ii
Abstract
The purpose of this research is to investigate the current alliance between Tata
Motor and Fiat Group within the Indian context, in order to understand what the
reasons behind this successful cooperation are. In addition, the research aims to
determine the feasibility of a co-branding strategy between the 2 companies.
Throughout the gathering of secondary data the research, various concepts
relating to alliances and branding have been critically evaluated: Joint Ventures,
International Joint Ventures, Knowledge Acquisition, Co-branding and Brand
Personality.
International Joint Ventures, as a part of alliance strategies, has been discussed
to identify the criteria that determine a successful recipe for the collaboration of
2 distinct firms. Furthermore, co-branding was discussed to identify an
appropriate model to apply to the case study. No solution has been found to this
discussion, only that each alliance strategy as well as co-branding strategy is
„case sensitive‟ and therefore situation-specific. Whatever circumstances the
organisation finds themselves in, they need to carefully evaluate the market and
partner they are about to “marry”.
There are, however, certain empirical factors that both firms can consider before
entering such alliance: corporate affinity, vision, compatibility and knowledge
transfer.
Primary data was gathered through employing a qualitative research in the form
of two main interviews, supported by a preliminary piloting phase. Each
interview represented another company (Tata Motors and Fiat India) and
consisted of one participant each.
The aim of the in-depth interviews was to obtain insightful knowledge regarding
the collaboration between these two firms as well as provide the study a glimpse
at the feasibility of co-branding these two brands in the future.
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This was tested by cross-referencing the two subjects as well as proposing
possible scenarios to the interviewees.
The findings of the in-depth interviews were compared to the literature review as
well as the information gathered through previous secondary data research
(company press releases, articles, company profiles).
These results showed the discrepancies primary and secondary research. More
specifically, the positive feasibility of a co-branding effort, due to the favouring
circumstances of their collaboration in the Indian Market. However, both
companies deny an interest for such strategy, clearly stating they currently
support the importance of their core brands.
The recommendations took both primary and secondary research into account;
therefore it is recommended to business strategists to consider the affinity
between two firms rather than the monetary benefits, since the first will bring
greater advantages to the collaboration.
A positive personal and corporate affinity between the two partners is likely to
lead to an increase in the productivity and consequently market position. Also,
the benefits of the collaboration need to be clearly and efficiently communicated
to the consumers.
Furthermore, the feasibility of a co-branding strategy does not always translate
in action, since it does not always represent an attractive solution for the
companies involved.
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Chapter 1 Introduction
1.0 Introduction
The topic of this dissertation is a result of the authors‟ interest and personal
background.
Having studied in a highly multicultural academic environment, where students
are exposed to a large cultural variety with particular regards to the Indian
culture, the author began to take an interest for this particular Asian culture.
Throughout his academic year in Scotland, the author has had the opportunity to
work with various Indian students and discover a strong affinity with his own
culture (Italian), as well as a great fascination for the potential Italian-Indian
collaborations.
The author initially thought to develop the study around the analysis of cross-
cultural communications between 2 major companies collaborating. However
after several meetings with his supervisor he decided it would be best to narrow
the investigation to the current study. Focusing his attention on a subject that
reflected not only the essence of how to conduct business in foreign countries,
but also offer a deeper insight into the culture and strategy of Joint Ventures.
This is the motivation behind the decision to combine the research of two main
topics: International Joint Ventures and Co-branding. More specifically the JV
and feasibility of co-branding Tata Motors with Fiat Group.
1.1 Aims of investigation
This dissertation aims to study and comprehend the nature and future of the
alliances between an Indian and an Italian company: Tata Motors and Fiat India.
In essence, the scope of this investigation is to identify the company‟s
perception and opinions of the current JV, between Tata Motors and Fiat India,
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as well as analyze the feasibility of a co-branding effort between the 2 brands in
the years to come.
A certain regard is also dedicated to underlining the affinities that these two
companies share, given the authors‟ belief that this factor may somehow
facilitate a positive outcome of such collaboration.
Moreover, the intention behind such investigation is also to advise industry
leaders as well as business strategist on the possibility to further develop an
already strong bond between these two companies.
In light of the increasing importance the Indian economy and the Indian
automotive market is assuming on the global scenario(Goldman Sachs 2005).It
would appear appropriate to develop an extensive study regarding this matter.
A strong bilateral collaboration would enhance the mutual development of the
companies, which would extend beyond national, international as well as
industry boundaries. Furthermore, considering these circumstances the author
will explain the potential benefits throughout the study.
1.2 Objectives of investigation
In order to pursue this investigation, three main objectives have been set.
1) To determine the current awareness and perception amongst Indian
consumers of the alliance, according to FIAT and Tata.
2) To examine the terms and dynamics between the 2 companies since the
IJV.
3) To identify the feasibility of a Co-branding strategy, between Tata Motors
and Fiat India.
The author will offer an explanation as to why these particular objectives were
chosen in the Data Analysis (Chapter 5).
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1.3 Structure of Dissertation
The dissertation has been divided into five main sections, which will be explained
in the following subsections.
1.3.1 Market Overview
In this first section the author will initially offer an overview of the Indian market
and then move on to offer an overlook of both companies: Tata Motors and Fiat
India. This has been done in order to offer the reader a better comprehension of
why the author has chosen these two companies. This section will also offer the
reader an insight into how these companies operate and their respective
business strategies.
The investigation will prove how their affinities with one another as well as
shared production lines are just some of the reasons why they have a long way
to go together.
1.3.2 Literature Review
The literature review will compare and contrast existing literature on the topics
of interest for this investigation. It will analyze previous work from academics
and professionals, regarding Joint Ventures, International Joint Ventures,
marketing knowledge, knowledge acquisition as well as co-branding. This section
will help the reader obtain a better understanding of the arguments that will be
discussed throughout the study, providing the tools to fully comprehend the
investigation.
1.3.3 Methodology
The third part will explain the methods used to collect and analyze the
qualitative primary data, providing the reader with justifications into why certain
methodological choices were made and how the results have been re elaborated
to create a comprehensive study and analysis of the investigation.
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Furthermore the author will explain how he has chosen to develop the questions
asked during the interviews and why open ended in-depth interviews were
chosen for the collection of primary data.
1.3.4 Findings and Data Analysis
In this section of the study, the author attempts to examine, analyze and
compare the findings of the primary data in order to offer conclusive deductions
of the information gathered. The collection of such information will be offered
though the coding of the two main interviews.
The secondary data collected in the literature review will be used to further
develop the analysis of the findings.
A transcription of the first interview has been written so to keep track of the
coding done by the author. A summary of the notes from the 2
nd
interview is
also available in the appendix.
1.3.5 Conclusions, Recommendations and Future Research
This part of the dissertation offers the reader a summary and synthesis of the
key findings of the research. These include a combination of the relevant
theories from the existing literature and the key findings of the qualitative
research (interviews).
Moreover the author will discuss certain topics by offering a personal insight into
the conclusions of the investigation, thus these arguments will not necessarily be
supported by raw data but will instead be a personal opinion regarding the
results of the research.
Recommendations will be given to marketers on how to maximize the outcome
of this International Joint Ventures, taking example from the study.
Moreover this section will discuss the current limitations to the investigation that
may have influenced the final outcome of the findings of this investigation.
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In this final section the author will also suggest further research of particular
arguments, which may be of interest to academics or professionals, in order to
obtain a greater understanding of the related topics.
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Chapter 2: An Overview of the Indian market: Tata
Motors and Fiat India
2.1 The Indian Automotive Industry
The time when the Indian Automobile market was dominated by the Ambassador
car or the small Fiat is only a far memory nowadays.
The liberalization of the Indian economy in 1991 finally allowed the flow of direct
foreign investments and has brought a noticeable economic boom as well as a
slow but steady development of the national infrastructures (Nirupam and Sachs
2001).
The combination of the two factors, have developed a massive and very
attractive Automobile market where Major global players of the Automotive
Industry play a significant role (Chidambaram 2006).
The Indian market is currently defined by a highly competitive environment,
where various car makers compete for what some say, may soon become the
third largest car market of the globe. It is estimated that by 2025, India will be
up there, right behind USA and China as one of the biggest automotive markets
of the globe (Goldman Sachs 2005).
Currently the Asian auto producers, such as Suzuki and Tata seem to dominate
the Indian market. Nonetheless this situation is likely to change as the nation is
developing, not only economically but culturally, towards a more Westernized
society (Ramesh 2006).
The automotive industry in India grew at a computed annual growth rate (CAGR)
of 11.5 percent over the past five years, as stated in the Economic Survey 2008-
09 tabled in parliament on 2nd July‟09 (Singh and Geetika 2008).
The industry also has strong consequences on the economy, due to its deep
forward and backward linkages with several key segments of the economy,
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which have made this industry one of the back bones of the nation
(McKinsey2007).
Even when the industry, was plagued by the economic downturn and the
Western markets that suffering from a major shrinkage, due to the recent credit
crisis, it still managed to grow by 0.7 percent in the 2008-09 period, with
passenger car sales registering 1.31 % growth, while the commercial vehicles
segment increased by a staggering 21.7 %(Singh and Geetika 2008).
It is obvious how these numbers are in clear contrast with the trend of Western
markets which have only seen a massive contraction during the same period
(World Economic Forum 2009).
As it stands the Indian Automobile industry is estimated to be worth a
remarkable US$ 34 billion and occupies the 12
th
place on the global list of
automakers (Ramesh 2006).
These numbers have already caught the eyes of various global players which
have rushed to enter this strategic market. From 1991 onward the market has
been becoming increasingly crowded, in particular with Asian rivals. However the
market has seen the entrance of several other Western rivals in the last 5-10
years, such as; Volkswagen, BMW, Skoda, Seat, Renault and Ford (Singh and
Geetika 2008).
The Commercial Vehicle market is catered by several global players such as Tata
Motors, Ashok Leyland, Volvo, Force Motors, and Eicher Motors. However even if
there is a high level of competition, this segment is without doubt dominated by
the local player, Tata Motors (Data Monitor 2009).
In the Passenger Vehicle market, the major players such as Volkswagen,
Hyundai, Mercedes, BMW, Maruti-Suzuki, Yamaha, Renault, Fiat and Tata, have
not left any stone unturned. They have been strategically launching themselves
into aggressive business initiatives such as merger and JV activities with their
Indian counterparts (IHS Report 2009).
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Examples of this strategy can be seen in the JV of Maruti with Suzuki, Hero with
Honda, Tata with Fiat, Mahindra with Renault, and Force Motors with Mann.
These strategies are being pursuit to benefit from a greater understanding of the
local market that Indian companies have in the hope they will pass this
knowledge on to foreign partners (Singh and Geetika 2008).
As it stands the automobile Industry contributes for 5% of the GDP and the total
units being produced annually has gone from 930 k units in 2003, to 2300 k
units in 2009(Singh and Geetika 2008). Moreover this industry is estimated to
be worth an impressive US$ 145 billion by 2016, having seen an annual increase
of exports of 40% over the last 8 years.
All the above stated factors make this country a highly attractive market, from
which we can expect much in the years to come. The high competition and
significant importance of it, in the authors‟ opinion it will offer the world a new
approach as well as propose new dynamics to the automotive industry.
In essence, the Indian Automobile Industry is determined by:
- 9% growth of GDP(22% un-official)
- 11.5% growth over last 5 years
- Estimated to be 3
rd
largest car market by 2030
- Currently worth $34 Billion
- Estimated to be worth $145 Billion by 2016
- High competition, with a dominant role by Tata in the commercial vehicle
segment
- 40% increase of export over the last 8 years
- 2300 K units produced in 2009
The author would like to discuss a certain limitation of the previous facts
regarding the Indian automobile market. Regularly when an industry is analyzed
it would be recommendable to apply a more academic tool of analysis, such as
Porter‟s five forces (Deresky 1999).
However since this investigation is not trying to determine if it would be feasible
to enter the market or to assess the attractiveness of it, but only providing
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information to the reader, the previous subsection, is to be considered an insight
of the current market based on reliable information gathered and not re-
elaborated.
2.2 Tata Motors: A future in JVs
The following information has been provided to offer the reader a greater
understanding of the aggressive strategy Tata motor has adopted in the last two
decades.
Tata has developed a particular interest for Joint Ventures rather than
acquisitions in the last years; however it has shown no hesitation to acquire
when necessary. Tata Motors, as well as the author, believes that this business
strategy has determined the various successes it has accumulated over the last
years and hopes that the same will happen with its recent Joint Venture with Fiat
(Singh and Geetika 2008).
Tata Motors is one of the leading automobile manufacturers in India. It produces
trucks, buses, utility vehicles and passenger cars. The company has various
assembly operations in India, South Korea, South Africa, Turkey, Sri Lanka and
Russia. The company‟s manufacturing base is spread across the nation and is
supported by a nation-wide dealership, sales, services and spare parts network
comprising over 2,000 individual locations. The car dealerships consist of 1000
units while the other 1000 is divided amongst servicing, sales of spare parts and
independent sales units (Data Monitor Tata 2009).
Tata Motors was established initially as Tata Locomotive and Engineering
Company (TELCO) to manufacture steam locomotives in 1945. After various
foreign collaborations for the production of commercial vehicles, and several
years later Tata launched its first passenger car in 1991(Tata Siera) and
changed its name to Tata Motors (Data Monitor Tata 2009).
Two years later, the company signed a JV agreement with Cummins Engine to
manufacture high horsepower and emission friendly diesel engines.
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