Tuesday, April 2, 2019
Acquisition of Jaguar and Land Rover by Tata
Acquisition of mountain lion and agriculture scouter by TataIn 2008 Tata locomotes, an Indian gondola manufacturer wanted to exsert its product portfolio and diversify its commercialize base. It acquired the both iconic British targets catamount and trim down spider from the American automaker c over Motor Corporation. This scholarship gave the fraternity access to premium gondola cars, a chance to add 2 iconic luxury brands to its st qualified and a world(prenominal) footprint. It gave struggling cover a chance to rid itself of two sledding- qualification vehicle units.JLR SWOT and PESTEL synopsis 2018 The deal was trans take a leakational. It catapulted Tata Motors from a commercial vehicle and small-car manufacturer to a spherical player with marquee brands in its portfolio. The scale of the attainment in any case was rotund relative to the size of Tata MotorsThe purchase especially that of mountain lion, by an Indian familiarity was viewed as topp ling of the world order and many critics expressed doubts ab prohibited Tatas talent to retain the quality and standard of jaguar Land Rover. Tata Group hot seat rattan cane Tata assured the world that we give way enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, memory their identities intact.For the 12-month period ended Dec 31, 2010, the auto makers revenue was in superfluity of 9.2 billion pounds ($15 billion), and terminal in come for that period was $1.5 billion. The Tata Group, led by Mr. Ratan Tata, was determined to make the deal stupefy and put to use the groups counselling skills, financial elections and credibility. To staunch the haemorrhage at the British unit, Tatas management center on reducing personifys, improving efficiencies and managing cash f down in the mouth lessons that Tata Motors had learned during the downs learng in 2001. Tata too infused $1 billion to fund operations and smartfound product launches. When the securities industryplace turned, the premier car maker was easy gathered to reap the benefits and turned profitable during the quarter ended Dec. 31, 2009, with a net profit of 55 million pounds ($90.6 million).HISTORY OF JAGUAR AND LANDROVER mountain lion and Land Rover are two iconic British brands that were acquired by Ford Motor Corporation in 1989. Land Rover is a British car manufacturer that specializes in four wheel mountvehicles. The name started from a single vehicle that was named by the Rover party as Land Rover in the year 1948. After developments, this became a porch of a variety of four-wheel drive simulates such as Discovery, Defender, throw off Rover and Freelander. In its history this connection has had a number of ownership (Holbeche, 2009). In 1967 Leyland Motor Corporation absorbed the Rover Company. Leyland thusly organize a merger with the British Motor H obsolescentings and formed British Leyland. The forwar d-looking partnership broke up in the 1980s only when in 1988 the Land Rover (Rover Group) was purchased by British Aerospace. The Rover Group was acquired by BMW in the year 1994 but the merger broke down in 2000 where The Rover Group was taken up by Ford Motor Company. It was in the year 2008 that Land Rover was sold to Tata Motors together with Jaguar cars (Johnson Turner, 2009).Jaguar Cars Ltd or Jaguar is a British luxury car manufacturer whose headquarters are located in Cov innovation UK. In 1922 the caller was founded as Swallow Sidecar Company that used to make motorbike sidecars and later passenger cars. After the Second World War, the SS connotations were unfavourable and then the name changed to Jaguar. The name changed to Leyland and eventually British Leyland in 1984 when it was listed in the capital of the join Kingdom Stock Exchange.THE SALEIn the year 2007, the Ford Motor Company, a widely value alliance which similarly happened to be the worlds third large st automaker ground on vehicle gross sales worldwide, reported the largest annual loss in the history of tackment of the company since 1903.The Company reported a loss of $12.8 billion. It similarly stated that it would not return to profitability until 2009. Ford stated that weak economy is the primary reason to sell Jaguar and Land Rover. The two brands were however suffering losses often contributeing in closure of few manufacturing computer programmets and heavy cut in workforceThe strategic PurchaseTata Motors Limited stood to have both strategic and economic gains form the encyclopedism of both Jaguar and Land Rover. First and fore or so, the deal would attend the company in acquiring a global footprint as easily as entering the prestigious segment of the worldwide cable car merchandise. After this deal, Tata Motors owned the cheapest car in the world (The Nano) going at around 2,500 as well as few of the close to big-ticket(prenominal) and voluptuary vehicles such as Land Rover and the Jaguar . though the deal solicited any(prenominal) skeptism based on the fact that Tata was an Indian company that was about to display the luxury brands, ownership should not be a major(ip) issue in terms of the sales, service and merchandise. Tata Motors will be promoted to twist a major player in this industry afterwards the attainment of Jaguar and Land Rover both of which have global nominal head as well as a levelheaded repertoire in terms of open brands, (Johnson Turner, 2009).The deal would also assist Tata Motors in reducing the dependence of the company to the Indian market which was at 90% of the companys sales before the science. It is in this view that the company stands to gain a lot from the deal as its market would be spread out to an some different(prenominal)wisewise geographical regions across the globe. The opportunities in terms of the diverse node segments would also be profitd (Holbeche, 2009).There was the possibili ty of adjoin in terms of economies of scale which in turn promotes the equal efficiency. In substantive sense the deal will appear as an amalgamation of 3 different companies that have already g atomic number 53 into the market and as a result, the unseasoned firm that will be formed after the acquisition will have some increased operation scale. This will miserly that the output work will rise and as a result the terms per unit work will be greatly cut down (Johnson Turner, 2009). Tata Motors Limited prospected that the acquisition of the two Brands would enable it to have an all-inclusive get out up of products ranging from cheapest to the most expensive travels in the market. The company has pronounced its presence in the local market (India) in the low as well as the mid-class market segments and after the acquisition the company is likely to acquire some of the segmentation of the markets that it has never plunged into. Jaguar cars are prestigious and howling(a) and as a result the cars have an established market for most of the celebrities especially in the music world. On the new(prenominal) hand the Land Rover is a heavy duty vehicle and based on the fact that it is a four-wheel drive it is preferred by most of the governments to carry out different trade union movements in the rural areas where the road entanglement is not developed, the vehicles are also famous among the affluent class of citizens and because the deal will enable Tata Motors to plunge into these market segmentations in which the company was not famous in (Johnson Turner, 2009).It is also worth to note that the other than the product incorporation, the company was facing tight competition from some of the party boss opulence vehicles producers. This segment of the market brought a lot of profits to the company it was highly competitive in terms of the global market. It was the prestigious brands that dominated the market based on the fact that they had the suppor t of the big railroad car companies. The German Porsche and the American Volkswagen companies sanctioned some of the luxurious brands such as Audi and Porsche. Other brands that had the support of big companies included Mercedes, Lexus, Alfa Romeo, Ferrari and Fiat. After the deal, Tata Motors Limited would direct be able to tackle these brands competitively (Holbeche, 2009).2- What strengths of Jaguar and Land Rover were the most valuable for Tata?Through Tata Motors acquisition of two of the most respected and iconic British brands that is Land Rover and Jaguar from the Ford Motors based in the United States, Tata motors stands to enjoy some gain on some(prenominal) grounds from that deal. This acquisition came in handy for Tata since it helped the company in acquiring a global foundation thus ushering them into a to a greater extent than drawn-out premier segment in regard to the global market of auto mobile products. Through this acquisition Tata would slide into possessi on of the cheapest car in the world thus the Nano at $2,500 in addition to recognized and well respected luxurious brands like the Land Rover and the Jaguar.Tata motors acquisition of these two top brands was that the acquisition of JRL would help it sink its over dependence on India as it formed its capital marker accounting for almost 90 percent of all of its sales. The company was convinced that this acquisition would present the company with a lot of opportunities to venture its business across different segments that marked a lot of potential in customer acquisition (Bhabatosh, 2010). In this regard Tata gained almost a 100 percent stakes in some companies. For instance it gained stakes in three U.K. pants, approximately xx six sales companies nationwide, two advanced engineering and design centres, IP right, allowances for taxes amounting to approximately $1.1 B in addition to $600 worth of pension.Tatas main indigence in making this acquirement was based on the fact that th ey would be now able to outsource their products to many countries globally. Other than taking engineering from these two brands Tata intended to use their strong markets so that they can shut in their other brands in those areas where these two brands have already penetrated and established in a bit to expand their market a bit more.As highlighted above Tata wanted to build a name outside India and hence make its presence felt in India. Most of it brands had only established a strong market in India and hence not in particular popular in the global market. Tata therefore capitalized on its desire to establish a greatly diversified line up of auto mobiles as this acquisition helped it up grade since it now recognizes as one of the manufactures that owns the cheapest car to some of the worlds most expensive models. Apart from this Tata gained in terms of new technological know-how and all the viable networks that can come as a log with is such a chance hence as former stated it wi ll be able to penetrate the global market and hence compete with other manufactures who have already embraced latest engineering (Bhabatosh, 2010). On top of this Tata would also be able to upgrade its old products that it has been offering in the blooming local or home market. In addition to using the companies technology Tata will also use its facilities of yield to make desirable improvements in its trucks and cars. Though the acquisition will cost Tata Company an approximate of $1 Billion it would actualize Tatas dream to go international band hence become one of the first brand in India to make global products hence its business will hand diversity overseas.Major scrapsDespite the benefits that have been identified above Tata also underwent some major challenges as a result of the acquisition of the Jaguar and the Land Rover. One of the major challenges that the Tata Company would face was nurturing these two brands and making them thrive in their own books in the market. The jaguar and the Land Rover are luxurious and expensive cars and there fore Tata has the uphill task of maintaining it standards and also up grading them so that they will be able to compete with other luxurious brands who are upgrading sidereal day in day out in a bid to try and fetch good market by attracting more customers.On the other hand the acquisition also goes to the negative for Tata since it increased Tata volatility in earnings since this happened at a very difficult economic crisis in the JRLs chief markets including the United States and also Europe. Tata motors were liable to incurring huge capital expenditures in its plan to make investments in another U.S $2.3 billion it would spend on the acquisition (Aswathappa, 2008). Tata motors had also at the same period incurred huge capital expenditures in regard to making developments on one of its cheapest cars the Nano in addition to a joint venture with fiat in order for them to make their manufacturing of some of their vehicles in India.The other problems will be that Tata will encounter difficulties in leveraging Jaguar and Land Rover dealers to sell Tatas products. This is because Tata has no patent synergies between them andJLR and in addition to this Tata has no expertise in kits marketing segments especially at such at a time when some of the markets like the United States and Europe are at a low tide. Tata Motors will also have to contend with stiff competition from other companies that have a good command in selling luxurious car in market segments that have been highly profitable but have been facing intense global competition (Aswathappa, 2008). These segments have other dominant brands which receive a lot of support from big automobile companies. For instanced the Volkswagen which is a car manufacturer of the American decent had been very precipitously backing up their brands like Audi as well as other models like the Mercedes from Daimler and Toyota with it Lexus were putting a lot o f pressure on Tata.The other major challenge that Tata will have in regard to making sales in the Jaguar and the Land Rover will be to sell them in a market that is so competitive and one which is not also growing. If stricter im sides on sack norms are make it would also be a very big challenge for Tata Motors Limited. Apart from these emission and competition norms Tata Motors Limited also face a major challenge in the funding as well as management.To go back to the governments tendency to make increments in markets that are developing to impose emission norms that are stricter the future of Tata Motors would be facing an uphill task. Though ford continues to support Tata Motors with engine supplies and technological support, Tata will eventually have to come up with their own capabilities in regard to building engines that are more advanced, safer and transmission systems in order to be at par with other luxury vehicles manufactures (Aswathappa, 2008). Failure to establish such kinds of capabilities difficulties will arise in distinguishing Tatas brands from those of its competitors.RecommendationsThe acquisition was thought to have a host of synergies. For instance, from this deal Tata anticipate to venture into and premium all terrain vehicles and luxury vehicle segments (Bruner 2004). By cartel the resource and the strength of both companies Tata judge to undergo a major improvement in its international market position, something that it ultimately underwent after the lucky consummation of the deal. This gave the company an entry point to the luxury car market a move that was expected to improve their balance sheet and increase their presence in the global market .this is because the luxury car market has a global presence .Tata motors also expected to improve their global marketing by acquiring the brands that were already known all over the globe by exploiting the markets that the acquired company already had ventured into. The company also expec ted to tap the technical expertise that the Land Rover and Jaguar employees had. wherefore the company expected to improve their sales and manufacturing practices this is gaining from the expertise that they had acquired while work for their former company. There were also expectations that the skills that they had acquired while working for the acquired company could be passed on to the Tata company employees through their interactions therefore the company had expectations that their human resource capital would improve as a result of working and interacting with the employees of the acquired brands. hence their combined technological expertise from the two companies was also expected to get hold of birth to more superior products in future and new collapse practices that could lead to more market opportunities.The acquisition was also expected to deepen the sharing of industrys best practices and especially in manufacturing sector and also in the system and process of qualit y assurance. This is because the two companies had different best practices that made them unique and as a result of their coming together new improved ways of doing things was one of the expected outcomes. In 2007 the acquired company had 75% sales in the UK, USA and European market while Tata was more reliant on the Asian market especially the Indian market therefore Tata motors expected to exploit these market that the acquired company had already scummy to .in other words if Tata motors had tried to enter these markets with only their own brands the marketing cost would have been extremely higher and therefore increased their cost but with the brands that had already acquired consumer loyalty all over Europe and in the UK and USA market marketing their own brands alongside the acquired ones was expected to be gainful and less cost prohibitive. The move was expected to reduce the Tata motors belief on the Indian market and the company expected to improve their sales and profits through this diversity.It was also through this acquisition that Tata got a broader good vans and SUV portfolio and therefore improved their range of brands. This improvement in their portfolio would have cost the Tata motors a lot in terms of designing and market entry not to mention the manufacturing cost. This implies that they acquired the technical skills that already had been applied and would have increased their production costs of the company to develop on their own and to publish their products into the market before winning the customers. Therefore through this acquisition Tata gained in terms of cost reduction market, portfolio improvement .In the luxury car market Tata would have probably taken years to break into this market and worn out(p) a lot of money to design a product that would have become widely acceptable as a luxurious model and compete with those already in the market and are widely trustworthy in this class as the jaguar .Therefore by acquiring jaguar the company today gained a competitive advantages in the industry and in the luxury car market since the brand was already widely true (Carney 2009). In terms of saving time and costs therefore the company immediately gained after acquiring the jaguar brand. This puts Tata in an advantageous position in the luxury car market in that should they choose to increase their portfolio in this sector they can market their new models alongside the jaguar model and therefore exploit the brand loyalty that jaguar commands in the market.The company also gained from the supply chains that the acquired brands already had this also plays a part in their cost reduction strategies. Tata had the advantage of having depress production cost while their acquisition had higher production cost and therefore unprofitable. The acquisition therefore could help the jaguar and land rover models reduce their cost by applying the cost saving measures that made Tata enjoy lower production cost. This would ce rtainly help the two brands return to profitability.ConclusionThe acquisition of Jaguar and Land Rover was gainful to the Tata motors in that the company immediately gained competitive advantages in the industry since Jaguar and Land Rover in the SUV and luxury car market these brands were already widely accepted. The company also gained cost reduction advantages because in the luxury car market Tata would have probably taken years to break into this market and spent a lot of money to design a product that would have become widely acceptable as a luxurious model .Tata also gained in that they acquired the technical skills that already had been applied .They also lowered their production costs since to develop on their own brands and to introduce their products into the market and win their customers would have increased their costs.