The world is becoming smaller, both metaphorically and literally. The Iron Curtain and the Berlin Wall have been disbanded, changing the fortunes of many economies. India is no exception to this change. The wave of liberalisation has given Indian corporates a new dimension to ‘globalisation’. Tata Motors, a trendsetter in the Indian automobile industry, is setting a new direction to the globalisation of the Indian auto industry.

The question that has been in the minds of the senior management at Tata Motors was — will we remain exporters of vehicles or do we venture into the international automobile market as a company that can match the best in the business? The answers were obvious. The first step was to align the international business to the two business units — the Passenger Car Business Unit (PCBU) and the Commercial Vehicle Business Unit (CVBU), to bring greater focus and increased synergy between the domestic and international operations.

International business needs to be looked at from a perspective that goes beyond volumes and presence in many countries. Dr V. Sumantran, executive director, PCBU, says, "The company has now embarked on a road where we have made exports an integral part of our business. We do not think of sales outside the country as a separate activity. It is now integrated within the mission of each of its businesses."

Says Ravi Kant, executive director, CVBU, "In a cyclical business such as ours, it is important that we hedge against cyclicality. International business offers an opportunity as different countries go through peaks and troughs in demand at different points in time. Our capacity utilisation is more effective and risks of downturns can be mitigated."

The Business Units have classified different markets in terms of size, growth opportunities, product segments and target volumes. Therefore, from being present as an exporter in 70 countries, the company today focuses on 15 to 20 key countries, where it will have a significant presence in terms of volumes and market shares. As Dr Sumantran says, "With this integration and focus, we have stepped out in specific areas with specific products. It will be unrealistic for us to be in all places and all product segments. We will choose regions very carefully and base our strategy on well-connected product strategies. We should be in the right regions with the right product at the right time."

The implementation of the business strategy will be in three stages; product upgradation, sales and distribution processes and penetration into new markets. The three stages could run concurrently, depending on the market and product needs.

Tata Motors has taken a number of initiatives to strengthen both product reliability and durability and marketing processes. Enhancing distribution reach and a robust sales process system have been key elements in consolidating the company’s leadership position in the domestic market. The implementation of this strategy has begun in a few markets abroad and in Mr Kant’s words "What we needed was an integrated approach where we invest in all the critical elements — product upgradation, sales processes, distribution and above all, people."

The company’s approach has been successful in Sri Lanka and Malaysia where the installation of a sales process system and face-to-face customer meets through road shows and service workshops has started yielding results. Recently, a large contingent of dealers from South Africa was invited to visit the company’s facilities in Pune and experience the new face of the international business.

The second part of the business strategy is to make an entry in new and yet uncharted markets, such as China and the CIS countries. Besides the assembly plants that Tata Motors has in Bangladesh and Malaysia, the company’s recent order for 500 buses from Senegal will involve providing technical and commercial assistance to the Senegalese government for setting up a bus body building plant. Tata Motors has been short-listed for South Africa’s "Taxi Project" in which the government will provide an entirely new transport system in that country. A joint venture project for bus body building in Ukraine and serious due diligence into the opportunities available in the Chinese market are other areas where Tata Motors is looking to create new opportunities.

Says Mr Kant, "We have identified new segments in these regions. The business strategies will be country specific. The nature of our business will depend on the country we are working in. In addition, inorganic growth through acquisitions could also quicken the process of internationalisation." The company recently signed a MOU with Daewoo Commercial Vehicle Company in Korea to acquire its truck plant. The synergies are significant – a presence in the 250 to 400 HP range of trucks is what the Korean company brings to the table. This complements the existing product range of Tata Motors which delivers vehicles up to 210 HP. In the commercial vehicle business, says Mr Kant, "One must understand that different markets are in different stages of evolution, depending on that country’s economic development. Our competitive edge will be in our ability to offer cost-effective products and services to each market, suited to the stage of development of that market. Our capabilities in design, world-leadership, software skills, technology assimilation capabilities and labour productivity will ensure that we are not only benchmarked with world-class companies, but are ourselves benchmarks in certain areas."

On the road to globalisation, Dr Sumantran points out that the Rover agreement has been an important step in helping Tata Motors to gain very quick access to a fairly large market and a large distribution network. "Working alone in this area would have taken us much longer to create a distribution network. The exposure that the company and the products have received through the agreement validates the belief that we have arrived at a significant milestone in promoting the Tata brand," elaborates Dr Sumantran. "Rover is getting a Tata product. It is a road that many automakers have tread in the past. It will take us more than three years to arrive at our goal. But at least we have started the journey in that direction."

By remaining connected with the international markets, one’s learning improves. One is able to draw on experiences in different markets and create strong synergies. In doing so, the company will have created world-class products to fight competition in the domestic market as well, with little extra investment. This assures a greater degree of stability and, going forward, will strengthen the company’s ability to manage risk.

Clearly, it takes the right mix of people with the right skills to make this happen. Innovation, knowledge, commitment and pride have been Tata Motors’ greatest asset. It has amply demenstrated that it can meet the challenge of change. "The company is now on a course that will need a new mindset," says Mr Kant.

	TCS:	Pushing boundaries
	Titan:	Living in interesting times
	Tata International:	International explorer
	TACO:	The better half
	Tata Steel:	Stealing the show
	Indian Hotels:	Sovereign splendour
	Tata Tea:	The world in a teacup
	Tata Technologies:	Future of auto tech
	Tata BP Solar:	Sunny side up

Uploaded on January 5, 2004