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Question Answered step-by-step HELP ME TO UNDERSTAND THIS. IF YOU DONT KNOW THE ANSWER JUST PLEASE… HELP ME TO UNDERSTAND THIS.  IF YOU DONT KNOW THE ANSWER JUST PLEASE DO NOT ANSWER, I WILL AUTOMATICALLY REPORT YOU  What were the drivers of JLR’s expansion in China?In what ways can the company profit from this move in the short term as well as in the long term? What are the likely risks that could derail JLR’s plans?What are the strengths of JLR that resonated with Chinese customers thereby driving its growth?Identify the factors that influenced JLR’s choice of entry mode. Outline the advantages and disadvantages (through a SWOT analysis) of the JV with Chery Automobile Co Ltd.What are the key challenges that JLR faced in the implementation of the JV? Was it unique to JLR?Research Exercise: Carry out further research on any of the successful JVs of competitors mentioned in this case and apply that knowledge to articulate how JLR should proceed to ensure success of the JV. Tata Motor’s Jaguar and Land Rover Brands: Competing In China In 2012Gale Business Insights: Global Case Study CollectionAbstractIn June 2008, in one of the most significant deals in the auto industry, Ford Motor’s premium British brands, Jaguar and Land Rover (JLR), were acquired for US$2.3 billion by Tata Motors Ltd, India’s largest automobile company. Contrary to industry expectations, within two years Tata Motors succeeded in turning JLR around and thereafter, JLR started driving growth of the parent company. While the United States and Europe, JLR’s major markets, were reeling under the effects of the global recession and Eurozone crisis at the end of the first decade of the 2000s; the emerging market of China became a key driver for the company. As part of a broader strategy to capture greater market share of the world’s fastest-growing market for luxury cars, in March 2012 JLR finalized a Joint Venture (JV) agreement to manufacture and sell vehicles with China’s Chery Automobile Company Ltd. However, JLR’s major competitors-Audi, BMW and Mercedes enjoyed early-mover advantages and had posted significant sales volumes.This case explores JLR’s market expansion strategy, possible implementation issues, competitive landscape, and human capital challenges facing the British subsidiary of an Indian company, as it was poised to implement a Joint Venture with its Chinese partner.This case was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. Information was gathered from corporate as well as public sources.Learning ObjectivesAfter analyzing this case study, students should be able to do the following: Understand what is meant by globalization in terms of (i) globalization of markets and (ii) globalization of productsOutline how globalization creates opportunities and challenges for a Multinational Enterprise (MNE)Recognize the appropriate mode for entering a foreign country through i) export, ii) licensing, iii) wholly owned subsidiary, or iv) a Joint VentureUnderstand the complexities in managing an international business due to (i) different countries having different market characteristics, (ii) wider range of problems confronted, and (iii) requirements to work within the limits imposed by the eco-political context IntroductionIn June 2008, Jaguar and Land Rover, two British marquee car brands, were acquired by Tata Motors Ltd, India’s largest automobile company with revenues of US$8.85 billion and net profit of US$538 million for the fiscal year ended 31 March 2008 (FY2007-08). Tata Motors was the country’s market leader in commercial vehicles and among the top three in passenger vehicles. It also ranked as the world’s fourth-largest manufacturer of trucks and the second-largest for buses.Jaguar and Land Rover were under-performing vehicle units under Ford Motor Company’s Premier Automotive Group (PAG 1) which reported a loss of US$344 million in 2006. While Ford remained in the red in 2007, 2 PAG was profitable recording a full-year pre-tax profit of US$504 million. 3 Jaguar and Land Rover businesses were seemingly on the threshold of recovery, with their combined operations accounting for profits in the last quarter (October-December) of 2007. Nevertheless, by then Ford had decided to divest these two businesses in order to focus on its core Ford brand.The US$2.3 billion deal included acquisition of brands, plants, and intellectual property rights. This gave Tata Motors access to premium car brands with superior design and engineering capabilities, resulting in a diversified product portfolio and global footprint. However, industry experts questioned the fit as the premium Jaguar and Land Rover (JLR) 4 brands were positioned well above the Indian company’s utility vehicles, low to mid-range passenger cars, and commercial vehicle offerings. Given that Tata Motors had no experience with luxury brands, the key question then was whether it could run JLR profitably.This was compounded by the timing of the acquisition, which coincided with the global financial crisis at the end of the first decade of the 2000s. Tata Motors had taken a 15-month US$3 billion bridge loan to finance the acquisition, which was extremely difficult to refinance due to the credit crunch at the time. Tata Motors had to resort to rights issue, divest its stakes in group companies, issue secured non-convertible credit enhanced debentures, and roll over part of the loan by extending the final maturity to December 2010.The auto industry worldwide was severely impacted by the subsequent global recession, dwindling vehicle financing, and high fuel prices. JLR was particularly hard hit when its traditional U.S. and European markets posted a sharp drop in demand. In the 10 months prior to March 2009, sales volumes plunged 32% compared same period a year earlier) 5 as JLR led Tata Motors to its first loss since FY2000-01. JLR reported a loss after tax of £306 million (US$504 million) 6 bringing Tata Motors to a consolidated loss of INR25.05 billion (US$520 million) for the year compared to net profits of INR21.68 billion a year earlier. 7,8Tata Motors focused on turning around JLR, while keeping operations autonomous in order to retain JLR’s identity in the marketplace, as well as maintain the company’s design and technical independence. To reduce costs Tata undertook a comprehensive exercise related to manufacturing, inventory, manpower and sourcing; improve efficiencies in IT and support systems; and exercise tight control over cash flow and improve working capital. 9 At the same time, Tata Motors invested £700-800 million annually to fund capital expenditure, operations, and product development at JLR. 10 To achieve higher returns, the time frame of new product launches was compressed and high-margin models were launched. 11 As the global economy improved, the auto industry also JLR became profitable during the quarter ended December 31, 2009, with net profits of £55 million-the first time in the black since the takeover. 12 Over the following years, JLR embarked on a growth trajectory by targeting emerging markets, with primary focus on market expansion in China.Jaguar Land Rover: Company BackgroundHeadquartered at Whitley, United Kingdom, JLR’s business was built around two worldwide acclaimed brands: Jaguar, which manufactured premier manufacturer luxury saloons (sedans, in North America) and sports cars and Land Rover, a renowned manufacturer of premium 4-wheel drive vehicles. The company’s manufacturing facilities were all located in the United Kingdom, including three production plants 13 and two advanced product design and engineering facilities. Sales were conducted principally through franchised dealers and importers with 78% of Land Rovers exported to 169 countries and 70% of Jaguars exported to 63 countries in 2012. 14 The company’s principal geographic markets (on retail basis) were the United Kingdom, the United States, China, Europe (excluding Russia), and the Asia Pacific. During FY2011-12, JLR collectively received over 145 awards which bore testimony to JLR’s corporate branding and value proposition driven by designing great products, creating an outstanding customer experience, and environmental innovation. 15As of March 31 2012, JLR’s claimed a global workforce of 22,650, including agency staff of 6,337. 16 As a wholly-owned subsidiary and integrated business division of Tata Motors, JLR was thriving as a result of heavy long-term investment by the parent company. Tata Motors announced in early-2012 that it would increase investment in JLR to some £1.5 billion annually over the next five years. 17 This would support ambitious growth plans for strong product lines with the launch of new models, new derivatives, and new engines, along with investment in infrastructure, technology, and human capital. JLR soon followed this with the announcement that it would add 1,100 new jobs and establish a new engine plant in the United Kingdom. See Table 1 for JLR’s retail volumes and key financials (2008-2012). Computer Science Engineering & Technology Software engineering Share QuestionEmailCopy link Comments (0)