Internationalization Strategy at Tata Motors - Essay Example

A proposal for a dissertation" identifying, analyzing and critiquing the internationalization strategy and activities of a selected multinational firm in its efforts to enter and establish itself in a specific emerging economy Background Globalized business environment exposes the firms to new challenges in context of choosing the right business growth and development strategies. Entering the global markets is a viable and attractive option for firms since it offers vast opportunities to tap new markets and expand revenues. However, the difficulty lies in framing suitable strategies that support the growth objectives. International strategies focus on developing competitive capabilities that can be used effectively to expand market presence and consolidate firm activities in the global markets. Tata Motors is a leading player in the automobile sector in India. The company has been successful in its global expansion strategies adopted by the group since the 1990s. The Tata Group started as a family owned conglomerate and it comprises of 108 operating companies with products and services ranging from steel, Consultancy Services, Communications, chemicals and beverages to automobiles. Tata Motors is ranked eighth in global vehicle producing sector. It entered into a strategic alliance with Daimler-Benz, the German automobile company, in the year 1954 to produce commercial vehicles. In the year 1991 the company entered the passenger car market segment (CNNmoney.com, 2012). Research topic The key questions facing the strategic choices of the firms in this situation is how to adapt itself to the market requirements and what kind of internationalization strategy should be applied to retain a successful market presence. The research aims to explore the strategic alternatives open to Tata Motors to support its global market expansion plans. The dissertation will identify and critically analyze the internationalization strategies of the firm. The focus of the research study will be on researching the automobile market trends in the chosen market (Russia), the advantages and disadvantages to which this market is exposed to, evaluate the various market entry modes and discuss the feasible strategies open to the company. The research objectives are to explore the internationalization strategies and alternatives open to Tata Motors in its quest to establish its market presence in Russia; to provide recommendations based on research findings and inferences. Research questions The following research questions will guide the objectives and the outcomes of the proposed research study – What are the vital aspects defining the internationalization experience of Tata Motors till date? What are the various market entry modes available to Tata Motors and which is the feasible strategy that can help the company establish its presence successfully in the chosen market? What kind of competitive pressures does the firm face in context to its market expansion plans in Russia? How will these forces impact the company’s internationalization strategy? Literature review Internationalization strategies have evolved over the past few decades in response to emerging needs and demands of global markets. Firms today seek various options that can help in consolidating its position in new markets. A number of research studies have focused on the globalization strategies that can be adopted by firms in different circumstances. The process of internationalization has been defined as “the process in which the firms gradually increase their international involvement” (Alina and Emilia, 2009, p376). This is a gradual process where firms evolve through distinctive phases of operations. The internationalization phase of the firm begins after the organization has consolidated its local market position and gathered the necessary competencies and capabilities required to tap global markets. A brief description of Tata Motors Russia According to a Boston Consulting Group (2012) report the Russian automobile industry is projected to become the fifth largest car market in the globe. There is growing demand for different car models in Russia on account of changing economic conditions and rising income levels (Ernst & Young, 2013). Tata Motors aims to tap into this market and establish a strong market presence. Marketing and business objectives of the company focus on sustaining its operations overseas with the goal of expanding market shares and revenues. The company’s global strategy has been a significant aspect driving the firm’s profits and market shares. It has been successful in entering many global markets through wholly owned subsidiaries, joint ventures or dealerships. As part of its global expansion plan the firm now seeks to enter the Russian markets. Access to global markets places firms under renewed pressure to face competitive forces and adapt itself to the needs and requirements of the new market (Tata Motors, 2014). International strategies and activities adopted by Tata Motors Russia International Strategy In this section we will be discussing about the International Strategy adopted by Tata Motors. Businesses have become global with trade barriers being removed from many countries across the globe. Internationalization is on the radar for many companies who not only want to export to foreign countries but to setup establishment and manufacture their products in those countries. Internationalization has been in the priority list of Tata Motor’s strategy and it has successfully entered into countries like South Africa, Argentina and Thailand through acquisitions and joint ventures (IIMB, 2014). The company wants to focus on international markets which are similar to India. The company has identified around fifteen to twenty key countries where it will have a significant presence in terms of market share and volume (Tata, 2004). The company plans to expand its production facility to the international markets. International Strategy activities adopted by Tata Motors Russia The key question relating to this study is the decision on how Tata Motors will enter the Russian market. Firm capabilities and competencies are vital indicators that determine the firm’s market position and hence its suitability to enter new and foreign markets (Grunig and Morschett, 2012). The corporate perspectives related to the firm’s decision to enter global markets involve a deeper focus on developing business potentials, expanding the scope and boundaries of existing operations for increased returns, and management efficiencies that will enable to firm to explore new opportunities (Welch et al., 2007). According to Ghemawat (2013) multinational enterprises seek to exploit the location advantages of the chosen market destinations in ways that can provide them with competitive advantages. The challenge lies in choosing an appropriate strategy for entering new markets. Theoretical models and frameworks in this context highlight the role of resource competencies, risk assumption abilities, and control over operations as the key factors in defining strategic choices (Johnson and Turner, 2010; Peng, 2013). Tata Motors had setup a plan based on the above framework where they have partnered with local Russian partner AMUR with plans to launch light commercial vehicles, small, medium and heavy trucks (The Economic Times, 2006). The company ran into rough waters with the global financial crisis in 2008-09 but have come out of it to launch the Tata and Daewoo brand of trucks and buses in Russia (The Hindu BusinessLine, 2014). Strategic decisions related to the market entry modes rests on the consideration of various factors that include the skills, competencies, resource capabilities and technical know-how of the firm (Ghemawat, 2013). These factors define the firm’s internal capabilities, strategic advantages and the extent to which the management can assume the risks in operations. A review of external advantages that involve a focus on the location-specific features is also required for effective strategic decision making. An evaluation of the external business environment provides the firm with the required knowledge for establishing new facilities and expanding business operations in the chosen location. Decisions related to firm’s entry mode is thus based on “the interplay of past experience, rational analysis of firm’s current situation, and a dialogue involving all the players and their intuitive assessments” (Alina and Emilia, 2009, p377). Research methodology The research study will be based on the qualitative method. Qualitative method is the methodology by which primary and secondary data is collected through research. It involves the analysis of human behaviour, market research and reasons out the decision making of the management. Qualitative research methods enable researchers to engage in systemic enquiry about the research context and explore various dimensions that explain the whole process and its implications on related variables (Merriam, 2009). This research method allows the researcher to explore available resources and collect facts and information using different methods to enable effective interpretation based on the findings of the research process. Qualitative research methods are most suited for explorative studies that require identifying and analyzing the different dimensions attached to the research context (Corbin and Strauss, 2008). The research process will involve a literature review, a critical analysis of the situation, followed by an assessment of the findings and observations to provide the final recommendations and inferences. The data collected for this study will rely on secondary sources that include existing research studies in the context, figures and observations made by other researchers and any other relevant data available. The qualitative model was selected as it involved understanding the market dynamics by collecting secondary data which involved organizational records and data collected through qualitative research. This helped the researchers in assessing the large volume of the Russian market. Qualitative model helps the business to understand the market scenario, the demographics associated with it which helps the management in taking business decisions. Timetable and resources The figure below illustrates the proposed milestone for conducting the different phases of the research – Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 6 Wk 7 Wk 8 Wk 9 Wk 10 Identifying research objectives   Literature review     Data collection     Data analysis     Writing the dissertation     Conclusion and recommendation   According to the timeline given above the dissertation work will be completed within 10 weeks. This is a rough estimation of the time needed to complete the work through various phases. The key resources required to complete this work are books, journals, articles, industry reports and any other research work done in similar context earlier. The internet will provide valuable support in enabling the researcher to collect the vital resources and explore vital data related to the chosen firm. Research limitations The primary limitation of the study is the reliance on secondary sources of information which may or may not be effective in representing the current status of international markets. To overcome this limitation the researcher will engage the use of varied sources. This will allow the researcher to compare the facts and data available and ensure accuracy in observations and inferences. Ethical implications The research study will adhere to ethical requirements of the study by maintaining accuracy in reporting facts represented by other researchers. Ethical means will be used to collect research evidences and report the sources accurately to avoid any misinterpretation of facts and data collected for the research. References 1. Alina, H. and Emilia, C. (2009), The internationalization strategy in a global age, The international conference on economics and administration, University of Bucharest, Romania. 2. Boston Consulting Group (2012), Transforming Russia’s auto industry – from recovery to competitiveness, BCG industry report. 3. Buckley, P.J. and Ghauri, P.N. (1999), The internationalization of the firm, International Thomson Business Press. 4. Corbin, J. and Strauss, A. (2008), Basics of qualitative research, Sage Publications. 5. CNNMoney.com (2012), Tata Motors, Global 500: Our annual ranking of the worlds largest corporations, [online] available from http://money.cnn.com/magazines/fortune/global500/2012/snapshots/11629.html (accessed 26 April 2014). 6. Ernst & Young (2013), An overview of the Russian and CIS automotive industry, Industry report. 7. Ghemawat, P. (2013), Redefining global strategy – crossing borders in a world where differences still matter, Harvard Business School Press. 8. Grunig, R. and Morschett, D. (2012), Developing international strategies – going and being international for medium sized companies, Springer Verlag. 9. IIMB (2014), Globalization of Tata Motors: Strategic Plans for the Future, [online] available from http://tejas.iimb.ac.in/articles/31.php (accessed 7th May 2014). 10. Johnson, D. and Turner, C. (2003), International business: themes and issues in the modern global economy, Routledge. 11. Merriam, S.B. (2009), Qualitative research – a guide to design and implementation, John Wiley & Sons. 12. Peng, M. (2014), Global strategy, Cengage Learning. 13. Tata Motors (2014), About us, [online] available from http://www.tatamotors.com/about-us/executive-team.php# (accessed 29 April 2014). 14. Tata Motors (2004), Riding the global wave, [online] available from http://www.tata.co.in/article/inside/d0Kc!$$$$!1aftfw=/TLYVr3YPkMU (accessed 7th May 2014). 15. The Economic Times (2006), Tata to focus on Russian market, [online] available from http://articles.economictimes.indiatimes.com/2006-08-31/news/27447375_1_lcv-commercial-vehicles-tata-motors (accessed 7th May 2014). 16. The Hindu BusinessLine (2014), Tata Motors headed to Russia, again, [online] available from http://www.thehindubusinessline.com/companies/tata-motors-headed-to-russia-again/article5682020.ece (accessed 7th May 2014). 17. Welch, L.S., Benito, R.G., and Petersen, B. (2007), Foreign operation methods: theory, analysis, strategy, Edward Elgar Publishing Limited. Read More