compete. According to Hiriyappa (2010), the term corporate-level strategy refers to the overall direction and scope of a company and the manner in which its business operations are integrated together to achieve the overall organizational goal. Hiriyappa (2010), further added that corporate-level strategy consist of various sub-strategies that include portfolio strategy, parenting strategy, and the directional strategy. From the analysis of the Tata Motors Limited, it is evident that the company applies the directional strategy as its corporate-level strategy. Under the directional strategy, the company employs the growth, stability, and retrenchment strategy (Witzel, 2010). According to Witzel (2010), under the growth strategy, Tata Motors Limited has been keen on acquiring and merging with other car manufacturing companies. For example, in 2008 Tata Motors acquired Jaguar Land Rover Plc. The company has formed various joint ventures that include the venture with Marcopole S.A, Fiat, and Hitachi. These ventures have contributed to the growth of the company in terms of market share and diversification of product offering. According to the writings by Kim and Mauborgne (2005) it can be stated that under the stability strategy, the company mainly aims at maintaining its market share and fading off competition within the market by sustain quality production and employing effective marketing strategies. Under the retrenchment strategy, it is noted that the company is keen on shedding off subsidiaries or products that do not perform well in the market or do not support their overall business objectives (Witzel, 2010). In order to guarantee the long-term success of the company it is will be crucial for the company to emphasize on the growth strategy because through the strategy the company will be able to increase its market share, and total revenue. Tata Motors’ competitive environment Witzel (2010) stated that the motor industry is characterized with intense competition from various players and among the most significant competitors in the industry include the Toyota Motor Corporation and General Motors Company, all of which offer related products. General Motors Company’s business level strategy is the focused differentiation through which the company aims at competing based on differentiation but only in a specified small market segment. In regards to the corporate level strategy, it is noted that the company also employs the directional strategy since it also applies growth and stability strategies (Witzel, 2010). As for the Toyota Motor Corporation, its business-level strategy is similar to that of Tata Motors as it also applies the integrated cost leadership and differentiation strategy. The company produces a variety of motor vehicles for different markets both high and low-end markets and as matter of fact, it manufactures among the cheapest car brands (Witzel, 2010). In terms of corporate level strategy, it is noted that the company focuses on the diversification for products and markets, and the expansion strategy. Additionally, the company has also engaged in disinvestment (retrenchment) strategy by selling of units that are not performing well or derail the attainment of the overall organizational goal. Among the three companies both Tata Motors limited and Toyota Motor Corporation are likely to be successful in the long-term but Toyota Motor Corporation is posed to surpass the success of Tata Motors because of its ever-increasing range of products and expanding market share, which is further supported by the integrated cost leadership and differentiation strategy. Fast cycle markets and slow cycle markets Hiriyappa (2010) stated that slow cycle markets exhibit low trading activities and innovation. The motor industry pre-exist in a slow-cycle market because consumers do not purchase automobiles on a regular or frequent basis and therefore, both Tata Motors, Toyota Motors, and General Motors would still thrive in such a market. Hiriyappa (2010) stated that fast cycle markets exhibit a combination of heavy trading and high volatility. Toyota Motor Corporation and General Motor Company are able to thrive in such a market because of a robust research and development departments that are spread across various countries and numerous manufacturing plants that can enable the companies to produce new automobiles at a fast rate and meet the higher demand. References Hiriyappa, B. (2010). Business Policy and Strategic Management. U.S: Createspace Publications Kim, C. and Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. U.S: Harvard Business Review Press Witzel, M. (2010). Tata: The Evolution of a Corporate Brand: India: Penguin Books Read More