Tata Motors Limited: Ratan's Next Step

Abstract

Suitable for MBA, EMBA, and executive education programs, this case uses Tata Motors' move to acquire Jaguar Land Rover (JLR) from Ford to analyze a growth-through-acquisition strategy. It offers a discussion about the firm's overall strategy to acquire instead of growing organically. The case begins when Ratan Tata, chairman of Tata Motors, unveils the world's cheapest car—the Nano. He had challenged the people around him to design and produce something that had previously been unthinkable. Their ability to deliver on such a bold aspiration provided the confidence Tata Motors needed to compete in the international automobile market. Ratan believed he would have to establish a firm foothold in the United States and the United Kingdom to be considered a global contender. His strategy was to become a runner in the bid to acquire JLR from Ford. Establishing a luxury brand would go a long way toward separating Tata Motors from regional automotive firms. Yet Ratan had to think about whether the firm was well positioned to execute the acquisition if it won the bid. Or was organic growth a safer route to the same end? Excerpt UVA-S-0184 Rev. May 9, 2013 TATA MOTORS LIMITED: RATAN'S NEXT STEP On January 10, 2008, Ratan Tata, chairman of Tata Motors Limited (Tata Motors), drove onto the stage at the New Delhi Auto Expo in the world's cheapest car. As he parked next to two other models of the Nano, he thought back on the day several years prior when he had promised the world an affordable car that could be bought for under $ 2,500. At the time, India was an emerging economy that had begun to invest millions of dollars in transportation infrastructure. Ratan saw the influx of roads and new prosperity for Indians as the perfect environment to debut a car that could be purchased by almost anyone. Like his personal hero, John F. Kennedy, Ratan challenged the people around him to design and produce something that had previously been unthinkable. Ratan's ability to deliver on such a bold aspiration instilled in his investors and him the confidence that Tata Motors was capable of competing in the international automobile market. The Nano's production was made possible by a wide range of capabilities within the Tata Group, which, along with Tata Motors, owned 98 other companies operating in 80 countries. Such a diverse and complete range of resources made Tata's future bright. And even as Ratan stood on the stage introducing his accomplishment, he wondered what the next step ought to be to move his company forward. A lifelong interest in automobiles and an appreciation of the Western car market led Ratan to believe that he would have to establish a firm foothold in the United States and the United Kingdom to be considered a contender in the global automotive industry. His mind turned to the ongoing bid and negotiations to acquire Jaguar Land Rover (JLR) from Ford Motor Company (Ford). Establishing a luxury brand would go a long way toward separating Tata Motors from regional automotive firms. Yet he had to think about whether the firm was well positioned to execute the acquisition if it won the bid. Or was organic growth a safer route to the same end? . . .