These forces determine the competitive position of organizations in the markets of their operations. We hereby introduce a brief introduction about this model and then determine the competitive positioning of Ford Motor Company and Tata Motors with the help of this model. One important observation that Michael E Porter made about these forces is that if these forces are intense then almost no company gains distinct competitive advantages and earns attractive returns on investments.
These forces determine the competitive position of organizations in the markets of their operations. We hereby introduce a brief introduction about this model and then determine the competitive positioning of Ford Motor Company and Tata Motors with the help of this model.
One important observation that Michael E Porter made about these forces is that if these forces are intense then almost no company gains distinct competitive advantages and earns attractive returns on investments.
The threats of new entrants and substitute products and services are prevalent in industries where major innovations are underway that can potentially cause creative destruction of the existing products and services.
New entrants always enter the markets with a desire to capture market shares quickly and hence tend to put lot of pressure on product pricing thus capping the profit potential of the market. Hence, the existing players in the market benefit out of the barriers to entry of new players that essentially comprise of ' supply and demand economies of scale, supplier switching costs to customers especially when the customers have invested heavily in solutions compliant with supplier's technology or are very much used to the samecapital requirements, access to distribution channels, restrictive government policies, etc.
The other two balancing forces are bargaining power of suppliers and buyers.
The bargaining power of buyers shall be lesser if competition is less given that customers will not have many choices for purchasing products.
However, the bargaining power of suppliers is higher in case of lesser competition given that lesser competition will not develop the supplier network and their mutual competition and hence they will tend to have more bargaining power.
Following is the image of original sketch of the matrix drawn by Ansoff himself: Ansoff Matrix A simpler form of Ansoff product marketing strategy is presented below: They have developed a globally centralized supply chain system that has supported their primary competitive advantage effectively.
The current market downturn has definitely affected their revenues and the higher cost of supply chain is hurting them. But with the relatively safer strategy of targeting new markets for existing product lines has kept the interest of their investors alive irrespective of their dismal financial performance.
Moreover they have sold off the non-performing assets like Jaguar and Land Rover companies to reduce the burden of operating costs. It is due to their confidence on their low risk strategies that they have refused to avail aid from government and are expecting to break even by If things favor them, they have the potential to become the next Ford of the world but if the happenings do not favor them like the Singur crisis witnessed by themthen they can suffer losses that will take decades for them to repair.
The balanced scorecard is presented in the figure below The Balanced Score Card System for Vision and Strategy The strategy is based on four primary factors that balance each other in a strategic framework ' Customer, Financial, Internal Business Process and Learning and Growth.
The Customer and Financial perspective is the way the company appears to the customers and the Stake Holders whereas the Internal Business Processes and Learning and Growth perspective is the way the company appears to the internal employees and managers.
The internal business processes and learning and growth perspective has been quite sound in both Ford Motor Company and Tata Motors but the perspectives have been entirely different.
Ford Motor Company has focused on localization of products at a global platter whereby they keep their parts supply chain centralized and assemble cars as per the local requirements of a region after studying the needs. This has resulted in they able to deliver different variants of cars as per the requirements of different countries using the same spares supplied by their centralized supply chain vendor.
Hence, the internal learning and growth of Ford Motors has been very comprehensive with localized knowledge captured from various countries and the benefits of global knowledge and experience effectively mixed with the localized knowledge.
Tata Motors appear to be far behind this strategy as compared to Ford Motors but they appear to be taking the same path towards globalization. They have developed Nano as per Indian conditions to start with but are ready to match the localized conditions required at the global level ' like the stringent emission norms of Europe.
They already have their small trucks Tata Sierra operating in UK which must have developed their knowledge on UK and European market requirements. Moreover, after the acquisition of Jaguar and Land Rover their knowledge will be strengthened further. They already have the basics in place to apply the knowledge in Nano and it may be just a matter of time that they will be able to achieve compliance for Nano against the regulations of Europe.
Capital budgeting is carried out to analyze the returns on investments within a specified time period from a project such that the same can be accepted or rejected by the stakeholders.
Capital Budgeting decisions have always been a major challenge for corporate management and investors from the perspective of the most appropriate method for carrying out the ROI forecasting and measurements.
In fact the widely accepted decision criteria use an old empirical generalization of 'Accept-Reject' criteria established whereby the project is either accepted or rejected based on its value addition to the firm, the investors and to the shareholder wealth.
Beranek showed that the cost of capital of a project is marginalized to maximize the investors' money and shareholders' wealth by including rate of interest, the required rate of return to stock holders, corporate marginal income tax rate, debt to equity ratio and lifetime of the proposed project and the weighted average cost of capital.
In another paper written by Beranekhe claimed that the Net Present Value rankings of the investment opportunities do not match equity market value unless the projects are of one period duration or are solely financed by equity only.
He established the widely used criteria by financial analysts that a project should be accepted only if its Present Value is greater than zero and recommended that the project among multiple mutually exclusive projects having highest Present Value should be chosen for best ROI.
Overall, the Net Present Value has remained the most trusted method to evaluate capital budgeting decisions due to its advantage of evolving the time value of money the fluctuations in value of money as time passes. Systematic risks are related to factors that are prevalent in a country, region or at global level and are external to the control of an organization.
Examples of Systematic risks are ' market risks, political risks, currency fluctuation risks, oil prices fluctuation risks, etc. Systematic risk assessment is important for the listed companies to effectively price the equities, determining the cost of capital and effective evaluation returns from projects.
The following presents a brief on valuation of Systematic Risks when evaluating the return on investments. The systematic risks of common stocks of an organization can be evaluated using variance in multiple factors that are closely observed by market experts.
Thompson enumerated the variance in the following factors that market experts observe to evaluate the systematic risks pertaining to the common stocks of a firm: The management of an organization try to smoothen different inputs and outputs to reduce environmental risks which are reflected in these variance analysis and hence they can be logical indicators of systematic risks pertaining to the common stocks of an organization.
To analyze the systematic risks more analytically, Thompson presented the following mean and trend forms to explain the Systematic Risks to Common Stocks: These risks are hard to predict because they depend upon the factors that are internal to the organization and are not linked with the market risks.five force of tata motors 1.
sdm college of engineering and management department of management studies report on porter five force model of tata motors submitted to: dr saleem sonnekhan submitted by: deepa m suraj p mruthyunjay h s naveen h rahul.
Porter’s 5 force model for the automatic vending industry Porter’s 5 force model is framework for industry analysis that determines the competitive power and appeal of a market.
These ‘ 5 forces ’ show a company’s ability to serve its clients and make a profit. Porter’s five force analysis is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in Michael Porter’s Five Forces have become a standard framework for the assessment of profit potential.
Porter S 5 Forces Analysis Of Tata Motors. Porter’s Five Forces – Competitor Analysis Michael Porter’s five forces is a model used to explore the environment in which a product or company operates to generate competitive advantage.
Porter’s Five forces analysis looks at five key areas mainly the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes. Description: Michael Porter's Five Forces Analysis of TATA Motors • The rivalry between existing sellers in the market.
• The power exerted by the customers in /5(9). Details of porter's five forces with the automobile industry and empasis on Tata motors on the whole.