- New Market opportunities
1.1 Analysis of the current competitive position
The car manufacturing industry, the demand for electric vehicles (EVs) has always been reviewed as a market opportunity (Raslavičius et al. 2015). Customer needs for electric vehicle (EVs) are still very high an implication of a market opportunity that is yet to be exploited to the fullest. With the rising demand, the market is likely to continue growing (Hertzke et al. 2018). This implies there are new markets that the manufacturer can target. According to Hertzke, et al. (2018), although India is modern to EVs and that EV industry dynamic is at early stages, its government has put in policy measures to encourage electric vehicle adoption.
2.1.1 Analysis of external competitive position
The current global competitive position of the company is that Tata Motors has been in the market for years, and it has established in different foreign countries. For this reason, the company recognizes obstacles associated with the international establishment, and it has survived the competition for years (Crawford, 2016). Tata Motors is known for its great innovative ideas when it comes to passenger and luxurious vehicles. The company has always outshined its competitors such as Nissan, Volkswagen and Fold, among others. The development of Nano was one of the company’s ability to adapt to industrial changes. An idea that its competitors realized its potential and quickly developed their versions to compete with Tata Nano.
The company is also known for the manufacture of the commercial vehicle, and it has faced the same competition from Daimler and other competitors. Too, the company has faced competition from its trucks and tractors products.
The external competitive position is further analyzed through a PESTLE analysis
PESTLE analysis
Tata motors limited is an established company with several operations, association and network across the world. Understanding the economic and environmental factors affecting the country will enable Tata Motors to understand the current external competitive position in the market.
- Political Environment
The introduction of Goods and Services Tax (GST) in 2017 that offers price rates in an automobile is an opportunity (Tata Motors 2017). The country subsumed all the existing; Excise duty, VAT, entry tax and CST into one tax GST which unified taxes in the country and taking away the previous tax regime that had led to double taxation. GST reduces tax burden to consumer, therefore allowing manufacturing and purchasing low priced cars.
According to Mr Ramakrishnam, the Group CFO, the GST tax bracket of 28% on automobile implies that there will be a sizeable cost reduction for small vehicle and SUVs and a marginal change in tax for commercial vehicles. The cheaper cars will raise the market demand and as a result, boost the manufacturing growth.
The government’s high trade barriers, including the new tariffs, provide an opportunity for Indian automobile companies to sell cheap cars locally and a threat to the automobile (Magezi, 2018). The taxes give the opportunity to Indian companies like Tata to modify and sell their Nano.
The demonetization policy in 2016, which banned high-value notes that accounted for 86% of records in circulation curbed of inflation. Also, the elimination of black currencies, among others, has contributed to commercial growth.
- Economic environment
India has a growing economy that has positively impacted automobile manufacturers such as Tata Motors. The country’s GDP grew by 7.2% after the demonetization policy (Magezi, 2018 and (Subramanian, 2018). The growth in GDP is an excellent opportunity for Tata Motors in that the growth associated with such growth increase the purchaser’s spending power.
The global automobile industry fosters an intensive competition which is adversely impacting companies such as Tata Motors. The presence of Hyundai and Volvo brands is a challenge that Tata Motors has to face when positioning its brands.
Tata Motors is a multinational company with operation in the UK; the negative impact of Brexit has affected the company the slow economic growth in the country Magezi, (2018). The inflation in the UK economy has also caused financial volatility which has affected customer’s purchasing power. Besides, according to PB Balaji, CFO Tata motors group, the effect of Brexit is likely to reduce productivity and competitiveness of the UK industries is expected to affect Tata Motors negatively.
- Social Environment
In the past years, cars were seen as a status symbol for the millennial. However, the trend of buying cars has gown down. This is because of the presence of Uber and Ola that offers the convenience of a personal vehicle, making millennial find owning a car less necessary (Jain, 2017). The trend is likely to harm automobile manufacturers in that, people have shifted from ownership to accessing, making buying a car less important for millennial. However, India is anticipated to become one of the countries with the median generation of youth. Therefore Tata Motors should expect to produce cars that are fit for this trend, and it’s likely to affect the demand for vehicles in the country.
- Technological Environment
Due to technological advancement, the development of intellectually connected cars is a significant trend in the automobile industry that is likely to affect the current car models, which might lower their demand. The development of Deep Neutral Networks (DNNs), the driven cars that use sensor and driven without human intervention will properly lender the current cars less effective (Tian et al. 2018). According to Magezi (2018), Tata Motors are in collaboration with Microsoft India; this will enable the company to prepare and plan for the innovation.
- Legal environment
The implementation of Goods and Services Tax (GST) fosters a growth opportunity for Tata Motors in that the automobile tax of 28% and the sizable reduced tax for small cars and SUVs will have a positive impact to the customers and manufacturers. In the sense that the tax implication will be passed to the consumer in the form of cheap cars; this will boost the growth of the manufacturing companies like Tata Motors.