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CASE OVERVIEW
In the two years to 2009, Tata Motors - one of India's leading car and truck companies - made two dramatic strategic moves: first, a major world-class acquisition and, second, the launch of a revolutionary new car. But, both were made against the backdrop of major strategic problems in the world car industry. This case explores what then turned out to be a tricky time for Tata.
Keywords: Tata Motors, Jaguar, Land-rover, Nano, Competition, Capabilities
TWO DRAMATIC NEW STRATEGIES
In 2008, Tata Motors acquired two world car brands and their associated assets - Jaguar and Land Rover (JLR) - from the struggling US car company, Ford Motors, for US$ 2.3 Billion. Commenting on the occasion, the company said, "This is a momentous time for all of us at Tata Motors. Jaguar and Land Rover are two iconic British brands with worldwide prospects. We are looking forward to extending our full support to the Jaguar and Land Rover team to realise their competitive potential."
One year later, the same takeover was facing major problems. Sales at JLR were down 32 per cent compared to the previous year, and the new purchase made a net loss of nearly US$ 450 million in the ten months since its purchase. Mr Ratan Tata, Chairman of Tata Motors commented in May 2009, "If one had known there was going to be a meltdown, then yes [Tata went too far] but nobody knew. Both the acquisitions were made, I would say, at an inopportune time in the sense that they were near the top of the market."
Around the same time as Tata Motors acquired JLR, the company also impressed the world with the launch of India's cheapest new car model, called the Nano. Priced at around only US$ 2,000 (One Lakh Indian Rupees), the new car design was aimed at the large, low- priced car market in both India and other developing countries. The Nano embodied new innovative manufacturing strategies and some neat, cost-saving features. Coupled with ow Indian labour manufacturing costs, the Nano was designed to be the world's lowest- priced car, while at the same time, delivering profits to Tata. But the new model was delayed by a major dispute over land for its...