M Business 5th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell

Exercise 4

Although operating internationally can create a strategic advantage, it can also result in increased costs and fierce competition. This is something that Indian automotive manufacturer Tata Motors knows all too well. Despite operating two successful luxury car brands-Jaguar and Land Rover-the Indian carmaker has struggled to introduce a successful vehicle into its home market. In 2008, the company introduced the$1,600 Tata Nano, a small vehicle marketed to budget-conscious consumers. Although the low price tag was supposed to position the stripped-down car as an alternative to inexpensive motorcycles, consumers quickly labeled the car as cheap, unsafe, and unfashionable. During the same period, Tata's international competitors introduced "new" car models in India that they currently sold in other countries. Unlike its competitors, Tata did not have a vast variety of car models that could be quickly rebranded or used as a template for future designs. This left one option for Tata to improve its competitive position-spend years completely designing a new car. Five years after the introduction of the Nano, Tata finally launched the Zest, a compact sedan that costs around $10,000. While its introduction is a step in the right direction, Tata Motors knows that it will need to continue designing new cars if it wants to be globally competitive. The Bolt is the newest car in Tata's pipeline and was introduced in2015. Both the Bolt and Zest feature the same engine, but the Bolt is a hatchback model that is marketed more as a compact sports utility vehicle. Tata Motors's global sales in passenger vehicles was down 1.11 percent from a year earlier, while sales of its luxury brand, Jaguar, rose 2.44 percent during the same time period. According to a Forbes estimate, the company's premium Jaguar Land Rover division accounts for 95 percent of its current valuation or sales. 8
If Tata abandoned its domestic car strategy and focused on the premium segment, how would this affect international sales?