India's Tata Buys Jaguar and Land Rover
Big cars, little cars, tea bags and steel girders now comprise the portfolio of Indian-owned conglomerate, Tata. By announcing its $2.3 billion purchase of British car brands Jaguar and Land Rover from the American-owned Ford Motor Company, the group has extended its product range to include something for everyone.
In January 2008, Tata launched the world's cheapest car, the Nano, priced at $2,500. At the other end of the scale, Jaguar's XF sports model starts at around $64,000. Activities in India involve creating and servicing the small but rapidly growing vehicle market. Tata's latest acquisitions will increase an international presence, which already incorporates the commercial vehicle operations of South Korea's Daewoo, joint ventures with bus-makers in Spain and Brazil and projects in Germany with Porsche and Volkswagen. It has also developed links in the U.S. with Chrysler.
Tata has reportedly paid Ford just half of what the brands originally cost. It is generally believed that Ford failed to make any profit while it owned Jaguar. The company also sold its high end Aston Martin range last year and will now focus on shifting its core U.S. business from red to black.
Alan Mulally, Ford's president and chief executive, said he was "confident" that the brands would continue to thrive under Tata's stewardship. "Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all," he said.
Chief executive Kant wants Tata Motors to grow globally. India's largest industrialist owns subsidiaries specializing in IT services, power generation, tea production and steel including U.K.-based Tetley Tea and Corus.
According to the BBC, Tata's revenues in the financial year to March 2007 "were equivalent to some 3.2 percent of India's gross domestic product." The group employs almost 290,000 people in 80 countries. As Western countries outsource jobs to India, Indian companies are using their wealth to move outside their own boundaries, driving business growth in more ways than one.
Discussion questions: What do you make of the rise of Tata and this new breed of multinational? What does it portend for U.S. manufacturers? Do you expect a comeback from Ford and other U.S. automakers? Are they capable of the kind of re-engineering necessary to compete in today’s world markets?