Ethics refer to the moral principles and values that increasingly determine how business activities are conducted.
Globalisation refers to how ideas, products and technologies are increasingly spread around the world, leading to greater integration between economies and businesses around the world.
Tata Motors Limited (TM), established in 1945, is a $42 billion, multinational automobile company headquartered in India. It has grown by the principles of external growth to create a network of 76 subsidiaries worldwide, such as Tata Daewoo in South Korea and Jaguar Land Rover in the UK, and become Indias largest automobile company. TM produces a wide range of passenger vehicles (PV), commercial vehicles (CV) and utility vehicles to Indian customers, which it produces in 6 production facilities in India.
Green Technologies: In response to the growing social and ethical awareness regarding air pollution, TML makes innovations in low emission engine technologies to maintain a positive corporate image to customers. Tata Cummins Engines promotes durability and eco-friendliness. Lighter due to aluminium.
However, the disadvantage is that developing green technologies requires significant expenditure on R&D and production. Hence, TMs production costs increase significantly, but increasing the price of its vehicles to recoup them would lead to a fall in sales.
Evidence 2: Investing heavily in petrol and diesel efficient engines. They down-sized their engine size by 30%.
Corporate Social Responsibility: TM builds sustainable relationships with its community stakeholders. It portrays an ethical brand image through effective promotion of its CSR actions. For example- it publishes a section on its CSR activities in its Annual Report, which can be downloaded from its official website. Examples of such activities are: sponsored education for 90,000 students in FY 2017, planted 100,000 saplings to raise environmental awareness.
Innovative green technologies and active participation in CSR helps TM satisfy external stakeholders such as pressure groups and environmentally-sensitive customers. TM won the 2017 Annual Greentech Award.
The India Brand Equity Foundation reports that globalization has led to shortened product life cycles for passenger vehicles. Firms must consistently innovate and offer different versions of their products to maintain customer loyalty. This increases the costs of Research & Development for Tata Motors. Tata Motors product development strategy has exceeded expectations, as their recent launch of Tata Tiago increased its passenger vehicle sales by 25.2% and was named the Compact car of the year. However, their net profit margin fell from 0.97% to 0.67%, highlighting the high production costs due to shortened product life cycles. TM adopted an innovative product development strategy to remain competitive, which is beneficial for its customers as they are offered higher value for their money. Yet, the high production costs are a major disadvantage.
Globalization has allowed TM to take advantage of external growth, as it has acquired 76 subsidiaries worldwide including big companies such as Tata Daewoo in South Korea and Jaguar Land Rover in the UK. This provides another advantage that TM has greater access to new engineering and automotive technologies in foreign countries due to integration with its subsidiaries, which it can adopt in its production facilities in India and offer more innovative and efficient mobility solutions.
The future presents challenges and opportunities for the company in equal measure both domestically and internationally. While pitfalls are many, Tata Motors looks well-positioned to capitalize on these opportunities and take on the world.