05-06-2013, 02:36 PM
Analysis of Importance of Executive Development Of TATA MOTORS
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INTRODUCTION
Tata Motors, leader in commercial vehicles, is India's largest automobile company with revenue of USD 14 billion in 2008-09. Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange and has operations in the UK, South Korea, Thailand and Spain. Tata Motors started operations in 1945 and entered commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz that lasted till 1969. In more than six decades of its operations, it has grown both organically and inorganically. In 2004, Tata Motors bought Daewoo’s truck manufacturing unit in South Korea followed by the acquisition of the Hispano Carrocera in South Africa. In 2008, it acquired prestigious brands Jaguar and Land Rover from Ford Motor Company. This acquisition was important since before that Tata Motors was considered as a formidable global player at lower market segment only.
Executive Development:
Executive development is the whole of activities aimed at developing the skills and competencies of those that have executive positions in organizations. While it is typical to find organizations that have dedicated corporate training and development people and processes, it is not always the case that an organization will have a dedicated executive development set of activities. In some organizations, there is a separate executive development is handled as one of many activities by the larger corporate training group, and in yet other scenarios there is no executive development activity to speak of.
In contrast to other corporate training and development activities, which have as their core purpose to build tactical skills for employees, executive development plays a different role for the organization. Indeed some executive development is conducted for the purpose of building tactical skills, yet executive development is also used to evaluate future potential future executives as well as a mechanism for the CEO and the executive team to cascade their strategies, goals and even elements of the culture to the rest of the management team and ultimately the organization. In the best of cases, executive development not only helps an organization execute its key strategies, it can also help provide input to the strategy creation process. In this way, executive development is much more strategic than typical corporate training and development which is used for most employees of an organization.
CORPORATE STRATEGY
The current strategy of the Tata Motors can best be summarized as ‘Disruptive Innovation’, wherein it has offered lower priced products and surpassed the market expectations. Its two latest offerings have further strengthened the Tata Motors position as a leading player. While Ace has been a rage in the market, Tata Nano has taken the world with awe. Much of the practices of Tata Motors, including its customer focus, attributes to the learning and experience of over six decades. Tata Motors that started with a huge success and market demand faced its first product failure in the launch of 1516. With the foreign players entering India, Tata motors that was primarily focusing on High weight commercial vehicles, included LCV in its offering and came up with Tata 407. Tata Motors in the meanwhile was also vying to develop end to end in-house technical competence and thus ventured into engine design by partnering with Cummins. Tata motors continuously faced the problem of overloading by the users and responded by introducing stronger machines.
Corporate Governance
Tata Motors being part of the Tata conglomerate has its philosophy deeply linked to the core philosophy of the Tata group. It has fair, ethical and transparent governance practices along with highest standards of professionalism, honesty, integrity and ethical behaviour. The company gives maximum importance to the value creation and sustainability of all the other stakeholders’ viz. customers, creditors, employees, vendors, community and the Government. Tata Motors have implemented the Tata Business Excellence model which is a part of Tata code of conduct applicable to all subsidiaries of Tata group. The company operates with a strong social conscience and believe in bringing benefit to people’s lives.
Tata Motors strictly follows The Whistle Blower Policy, an extension of the Tata Code of Conduct, which requires very employee to promptly report to the management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of the Company. The Ethics and Compliance Committee who monitors the compliance of the ‘Tata Code of Conduct for Prevention of Insider Trading’ by checking monthly reportson dealings in securities and also decides penal action, if necessary. This is more important since in Indian market Tata brand is synonymous with Trust. CSR activities of Tata Motors covers major areas like environment, energy and water conservation, health, education and livelihood.
TATA-JLR
TATA Motors bought the iconic Jaguar and Land Rover operations from Ford for 1.15 billion pounds in Mar-Apr’08. Tata gained the rights to the Daimler, Lanchester, and Rover brand names. In addition to the brands, Tata Motors also gained access to 2 design centres and 3 plants in UK. The key acquisition would be of the intellectual property rights related to the technologies. However there is a challenge related to the technology changes in the new entity and Ford’s technology will help in the short run and looking at the emerging emission standards hybrid and green technology will be the need of the hour.
Enterprise Process Model (EPM) - Process Management at Tata Motors
When Tata Motors made a huge loss of 500 crores in the year 2000-01, analysts had all but written off Tata Motors fortunes. But TML was determined to bounce back and hence started the process of serious introspection. Three key reasons were identified for the massive loss—a) Lack of customer focus b) lack of process management c) lack of new products and variants. TML had decided the three elements in a systematic manner, the major emphasis being processmanagement.
Tata Motors hence started to adopt the APQC 13 (American Productivity and Quality Center) processes and sub process and hence derive the Tata Business Excellence Model (TBEM, based on the Malcolm Baldrige National Quality Award Process), thus adopting a process oriented approach than merely people oriented approach. This practice minimized the ‘influence of individual employees’ in running the operations. This also entailed the documentation of the processes, which brought about lot of clarity in terms of roles and responsibilities of process owners, inputs and outputs of the processes, in process and end process measures, entities involved and its linkage with the ISO and TS standard system.
Product development
New Product Development would involve idea generation, product screening, concept testing, Business and financial analysis, product development, test marketing and commercialization. An automobile product development cycle is said to be consisting of concept stage (where the car starts), Advance engineering (where the car takes shape), product engineering (where the details are filled in), production engineering (where the car is worked out) and the manufacturing stage (where all comes together)3. Tata Motors Engineering Research Centre in Jamshedpur focuses in upgrading the components and parts with evolution of technology and also is one of the best in determining the needs of a customer and developing a new product to cater to the needs. Tata Nano is one such product from the stable of Tata motors. Besides this centre the Research and development of Tata motors has become international with centres in Spain, UK and South Korea also.
Cost Cutting Techniques
After a rough fiscal year in 2001, Tata Motors realized that the only way to survive this market was to cut down on costs. They started practicing an entirely new way of procuring their supplies and hence gave rise to a unique way of managing supplier relationship. The earlier traditional method that Tata Motors gave the technical specifications to the supplier and the supplier who was successful in acquiring the bid filled up the orders. However under the new system Tata Motors simply provided the output they expected, and allowed the suppliers to be as creative and innovative with their designs, materials, and prices. In other words Tata Motors would simply describe the goal that they wanted to achieve with certain part and the suppliers would supply the parts according their own convenience. For example instead of giving technical specifications for the wind shield of Tata Indica, it would just describe the goal of cleaning the windshield, and let the suppliers come up with ideas to meet those goals in the most cost effective manner, without compromising on quality. This practice led to huge cost savings in raw materials and the Tatas could deliver the cheapest car of the world at just 2500$. By leveraging local design capabilities and avoiding the dependency on high end design systems, Tata Motors has been able to provide low cost solutions in a continuous and efficient manner. Also Tata Motors tried the innovative method of Zero Based Costing. For example initially TML paid for forged components on a cost plus basis, in the new system it paid a price depending on the weight of the forgings.