TATA MoTOns ACQUTRIIS THE JAGUAR ICON

TATA MoTOns ACQUTRIIS THE JAGUAR ICONOn March 26, 2048 India’s Tata Motclrs linalized a deal toacquire ihe Jaguar and Land Rover luxury brands from Fordfor $?.3 billion. Tata Motors has built vehicles lor more than50 years, though mainly trucks. Earlier in 2ff)8 Tata Motors hadrevealed plans to launch the Tata Nano, a budget $2,500 (txelakh rupee) compact city car. Tata Motors is part of the TataGroup, one of India’s biggest conglomerates. Some of Tata’sother businesses include luxury hotels (‘Iaj Mahal in Mumbai,Pierre in New York), tea (Tetley), steel (Corus), insurance, andmobile phone service. The company is highly respected inlndia.Not surprisinglyl n’rany people were very skeptical about themerits of the deal and questioned whelher an Indian companywas really the best steward for a luxury marque like Jaguar.Some speculatcd that the deal was motivatcd try Thta’s desire toacquire iconic brands, almost like former colonials acquiring thetrapping,s of the former empire. Jaguar had lost Fbrd $15 billionduring Ford’s l8-year ownership of the brand, and Jaguar’s saleswere in a steady decline. Jaguar sold 60.4115 cars in 2007, a hugedrop from 130.334 in 2fi02. Some industry analysls struggled tr-rsee wha! value Tata could add that had eluded Ftrrd, and whatsynergies could arise between the sellirrg o1 the $2,500 Nano and the prestigious Jaguar brand icon.Some experts say that Ford never really understood how tofit the Jaguar brand in its portfolio and how Io market it better.F-ord’s higgest blunder may have been undermining Jaguar’sbrand heritage with the launch of low-end models, the midrange S-Type in 1998 and the compact executive X-Iype in2001. Ford discontinued both models in 2001i.Stxtrces: “Maybc Tata, Jaguar/Land Rover Is Not Such An OddCouple.” USA Ibday, May 27,200tt: “A Uscd-car Bargain.” IfteEconorni.st, tviuy 26, 2008; “Carr Tata ‘I-urn Jaguar Into an Objcct ofL)esire?” Mediu,May 15,2008, p. 18. Thta has experience taking over global brands (e.g., TetteyTea, Corus Steel). Its strategy has been to lct each businessrun its own entity, with modest input from the home office. Thepurchase of f)aewoo, the South Korean truck manufacturer,illustrales fhis strategy. After Thta bought the firm in 2fi)4,Daewoo still operates mostly as a Korean busines-s. TataMotors has promised not to shilt production from Jaguar’sBritish factories A key elemenr of the deal is that Ford willcontinue to supply Jaguar with engines and components, as rvellas providc access to Ford’s hybrid and low-emission powertrain technology. The new owner plans to return the Jaguarmarque to i1s premium heritage, eschewing volume modelssuch as rhe X-Type. Ravi Kant, tbe chairman of Tata Molcirssaid: ‘.At this moment, our focus is on making sure we streogthenour posilion in the segments we are already and seeing thatJaguar and Land Rover go on to become not just a verycherished brand but a very profitable brand.” (USA Totlay,May 27.2ffi8). The first step will be an update of the XJType, Jaguar’s {Iagship saloon. Thla also ponders the launcho{ a successor to the E-Type sports car of the I 960s. Thta hopesthat the Jaguar’s footprint will enabie it to penetrate into Europeand the United Stale$, markets where it is completely unknorvnat present. DrscussloN QUESTI0NS l. Will the acquisition of the Jaguar msrque he a smooth ridefor’Iata? Does the ThtalJaguar doal make any sense? What areTata’s underlying motives for the acquisition?2. What cultural issues do you think will crop up between TataMotors and the new acquisilion? Ilow should Tata cope with these? What are the marketing challenges that Tala will face?How do you think these should be tackled? 3.