There are different types of approaches that made when looking into global strategies. Few things that must be taken into consideration are the opportunities and challenges of the organizations host country, along with reviewing the various options to enter that country. Gathering this information will help create an appropriate global strategy for Tata Motors. Tata Motors is able to plan functional strategies, such as marketing, human resources, logistics, operations, and finances. Along with creating, a contingency plan will ensure the company meets their goal and mission.
TrendsThe main trends that affect Tata Motors are outsourcing and global consumption patterns. "Forces of globalization are real and their influences are felt everywhere. It entails free trade, free mobility of both financial and real capital, and rapid diffusion of products, technologies, information and consumption patterns" (United Nations Workshop). Tata Motors is looking to acquire some interesting businesses and brands to expand business interests abroad.
Another trend affecting Tata Motors is global consumption. Tata Motors offers economical small cars, which is a major theme in the global market place at this time . Global consumption patterns will hit Tata Motors offering products that will suit the needs of consumers all over the world; each one for a specific reason, such as size, affordability, exclusivity, gas mileage, and service among others.
The non-North American countries affected by the global consumption and outsourcing trends directly relates to automobile countries that invest in Tata Motors. These major countries are the United Kingdom, South Korea, and Thailand. As global consumption decreases due to the economic downturn of the United States' recession, so does Tata Motor's GDP. In recent years, global consumption has dramatically declined. The interesting fact is that the United States automobile company's relationship to Tata Motors is causing the reduced profits. General Motors and Ford filings of bankruptcy as effected India's industry of production (Manghwani, 2008). "U.S sales have fallen down by 32% which has directly affected the Indian car industry where GM has recorded a fall of 45%, Ford of 30% and Chrysler down by 35%. All the three major car manufacturers have reported declined growth after the hit of recession" (Manghwani, 2008). South Korea's Hyundai believe the effect of reduced global consumption, which consequently this has prompt Hyundai to invest more into Indian automobile production, like Tata Motors. South Korea believes there is potential for reduced production costs in future dealings with Tata Motors. In 2007, a joint outsourcing venture with Thailand's Thonburi Company, has allowed Tata Motors to hold 70% stake in the company. However, the United States' recession has created an economic strain on Tata Motors, which has required the company to reduce 300 jobs Manghwani, 2008).
Tata Motors has been assertively obtaining foreign products to enhance its international charisma. Tata Motors has operations in the United Kingdom, South Korea, and Thailand, (Tata Motors, 2009).
The most important foundation for setting up outsourcing process or selecting service providers in other countries is to detain remarkable relative benefit accessible by these countries in terms of cost operations. Other countries offer an enormous pool of people that are highly educated, English speaking labor force in a variety of fields, such as technology and customer service, at a much lower cost as compared to developed countries. This makes it probable for global companies to set up hubs to carry out some of the tasks at lower costs in these countries.
Organizations Facilitating the TrendsOutsourcing is facilitated in the modern era by many different types of companies and services, the most common being the information technology industries (I.T.) and the manufacturing industries. I.T. outsourcing plays a significant role in today's business world mainly because all companies want the latest and most up to date technology to ensure the most efficient processes are in place (Greene, O. 2009). Use of outsourcing in this industry allows a company to bring in expertise from different companies, and be able to increase and reduce staffing levels as are appropriate at the time of any given project. Manufacturing industries tend to require a more permanent solution when outsourcing but may still look to use a company on an as needed basis. For example, if the current recession begins to end, the aim of a company is to 'build resources without necessarily hiring (King, R. 2009).' This allows a company to ramp up production and meet increased consumer demand without the initial set up cost of hiring and training.
Companies seeking to take advantage of demand in developed countries and being able to exploit the demand in developing countries facilitate global consumption industrially. Global consumption of certain products and services may still be high even though there is a downturn in many economies. In the automotive industry the last two years has seen a general move away from fuel inefficient vehicles to more fuel-efficient vehicles, and companies, which have been able to move into this area most quickly, have thrived. The main industries facilitating global consumption are the electronics and technology based industries 'in 2002, 1.12 billion households-about three quarters of humanity-owned at least one television set (World watch institute. 2008).' As standards of living improve, and disposable incomes increase, demand for consumer items will increase, this will increase the demand of electronic items, automobiles and result in the increased demand for fossil fuels to maintain an improved economy, such as gas for automobiles and coal for power.
Political and legalAccording to the Economist Intelligence Unit (2006), the political and legal system of India is classified as a constitutional federal democracy. This form of government is styled after the British parliamentary form, and the structure and function is modeled by the world's longest and most detailed Constitution. The Constitution was adopted in 1949 and put into effect in January 1950. The basic principles of the Constitution State India as a sovereign, socialist, secular republic, enumerating key human rights of justice, liberty, and equality among the people of India. The president is elected as the head of state; his powers are mostly ceremonial but in times of emergency his powers are put to practice, also there is the judiciary branch of government, which is guided by the Supreme Court, which determines legislative bills and is the jurisdiction that handles disputes of state and union. The president appoints its members. Alongside the Supreme Court India, also have lower courts and head of courts for each state to oversee and enforce the state and local issues.
Spain operates through the form of a constitutional monarchy, which was established through a constitution in 1975. According to Dictionary.com (2009) a form of national government in which the power of the monarch (the king or queen) is restrained by a parliament, by law, or by custom. The government comprises of an Executive, Legislative, and Judicial branches. The Executive is nominated through a monarch and democratically voted into office through a Congress of Deputies (U.S. State Department, 2009).
The political system in Spain helps to define the legal system. Spain has a civil law system and three codes that contribute to this legal system. According to Dictionary.com (2009), civil law is the body of laws of a state or nation regulating ordinary private matters, as distinct from laws regulating criminal, political, or military matters. These three codes are the civil code, criminal code, and commercial code.
The biggest challenge in India is the government. India is not a poor country, but the regional and middle government corrupts the political and legal systems. Within the next 15-20 years, India could be the second or third richest economy in the world. India has been lending money internationally the main financial system being of the United Kingdom and European countries using the Euro.
Ethical and Social ResponsibilityIn India Tata Motors is the country's largest automobile manufacturer with employs of 23,000 people (Tata motors, 2009). This normally would place a large amount of responsibility upon a company to act ethically and be socially responsible; however, it appears that Tata Motors has in recent times provoked upset at the way in which the company is expanding in India. "On Aug. 24, 2008 an estimated 30,000 protestors, angry at the way the state government had acquired 400 acres of land surrounding the plant, gathered at the factory, and blocked roads (Rowley, 2008)." As the country's largest automobile manufacturer, Tata will want to be considered a good employer to work for and have a global image comparative to other renowned auto manufacturers such as Volkswagen. Tata must ensure that planned manufacture of new vehicles and acquisitions of other companies do not risk the future livelihood of the employees in India.
The social responsibility will be to bring a company to the Spanish community which can provide long term employment, clean and modern working facilities, producing vehicles which can be sold on the global stage and bring a sense of achievement to the area. Tata Motors could look to the example of Nissan in northeast England where the motor manufacturer has close community ties and is working with Sunderland Association Football Club to promote the city for the 2018 football World Cup (Sunderland. 2009). This sort of activity generates publicity for the company on a global platform and establishes the company as major champion of local causes.
The infrastructure in India poses more challenges than opportunities to Tata Motors. The airport facilities are being upgraded by 2010 (Net Resources International, 2009) to cope with increased demand; however, currently the airports are regarded as liability. The government has recognized this weakness, which affects the country's ability to attract foreign investment and affects Tata Motors ability to be one of the dominant global automobile manufacturers.
Challenges posed by InfrastructuresThe ports in India have failed to keep pace with the country's economic growth, and although the ports can accept incoming goods and ship outgoing goods at current levels, if these levels are to be increased, then more or better rail and road connections between the ports and the manufacturing locations need to be developed. As stated previously the power grid system in India is also requiring development and power outages are not unusual in India, more than expected. India does have a plentiful supply of raw materials with which to build internally and trade internationally. The presence of natural raw materials will enable Tata Motors to build manufacturing units in India and not have to seek foreign investment to grow.
Developing roadways is a major priority for the Indian government, and a major benefit to Tata Motors a company who would seek to provide the population with vehicles to travel the new roadways.
Industrial zones in India are a recent development designed to attract foreign investment (Saraitha, 2006). These special economic zones (SEZ) as they are known are seen as a solution to India's terrible infrastructure. These zones are able to attract foreign investment and development, with the belief that the private sector will develop roads and power grids much more effectively than the government would be able to. There are some resistance in India to the cheap offering of land to foreign investors; however, "the country's first operational SEZ has wide roads, street lighting, water and sewer networks, 24-hour private security, fiber optic cable and even a power station and space in the zone sold out to an array of 32 international and domestic companies (Saraitha, 2006)."Although the country's current infrastructure may be a challenge to Tata Motors, the governments' attitude, the foreign investment and the creation of special economic zones should in the near future provide opportunities for Tata MotorsChallenge and OpportunitiesSpain is a rich country in many ways. Located in the European Union, Spain's border are mostly by water and neighboring country to France, Morocco, Andorra, Portugal, and Gibraltar with three neighboring bodies of water, the Bay of Biscay, the North Atlantic Ocean and the Mediterranean Sea (eGovernment Factsheet, 2009). Spain has an abundance of port space to transport merchandise, food, and any other product or resource necessary. The summer climate is very warm and the winters in Spain are cold. The one natural hazard that threats the area is periodic droughts. Spain's current environmental issues are pollution of the Mediterranean Sea from raw sewage and effluents from the offshore production of oil and gas, water quality and quantity nationwide, air pollution, deforestation, and desertification (eGovernment Factsheet, 2009).
Spain does have a very well developed communication system with 379 television broadcast stations, full Internet capabilities (3.264 million Internet hosts), and radio capabilities (eGovernment Factsheet, 2009). Spain has 153 airports, nine heliports, and 681,224 kilometers of roadways, 1000 kilometers of waterways, and 158 merchant marines carriers, (eGovernment Factsheet, 2009). Spain neighboring bodies of water are Algeria, Bilbao, Cartagena, Huelva, Tarragona, Valencia, and Barcelona, which is one of the largest and most important to Spain.
Spain has very rich territories when it comes to natural resources. Some of the natural resources that enrich the territory are coal, lignite, ore, copper, lead, zinc, uranium, and mercury. Another type of natural resources that Spain accounts for are wine, salt, olive oil, marble. The country of Spain is full of resources and has numerous infrastructures for any upcoming business that wants to enter the European market. It is a well-developed territory with a lot to offer to the future.
Spain operates through the form of a constitutional monarchy. According to Dictionary.com (2009) a form of national government, in which the power of the monarch (the king or queen) is in control by a parliament, by law, or by custom.
With Spain's current infrastructure, the country lends itself very well in terms of Tata Motors. The country has a huge network of the port facilities, airports, roads, raw materials, telecommunications, and industrial zones. The network allows for rapid and efficient production time when looking at the use of roads within Spain, as there are many. The many airports establish a consistent ability to move product from location to location cheaper than roads may provide, including Spain's ports assist in transport.
The telecommunications assists in a network, which aids in viable communication with Tata Motors home country of India. The mercury and uranium are not natural resources in which would need to be use in the production towards Tata Motors. Spain will need to analyze these challenges and opportunities through a market analysis to determine cost relating for relocating of Spain.
Spain's mixture of different variables makes Spain a highly qualified destination, such as improving competitiveness, such as infrastructures, investment incentives, culture, and legislative framework, (Challenges and opportunities for offshoring in Spain, 2004). However, Spain cannot compete with other countries because of labor costs, but it does offer companies looking to offshore their actions to a stable and well-developed environment. Spain has a better cost structure than the other European countries because of certain costs and a productivity rate, which is more competitive than other countries. Spain has a vital opportunity to draw those actions that are less labor concentrate, but extremely experienced, which enables the implementation of actions of greater extra value and compound business development, (Challenges and opportunities for offshoring in Spain, 2004).
Various Options to Enter SpainSpain has a numerous of ways to enter the country. The diverse airports, roads, and being a country with an oceanfront, lends itself well to outside businesses establishing. These types of transportation contribute to a rather smooth transition.
A thing to consider is the land arrangements once in the country. The country has available land that can be leased, rented, and bought. The leases are generally through what is refer to as a traspaso, which is the transferring of a lease from one person to the next. Theses type of transfers tends to be easier and the government is more relaxed. These are best done through contractual agreements and are normally leases that have a term of five to twenty years. Rental agreement allows a business to be able to move whenever, but eliminates the opportunity to ever lease the land towards the option to own. A remarkable lease agreement that may want to be considered would be a freehold, which allows an agreement towards the leasing party to alter the building for accommodating the business needs (JustLanded.com , 2009).
An issue is to be able to understand and apply for the various licenses and taxes through Spain's government. These licenses have to be regionally established relating to the area the business will be leasing. There are licenses that need to be obtaining when there is an intention to remodel, as floor plans need to be submitting to Registro de la Propiedad Inmobiliaria and range from Ã¢ÂÂ¬50 to Ã¢ÂÂ¬1,500. The business model needs to be registered with Comunidad de Madrid (SpainExpat.com , 2009). According to SpainExpat.com (2009), "Your business will also need a "Visitors Book" (Libro de Visita). You must acquire it from your province's DirecciÃÂ³n Provincial del Ministerio de Trabajo y Asuntos Sociales and have it available at all times for labor and Social Security inspectors" (para. 26). Local taxes and country taxes are also required to be paid in order to operate a business in Spain (SpainExpat.com , 2009).
Functional Strategies and MarketingTo ensure maximum efficiency Tata Motors will periodically review functional strategies to ensure that the strategies are consistent with the business strategies, that the strategies are making the best use of the organizations strengths and are supportive of other functional strategies (Kulzick, 2000).
The Spanish marketplace will be very different from the Indian marketplace in terms of members of the population with disposable income; however, the common theme in the global market place for automobiles today is vehicle economy, and Tata Motors manufactures very economical vehicles. The market in Spain is quite diverse with cars ranging from small and low-priced economical models to luxury models such with all major brands represented. Tata Motors will look to enter the economy sector of the market and will seek the Assistance of an established marketing company based in Spain.
Human Resources and LogisticsHuman resources will be located in the Spanish location, supporting the management team in Spain and reporting up through the company structure with senior officers based in Spain. The nature of human resources will necessitate in the company having a global human resource management section covering the company, with specialist arms operational in each country.
The logistic operations in Spain will plan to operate within the Spanish management structure and accountable to Executive Officers based in Spain. The routes in Spain should be much easier to work with than the infrastructure in India. Making the logistics accountable to the Spanish management team will ensure that low standards accepted in the Indian marketplace will not be the same policy in Spain. Tata Motors will be competing with other major European manufacturers currently in Spain and will need to perform to the highest standards to achieve the results required to make the company successful.
Functional Strategies Operations and FinanceTata Motors operational strategies, which will occur in India, are as follows. The mission statement is to "be the most admired multi-national Indian car company producing vehicles that people love to buy." The second part is to "create an organization that people enjoy working for, doing business with, and investing." The core values are integrity, customer focus, corporate citizenship, and passion for engineering. The main purpose is to "create economic assets for the road transportation for the bulk movement of goods and people and participate in managing these over life of assets in order to create and capture economic value."There future goals for Tata Motors are to become green, reduce pollution, restore ecological balance, end of life vehicle treatment, community development, health and sanitation, employment generation, and community centers. These goals are going to be reachable by reducing environmental pollutions and regular pollution drives and restoration of ecological balance (Tata Motors, 2009). The pollution is going to be reduced by continuing to have cleaner engines in our cars. Tata Motors has also "upgraded the performance of its entire range of four and six cylinder engines to meet international emission standards." (Tata Motors, 2009).
There also has been an effluent treatment facility set up in the plants. His was done to avoid polluted water going back into the ecosystem (Tata Motors, 2009). Tata Motors is also responsible for over half a million trees that have been place in the ground in the Poona region (Tata Motors, 2009). When an automobile no longer is running, Tata Motors will recycle the parts that they can instead of them ending up in a landfill. Tata motors will be giving money to help neighboring committees with projects such as roads, health, education, and water. Provide health services for all who are under the "health for all' program (Tata Motors, 2009).
The employment generation will provide the confidence one will need in life for the employees and their families. Lastly, the community centers will be found in areas near the plants where everyone is encouraged to use them. Several programs are done there to help foster a neighborhood atmosphere. This will be done when needed in the operations to maintain the standard that has been set all these years (Tata Motors, 2009).
The financial operations in India will be accessible, but limit to those the management of the plants and the corporate people as well. This has been done since the start of Tata Motors and will continue to do so. Tata Motors will continue to do what it needs to so that the shareholders will not get the hit (Tata Motors, 2009). Changes are made to make Tata Motors profitable during the hard times such as signing with Ford Motors, Inc. to sell Jaguar Land Rovers. This has increased sales a lot (Tata Motors, 2009). Tata Motors will do whatever it takes to be the company mentioned above and meet the goals set forth. This means by continuing to lower prices and introducing new cars do so they will.
Contingency PlanTo every plan A, there is always a plan B and with the case of Tata Motors, they have kept their choices open and looked into another country that might offer them the same advantages of a host country as Spain would. In the case, that Spain was unable to allow Tata Motors the resources as the host country; Tata motors have chosen the neighboring country of France. Both France and Spain are European countries in the Latin category. Like Spain, France has the infrastructure that will aid Tata Motors in India make their next step into the Global market. As neighboring countries they have the same advantages to offer, they share very similar infrastructure with that of France being possibly better. France has the leading road and highway system and their geographic location offers Marseille as their largest port for imports and exports. The southern coast of France is accessible through the Mediterranean and from the Atlantic Ocean as well. Both Spain and France belong to the southern region of the European Union and both share the Latin culture. As a contingency plan for Tata Motors France is the choice because it offers them the same quality infrastructure, access, culture, geographical location and technology to compare with their first choice, Spain. France has 27 airports, five main ports and its five rivers all connect to make navigable waters all through France. In general, France would be the best choice for Tata Motors to approach and adopt as a host country if Spain were to no longer be so. The next best choice that will offer Tata Motors exactly what they are looking for and will provide them with the same resources is France.
ConclusionTata Motors took into consideration when creating their global strategies. The opportunities that Tata Motors face are the abundance of port space to transport merchandise, food, and any other product or resource necessary. The warm climate and the winters in Spain are cold. The various forms of communication system with 379 television broadcast stations, full Internet capabilities (3.264 million Internet hosts), and radio capabilities (eGovernment Factsheet, 2009). Spain has 153 airports, nine heliports, and 681,224 kilometers of roadways, 1000 kilometers of waterways, and 158 merchant marines carriers, (eGovernment Factsheet, 2009). The challenges for Tata Motors include different variables makes Spain a highly qualified destination, such as improving competitiveness, such as infrastructures, investment incentives, culture, and legislative framework, (Challenges and opportunities for offshoring in Spain, 2004).
Tata Motors will create is an organization that people enjoy working for, doing business with, and investing. Creating the contingency plan will ensure the company to meet their goal and mission. In the case, that Spain was unable to allow Tata Motors the resources as the host country; Tata motors have chosen the neighboring country of France. Both France and Spain are European countries in the Latin category. Like Spain, France has the infrastructure that will aid Tata Motors in India make their next step into the Global market. This contingency plan will ensure the company meets their goal and mission.
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