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Here’s how the following SWOT Analysis of Tata Motors came to be:

With the bailout of General Motors underway I’ve been doing some research on other automakers to see if there are any interesting stories out there. Tata Motors is a manufacturer that is relatively unknown in the U.S. yet has a compelling story. And a SWOT analysis of Tata Motors offers lessons for every business owner.

More than 800 million automobiles and light trucks are on the road worldwide with more than 70 million new vehicles sold in 2008. Tata Motors, founded in 1945, ranked 19th in global production with 798,265 vehicles. India, as a region, is experiencing one of the highest growth rates in the world.

Tata has been actively acquiring and joint venturing with other companies during the past five years. The purchase of Daewoo Commercial Vehicles (2004), a minority investment in Spanish bus and coach manufacturer Hispano Carrocera (2005), an alliance with Fiat, a joint venture with Brazilian bus and coach manufacturer Marcopolo and with Thailand’s Thonburi Automotive Assembly Plant Company (2006).

2008 heralded two major events: the purchase of Britain’s icons Jaguar Land Rover and the launch of the Tata Nano, the “People’s Car” for 100,000 rupees or approximately $2,100. Seating 4, the Nano is a mere 10 feet long and has a 4 gallon fuel tank. These events have given Tata Motors its “15 seconds of fame” or … will we see more?

Here is my SWOT Analysis of Tata Motors

Strengths

The Nano is Tata’s iPod. Great engineering and design in a rules-breaking product that has generated global awareness and admiration

The brand is very well established in the economy segment

Tata’s management is strengthened by the collective experience of its partners and acquired companies – this includes general management, marketing, sales and operations

Tata’s buying power is enhanced and leveraged through its size

Tata is making smart acquisition and partnering decisions so far. Local management teams remain in place vs. installing Tata leaders from afar. 1+1 = 3 seems to be working so far

Weaknesses

Tata Motors is not well positioned in the luxury segment. This is not a problem during recessionary times but a lack of diversification can hurt during better times

Most of the automobiles Tata manufactures are based on older platforms

The Company’s manufacturing practices trail competitors

Opportunities

The Nano could sell well in other geographic markets. Expanding markets such as China may find the Nano just the answer

Jaguar and Land Rover provide Tata with an opportunity to establish itself in the luxury segment

Threats

Powerful competitors for the luxury market including Honda, Toyota, Ford and Mercedes-Benz are beginning to push into the Indian market

Tata’s competitive price advantage will be under pressure as environmental regulations are tightened

Rising material costs will create pressure to increase prices

There is a trending rise in diesel fuel costs which will hurt Tata’s line of products

One of the conclusions I’ve reached in my SWOT analysis of Tata Motors is that the company has done of a very good job in the past five years of strengthening its position in the market. It appears to have an excellent opportunity for future success but like all businesses, faces significant challenges.

How far can Tata take the Nano? It will be an interesting story to follow!

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