This the company has a vast product line. Catering

This
investment requires high capital, strong distribution network, advanced
technologies, strong brand name. Tata Motors benefits from economies of scale
as it has in house research centres, and its subsidies providing the company
with supplies, saves the company huge amounts providing extensive barriers to
entry for new entrants.

Existing
companies penetrating new products such as such Intelligent Geely a $1500 car
by China and Maruti Ritz by Maruti Suzuki could pose a threat but the
probability of a new company entering is very low(Forbes, 2015).

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Robust growth
and improved infrastructure in India is attracting few international companies
to home. These global competitors brining decades of international experience,
significant financial and non-financial resources, advanced technology and
knowledge have either established operations in India or have created joint
ventures with locals. Hence, intensification of competition is highly probable
in the future.

 

The fluctuation in oil prices, extreme consequences of
global warming could lower down the demand for fuel consuming cars. The
government could set a quota on use of fuel consuming cars if need be, just as
it shut down nuclear power plants in India this year due to smog.

2.1.4.     
Bargaining Power of Buyers

The bargaining power doesn’t have much influence as the
company has a vast product line. Catering to the low-end consumers, the company
has lowered the bargaining power. 

2.1.5.     
Bargaining Power of Suppliers

The major supplies for this industry include raw
materials like steel. This major raw material is supplied by its own unit, Tata
Steel. Furthermore, many ancillary industries are opening near automobile
manufacturers; hence there are a lot of suppliers in this industry. Bargaining
power is moderate as its own subsidiary provides the company with supplies.

 

 

 

 

 

 

 

2.2.           
PESTEL Analysis

 

2.2.1.     
Political

The
political issues in these numerous countries concern the company and it shall
as one unit go through the consequences of political instability in any of the
countries it operates in. After purchasing Land Rover and Jaguar and being
listed on New York stock exchange, it shall obey UK and US laws and regulations
as well.

India
having a complicated bureaucracy, affects the company’s operations by
disturbing the macro economic factors of the country.

 

2.2.2.     
Economic

Tata
motors must understand the trend of variables such as economy fluctuation,
monetary and fiscal policy, Inflation, government spending, unemployment level,
interest rate, exchange rate and GDP per capita, of every country it is related
to.

India
has a GDP per capita = $ 3,200 and $ 3.68 trillion national purchasing power.
As been affected by global economic depression, the increase of material price
forced Tata Motors to increase its truck price of 3.5% which lead to decrease
in demand. In the international market, Tata Motors must keep an eye out for
any fluctuations in exchange rates as it effects profitability, especially US
Dollar as it is listed in New York Stock Exchange.

 

2.2.3.     
Social

The culture of buying
cars in countries where the company operates is the fundamental concern. The
attitude and life style affects the demand for products which also influence
its decisional making. Doing business in countries with different cultures,
Tata Motors must understand and apply different strategy. The possible threat
in this realm is the increasing gap between wealth of different classes, this
directly would affect the demand.

2.2.4.     
Technological

Having
their own research departments, they never tend to miss an opportunity to excel
as they allocate 2% of their Sales to Research & Development.

Tata
Technologies Limited aids Tata Motors in adapting to newer technologies.

Where
they lag is the manufacturing of environmental friendly buses such as hydrogen
fuel cell buses and hybrid cars which they are planning to work on.

 Moreover, Tata Motors has expanded their
services through internet by having Online Booking Services which allows the
customers to book a day for car service and by allowing the purchase of Tata
Nano online.

 

2.2.5.     
Environment

Tata motors has a good
standard of manufacturing vehicles adhering to the euro and Indian standards of
emission and it also invested into creating greener cars by researching in
alternate fuel methods and low consumption of fuel which creates a balance
between the eco systems.

 

 

2.2.6.      Legal

 

Tata in recent years
have been adhering to the government’s laws and taxations that the Indian
government has awarded Tata Motors as the best car manufacturer. There have
been serious frictions due to Tata Nano Singir Controversy which has negatively
affected the company.

 

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