Tata Motors and the Fiat Auto Joining Forces



Tata Motors and the Fiat Auto Joining Forces

Introduction

The purpose of this paper is to analyze business alliances in Indian automobile industry, using a case of Tata Motors and Fiat India. It details business opportunities in India, which has witnessed increased business investments in recent times. It also discusses among others, the benefits of joint venture to Fiat Car Company in the growing Indian market, the possible long term challenges for the partnership between Tata and Fiat. It evaluates joint venture strategy and proposes recommendations for successful business alliance.

Analysis of India's business Opportunities

India offers a huge business opportunity virtually in all sectors, ranging from IT, financial, real sector, media, automobiles and the like. The country was least affected by the recent global recession and is thus considered to be among the leading enviable destinations for business investments. The country is endowed with huge labor force comprising of engineers, technicians, scientists, business managers and other skilled manpower ranked among the best globally. The country is strategically located, surrounded by oceans with well developed ports connecting the country to the rest of the world, and has a stable and pro business government.

India is characterized by rapid economic growth and industrialization which offers viable business investment opportunities for potential investors. India is one of the fastest growing economies in the world and eleventh largest economy in terms of nominal GDP (The Economist, 2012). Increased economic growth has increased the purchasing power and consumerism of the Indian population which is driving business situation. Business firms can successfully utilize increasing per capita income in the country to enhance their performance. Foreign exchange market in India is relatively stable and conducive for international business investments.

India has a population of over 1.2 billion which provide both skilled and unskilled labor, and also huge market for goods and services. The majority of the Indians fall in the middle class which drive consumerism in the country (Business Maps of India, 2012). English language has been universally adopted and enhances business communication and marketing of goods and services. The country has cosmopolitan culture, following both traditional and western culture; provide opportunities for market segmentation of products and services. India has embraced technological innovation and development and has an excellent IT infrastructure and support. These are used to boost efficiency and productivity driving business performance and competitiveness of Indian business firms. The government of India is business oriented and there is political will for business support from political leaders.

Impact of Joint venture on Fiat

Market size of Fiat India had declined owing to its dealers problems. Lack of spare parts and poor customer service tainted the image if Fiat in the expanding Indian market, as it struggled to compete in the automobile market. The alliance of Fiat India with Tata Motors is likely to boost Fiat's financial position and customer service through transfer of skills from Partner Company. The good will of Tata Motors as well Company's reach is likely to enhance the image ...