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Another concern regarding the case is the unequal stake of Fiat and Tata Motors in the deal. The agreement has already been signed hence raising such questions might seem irrelevant for readers of this case. Brief Overview of the Deal In 2006, Italian automaker Fiat Auto S.p.A. (Fiat Auto) has signed Memorandum of Understanding (MoU) with Tata Motors (TM) in order to form a joint venture (JV). Key objective of the joint venture was manufacture automobiles, engines of automobiles and transmission in Indian market (ICMR India, 2007). The deal will help Tata Motors to export car in overseas market whereas Fiat will get the opportunity to sell its car through selected dealers of Tata Motors. In the first month of 2006, both the Indian and Italian auto major have signed marketing agreement in order to sell selected brands of Fiat cars with the help of marketing team of Tata Motors. Problems It was an obvious fact that both the firms were going to benefit from the co-operation, but not without challenges. The Tata Fiat alliance was bound to confront intense competition from several other automobile manufacturers in India, which were also in midst of different alliances. Companies like Renault SA also got into joint venture with Mahindra & Mahindra Ltd in order to launch Logan, which was a sedan and it could easily give a tough fight to Tata’s Indigo. Even companies like Toyota Motor Corp. And its subsidiary company Daihatshu Motor Co. Ltd planned to launch small cars for the Indian market. This scenario revealed that Tata already had many competitors in the market from every car segment, ranging from sedan class to small cars (ICMR India, 2007). As far as Fiat’s problems were concerned, they faced trouble during 1990s due to their failure to move on the larger car segment from smaller cars, and several other internal and external financial troubles. By 2002, the company had already lost around $2.5 billion and its market shares have gone considerably in Italy by 28 percent and in Europe by 7 percent. Fiat also announced its intention to downsize for cutting cost. The company had to sell off its assets in order to pay off its debts, and a simultaneous change of 4 CEO. All these facts are enough to state the business performance of Fist, when it went for joint venture with Tata Motors. Tata Motors though a sustainable company, already had to face several threats due to intense market competition and along with that getting into strategic alliance with a company which is neither stable nor profitable was a matter of concern and a tough decision to make (The Hindu, 2013). Solution The deal can be viewed as the synchronization of Indian and Italian culture. According to the deal, Fiat and TATA has restricted their operation by offering limited products to customers but it is recommended for both the company to improve their market penetration by offering more number of products to customers. Hence, the joint venture needs time to be profitable and it will not be right to expect that the deal will fetch profits for both the company in overnight manner due to extensive competition in Indian auto market. In such context, both the company need to work together in order to cut down the cost in Ranjangaon facility in order to offer low priced car variants to middle and upper-middle class Indian customers. TATA Motors and Fiat need to consider both the option of selling cars to domestic market and exporting cars under the brand name of Fiat or Tata in order to penetrate in foreign shores (Ozcan et al, 2008). Fiat Group should establish a separate National Sales
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(“Tata Motors and Fiat Auto: Joining Forces Case Study”, n.d.)
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(Tata Motors and Fiat Auto: Joining Forces Case Study)
“Tata Motors and Fiat Auto: Joining Forces Case Study”, n.d. https://studentshare.org/management/1478701-tata-motors-and-fiat-auto-joining-forces.
The two companies have adopted various strategies that have been successfully towards problem solving within and outside the operations. In addition, these strategies have promoted market development within their region and the global market.
These incorporated other companies that were not using the Tata brand name in their products. The companies could use the reputation of Tata in raising money for global and domestic markets, as well as accessing the financial and managerial support from the group.
The history of Fiat began many years ago, at the dawn of Italian industrialization, in which the Company has always played a leading role. From that moment on, the Fiat brand spread throughout the world and developed extensively. Today, following a change in corporate culture and mentality, the name Fiat is still fraught with meaning, and not only on account of the cars we produce- cars with attractive styling and exciting engines, cars that are accessible and improve the quality of everyday life- but also on account of our heritage and tradition: let's take a stroll back in time through the brand's history.
The UAW has made, and continues to make, substantial concessions in regards to their rate of pay in an effort to compromise with management and contain costs during this period of economic uncertainty. Recent actions at GM have been responsible for additional savings, and they would like to get their labor costs down into the $50 range, only marginally higher than the $49 paid by Toyota and Honda, which are widely believed to be the gold standard for autoworker compensation packages.
In other words Fiat was affected by a microscopic strategy orientation. Secondly Fiat's current problems can be basically attributed to its inability to identify growth drivers such as technology driven productivity gains and capturing niche markets and retaining them.
The reality with International markets is that customers are extremely price-conscious. While making purchases based on emotional appeal, there is a rational side which does have an effect on the decision to buy a particular make and model of car. This ultimately targets emotional people.
Born in Detroit Michigan in 1910 General engines has delivered a steady of vehicles, for example, Chevrolet, Pontiac Cadillac, and Buick which have ended up family unit names in the U.s. As being what is indicated, the General Motors Brand is decently established in America as well as all through the world.
y also acquired majority stake in Italian design and engineering company that has allowed them to also deal in designing motor vehicles and other engineering works by its subsidiary Tata technologies Limited. The company has several assembly plants in India, South Africa,
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