Question

Headquartered in Mumbai, India, Tata Motors is one of the largest multinational manufacturing companies.
It manufactures commercial and passenger vehicles—cars, trucks, vans, coaches, buses, construction
equipment, and military vehicles. Tata Motors has several auto manufacturing and assembly plants,
and research and development centers located across India, including in Jameshedpur, Lucknow, and
Pune. With a solid base in the country, Tata Motors has also built its operations in Argentina, South
Africa, Thailand, and the United Kingdom. In 2014, the company was ranked the world’s 287th biggest
corporation in Fortune’s Global 500 list. Marketing its products through dealership, sales, services, and
spare parts network, the company produces well-known models like the Nano, Safari, Aria, Zest, Bolt,
and Venture brand names, as well as Xenon XT brand name.
For a fourth straight quarter, the decline in China sales of Jaguar Land Rover (JLR), a subsidiary
of Tata Motors, dragged down the company’s profits. Jaguar’s net income fell 49 percent to 27.7 billion
rupees ($434 million) in the quarter ended in June, 2015. Its retail sales plunged 33 percent in
China that quarter, which lead to a 1 percent decline in worldwide deliveries. The luxury unit has cut
its sales targets and prices in China as all automakers brace for a slowdown in the world’s biggest auto
market. Tata Motors’ earnings for the second quarter of 2015 were also hurt by a prolonged slump in
sales of its light commercial vehicles in India. Tata’s revenue fell 5.7 percent to 610.2 billion rupees.
Sales at the luxury unit declined 6.5 percent to 5 billion pounds. Shares of Tata Motors stock has
slumped 29 percent over the past six months making it the second-worst performer on the S&P BSE
Sensex, which has lost 1.7 percent in the period. Sales of the Tata’s Evoque sport utility vehicle were
also lower in China.
The company’s vision statement, posted on the corporate website, states that by 2025, the company’s
commitment to delivering improved quality of life will be available to 25 percent of the global
population, making Tata one of the 25 most admired global brands and one of the most valuable companies
in the world. Its mission is to use its leadership experience, long-term value creation, and the
trust it has built to improve the quality of life of its consumers around the world.
Questions
1. How has the value of the Indian rupee changed compared to China’s yuan and the US dollar in
the last six months? How does this impact Tata?
2. In the About Us section of the company’s website, go to the corporate governance section and
click on the values and purpose link. Evaluate Tata’s vision and mission statement mentioned in
this section. Discuss the potential implications of Tata’s vision and mission on the firm’s competitive
advantages.

Answer 1

Answer 1 : Value of Indian rupee against Chinese Yuan is almost stable throughout the last six months and as on 25/12/2018 the exchange rate between Indian rupee and Chinese Yuan is 10.164 INR = 1 CNY and almost six months before on 29/06/2018 the exchange rate was 10.3352 INR = 1 CNY, a very minor appreciation of Indian currency from the June,2018 levels.

Whereas Exchange rate between Indian rupees and US Dollar as on 25/12/2018 is

70.1241 INR = 1 USD and exchange rate as an 29/06/2018 was 68.4465 INR = 1 USD and it shows Indian rupee is depreciating against USD and it had even touched 74.3407 INR= 1 USD as on 09/10/2018

Its impact on TATA should not be negative in both of the cases since in case of China exchange rate is stable but due to slow down in Chinese economy and decline in its GDP growth is hurting TATA's sales in China and also trade war between US and China is hurting TATA's sales in China due to uncertainty in global trade behavior and fear it has caused on Chinese economy.

Impact of Indian currency's depreciation against USD should be a positive sign for its exports to USA and its positive impact on TATA's exports to USA but due to depreciation in Indian rupee foreign investors are pulling out their money from Indian economy and further due to protectionist policies of US President Donald Trump and increase in import duties on steel and aluminium and trade war between US and CHINA has created a uncertain economic situation in the US and world export sales which is impacting TATA's exports to USA and this is also causing decline in its sales.

2 Tata's vision and mission will positively impact its competitive advantage because its vision and mission is to improve the quality of life of its consumers and training to to its human resource/its employees, its partners based on mutual respect and its care of the environment which means it takes into count effect of its activities on environment and the society as a whole and it is committed to improve the same and it is also committed towards excellence, high quality and meritocracy in its products and services and all these philosophy, vision and mission will put positive impact on its employees, consumers, its partners and the society as a whole which will impact its future growth positively.