Tata Motors Limited is India's is one of the largest automobile companies. The company is earning revenues of approximately USD 8.8 billion. Tata is considered to be the leader in the market of commercial vehicles. The company is considered to be the top three in passenger vehicles. The company has diverse winning products including midsize cars and utility vehicles.
Tata Motors is the world's fourth largest manufacturer of truck. In addition, the company is the second largest manufacturer of truck. According to the Chairman of Tata Group, Ratan Naval Tata, the innovation of Nano is not only for the people of India but the overall transport sector. Tata Nano has been created to provide customers with a safe mode of transportation (Vandome et al, 2010, pp. 18).
Internal and External Environment of Tata Groups
Resources and capabilities we identified as providing competencies for Tata are its skilled workforce, brand equity, the entrepreneurial spirit and strong corporate culture, and the capability to create synergies between units. Tata's resources and capabilities and their implications for the company's competitiveness and economic performance are explained below (Kedia 2006: 41):
Strong Brand Equity
Unified Corporate Culture/ Entrepreneurial Spirit
Strength of TAS, Highly Skilled Workforce
Diversified business units
Conflicts between Tata Sons and its various companies
Competition between units
Lack of integration and coordination
Weak corporate communication
Alliances with foreign firms
Liberalizing, emerging economy, with many new markets with decreasing barriers to entry
IPO to raise capital and reward shareholders
Low barriers to entry in many industries
Entry of foreign firms into UK markets
Uncertainty surrounding share repurchase plan
In UK, the company has a strong brand image and recognition; therefore, the company has many opportunities to leverage its strong brand equity and financial resources to enter new markets and industries. In addition, the government has introduced a series of drastic reforms and liberalized its government owned and controlled economy. Therefore, it has become easier for the company to expand its products and enter into new markets in almost every sector of the economy. Further, it has given the company a significant and tremendous advantage over other companies in various industries. However, it is also observed that government reforms in the country have also lowered the barriers to entry for new companies that have increased competition for the Tata group of companies (Lala 2007: 70).
As more companies are flooding into the country, it threatens the market share of Tata companies. Therefore, the world is globalizing rapidly and the economy is liberalizing. For this purpose, Tat group of companies is forced to consider its strengths and weaknesses for analyzing its companies and subsidiaries and their related industries. Also, the company is evaluating its threats and opportunities because of the changing global economy (Fisman et al. 2004: 18).
Rationale behind Ratio Analysis
In order to asses any company, financial statement analysis in general and ratio analysis in particular are the first step in the process. These ratios are calculated and compared to some benchmark figures which can be forecasted results, historical ...