Competitive Advantages-TATA
Tata Motors is located in the developing country of India. This location has been
and will continue to be vital to Tata’s success. In India, Tata can take advantage of the
fact that manufacturing labor cost is only eight to nine percent of sales, compared to 30
to 35 percent of sales in developed countries. In addition, India is one of the world’s
largest producers of automotive components which gives Tata Motors direct access to
many of these components. Tata has higher bargaining power with suppliers because it
is a local, not foreign, car manufacturer. Tata Motors is able to leverage Indian
automotive market because the current increase in demand due to the improvements in
infrastructure and growth of population and disposable incomes in India. The Society of
Indian Automobile Manufacturers stated, “India, where some 1.4 million new cars are
sold each year, is also a hugely attractive market for dozens of car companies and most
of them can’t risk ignoring what appears to now be a potent competitive advantage for
Tata Motors. India’s car market is expected to touch 2.2 million units a year by 2010”
(Livemint.com). Additionally, the India government has made protectionist policies and
regulations that are extremely favorable to Tata. In December 1997, the Indian
government put in place policies that require foreign carmakers to invest at least 50
million dollars in equity to set up manufacturing operations in India. This means that
Tata Motors is able to take advantage of the low cost of labor, land assets, and overall
investment practices without having to implement this 50 million dollar investment.
Finally, Tata Motors largest competitive advantage is that it has prospered and
grown in only developing markets for over 70 years. Tata Motors has implemented
programs that allow it to prosper while maintaining low costs and high profits.
