CONTENTS Page no.

INTRODUCTION 2

HISTORY 2

CHARACTERISTICS OF MNC’S 3

BENEFITS OF MNC’S TO HOME COUNTRY 5

PHENOMENAL GROWTH OF MNCS 9

ROLE OF MNC IN INDIA 11

DISADVANTAGES OF MNCS 13

TATA GROUP 14

TATA'S GLOBAL OPERATIONS 28

1

INTRODUCTION

Multinational corporations are business entities that operate in more than one country. The

typical multinational corporation or MNC normally functions with a headquarters that is

based in one country, while other facilities are based in locations in other countries. In some

circles, a multinational corporation is referred to as multinational enterprise (MBE) or a

transnational corporation (TNC).

The exact model for an MNC may vary slightly. One common model is for the multinational

corporation is the positioning of the executive headquarters in one nation,while production

facilities are located in one or more other countries. This model often allows the company to take

advantage of benefits of incorporating in a given locality, while also being able to produce goods

and services in areas where the cost of production is lower.

History

There is a dispute as to which was

the first MNC. Some have argued

that the Knights Templar, founded in 1117,

became a multinational when it stumbled

into banking in 1135. However, others

claim that the Dutch East India Company

was the first proper multinational.

2

The multinational corporations have certain characteristics which may be discussed below:

Giant Size:

The most important feature of these MNCs is their gigantic size. Their assets and sales run

into billions of dollars and they also make supernormal profits. According to one definition

an MNC is one with a sales turnover of f 100 million. The MNCs are also super powerful

organizations. In 1971 out of the top ninety producers of wealth, as many as 29 were MNCs,

and the rest, nations. Besides the operations, most of these multinationals are spread in a vast

number of countries. For instance, in 1973 out of a total of (, 000 firms identified nearly 45

per cent had affiliates in more than 20 countries.

International Operation:

A Fundamental feature of a multinational corporation is that in such a corporation, control

resides in the hands of a single institution. But its interests and operations sprawl across

national boundaries. The Pepsi Cola Company of the U.S operates in 114 countries. An MNC

operates through a parent corporation in the home country. It may assume the form or a

subsidiary in the host country. If it is a branch, it acts for the parent corporation without any

local capital or management assistance. If it is a subsidiary, the majority control is still

exercised by the foreign parent company, although it is “incorporated in the host country. The

foreign control may range anywhere between the minimum of 51 per cent to the full, 100 per

cent. An MNC thus combines ownership with control. The branches and subsidiaries of

MNCs operate under the unified control of the parent company.

3

Oligopolistic Structure:

Through the process of merger and takeover, etc., in course of time an MNC comes to

assume awesome power. This coupled with its giant size makes it oligopolistic in character.

So it enjoys a huge amount of profit. This oligopolistic structure has been the cause of a

number of evils of the multinational corporations.

Spontaneous Evolution:

One thing to be observed in the case of the MNCs is that they have usually grown in a

spontaneous and unconscious manner. Very often they developed through "Creeping

instrumentalism." Many firms become multinationals by accident. Sometimes a firm

established a subsidiary abroad due to wage differentials and better opportunity prevailing in

the host country.

Collective Transfer of Resources:

An MNC facilitates multilateral transfer of resources Usually this transfer takes place in the

form of a "package" which includes technical know-how, equipment's and machinery,

materials, finished products, managerial services, and soon, "MNCs are composed of a

complex of widely varied modern technology ranging from production and marketing to

management and financing. B.N. Ganguly has remarked in the case of an MNG "resources

are transferred, but not traded in, according to the traditional norms and practices of

international trade."

4

Benefits of MNC’s to Home Country

Benefits of MNC’s to host countries:

Multinational corporate structure :

Promote global co-operations:

Facilitate inflow of foreign

exchange:Promote

bilateral trade relations:

Ensure optimum

utilization of resources:

Raise the rate of investment:

Accelerate industrial growth:

Facilitate transfer of technology:

Promote export and reduce

imports:

Provide services to professionals:

Facilitate efficient

utilization of resources:

Provide benefits of R and D activities:

Support enterprises in

host countries:

Break domestic monopolies:

5

Multinational corporations can be divided into three broad groups according to the

configuration of their production facilities:

· Horizontally integrated multinational corporations

manage production establishments located in different countries to produce the same or

similar products.(example: McDonalds)

· Vertically integrated multinational corporations

manage production establishment in certain country/countries to produce products that

serve as input to its production establishments in other country/countries. (example: Adidas)

· Diversified multinational corporations

manageproduction establishments located in different countries that are neither

horizontally nor vertically norstraight, nor non-straight integrated. (example:

Microsoft)

Others argue that a key feature of the multinational is the inclusion of back office functions in

each of the countries in which they operate. The globally integrated enterprise, which some see

as the next development in the evolution of the multinational, does away with this requirement.

6

Benefits of MNC’s to home country:

1) Facilitate inflow of foreign exchange: - MNC’s collect funds from the

enterprises of other countries in the form of fees, royalty, and service

charges. This money is taken to the country of their origin. MNC’s make their

home countries rich by facilitating inflow of foreign exchange from other

countries.

2) Promote global co-operations: - MNC’s provide co-operation to poor or

developing

countries to develop their industries. The countries of their origin participate

in such

international co-operation, which is beneficial to all countries- rich and poor.

3) Ensure optimum utilization of resources: -MNC’s ensure optimum

utilization of natural and other resources available in their home countries.

This is possible due to their worldwide business contacts.

4) Promote bilateral trade relations: -MNC’s facilitate bilateral trade

relations between their home countries and the other countries with which

they have business relations.

Benefits of MNC’s to host countries:

1) Raise the rate of investment: - MNC’s raise the rate of investment in

the host countries and thereby bring rapid industrial growth accompanied by

massive employment opportunities in different sectors of the economy.

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2) Facilitate transfer of technology: -Multinationals act as agents for the

transfer of

technology to developing countries and thereby help such countries to

modernize their

industries.They remove technological gaps in developing countries by

providing technomanagerial skills.

3) Accelerate industrial growth: - multinationals accelerate industrial

growth in host countries through collaborations, joint ventures and

establishment of subsidiaries and branches. They facilitate economic growth

through financial, marketing and technological services. MNC’s are rightly

called “ messengers of progress”.

4) Promote export and reduce imports: - MNC’s help the host countries

to reduce the imports and promote the exports by raising domestic

production. Marketing facilities at global level are provided by MNC’s due to

their global business contacts.

5) Provide services to professionals: - MNC’s provide the services of the

skilled professional managers for managing the activities of the enterprises

in which they are involved/interested.This raises overall managerial

efficiency or enterprises connected with multinationals.MNC’s bring

managerial revolution in host countries.

6) Facilitate efficient utilization of resources: - Multinationals facilitate

efficient utilization of resources available in host countries. This leads to

economic development.

8

7) Provide benefits of R and D activities: -Multinationals has enormous

resources at their disposal. Some are utilized for R and D activities. The

benefits of R and D activities are passed on to the enterprises operating in

the host countries.

8) Support enterprises in host countries: - MNC’s support to enterprises

in the host countries in order to support their own operations indirectly. This

is how MNC’s support enterprises in the host countries to grow. Even

consumers get new goods and services due to the operations of MNC’s.

9) Break domestic monopolies: - MNC’s raise competition in the host

countries and thereby break domestic monopolies.

A number of factors have contributed to the phenomenal growth of MNCs.

Some of the important factors are as follows: -

1) Expansion of market territories: -

Rapid economic growth in a number of countries resulting in rising GDPs and per capita

incomes contributed to the growing standards of living. This in turn contributed to the

continuous expansion of market territories. MNCs both contributed to the expansion of

market territories and also grew in size and spread as a result of expansion of market

territories.

2) Market superiorities: -

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In many ways, MNCs have an edge over domestic firms, such as: -

a) Availability of reliable and current data,

b) MNCs enjoy market reputation,

c) MNCs encounter relatively less problems and difficulties in marketing the products,

d) MNCs adopt more effective advertising and sales promotion techniques, and

e) MNCs enjoy faster transportation and adequate warehousing facilities

3) Financial superiorities: -

MNCs also enjoy a number of financial advantages over domestic firms. These are: -

a) Availability of huge financial resources with the MNCs helps them to transform business

environment and circumstances in their favor.

b) MNCs can use the funds more effectively and economically on account of their activities

in numerous countries.

c) MNCs have easy access to international capital markets, and

d) MNCs have easy assessed to international banks and financial institutions.

4) Technological superiorities: -

MNCs are technologically prosperous on account of high and sustained spend on R&D.

developing countries on account of their technological backwardness welcome MNCs to their

countries because of the attendant benefits of technology transfer.

10

Role of MNC in India

There are a number of reasons why the multinational companies are coming

down to India.India has got a huge market. It has also got one of the fastest

growing economies in the world. Besides, the policy of the government

towards FDI has also played a major role in attracting the multinational

companies in India.

For quite a long time, India had a restrictive policy in terms of foreign direct

investment. As a result, there was lesser number of companies that showed

interest in investing in Indian market. However, the scenario changed during

the financial liberalization of the country, especially after 1991. Government,

nowadays, makes continuous efforts to attract foreign investments by

relaxing many of its policies. As a result, a number of multinational

companies have shown interest in Indian market.

It is too specify that the companies come and settle in India to earn profit. A

company

enlarges its jurisdiction of work beyond its native place when they get a wide

scope to earn a profit and such is the case of the MNCs that have flourished

here. More over India has wide market for different and new goods and

services due to the ever increasing population and the varying consumer

taste. The government FDI policies have somehow benefited them and

drawn their attention too. The restrictive policies that stopped the company's

11

inflow are however withdrawn and the country has shown much interest to

bring in foreign investment here.

Besides the foreign directive policies the labor competitive market, market

competition and the macro-economic stability are some of the key factors

that magnetize the foreign MNCs here.

Following are the reasons why multinational companies consider India as a

preferred

destination for business:

Huge market potential of the country

FDI attractiveness

Labor competitiveness

Macro-economic stability

Advantages of the growing MNCs to India

There are certain advantages that the underdeveloped countries like and the developing

countries like India derive from the foreign MNCs that establishes. They are as under:

Initiating a higher level of investment.

Reducing the technological gap

The natural resources are utilized in true sense.

The foreign exchange gap is reduced

Boosts up the basic economic structure.

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Disadvantages of MNCs

Roses do not come without thrones. Disadvantages of having MNCs in a developing country

like India are as undero

Competition to SMSI

Pollution and Environmental hazards

Some MNCs come only for tax benefits only

Exploitation of natural resources

Lack of employment opportunities

Diffusion of profits and Forex Imbalance

Working environment and conditions

Slows down decision making

13

Tata Group

The Tata Group is a multinational conglomerate based in Mumbai, India. In terms of market

capitalization and revenues, Tata Group is the largest private corporate group in India and has

been recognized as one of the most respected companies in the world. It has interests in steel,

automobiles, information technology, communication, power, tea and hospitality. The Tata

Group has operations in more than 85 countries across six continents and its companies

export products and services to 80 nations. The Tata Group comprises 114 companies and

subsidiaries in seven business sectors, 27 of which are publicly listed. 65.8% of the ownership of

Tata Group is held in charitable trusts. Companies which form a major part of the group include

Tata Steel, Corus Steel, Tata Motors, Tata Consultancy Services, Tata Technologies, Tata Tea,

Titan Industries, Tata Power, Tata Communications, Tata Teleservices, Tata AutoComp Systems

Limited and the Taj Hotels.

The group takes the name of its founder, Jamsetji Tata, a member of whose family has almost

invariably been the chairman of the group. The current chairman of the Tata group is Ratan Tata,

who took over from J. R. D. Tata in 1991 and is currently one of the major international business

figures in the age of globality. The company is currently in its fifth generation of family

stewardship. The 2009 annual survey by the Reputation Institute ranked Tata Group as

the 11th most reputable company in the world. The survey included 600 global companies.

14

HISTORY

Tata, family of pioneer Indian industrialists and philanthropists. The founder of the Tata

business empire was Jamsetji Nusserwanji Tata (1839-1904). Born in Navsari, into a Parsi

family,Jamsetji studied at Elphinstone College in Mumbai before entering his father’s business

as a general merchant trading with the East. He soon proved highly successful, setting up a

branch in Shanghai and steering the family through the speculation and collapse of cotton prices

that arose due to the American Civil War.

Jamsetji traveled widely and introduced sound business principles which he believed to

be the cornerstone of his success. His key concerns were to utilize modern technology, and to

ensure good working conditions and welfare for his employees. These principles could clearly be

seen in his first major venture, the establishment of the Empress Mills in 1877 at Nāgpur. In

1886 he founded the Svadeshi Mills Company—the name of which indicated his sympathies

with a nationalist movement of the day competing directly with British firms in the manufacture

of fine cotton. His iron and steel works at Sakchi, around which he built houses, schools, and a

hospital for the workers, expanded from a village into the current industrial town of Jamshedpur.

Other projects included the founding of the famous Taj Mahal Hotel in Mumbai, and the

beginning of work on a major hydroelectric project in the Western Ghats mountain range.

Jamsetji was also concerned with the development of Mumbai, and India as a whole, and hoped,

through improving educational and research facilities, to provide the skilled workforce needed

for an emerging modern, industrialized nation.

15

He founded a number of educational institutions, but his efforts to form an Indian

university as a center of excellence for science did not reach fruition until after his death when,

in 1909, the Indian Institute of Science was established in Bangalore. It remains an outstanding

research center.

Jamsetji’s achievements were built upon by his sons Sir Dorabji Jamsetji Tata (1859-

1932) and Sir Ratan Tata (1871-1918), who completed the hydroelectric project. They also

brought the original companies under the name of Tata Sons and Company, and set up branches

of their business in London, Paris, New York,Shanghai, and Kobe. The Tata Trust has provided

funds for hospitals and research establishments, including the Tata Institute for Fundamental

Research. Tata Airlines was founded in 1932, being renamed Air India in 1946, and was taken

over by the government as India’s national airline in 1953. The Tata empire remains one of

India’s largest business groups. From 1938 to 1993, it was chaired by Jehangir Ratanji Dadabhoy

Tata (1904-1993), under whom the business continued to expand and diversify. On the death of

J.R.D. Tata, the chairmanship passed to Ratan Naval Tata.

16

TATA’S DIVERSITY OVER THE GLOBE

TATA

NORTH AMERCIATATA SONS

JAGUAR LAND

ROVERTATA

GROUPTATA

CHEMICALSTATA

COMMONICATION

TCSTATA ELXSI

TATA GLOBAL

BEVERAGESTATA

INTERACTIVE SYSTEM

TATA STEELTATA

TECHNOLOGIES

SOUTH AMERICA

RALLISTATA

CHEMICALS

TATA COMMUNICATION

TCSTATA

MOTORSTATA STEEL

AFRICATATA

GROUPTATA

HOLDINGSTATA

AUTOMOBILES

TATA CHEMICALS

TATA POWERS

TATA STEEL

WEST ASIA

VOLTASTITAN

TATA ELXSITCS

TATA INTERACTIVE SYSTEM

AUSTRALIA

TATA GROUPTATA

CHEMICALS

TATA COMMONICATIO

NTCS

TATA ELXSITATA

GLOBALBEVERAG

ESTATA

INTERACTIVE

SYSTEMTATA STEEL

SOUTH EAST

ASIA,EAST ASIA AND

SOUTH ASIA

TATA COMMONICATIO

NTCS

TATA ELXSITATA

GLOBALBEVERAG

ESTATA

INTERACTIVE

SYSTEMTATA

STEEL.

CHINATATA SONS

JAGUAR LAND

ROVERTATA

GROUPTATA

CHEMICALSTATA

COMMONICATION

TCSTATA ELXSI

TATA GLOBAL

BEVERAGESTATA

INTERACTIVE SYSTEM

TATA STEELTATA

TECHNO

INDIA (HEADQUATERS)

17

TATA DIVERSITIES OVER THE SECTORS

SECTORS

Information Technology & CommunicationEngineeringMaterialsServicesEnergyConsumer ProductsChemicals

18

ENGINEERING

TAL Manufacturing Solutions exports titanium-composite floor beams that are installed

in the Boeing 787 aircraft.[13]

Tata AutoComp Systems Limited (TACO) and its subsidiaries, auto-component

manufacturing

Tata Motors (formerly Tata Engineering and Locomotives Company Ltd (TELCO)),

manufacturer of commercial vehicles (largest in India) and passenger cars

Jaguar and Land Rover

Tata Projects

TCE Consulting Engineers

Telco Construction Equipment Company

TRF Bulk Material Handling Equipment & Systems and Port & Yard Equipments.

Voltas , consumer electronics company

Energy

Tata Power is one of the largest private sector power companies. It supplies power to

Mumbai, the commercial capital of India and parts of New Delhi. Chemicals.

Rallis India

Tata Pigments

Tata Chemicals , headquartered in Mumbai, India, Tata Chemicals has the largest single

soda ash production capacity plant in India. Since 2006 Tata Chemicals has owned

Brunner Mond , a

United Kingdom-based chemical company with operations in Kenya and the Netherlands.

19

Advinus Therapeutics , headquartered in Bangalore, India, a Contract research

organization focused on drug discovery and development for Pharmaceutical, Agro and

Biotech industries.

Services

The Indian Hotels Company

Tata Housing Development Company Ltd. (THDC)

Tata-AIG General Insurance , a joint venture with AIG

Tata-AIG Life Insurance , a joint venture with AIG

Tata Advanced Systems Limited

Tata Asset Management

Tata Financial Services

Tata Capital

Tata Investment Corporation

Tata Quality Management Services

Tata Share Registry

Tata Strategic Management Group

(TSMG) is one of the largest consulting firms in South Asia.

Consumer Products

20

Tata Salt, I Shakti Salt, Tata Salt Lite

Tata Ceramics

Infiniti Retail

Tata Tea Limited is the world's second largest manufacturer of packaged tea and tea

products. It also owns the Tetley brand of tea sold primarily in Europe.

Titan Industries manufacturers of Titan watches

Trent (Westside)

Tata Sky

Tata International Ltd - Leather Products Division

Tanishq jewelery

Star Bazaar

Information systems and communications

CMC Ltd

Computational Research Laboratories

INCAT

Nelco

Nelito Systems

Tata Business Support Services

(formerly Serwizsol)

Tata Consultancy Services Ltd . (TCS) is Asia's largest software company with 2008-09

revenues being over US$ 6 bn.

21

Tata Elxs i is another Software and Industrial design company of the Tata stable. Based

in Bangalore and Trivandrum. One of the leading companies in the animation industry of

India.

Tata Interactive Systems

Tata Technologies Limited

Tata Teleservices

Tatanet

Tata Communications , formerly VSNL, the Indian telecom giant, was acquired in 2002.

Tata-owned VSNL acquired Teleglobe in 2005.]

22

Tata acquisitions and targets

February 2000 - Tetley Tea Company,$407 million

March 2004 - Daewoo Commercial Vehicle Company, $102 million

August 2004 - NatSteel's Steel business,$292 million

November 2004 - Tyco Global Network, $130 million

July 2005 - Teleglobe International Holdings, $239 million

October 2005 - Good Earth Corporation December 2005 - Millennium Steel, Thailand,

$167 million

December 2005 – Brunner Mond Chemicals Limited, $120 million

June 2006 - Eight O'Clock Coffee, $220 million

November 2006 - Ritz Carlton Boston,$170 million

Jan 2007 - Corus Group, $12 billion

March 2007 - Bumi Resources, $1.1 billion

April 2007 - Campton Place Hotel, San

Francisco, $60 million

February 2008 - General Chemical Industrial Products, $1 billion

March 2008 - Jaguar Cars and Land Rover, $2.3 billion

March 2008 - Serviplem SA, Spain

April 2008 - Comoplesa Lebrero SA,Spain

May 2008 - Piaggio Aero Industries S.p.A ., Italy

June 2008 - China Enterprise Communications, China

June 2008 - Neotel, South Africa.

23

October 2008- Miljo Grenland / Innovasjon, Norway Imacid chemical company,

Morocco

24

ASSETS DISTRIBUTION OF TATA GROUPS (2012-13)

Assets

Information Technology & CommunicationEngineeringMaterialsServicesEnergyConsumer ProductsChemicals

GROUP FINANCIALS

2012-13 (US$ Billion)

2011-12 (US$ Billions

% Change 2012-13 (Rs. Crores)

2011-12 (Rs.Crores)

%Change

Total Revenue 96.8 100.1 (3.3) 527,047 475,721 10.8

Sales 95.6 99.1 (3.5) 520,469 471,045 10.5

Total Assets 107.2 108.5 (1.3) 583,554 515,933 13.1

International revenue(Including Exports)

60.7 59.1 2.7 330,530 280,840 17.7

Net Forex Earnings 3.0 1.6 90.6 16,604 7,604 118.4

TOTAL REVENUE OF TATA GROUP (2012-13)

25

9%

42%

29%

4%

8%

4% 3%

Total Revenue of TATA Group

Information Technology &communication

Engineering

Materials

Services

Energy

Consumer Product

Chemicals

GROUP FINANCIALS

2012-13 (US$ Billion)

2011-12 (US$ Billions

% Change 2012-13 (Rs. Crores)

2011-12 (Rs.Crores)

%Change

Total Revenue 96.8 100.1 (3.3) 527,047 475,721 10.8

Sales 95.6 99.1 (3.5) 520,469 471,045 10.5

Total Assets 107.2 108.5 (1.3) 583,554 515,933 13.1

International revenue(Including Exports)

60.7 59.1 2.7 330,530 280,840 17.7

Net Forex Earnings 3.0 1.6 90.6 16,604 7,604 118.4

GROUPS CONTRIBUTION TO THE EXCHEQUER 2012-13

26

Tata group companies

Corporate TaxExcise #CustomsSalesOthersTolal

Tata group companies

(US$ Millions)

Government finances

(US$ Millions)

Tata group companies

(Rs.crores)

Government finances

(Rs.crores)

% Share of Tata companies

Corporate Tax 1,527 65,909 8,317 358,874 2.3Excise # 2,192 46,658 11,935 254,055 4.7Customs 549 30,276 2,989 164,853 1.8Sales 1,454 74,086 7,915 403,400 2.0Others 932 25,787 5,073 140,409 3.6Tolal 6,654 242,71

636,229 1,321591 2.7

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Tata's global operations

Tata Motors has been aggressively acquiring foreign brands to increase its global presence. Tata

Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land

Rover, a business comprising the two iconic British brands that was acquired in 2008. Tata

Motors has also acquired from Ford the rights to three other brand

names: Daimler, Lanchester and Rover.

In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea’s second

largest truck maker. The rechristened Tata Daewoo Commercial VehiclesCompany has launched

several new products in the Korean market, while also exporting these products to several

international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea

are from Tata Daewoo.In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a

reputed Spanish bus and coach manufacturer,[9] giving it controlling rights of the company.

Hispano’s presence is being expanded in other markets.

On Tata's journey to make an international foot print, it continued its expansion through

the introduction of new products into the market range of buses (Starbus & Globus) as well as

trucks (Novus). These models were jointly developed with its subsidiaries Tata Daewoo and

Hispano Carrocera. In May, 2009 Tata unveiled the Tata World Truck range jointly developed

with Tata Daewoo [27] They will debut in South Korea, South Africa, the SAARC countries

and the Middle-East by the end of 2009 [27] In 2006, it formed a joint venture with the Brazil-

based Marcopolo, a global leader in body-building for buses and coaches to manufacture fully-

built buses and coaches for India and select international markets.[28] Tata Motors has expanded

its production and assembly operations to several other countries including South Korea,

Thailand, South Africa and Argentina and is planning to set up plants in Turkey, Indonesia and

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Eastern Europe. Tata also franchisee/joint venture assembly operations in Kenya, Bangladesh,

Ukraine, Russia and Senegal. Tata has dealorships in 26 countries across 4 continents Though

Tata is present in many counties it has only managed to create a large consumer base in the

Indian Subcontinent namely India, Bangladesh, Bhutan, Sri Lanka and Nepal and has a growing

consumer base.

Present and future challenges

Tata Motors have some distinct advantages in comparison to other multinational competitors

especially a cost advantage as labor costs for Tata Motors is 8-9 percent of sales as compared to

30-35 percent for most multinational companies. Another advantage in the increasing demand in

its own backyard, India due to infrastructure developments and rising GDP. Indiremainsoneof

the few developing auto markets where domestic brands have managed to keep alarge presence,

Tata and fellow compatriots account for more than 60% of the passenger vehicle sales and 95%

of commercial vehicle sales. There are also favorable Government polices and regulations in

place in order to help boost the auto industry. However, Tata has not been able to capitalize on

its global presence. Tata relies heavily on its sales in India and has not yet managed to create a

foothold in international markets even though it has a number of well reputed subsidiaries.

However, Tata Nano may boost its international presence atleast in developing economies.

Though it has an advantage in India, thanks to low costs and government policies it soon faces

stiff competition from it multinational competitors all eyeing for a share in the ever growing

Indian auto sector. Earlier, a policy required majority-owned subsidiaries of foreign car firms to

invest at least US$50 million in equity if they wished to set up manufacturing projects in India

and mere car assembling operations were not welcomed. An Indian cabinet panel has since

29

announced a new automobile policy that sets fresh investment guidelines for foreign firms

wishing to manufacture vehicles in the country. Investments in making auto parts by a

foreign .vehicle maker will also be considered a part of the minimum foreign investment made

by it in an auto-making subsidiary in India. The move is aimed at helping India emerge as a hub

for global manufacturing and sourcing for auto parts. The policies adopted by Government will

increase competition in domestic market, motivate

many foreign commercial vehicle manufactures to set up shops in India, whom will make India

as a production hub and export to nearest market. Thus Tata Motors will have to face tough

competition in near future, which might affect its growth negatively. Currently, the presence of

Suzuki through its subsidiary, Maruti Suzuki in the Indian market may also be alarming. Maruti

has aggressively launched family cars to undermine the Tata models. Tata has continued to be

strong in the MUV and SUV sector due to lack of competition and correct pricing. However,Tata

now faces stiff competition from fellow compatriot Mahindra as well as multinational brand like

Toyota and Chevrolet. In addition, the growing presence of fellow Indian competitors, Mahindra

and Force Motors not only in the Indian but also in the Global market may effect Tata's sales.

Mahindra and Force have formed joint ventures with Renault and MAN respectively. Mahindra

has also formed a 51:49 JV called Mahindra Navistar with ITEC, USA (parent Navistar

International), to manufacture commercial vehicles and to bolster its position in the CV

business[31] Ashok Leyland, which is the second largest commercial manufacturer in India has

remained Tata's biggest competitor in the Indian heavy commercial vehicle market and with its

aquistion of Czech Republic-based Avia[32] it may manage to increase its presence in

neighbouring markets such as Sri Lanka, Nepal where Tata Motors has a monopoly. To counter

the growth of these various companies Tata has come up with revised or new models like Indica

30

Vista, Indigo Vista, Xenon, Tata World Truck and a aggressive marketing policy.

CONCLUSION

Tata has shown that it is committed to sustainable and environmental practices as part of its

overall aim to act responsibly. It shows commitment and progress towards key targets of

sustainability as well as encouraging sustainable decision-making in its customers and within

their markets.

The key to the success of this approach is to recognise the unique properties of steel as a

recyclable material and to ensure that measurements of sustainability are taken over the entire

life cycle of a product, not just the use-phase.

The company is developing a new range of fuel-efficient commercial vehicles to tackle the

competition head on."

Tata Motors' market share in the commercial vehicles segment has steadily slipped, and in 2011-

12, its share was 59.4% compared to 61.2% a year ago. Its sales growth was also slower than the

industry's. While the country's commercial vehicle sales in 2011-12 grew at 19.2% compared to

the previous year, Tata Motors' commercial vehicle sales grew only at 15.7%.

The company's consolidated net profit for the 2011-12 fiscal grew 45.8% to R13,516.5 crore,

primarily driven by the performance of its UK arm Jaguar Land Rover. On a standalone basis,

the company's net profit for the fiscal fell 31.4% to R1,242.2 crore. Competition from Tata

Motors is emerging from German-major Daimler's BharatBenz range of trucks, which plans to

launch 20 models by the middle of CY13 and have invested R4,400 crore to set up a

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manufacturing capacity of 36,000 units a year. The capacity will be ramped up to 72,000 in the

next phase of expansion.

Mahindra Navistar has managed to eke out a market share of 3.6% after two years of operations

and is planning to ramp up capacity to get a greater share of pie. "Tata Motors will need a

significant upgrade in products to stay ahead of the competition in the next 4-5 years," said a

consultant with a foreign management consultancy firm. "Though its sales and service network

still gives it an edge and it will have leadership for the next couple of years, it needs to invest

now and start planning for what will happen after five years."

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