Kompaniya Tata na Rossiyskom rynke avtomobilestroeniya v perspektive
Understanding Global Markets
Tata Motors – the best to the
masses
Tata’s Entry Into
Russian Automobile Market
Prepared by:
Rashid Mukhamedov
Prepared for :
Eliana Senna
MAIBA January 2006
May 25th
2006
Bournemouth University
Contents :
Introduction
……………………………………………………………..2
Market
opportunities for Tata in Russia………………………4
Macro-environment
…………………………………………………..5
Country’s
pest analysis………………………………………………5
Political factors………………………………………………………………5
Economical factors………………………………………………………….5
Socio-cultural factors……………………………………………………….6
Technological factors……………………………………………………….7
Industry
factorsand competitive forces………………………7
Direct competitors and rivalry among existing
companies……………...7
Micro-environment
…………………………………………………...8
Swot
analysis……………………………………………………………..8
Strengths
and weaknesses…………………………………………………8
Opportunities and threats…………………………………………………..8-9
Market
entry mode……………………………………………………9
Market
segments……………………………………………………….9
Marketing
mix………………………………………………………….10
Product ……………………………………………………………………...10
Price …………………………………………………………………..11
Place………………………………………………………………… 11
Promotion……………………………………………………………...11
Conclusion………………………………………………………………12
References
………………………………………………………………13
Introduction
“Tata – the best to the Mass”
Today Tata is India’s
biggest car manufacturer with a 59% market chare .Established in1945 Tata Motors, is one of India's largest
automobile makers, has been manufacturing buses, trucks and
tractor-trailers, passenger cars (Indica V2, Indigo, and Indigo Marina), light
commercial vehicles (TATA 407), and utility vehicles (Tata Safari EX+, Tata
Sumo SE+, Tata Spacio) for sale primarily in India but also in other Asian
countries and in Africa, Australia, Europe, the Middle East, and South America.
With such a large export presence, the company operates plants in Bangladesh, Kenya,
Malaysia, South Africa, and Ukraine. Tata Finance, in which
Tata Motors held a 12% stake, has merged with Tata Motors. Tata Motors, a
Company that cares about the future. True to the tradition of the Tata Group,
Tata Motors is committed in letter and spirit to Corporate Social
Responsibility. It is a signatory to the United Nations Global Compact, and is
engaged in community and social initiatives on labour and environment standards
in compliance with the principles of the Global Compact. In accordance with
this, it plays an active role in community development, serving rural
communities adjacent to its manufacturing locations.
Tata
Motors believes in technology for tomorrow. Its products stand testimony to this. Their annual expenditure on R&D is approximately
2% of our turnover
Todayambitious Indian vehicle makers are driving
overseas to build a global presence for their brands, encouraged by robust
domestic sales. Companies are setting up manufacture and assembly operations
for everything from tractors to motorbikes in countries like Indonesia and South
Africa, taking advantage of tax benefits and expanding
markets beyond traditional destinations in South Asia
.
Tata Motors Ltd.,
which owns 21 percent of Spanish bus maker Hispano Carrocera and this month
formed a joint venture with Brazilian bus maker Marcopolo, is stepping up
production at its bus building facility in South
Africa and is looking to assemble pickup trucks in Thailand with a
local firm.
Mahindra & Mahindra, which has a joint venture with China's Jiangling Motors for tractors, has plans
to assemble pickup trucks in Malaysia
through a unit of DRB-HICOM, while TVS Motor has entered a joint venture in Colombia and is setting up an assembly unit in Indonesia.
The year 2003 was extremely
significant for Tata Motors, and not just because the company changed its name.
The high point
of an eventful 12-month period was the trailblazing debut on European roads of
the City Rover, an improved version of the Indica. The year also saw Tata
Motors reaching the 3-million milestone in vehicles produced.
On
July 29, 2003 the company changed its name from Tata Engineering to Tata
Motors. The new name reflects the company’s core business of designing,
manufacturing and marketing automobiles. Less than a month later, in August
2003, Tata Motors produced its 3-millionth vehicle, reaching a landmark that
exemplifies the company’s ambition and progress.
Market opportunities for Tata in Russia
The next step to exploiting new markets is
sending absolutely new product of Tata Motors to Russian Federation . The Russian Federation
is the largest of the 21 republics that make up the Commonwealth of Independent
States. It occupies most of eastern Europe and north Asia, stretching from the
Baltic Sea in the west to the Pacific Ocean in the east, and from the Arctic
Ocean in the north to the Black Sea and the Caucasus
in the south. It is bordered by Norway
and Finland in the
northwest; Estonia, Latvia, Belarus,
Ukraine, Poland, and Lithuania
in the west; Georgia and Azerbaijan in the southwest; and Kazakhstan, Mongolia,
China, and North Korea along the southern
border.
At
the start of 1992, Russia
embarked on a series of dramatic economic reforms, including the freeing of
prices on most goods, which led to an immediate downturn. A national referendum
on confidence in first president Yeltsin and his economic program took place in
April 1993. To the surprise of many, the president and his shock-therapy
program won by a resounding margin. In September, Yeltsin dissolved the
legislative bodies left over from the Soviet era.
With the population of
142 mln people and unexplored opportunities Russia creates very attractive
market for any businesses. According to
its slogan, Tata will focus onthe
middle class which is 60mln people with average wages 900GBPounds a month (in big cities). In our
case Tata motors is going to enter this market in spite of strong competitors
such as Mercedes, BMW, Toyota,
Nissan and others.
Macro-environment
Pest
analysis
1.Political factors
Russian Federation one of the
largest countries on the map in the world consists of 21 republics, 48 regions.
President is a chief of the government. The government is divided into 3
branches:1. executive 2. judicial 3. legislative
The prime minister is a
head of government and Cabinet of ministers (executive branch) which is
composed of 12 ministers. The legislative branch comprise Council of Federation
( consists of 178 seats) and StateDuma
(Russian parliament with 450 seats) . And the last one is Judicial branch which
consists of Constitutional Court,
Supreme Court and Arbitral Court. The political and
social environment of Russia
is stable, and the government is sympathetic and have positive attitude towards
business. Quite strong legal system, stringent guidelines on intellectual
property, and competitive corporate tax rate shows the government's
understanding of the needs of businesses.
2. Economical factors
Russia ended 2005 with its seventh straight year of growth, averaging 6.4%
annually since the financial crisis of 1998. Although high oil prices and a
relatively cheap ruble are important drivers of this economic rebound, since
2000 investment and consumer-driven demand have played a noticeably increasing
role. Real fixed capital investments have averaged gains greater than 10% over
the last five years, and real personal incomes have realized average increases
over 12%. During this time, poverty has declined steadily and the middle class
has continued to expand. Russia
has also improved its international financial position since the 1998 financial
crisis, with its foreign debt declining from 90% of GDP to around 31%. Strong
oil export earnings have allowed Russia to increase its foreign
reserves from only $12 billion to some $180 billion at yearend 2005. These
achievements, along with a renewed government effort to advance structural
reforms, have raised business and investor confidence in Russia's
economic prospects. The middle class’s life standards have increased recently. Russia
posted gross domestic product growth of 8.3 % in 2000 and most of industrial
sector posting double digit growth figures, the GDP grew about 5 % in 2001 and
4.3 % in 2002 It is expected to grow about 6.5 % in 2003. This is still higher
than most of the other countries.
The Russian GDP, however, has
contracted an estimated 45% since 1991, despite the country's wealth of natural
resources, its well-educated population, and its diverse - although
increasingly dilapidated - industrial base.
By the end of 1997, Russia had
achieved some progress. Inflation had been brought under control, the ruble
(national currency unit) was stabilized, and an ambitious privatization program
had transferred thousands of enterprises to private ownership. Some important
market-oriented laws had also been passed, including a commercial code
governing business relations and the establishment of an arbitration court for
resolving economic disputes.
3.Socio-cultural factors
The population of Russia is 142.8 mln people. Nearly
100% of population can read and write. Age structureof population is as follows:
0-14 age – 14.2%
15-64 years – 71.3%
65 andover – 14.4%
The average life expectancy is 67 years .Russian is a state
language. The dominating religion is Christianity with Russian ortodox 15-20% ,
Muslims- 15 %, other Christians 2%, the rest are non-believers.
4.Technological factors
Russia
is an attractive market for both big
businesses seeking to penetrate post Soviet are markets. Russia
has a strong transport and communications infrastructure that is connected to
all the major economies in the world through sea, air and other
telecommunication services.
Industry
factors and competitive forces
Direct and indirect
competitors
Graph1. Market shares of car manufacturers’ in Russian
market (2001)
As we can
see from the above graph ,market is
dominated by German cars( BMW, Mercedes, Audi). But these cars are oriented for
upper class of population, whose income is minimum $70-80000 a year. Tata’s
direct competitor will be “Avtovaz” - local domestic company which has been
manufacturing mostly light passenger cars since 1970s. Its pricesvary from $2900 to 6500$ which is more
expensive than Tata offers . Furthermore “Avtovaz”’s cars do not meetworld standards, most of their cars are
stillnot equipped withbasic componets such as ABS braking system,
Power-assisted steering , Airbags and others. Considering Russian climate,
especially winter Tata’s X-1 models will be exclusively equipped with powerful
ignition system which is resistant to low temperature up to -35*C (below zero).
Micro-environment
Swot
analysis
|
Country
name:
|
 
conventional long form: Russian
Federation
conventional short form: Russia
local long form: Rossiyskaya Federatsiya
local short form: Rossiya
former: Russian Empire, Russian
Soviet Federative
Socialist Republic
|
|
Government
type:
|
federation
|
|
Capital:
|
Moscow
|
|
Administrative
divisions:
|
48 oblasts (oblastey, singular - oblast), 21 republics (respublik, singular -
respublika), 9 autonomous okrugs (avtonomnykh okrugov, singular - avtonomnyy
okrug), 7 krays (krayev, singular - kray), 2 federal cities (singular -
gorod), and 1 autonomous oblast (avtonomnaya oblast')
oblasts: Amur (Blagoveshchensk), Arkhangel'sk, Astrakhan', Belgorod,
Bryansk, Chelyabinsk, Chita, Irkutsk, Ivanovo, Kaliningrad, Kaluga, Kamchatka
(Petropavlovsk-Kamchatskiy), Kemerovo, Kirov, Kostroma, Kurgan, Kursk, Leningrad,
Lipetsk, Magadan, Moscow, Murmansk, Nizhniy Novgorod, Novgorod, Novosibirsk,
Omsk, Orenburg, Orel, Penza, Pskov, Rostov, Ryazan', Sakhalin
(Yuzhno-Sakhalinsk), Samara, Saratov, Smolensk, Sverdlovsk (Yekaterinburg),
Tambov, Tomsk, Tula, Tver', Tyumen', Ul'yanovsk, Vladimir, Volgograd,
Vologda, Voronezh, Yaroslavl'
republics: Adygeya (Maykop), Altay (Gorno-Altaysk), Bashkortostan
(Ufa), Buryatiya (Ulan-Ude), Chechnya (Groznyy), Chuvashiya (Cheboksary),
Dagestan (Makhachkala), Ingushetiya (Magas), Kabardino-Balkariya (Nal'chik),
Kalmykiya (Elista), Karachayevo-Cherkesiya (Cherkessk), Kareliya
(Petrozavodsk), Khakasiya (Abakan), Komi (Syktyvkar), Mariy-El (Yoshkar-Ola),
Mordoviya (Saransk), Sakha [Yakutiya] (Yakutsk), North Ossetia (Vladikavkaz),
Tatarstan (Kazan'), Tyva (Kyzyl), Udmurtiya (Izhevsk)
autonomous okrugs: Aga Buryat (Aginskoye), Chukotka (Anadyr'), Evenk
(Tura), Khanty-Mansi, Koryak (Palana), Nenets (Nar'yan-Mar), Taymyr
[Dolgano-Nenets] (Dudinka), Ust'-Orda Buryat (Ust'-Ordynskiy), Yamalo-Nenets
(Salekhard)
krays: Altay (Barnaul), Khabarovsk, Krasnodar, Krasnoyarsk, Permskiy,
Primorskiy (Vladivostok), Stavropol'
federal cities: Moscow (Moskva), Saint Petersburg (Sankt-Peterburg)
autonomous oblast: Yevrey [Jewish] (Birobidzhan)
note: administrative divisions have the same names as their
administrative centers (exceptions have the administrative center name
following in parentheses)
|
|
Independence:
|
24 August 1991 (from Soviet Union)
|
|
National
holiday:
|
Russia
Day, 12 June (1990)
|
|
Constitution:
|
adopted 12 December 1993
|
|
Legal
system:
|
based on civil law system; judicial review of legislative acts
|
|
Suffrage:
|
18 years of age; universal
|
|
Executive
branch:
|
chief of state: President Vladimir Vladimirovich PUTIN (acting
president 31 December 1999-6 May 2000, president since 7 May 2000)
head of government: Premier Mikhail Yefimovich FRADKOV (since 5 March
2004); First Deputy Premier Dmitriy Anatolyevich MEDVEDEV (since 14 November
2005), Deputy Premiers Aleksandr Dmitriyevich ZHUKOV (since 9 March 2004) and
Sergey Borisovich IVANOV (since 14 November 2005)
cabinet: Ministries of the Government or "Government"
composed of the premier and his deputies, ministers, and selected other
individuals; all are appointed by the president
note: there is also a Presidential Administration (PA) that provides
staff and policy support to the president, drafts presidential decrees, and
coordinates policy among government agencies; a Security Council also reports
directly to the president
elections: president elected by popular vote for a four-year term;
election last held 14 March 2004 (next to be held March 2008); note - no vice
president; if the president dies in office, cannot exercise his powers
because of ill health, is impeached, or resigns, the premier serves as acting
president until a new presidential election is held, which must be within
three months; premier appointed by the president with the approval of the
Duma
election results: Vladimir Vladimirovich PUTIN reelected president;
percent of vote - Vladimir Vladimirovich PUTIN 71.2%, Nikolay KHARITONOV 13.7%,
other (no candidate above 5%) 15.1%
|
|
Legislative
branch:
|
bicameral Federal Assembly or Federalnoye Sobraniye consists of the Federation
Council or Sovet Federatsii (178 seats; as of July 2000, members appointed by
the top executive and legislative officials in each of the 88 federal
administrative units - oblasts, krays, republics, autonomous okrugs and
oblasts, and the federal cities of Moscow and Saint Petersburg; members serve
four-year terms) and the State Duma or Gosudarstvennaya Duma (450 seats;
currently elected by proportional representation from party lists winning at
least 7% of the vote; members are elected by direct, popular vote to serve
four-year terms)
elections: State Duma - last held 7 December 2003 (next to be held in
December 2018)
election results: State Duma - percent of vote received by parties
clearing the 5% threshold entitling them to a proportional share of the 225
party list seats - United Russia 37.1%, CPRF 12.7%, LDPR 11.6%, Motherland
9.1%; seats by party - United Russia 222, CPRF 53, LDPR 38, Motherland 37,
People's Party 19, Yabloko 4, SPS 2, other 7, independents 65, repeat
election required 3
|
|
Judicial
branch:
|
Constitutional Court; Supreme Court; Supreme Arbitration Court; judges for
all courts are appointed for life by the Federation Council on the
recommendation of the president
|
Economy
|
GDP
(purchasing power parity):
|
$1.539 trillion (2005 est.)
|
|
GDP
(official exchange rate):
|
$740.7 billion (2005 est.)
|
|
GDP -
real growth rate:
|
5.9% (2005 est.)
|
|
GDP -
per capita (PPP):
|
$10,700 (2005 est.)
|
|
GDP -
composition by sector:
|
agriculture: 5%
industry: 35%
services: 60% (2005 est.)
|
|
Labor
force:
|
74.22 million (2005 est.)
|
|
Labor
force - by occupation:
|
agriculture: 10.3%
industry: 21.4%
services: 68.3% (2004 est.)
|
|
Unemployment
rate:
|
7.6% plus considerable underemployment (2005 est.)
|
|
Population
below poverty line:
|
17.8% (2004 est.)
|
|
Household
income or consumption by percentage share:
|
lowest 10%: 1.7%
highest 10%: 38.7% (1998)
|
|
Distribution
of family income - Gini index:
|
40 (2002)
|
|
Inflation
rate (consumer prices):
|
11% (2005 est.)
|
|
Investment
(gross fixed):
|
17.5% of GDP (2005 est.)
|
|
Budget:
|
revenues: $176.7 billion
expenditures: $125.6 billion; including capital expenditures of $NA
(2005 est.)
|
|
Public
debt:
|
15.6% of GDP (2005 est.)
|
|
Agriculture
- products:
|
grain, sugar beets, sunflower seed, vegetables, fruits; beef, milk
|
|
Industries:
|
complete range of mining and extractive industries producing coal, oil, gas,
chemicals, and metals; all forms of machine building from rolling mills to
high-performance aircraft and space vehicles; defense industries including
radar, missile production, and advanced electronic components, shipbuilding;
road and rail transportation equipment; communications equipment;
agricultural machinery, tractors, and construction equipment; electric power
generating and transmitting equipment; medical and scientific instruments;
consumer durables, textiles, foodstuffs, handicrafts
|
|
Industrial
production growth rate:
|
4% (2005 est.)
|
|
Electricity
- production:
|
931 billion kWh (2004)
|
|
Electricity
- consumption:
|
811.5 billion kWh (2004)
|
|
Electricity
- exports:
|
24 billion kWh (2003)
|
|
Electricity
- imports:
|
14 billion kWh (2002)
|
|
Oil -
production:
|
9.15 million bbl/day (2005 est.)
|
|
Oil -
consumption:
|
2.8 million bbl/day (2005 est.)
|
|
Oil -
exports:
|
5.15 million bbl/day (2004)
|
|
Oil -
imports:
|
75,000 bbl/day
|
|
Oil -
proved reserves:
|
69 billion bbl (2003 est.)
|
|
Natural
gas - production:
|
587 billion cu m (2005 est.)
|
|
Natural
gas - consumption:
|
402.1 billion cu m (2004 est.)
|
|
Natural
gas - exports:
|
157.2 billion cu m (2004 est.)
|
|
Natural
gas - imports:
|
12 billion cu m (2004 est.)
|
|
Natural
gas - proved reserves:
|
47.57 trillion cu m (2003)
|
|
Current
account balance:
|
$89.31 billion (2005 est.)
|
|
Exports:
|
$245 billion (2005 est.)
|
|
Exports
- commodities:
|
petroleum and petroleum products, natural gas, wood and wood products,
metals, chemicals, and a wide variety of civilian and military manufactures
|
|
Exports
- partners:
|
Netherlands 9.1%, Germany 8%, Ukraine 6.4%, Italy 6.2%, China 6%, US 5%,
Switzerland 4.7%, Turkey 4.3% (2004)
|
|
Imports:
|
$125 billion (2005 est.)
|
|
Imports
- commodities:
|
machinery and equipment, consumer goods, medicines, meat, sugar, semifinished
metal products
|
|
Imports
- partners:
|
Germany 15.3%, Ukraine 8.8%, China 6.9%, Japan 5.7%, Kazakhstan 5%, US 4.6%,
Italy 4.6%, France 4.4% (2004)
|
|
Reserves
of foreign exchange and gold:
|
$181.3 billion (2005 est.)
|
|
Debt -
external:
|
$230.3 billion (30 June 2005 est.)
|
|
Economic
aid - recipient:
|
in FY01 from US, $979 million (including $750 million in non-proliferation
subsidies); in 2001 from EU, $200 million (2000 est.)
|
|
Currency
(code):
|
Russian ruble (RUR)
|
|
Exchange
rates:
|
Russian rubles per US dollar - 28.284 (2005), 28.814 (2004), 30.692 (2003),
31.349 (2002), 29.169 (2001)
|
|
Fiscal
year:
|
calendar year
|
|
Telephones
- main lines in use:
|
39.616 million (2004)
|
|
Telephones
- mobile cellular:
|
74.42 million (2004)
|
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