Tata Motors and the Financial Crisis

Keywords:

Abstract:

 
As the global financial crises wreaked havoc on major Western automobile companies, particularly in the United States, Tata Motors, the biggest Indian automobile manufacturer seems to have weathered the storm quite successfully so far.
 
 
In this paper we will explore how the global financial crisis has affected Tata Motors, particularly in passenger car division, and how the company responded to the crisis strategically.
 
Based on Boyer and Freyssenet’s (2003) definition of productive models the focus will be on changes in the profit strategy (constituted by the interplay of product policy, production organization and employee relations) in relation to key contextual changes in the company’s internal (corporate governance, conglomerate embeddedness, internationalization) and the external environment (liberalization, market conditions, financial crisis) before and after the global financial crisis.
 
The paper will be structured as follows: The paper identifies first the development of Tata motors profit strategy up to the emergence of the financial crisis. Specifically, this involves describing the interplay between Tata productive model/profit strategy and changes in the company’s internal and external environment. In a second step we will ask if and how the pre-crises productive model/profit strategy is affected by the crisis and how Tata Motors reacts to it. Regarding the former, this involves asking how much the company’s business environment – national and international – has been actually affected by the crisis. With regard to latter, the responses, we will show how Tata has adapted its productive model/profit strategy to cope with the new business environment.
 
A major conclusion of our analysis may be that given Tata motors embeddedness in the Tata conglomerate, its corporate governance (family ownership) and given the company’s embeddedness and strong focus on the Indian market, it was buffered to some degree from the effects of the financial crisis. As a result Tata Motors response to the financial crisis in terms of productive model/profit strategy adaptation was less dramatic as compared to other Western automobile manufacturers.      
 
Boyer, R., Freyssenet, M., 2003. Produktionsmodelle. Eine Typologe am Beispiel der Automobilindustrie. Edition
sigma, Berlin.
Structure of paper/book chapter
 
Introduction
-          Tata’s financial and market performance before and after crisis
 
The origin of TATA Motors, passenger car division
 
The evolution of Tata’s productive model/profit strategy up to the financial crisis
-          The development Tata’s productive model along with changing context conditions
o   The model
§ Development of market share and profitability
·         Profit strategy
·         Product policy
·         Organization of production
·         Employment relations
o   The context
§ Development of international economic regime and market conditions for Tata (supply and demand side)
§ Development of India’s economic regime and market conditions (supply and demand side)
§ Development of Tata’s conglomerate’s strategy, structure and governance  
 
 
The Tata’s productive model/profit strategy after the financial crisis
-          The development Tata’s productive model following changing context conditions as part of financial crisis
o   The productive model
§ Development of market share and profitability
·         Profit strategy
o   Product policy
o   Organization of production
o   Employment relations
o   The context
§ Effects of changing international economic regime and market conditions following the crisis (supply and demand side)
§ Effects of India’s economic regime and market conditions (supply and demand side) following the crisis
§ Effects of Tata’s Conglomerate’s strategy, structure and governance following the crisis
 
Conclusion  
-          The effect of the financial crisis on Tata Motors productive model
-          The economic sustainability of Tata Motors productive model in future