Tata Motors

Topics: Automotive industry, Tata Motors, Automobile Pages: 14 (2985 words) Published: March 30, 2015

Tata motors3
. Microeconomic Environment3
1.1 Introduction3
1.2 Market Structure:4
1.3 Role of Government:4
1.4 Fixed Cost and Variable Cost5
1.5 Substitutes and Elasticity of Demand6
1.6 Economies of Scale7
2. MACROECONOMIC environment8
2.1 INDIA8
2.2 Microeconomic Environment8
2.3 Economic growth9
2.3 Employability10
2.5 Market value in the economy11
2.6 Revenue and profits11
2.7 Political environment11
2.8 Inflation12

Tata motors
1. Microeconomic Environment
1.1 Introduction
Tata Motors Limited is India’s largest multinational automobile manufacturing company with the revenue of US$ 38.6 billion as in financial year 2013-14. In Indian automobile segment, Tata is leader in commercial vehicles in each segment and also amongst top in passenger vehicles. It has around 60000 employees working in plants across five Indian states. It was founded in 1945 by Jamsetji Tata originally to manufacture locomotives and produced its first commercial vehicle in year 1954 and since it has established its presence across length and breadth of country. Today their product includes automobiles, commercial vehicles, coaches, buses, construction equipment, military vehicles and automotive parts. Tata Motors have two main market segments that it aims to penetrate with their line of cars it produces. First target market is catering to the middleclass families and individuals who are looking to buy their first car. These target market are concentrated mainly in Indian sub-continental region; specifically in India, Myanmar and Thailand. Tata motors cater this particular segment by offering cars such as Tata Nano and Tata Indica. Other target market that Tata Motors focus on is people with higher income. To this target market, Tata motors offer them Jaguar and Land Rover line of cars. The major competitors of TATA Motors in Indian market are Ford Motors, Hyundai, General Motors and Suzuki Motors Corporation which are also producers of medium ranged passenger and commercial vehicle aimed at vast middle class population. In passenger vehicle segment (2012-13), Tata motors stands at 3rd position and has a market share of about 11.79% which is lower than the market leader Maruti-Suzuki India which controls nearly 39.43% followed by Hyundai at 14.39% (economictimes.com) Micro- Economics (demand & supply, type of market, role of govt., market mechanism)

1.2 Market Structure:
Tata Motors operates in Oligopoly market as there are few major companies in Indian automobile segment. Extremely concentrated firm structure of automobile industry has created very high barriers for entry and limited upgrading prospects of smaller firms (T.J. Sturgeon et al). As cars are homogenous product the customers differentiate a Tata car on the basis of physical attribute, services, type of engine, image and advertisements; for e.g., Tata Nano is known by customers because of it unique design, compact size and decent engine. The price of cars manufactured by Tata motors is determined by the seller himself and also according to the competition. Tata cannot keep their prices too high as it will fail to generate sales, so they have to determine their prices carefully based on competition. There are few other major competitors in Indian car segment like Maruti Suzuki India, Hyundai and M&M.

(Oligopoly Market)
1.3 Role of Government:
The government of India has introduced The Motor Vehicles Act to monitors all aspects of road transport vehicles (the Motor Vehicles Act, 1988). This act provides framework regarding licensing of drivers, registration of vehicles, insurance, permits, traffic regulation and penalties. In india, taxes on cars are imposed by both central government and state government. The government earns substantial revenues from this taxation policy. Taxes on cars include motor vehicle tax, passenger and good tax, state VAT and sales tax. These taxes...

References: (economictimes.com)
(sexton, 2012) (www.seekingalpha.com) (www.termpaperwarehouse.com) (www.moneycontrol.com) (www.tatamotors.com)
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