Acquisition Of Jlr By Tata.docx

A Project Report on

“Acquisition of JLR by TATA” Submitted to: Auro University, Surat, Gujarat, India

Under the Guidance of: Dr. Monika Suri (Associate Professor)

In partial fulfillment of the Requirements for the Degree of Master of Business Administration (MBA)

Subject: International Marketing

Offered By: Auro University, Surat

Prepared by: Abhilasha Agarwal Satyanshu Sharma th (Block 7 , Semester IV, MBA 2017-19)

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TABLE OF CONTENT Abstract ............................................................................................................................................ 4 1. Introduction to International Marketing ........................................................................................ 5 1.1 How to Enter the International Market? ...............................................................................................5

2. Introduction to Company with acquisition POV .............................................................................. 7 3. Nature of Acquisition of JLR by TATA Motors ................................................................................. 8 3.1 Reasons behind Ford Motor’s Decision to sell JLR .................................................................................8 3.2 The rationale to acquire JLR .................................................................................................................8

4. International Marketing Environment after Acquisition ............................................................... 10 4.1 SWOT Analysis ................................................................................................................................... 10 4.2 Porter’s Five Forces ............................................................................................................................ 10 4.3 PEST Analysis ..................................................................................................................................... 12

5. Market Entry Strategies .............................................................................................................. 15 6. Global Product Strategies ............................................................................................................ 17 6.1 Product Innovation ............................................................................................................................ 17 6.2 Product Description ........................................................................................................................... 17 6.3 Aluminum Body ................................................................................................................................. 17 6.4 Environment Friendly Paint ................................................................................................................ 17 6.5 Bio Fabric Seats.................................................................................................................................. 18 6.6 The Futuristic Plastic Interiors ............................................................................................................ 18 6.7 Eco-friendly Tyres .............................................................................................................................. 18 6.8 Coolants ............................................................................................................................................ 19 6.9 Hydrogen Technology ........................................................................................................................ 19 6.10 Product Planning.............................................................................................................................. 21 6.11 Product Mix ..................................................................................................................................... 22

7. Global Pricing Strategies ............................................................................................................. 24 8. Integrated Marketing Communication ......................................................................................... 25 8.1 Marketing Mix ................................................................................................................................... 25

9. Change in Marketing Strategies................................................................................................... 29 9.1 TATA’s advertising in its early years .................................................................................................... 29 9.2 Advertisement of JLR ......................................................................................................................... 39 Page 2

10. International channels of Distribution & Logistics ...................................................................... 46 11. Role of WTO in acquisition ......................................................................................................... 55 12. Recommendations ..................................................................................................................... 57

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Abstract In June 2008, India-based Tata Motors Ltd. announced that it had completed the acquisition of the two iconic British brands - Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion. This acquisition would help the company in several ways, to get a global footprint and enter the high- end premier segment of the global automobile market. Now the Tata Motors would own the world's cheapest car - the US$ 2,500 Nano, and luxury marquees like the Jaguar and Land Rover. In the Competitive market for attaining the Success, one needs to be a global player to manage the business risk and company need to be strategies themselves based on its internal strengths & external opportunities and Tata Motors acquisition of Jaguar and Land Rover is an unique example for this. Tata Motors wanted to expand its product portfolio and diversify its market base. According to industry analysts, some of the issues that could trouble Tata Motors were economic slowdown in European and American markets, funding risks, currency risks etc. In the 10 months post-acquisition, sales volumes plunged 32% and the unit recorded a loss of 281 million pounds ($461 million). Tata's total debt in March 2009 rose to 435.8 billion rupees ($9.72 billion), nearly double what it owed in the previous fiscal. In such scenario the question generated about the acquisition decision of Tata motors is right or wrong. This report is an attempt to critically analyze that the decision taken by Tata Motors about acquisition of Jaguar Land Roar two iconic brands was the right decision & other different aspects.

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1. Introduction to International Marketing The International Marketing is the application of marketing principles to satisfy the varied needs and wants of different people residing across the national borders. Simply, the International Marketing is to undertake the marketing activities in more than one nation. It is often called as Global Marketing, i.e. designing the marketing mix (viz. Product, price, place, promotion) worldwide and customizing it according to the preferences of different nation people. The foremost decision that any company has to make is whether to go international or not, the company may not want to globalize because of its huge market share in the domestic market and do not want to learn the new laws and rules of the international market. But however, there are following reasons that attract the organization to be global:  Increased Economies of Scale  High-profit opportunities in the international market than the domestic market  Huge Market Share  Elongated life of the product  Untapped International Market

1.1 How to Enter the International Market? 1.1.1 Exports The easiest way to enter the market is through exports that can be indirect or direct. In Indirect Exports, the trading companies are involved that facilitates the buying and selling of goods and services abroad, on the behalf of the companies.

Whereas in Direct exports, the company itself manages to sell the goods and services abroad, by opting one of the following ways:  By setting Domestic based Export Department, working as an independent entity  Through Overseas sales branch, that carries out the promotional activities and facilitates sales and distribution.  The sales representatives traveling abroad  The distributors or agents in abroad working exclusively on the behalf of the company 1.1.2 Global Web Strategy Nowadays, companies need not go to the international trade shows to show their products, they can very well create the awareness among the customers worldwide through an electronic media i.e. internet. Through the company website, customers can read the Page 5

detailed information, generally written in different languages, about the product and can order online. 1.1.3 Licensing and Franchising One of the ways to globalize is through licensing, wherein the domestic company issues the license to the foreign company to use the manufacturing process trademark, patent, name of the domestic company while facilitating the sales. In licensing, the domestic company has a less control over the licensee. But, in the case of franchising, the domestic company enjoys the higher control as it allows the franchise to function on its behalf, and in line with the terms and conditions of the domestic company. MC Donald’s, Dominos are the examples of franchising. 1.1.4 Joint Ventures The companies can go international by joining hands with other country based companies with the intention to monetize their existing relationships with the local customers. In India, TATA AIG, HDFC standard life insurance, TATA Sky are the examples of joint ventures. 1.1.5 Direct Investment Ultimately, the firms can establish their own business facilities or own a part of the local company to facilitate the sale of goods and services. The companies go international with the objective to have increased sales along with the huge market share. But certain things such as political, social, technological, cultural situations should be kept in mind while designing the marketing principles since these are different for the different nations.

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2. Introduction to Company with acquisition POV The automobile industry in India is one of the most successful stories of post liberalization manufacturing space in India and entirely based on prudent policy support of the Government. However, the recent economic changes have not only been unfavorable but they have been inhibitor for the automobile industry. Some of the critical factors which are affecting the automobile sector are GDP, inflation rates, interest rates, Exchange rates along with the some qualitative factors like recession. These factors are continuously changing which affect the demand of the product. In such scenario only strong strategies will help the company to survive in market. Tata motors strategy of diversification, acquisition, and merger will be a best example for the survival and growth. This report covers the Strategy adopted by Tata motors to enter into premium class segment by acquiring Jaguar Land Rover. Although the company was in trouble right after the acquisition of Jaguar and Land Rover (JLR) in June 2008 due to the arrival of global financial crisis. The bridge loan of US$ 3 billion which used to fund the acquisition of JLR was due on June 2009 and yet at the end of the year 2008, Tata was only able to repay the US$ 1billion. The declining revenues and a tight credit conditions was hurting the company’s cash flow. But due to the management competencies & changing economic situation help the company to not only to overcome the situation but also to grow.

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3. Nature of Acquisition of JLR by TATA Motors 3.1 Reasons behind Ford Motor’s Decision to sell JLR "Acquisition of JLR provides the company with a strategic opportunity to acquire iconic brands with a great heritage and global presence, and increase the company's business diversity across markets and product segments." - Tata Motors, in April 2008 In 2006, reports said that losses at Jaguar stood at USD 715 million. Jaguar was not performing well as it was unable to provide any profit for Ford due to high manufacturing costs in United Kingdom. Bringing down production costs and turning around the company successfully will be the challenge for the company. That was the reason Ford was ready to sale the JLR at half of the price. Tata take this as an opportunity to enter into premium class segment to take an advantage of demographic dividend of India because of the double digit GDP growth during that period. Company have an assumption that the situation may last for few years and disposable income of people may increase which help the company to diversify their business in India into premium class segment. But due to economic slowdown not only world market but also Indian market get affected and Tata Motors was in trouble.

3.2 The rationale to acquire JLR On acquiring JLR, Ratan Tata, Chairman, Tata Group, said, "We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business. We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact. We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business." Tata Motors stood to gain on several fronts from the deal.  The acquisition would help the company to enter in to the high-end premier segment of the global automobile market.  Tata also got two advance design studios and technology as part of the deal. This would provide Tata Motors access to latest technology which would also allow Tata to improve their core products in India  The cost competitive advantage as Corus was the main supplier of automotive high grade steel to JLR and other automobile industry in US and Europe. This would have provided a synergy for TATA Group on a whole. Page 8

 In the long run, TATA Motors will surely diversify its present dependence on Indian markets (which contributed to 90% of TATA’s revenue). Along with it due to TATA’s footprints in South East Asia will help JLR do diversify its geographic dependence from US (30% of volumes) and Western Europe (55% of volumes)

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4. International Marketing Environment after Acquisition 4.1 SWOT Analysis 4.1.1 Opportunities  Demand of luxury automobiles in growing markets like India and China

 Support from Jaguar in Technology  Complete product line with addition of luxury brands  Access to European and American Market 4.1.2 Threats  Volatility in market driven by new products

 Strong presence of competitors like Mercedes, BMW, Lexus and Infinity  Receding sales and brand image  High interest rate Investment riskier and costlier 4.1.3 Strengths  Tata’s strong management capability

 Strong monetary base to invest  Synergy due to Corus, TACO and TCS  Experience in growing market like India  New product development and brand building experience 4.1.4 Weaknesses  Inexperience in Handling luxury automobile brand

4.2 Porter’s Five Forces 4.2.1 Barriers to entry Economies of Scale: As our new launch of Jaguar XH requires high capital investment for the manufacturing of our new car which is environmental friendly and targeting a specific segment of the market .So the risk of new entrant is high as other big players might try to imitate the same concept.

Knowledge and Technology: The ideas and knowledge that provides competitive advantage over others is its unique hydrogen-based technology which creates barrier to entry.

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Product Differentiation: As the new product has to be different and accepted by the customers. So, we are providing our customers with the expected attributes of premium luxury cars. Access to Distribution Channels: A well developed distribution is must for its success when a new product is launched in the market. So we will take advantage of well established TATA Motors channels across the world. 4.2.2 Buyers Switching Cost: As it is first of its kind, so they have no options to switch over.

Number of Customers: The bargaining power of buyer is low as there we have mentioned in our switching cost that there are barriers to new entrants. There is no forward integration of buyers. Brand Image: the Jaguar Land Rover already has an established Brand Image as a manufacturer of premium luxury cars. 4.2.3 Suppliers Bargaining Power of Suppliers: Bargaining Powers of suppliers is less. 4.2.4 Threat of Substitutes Price Brand: The threat that consumer will switch to a substitute product is very low.

Buyers Willingness: The willingness of the customers to buy this product will be because of the higher efficiency and good quality of an eco-friendly premium luxury car. 4.2.5 Competitive Rivalry Number and Diversity of Competitors: This means the amount of competition in the car industry which appears to be in the luxury cars such as BMW & Mercedes in Europe, Lincoln and Cadillac in U.S.

Exit Barriers: If the new product fails in the market then it is not easy for the company to exit because of the involvement of huge capital investments. Product Quality: To maintain its new generation premium luxury car the company has to make manufacturing improvements continuously to further keep uplift its quality.

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4.3 PEST Analysis 4.3.1 Political Factors Since Tata Motors operates in multiple countries across Europe, Africa, Asia, the Middle East, and Australia, it needs to pay close attention to the political climate but also laws and regulations in all the countries it operates in while also paying attention to regional governing bodies. Laws governing commerce, trade, growth, and investment are dependent on the local government as well as how successful local markets and economies will be due to regional, national and local influence.

On March 26, 2008, Tata Motors reached an agreement with Ford to purchase Jaguar and Land Rover. In order to be capable of this acquisition, Tata Motors must have a full comprehension of the governing bodies and laws regulating commerce in the home country, the United Kingdom, but also in countries, Jaguar and Land Rover operate in. In accordance, Tata’s headquarters in Mumbai, India, strictly controls and regulates operations in all dealerships and subsidiaries, in addition to knowing and abiding by all labor laws in the multiple countries where they have manufacturing plants it has to watch political change. This will be especially vital in the future as Tata Motors continues to expand and grow into new markets. “While currently about 18% of its revenues are from international business, the company's objective is to expand its international business, both through organic and inorganic growth routes”. The foundation of the company’s growth internationally is a deep understand of economic stimulation, customer needs, and individual 5 government regulations and laws. Although it is the headquarters ultimate responsibility to make sure each individual office and branch is operating and abiding by the local laws, it will become increasingly more important for that duty to be taken care of at the regional or even local level. 4.3.2 Economic Factors Operating in numerous countries across the world, Tata Motors functions with a global economic perspective while focusing on each individual market. Because Tata is in a rapid growth period, expanding or forming a joint venture in over five countries worldwide since 2004, a global approach enables Tata Motors to adapt and learn from the many different regions within the whole automotive industry. They have experience and resources from five continents across the globe, thus when any variable changes in the market they can gather information and resources from all over the world to address any issues. For instance, if the price of the aluminum required to make engine blocks goes up in Kenya, Tata has the option to get the aluminum from other suppliers in Europe or Asia who they Page 12

would normally get from for production in Ukraine or Russia. Tata Motors also has to pay close attention to shifts in currency rates throughout the world. Currency fluctuations can equate to higher or lower demands for Tata vehicles which in turn affect profitability. It can also mean a rise in costs or a drop in returns. But they also have to pay attention to not just the domestic currency, the rupee, but also to the dollar, euro, baht, won, and pound, to just name a few. Just because the rupee is strong against the dollar does not mean it is strong against all the other currencies. Attention to currency is important because it influences where capital investment will develop and prosper. 4.3.3 Social Factors Undoubtedly, the beliefs, opinions, and general attitude of all the stakeholders in a company will affect how well a company performs. This includes every 6 stakeholder from the CEO and President, down to the line workers who screw the door panel into place, from the investor to the customer, the culture and attitude of all these people will ultimately determine the future of a company and whether they will be profitable or not. For this reason, Tata Motors tends to use an integration and rarely separation technique with foreign companies they acquire. On the other hand, some economic issues that Tata Motors face must also be looked at from a more localized perspective. For instance, the market in India for cars is much different than the market for cars in Italy. For one, India has over one billion more people than Italy does, thus the market is much larger or not as limited. Second, you must also take into affect the demographics and the average income of each market. Italians have a higher average income per capita than Indians and Italian citizens tend to drive larger and fancier cars. For this reason, the Tata Nano might not do so well in the Italian market. In summation, Tata Motors views the economy from a global perspective with operations across the entire globe; however, they must also maintain a local market understanding and knowledge when it comes to product positioning and placement throughout the different markets Tata conducts business in. In 2004, Tata Motors acquired Daewoo Commercial Vehicles Company, which was at the time Korea’s second largest truck maker. Rather than using de-acculturation or assimilating Daewoo, Tata took an integrated approach, and continued building and marketing Daewoo’s current models as well as introducing a few new models globally just as it had been done under Korean management. With the new acquisition of Jaguar and Land Rover, Tata will have to be careful with how they handle the acquisition. While Land Rover is thriving while under the helm of Ford, Jaguar was more of the trouble child. “Jaguar cost Ford some $10 billion during its 18-year stewardship and its sales were in headlong decline, especially in America, its most important market. Industry analysts also struggled to see what value Tata could Page 13

add that had eluded Ford, and what synergies there could be between a maker of trucks and basic cars and two luxury marques.” Separation could be a good approach for the immediate future 7 to keep the name of Jaguar and Land Rover distinguishable and associated with the luxury automobile market. Overall, Tata does a good job of integrating some aspects of their large multi-national conglomerate into new acquisitions; however, the company must also understand that separation from the name Tata can be valuable in some social areas. 4.3.4 Technological Factors Tata Motors and its parent company, the Tata Group, are ahead of the game in the technology field. The Tata Group as a whole has over 20 publicly listed enterprises and operates in more than 80 countries worldwide. This equates to Tata Motors having many experience and resources to draw from for research and development purposes. “The foundation of the company’s growth is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D”. Employing 1,400 scientists and engineers, Tata Motors’ Research and Development team is ahead of the pack in India’s market and right with the rest of the field internationally. Among Tata’s firsts are “the first indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger car,” as well as the increasingly famous Tata Nano, which is projected to be the world’s cheapest production car (Tata). In the automotive industry, it is becoming increasingly crucial for manufacturers to stay on top of the technology curve with new problems always rising such as escalating gas prices and pollution problems. Tata recognizes this and dedicates lots of resources and time into research and development to be even with or preferably ahead of other competitors, global trends, and changing economies. In all, an automobile manufacturer must change, adapt, and evolve to stay competitive in the automotive game, and this is exactly what Tata is doing with their rapid growth, and extensive research and development.

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5. Market Entry Strategies Jaguar and Land Rover made their India entry a year or so after Tata Motors took over the iconic luxury British brands. Beginning with the assembly of the Freelander 2 at a plant in the premises of its parent company, the company now makes four models in India and plans to bring in more. Jaguar Land Rover was launched in India in June 2009. Since then, the industry has grown three-fold & company has seen our volumes grow circa 15-fold. Despite not being present in the sub-40 lakh segments of premium hatch-backs, small sedans, compact sedans and SUV’s, which form around 40-50 per cent of the premium car industry, company enjoys 8-9 per cent market share in the overall premium car market and around 14-15 per cent share in JLR relevant segments. So, yes, it can be said that the company has managed to well establish JLR in India. Company’s circa 15-fold growth since FY ‘09-‘10 may be attributed to a number of factors like establishing leading after-sales service network across India, building parts warehouse with high fill rates to be able to service customer requirements promptly, focus on service and sales staff training and expansion of local manufacturing footprint and providing more product choice to customers. With key product launches like Discovery Sport and Jaguar XE this fiscal year, company shall continue this product offering and are targeting yet another year of growth. Overall, company provides customers in India a choice of over 30 different engines/derivatives. The Jaguar range in India includes locally manufactured XF and XJ and F-Type (CBU form) with prices ranging from 42.5 lakh to 124.75 lakh. The Land Rover range includes locally manufactured Freelander 2 and Range Rover Evoque and CBU forms of Discovery, Range Rover Sport, and Range Rover. The prices range from 41.06 lakh to 181.6 lakh. The split between them is roughly 50:50. Company locally manufactures four models at the plant in Pune — Freelander 2, Range Rover Evoque, Jaguar XF and Jaguar XJ. Production at the Pune plant has grown multi-fold since its inauguration in 2011 and the local manufacturing of Range Rover Evoque in the facility early this year, comes as part of Jaguar Land Rover’s plans to expand its manufacturing footprint globally, increasing its production capacity outside of the UK.

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Jaguar Land Rover has a global approach to quality to ensure consistent levels are achieved at all manufacturing plants and the same quality systems and standards are applied and achieved in India plant operations as well. Jaguar as a brand has done extremely well in India and Jaguar XE will take this success to the next level. Jaguar XE is a unique vehicle with segment first Aluminum-intensive monologue design. By virtue of its desirable proposition, the XE will enable us to target a whole new industry segment and make the Jaguar brand more accessible. Company is extremely positive about the XE in India and is confident about maximizing its sales. Jaguar XE is expected to be launched in India in early 2016. Company has a network of 21 retailers across 20 major cities in India and plans to expand the network to 22-23 outlets by the end of the calendar year. (Kshirsagar, 2015)

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6. Global Product Strategies 6.1 Product Innovation According to the analysis conducted above Jaguar has the back up of financial and technology resources to innovate and make its way back into the premium selling business. Our idea of innovation is to come up with a commercially applicable technology in the highly competitive world automobile industry. Hydrogen cars are making headway in the R&D centre of many automobile giants. Our innovation is to come up with a high-end environmental friendly car, which can be commercially viable technology for high-end buyers to spend. The idea generated by our group is to come up with a product, which not only has a hydrogen engine but all the other components used in the car are environment friendly. This includes the seats, tyres, aluminum body, reduction in pollutants etc. Unlike other manufacturers we recommend to launch a high end product. The reason for this is to target our new technology to customers that are willing to pay the price for a better, faster and an environmental friendly car.

6.2 Product Description We have named our product as the Jaguar XH (H for hydrogen). The hydrogen technology is chosen for 3 reasons first being the fact the new innovative technology of hydrogen cars, which is gaining momentum in the automobile industry. Secondly, this technology can give Jaguar and TATA the competitive advantage they need to gain back their lost brand awareness. And lastly, the awareness of the overall environmental impact in the automobile industry has been growing as European and U.S. regulations, e.g. for vehicle emission, have become more stringent.

6.3 Aluminum Body A car’s body makes up around 25% of its total weight, so Jaguar uses aluminum wherever possible to make weight savings. And because the body is lighter, the braking and suspension components do not need to be as big, equaling more weight saving. The aluminum body developed by Jaguar helps in its cars to become lighter and faster. Aluminum technology also makes the cars safer meeting increasingly safety requirements. All the body parts including the nuts and bolts are made of aluminum reducing the car weight considerably. (Power aluminum)

6.4 Environment Friendly Paint Painting vehicles has in the past been one of the auto industry’s biggest environmental challenges stated by Mary Ellen Rosenberger. We are planning to develop paint; which is Page 17

environment friendly. The technology will combine an advanced chemical formulation, which will be made of high-solids, solvent- borne paint. The high solids, solvent borne paint helps to produce fewer volatile organic compounds (VOC) and CO2 emissions than the water borne and current solvent-borne paints. The innovative three wet coating which, are to be applied on the vehicle, are on top of the other, without any drying time during the coats. Doing this will reduce the process in painting, which will lead to a smaller and more efficient paint shop. There are high hopes for this technology and it is estimated that doing this will help save about $7 per vehicle by cutting the time it takes to paint and will even cut back the CO2 and VOC emissions by 10 percent. Even environmentally it will cut down the greenhouse gasses by 15 percent (Auto week).

6.5 Bio Fabric Seats Bio fabric helps in reducing co2 emissions because it is made from plants. It concerns about durability, it is not only smooth and soft to touch but also has long life. It is ideal for seats covers, door trims, floor mats and some more. It is produced in the same way as polyester materials, which is petroleum, based, so basically there is no need for the special technology. Main difference is that they take 10 to 15% less energy to make and save up to 30% in co2 emissions and co2 is emitted when the car is disposed. (Honda)

6.6 The Futuristic Plastic Interiors We plan to implement environmental-friendly wheat straw-reinforced plastic in our vehicle. It’s just the third-row interior storage bins made from the natural fiber-based plastic that contains 20 percent wheat straw bio-filler, this application alone reduces petroleum usage by some 20,000lbs per year, cuts CO2 emissions by 30,000lbs per year, and represents a smart, sustainable usage for wheat straw, the waste byproduct of wheat. Wheat strawreinforced resin has many advantages over non-reinforced plastic, which is currently used by most of the auto companies. It has better dimensional integrity than a non-reinforced plastic and weighs up to 10 percent less than a plastic reinforced with talc or glass. We will consider center console bins and trays; interior air register and door trim panel components, and armrest liners to be made from the wheat straw-based plastic. We recommend the usage of such materials for the Jaguar XH. (Gizmag.com)

6.7 Eco-friendly Tyres Bridgestone ECOPIA EP150 eco-friendly tyres will be used in the car Jaguar XH. These low rolling resistance tyre combines high-level wet safety with lower fuel consumption and CO2 emissions. These tyres meet the challenging objective of combining Page 18

top-class wet safety with reduced rolling resistance, leading to higher fuel efficiency and lower CO2 emissions. These Bridgestone tyres are made of materials technology called NanoPro-TechTM combined with a new tread design. NanoPro-TechTM produces a lower rolling resistance by reducing energy loss in the top compound during rotation. The new tread design features thin rib and a connected block by which contact pressure and wet braking performance is enhanced. ECOPIA is Bridgestone’s flagship brand that helps to increase vehicle energy efficiency and thus contributes to the prevention of global warming. This is achieved by tumbling rolling resistance and/or saving resources whilst maintaining various performances needed of tyres, especially advanced safety performance. (News Market)

6.8 Coolants Hydro chlorofluorocarbons (HCFCs) are compounds made up of hydrogen, chlorine, fluorine, and carbon atoms. HCFC’s are a substitute to CFC’s that are used as a coolant in refrigerators, aerosols, cars, etc. Earlier CFC’s were used as a coolant and because it had classes of compounds that used to deplete the ozone layer, HCFC’s are now used as a substitute and are not as harmful as compared to CFC’s.(Science J rank)

6.9 Hydrogen Technology The Jaguar XH is a car which is good for the environment. For the very first time, this car will be sold to the direct customer on a full scale basis and will be the most environment friendly car in the world. Based on the same design that is currently being used by Honda FCX Clarity, the Jaguar XH will use a hydrogen tank that will pass hydrogen through a battery and produce energy which will in turn run the motor of the car. This car uses no gas of any kind and hence does not leave any harmful pollutants. Hydrogen is stored in a tank and is then passed through a fuel cell which combines hydrogen and oxygen to produce electricity. The vehicle is then propelled by an electric motor which leaves behind only clean water vapor behind hence making it a zero omission vehicle. Source: Honda Clarity

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However, as compared to petrol, hydrogen does not affect the environment in any way possible and the only emission that is released is water vapor. So even though hydrogen may be very environment friendly, it simply fails to produce as much as energy as petrol can give. In other words, the car will not run as fast as it does when petrol is being used. There are a couple of innovative strategies that can be used in order overcome this barrier of speed and efficiency. We propose to design and make the car more aerodynamic and sleek and made of aluminum. Aluminum is used as it is lighter than steel and is strong as well. Although the estimate cost to setup one large hydrogen fuel station would cost about $1.16 million approximately (Energy independence), we do not plan to set these up during the initial years till we see a marginal increase in our sales for jaguar XH or other companies may want to join partnership and build the hydrogen fuel stations in different parts of every city. Our proposed business strategy would be to set up a huge hydrogen fuel stations in different parts of the country based on a location strategy. For example: there would be 8-10 hydrogen fuel plants in different parts of UK. For example: London, Bristol, Manchester, Birmingham, Newcastle, Edinburgh, etc. The diagram shown below, demonstrates as to how hydrogen will be produced at each of our plants. Source: Argonne National Laboratory Our strategy is to deliver fuel to our customers rather than them coming to us and refueling. By strategically placing these 10 stations all over UK, we would be able to deliver fuel to our customers much more efficiently and effectively. Although this may sound a little strange, there is a logical reasoning behind this strategy. To set up each fuel pump (small) across the country would cost approximately $253,000 which is exorbitant (Energy Independence). So in order to save up a lot on cost, we plan to just set up 8 to 10 factories in strategic locations. Now our customers do not need to come to the factory to refuel but we would go to them instead. It may then seem as to how fuel can be delivered so often. But a litre of hydrogen can run the car for approximately 390 kilometers. Hence it will be more cost effective for us to deliver the fuel directly as per their convenience. We would have mini fuel trucks like the size of the regular ambulances that will be particularly be imported from India (as the cost is low) and will run on LPG and the emission from these vehicles will be controlled as well by using the 3-way catalyst technology (Nett). Each location will have an average of 5 to 10 fuelling trucks depending in the demand of the vehicle in those particular cities. Now, if the owner of the car sees that his car is running low on fuel, all he needs to do is to make a phone call. But then what if he already runs Page 20

out? Every car is fitted with an emergency hydrogen tank which is attached to the main tank. This emergency tank will contain a litre of hydrogen enough to run the car for approximately 390 kilometers.

6.10 Product Planning 6.10.1 Marketing of our new innovation ‘Jaguar XH’ (Hydrogen) Target Market: This product will be targeted towards the upper class segment in the US and UK markets, the product will offer new hydrogen technology to its consumers. The major attraction for this segment of consumers will be the new hydrogen technology and the higher speed and efficiency offered by this technology.

New Product Development Policy: We recommend company will continue investing in Research and Development for updating and improving our new product according to latest developments and trends in consumer’s tastes. The special R&D budget for this product will be calculated in the section ahead. It was first environment friendly car to be sold on retail basis in the UK and US market in the year 2013. Pricing-policies and procedures relating to: Price Level: Our product will be expensive and target the premium segment and its price will range between GBP 1.5 million to GBP 1.8 million. Margins to adopt: Considering the heavy investment in the project. We would start with a heavy margin and slowly tighten the margin on the basis of market competition. Price Policy: Our Company will follow One-Price policy in a country but price may vary between U.S and U.K depending upon Government taxes and Import Export tariffs Branding policies and procedures relating to Brand Policy: The car will be available in the market under the brand name of Jaguar. Channels of Distribution- policies and procedures relating to: The car will be available to end users through already established showrooms of Jaguar in U.S and U.K. also the existing channels of distribution will be proposed. Advertising- policies and procedures relating to: Product Image: Our product will be the first of its kind. It will be the world’s most environmental friendly car and this will be its unique selling point. It will be marketed as the Page 21

world’s first fastest sedan because of the advantages of hydrogen technology. A heavy budgeted marketing plan will be needed, as this product will be the next biggest innovation to hit the industry after the TATA Nano. Corporate Image: Jaguar is famous for years for manufacturing quality luxury and sports cars for upper and upper middle segment of the market. With the takeover by TATA, it will be benefited by the reputation that TATA enjoys of an innovative company. Mix of Advertising: Our car will be advertised through Ads on T.V, Internet. Big boards and banners will be displayed in the main and commercial areas in cities of U.S and U.K. Promotions- policies and procedures relating to: Tag line – ‘The Greenest Leaping Cat’ It was marketed with an expensive marketing budget of GBP 100 million through all possible promotional sources, as the world’s most environmental friendly car ever. Display and Launch: Our car will be first displayed and launched in Auto Expo in U.S and U.K in 2015 and all other major automobile expo’s held in all parts of the world. It will be available for test-drives at Jaguar showrooms in U.S and U.K. It will also be put on display for public at major airports in U.K and U.S. Servicing: As this is an all new product and technology, servicing could be a biggest challenge that JLR will face. All arrangements will be made for after-sale servicing of our new car at all the service centre for Jaguar in U.S and U.K. Also auto parts will be made available with the dealers for replacements in case of damage by accidents. (Harvard Business School)

6.11 Product Mix Jaguar is a premium luxury car brand, which is now a part of Tata Motors. Being a car manufacturer for more than nine decades, Jaguar has constantly changed its models over time. The first model was 2 ½ liter saloon, succeeded by 3 ½ liter saloon. Then the company introduced Mark series of vehicles. The engines of these cars were manufactured by Standard Motor Company. Along with regular driven models, Jaguar had a first breakthrough with the launch of record breaking engine design in XK120 sports car in October 1948. In 1992 Jaguar had the fastest production car in the world XJ220. XJ220 achieved the maximum speed of 217 mph (349 km/h). Over the years after 1992 Jaguar models sported their famous chrome plated leaping Jaguar, which used to be the part of Page 22

radiator cap earlier. Jaguar mainly focuses on research and development, which helps them to develop world class innovation as part of their marketing mix product strategy. They aim at making sleek, sturdy cars using aluminum technology which helps to build lighter and more agile cars like the XE and the XF models. They are into the development of prospects of technologies of predictive gesture and voice control activation, laser referencing which will help to warn the drivers of any obstacles unseen by the driver and semi-autonomous driving systems to eliminate driving errors and improve road safety.

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7. Global Pricing Strategies Jaguar being the luxury car manufacturer does not aim the masses for its products. Premium pricing strategy in its marketing mix is the backbone of the brand. The prices are supreme for all its range of models. The model XF costs approximately 30000 GBP, while XK costs around 60000 GBP. These prices increase as per customers’ requirements. In India the start price is around Rs 49 lakhs, and goes upto Rs 2 crores. Compared to its competitors BMW, Mercedes and Audi; Jaguar is expensive and they take pride in being able to provide high performance, luxury and innovation in every vehicle they deliver. They provide best in class warranty coverage which is unlike other competitors’ coverage. They have the 5 year/ 60000 miles coverage whichever comes first, along with complimentary, roadside assistance and telematics coverage. The resale value of Jaguar is decent but not as much as compared to its German competitors. Be rest assured, if you think of how much diesel or petrol will cost when you buy this car, then this car is not for you. Jaguar purely uses a super premium pricing. The preserve of the rich or famous, Jaguar cars can be very expensive. The starting price of the XF is about 30,000 GBP, while the XK can cost nearly 60,000 GBP. These prices can have thousands added on, depending on the customer’s desires. In India, the Jaguar XF is around 48,60,000 (INR), and can rise to as much as 1,88,00,000 (INR) for a convertible XK. Jaguar provides dealerships which can offer customers loans or repayment schemes. The running costs and maintenance of a Jaguar may be more expensive compared to other car brands. Nevertheless, it is worth the luxurious features the car comes with. However, it does not fit everybody’s budget.

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8. Integrated Marketing Communication 8.1 Marketing Mix Marketing Mix of Land Rover analyses the brand/company which covers 4Ps (Product, Price, Place, Promotion) and explains the Land Rover marketing strategy. The article elaborates the pricing, advertising & distribution strategies used by the company. Let us start the Land Rover Marketing Mix: 8.1.1 Product Land Rover is a luxury SUV brand which has a strong presence all across the world. Land Rover has a long history of coming up with innovations from 1969 when a prototype range rover velar was manufactured, in 1970 they came up with 3 door range rover which was replaced by 4 door range rover in 1981. Land Rover came up with second generation and third generation range rover in 1994 & 2001 respectively. It started with Range Stormer concept in 2004 and came up with range rover sport production in 2005. It launched LRX concept in 2008, Range Rover Evoque production. It came up with fourth generation in 2012 which was succeeded by Range rover hybrid in and second generation Range Rover sport in 2013. 2015 was one of the year when many new innovative concepts were launch as such Range Rover SVR sport launch, Range rover SV autobiography, Range Rover Evoque convertible. In 2017 they have launched new Range Rover Velar which has main focus as the family vehicle. Right from the starting Land Rover has focused on innovation and technology and is known for its luxury, comfort and speed. Land Rover products only focus on the customers of above economical classes. Land rover’s current diverse product portfolio in its marketing mix which is giving a tough competition to others with its compact design are Range Rover, Range Rover Sport, New range rover velar, Range Rover Evoque, All new discovery, discovery, discovery sport. Land Rover to focus more on its positioning of cars and how to make it more visible and have stayed with high quality premium products rather than going for low cost models.

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8.1.2 Price Land Rover SUV pricing varies according to demography, different markets, different products and location. This helps in covering a larger number of customers who can access their vehicle according to their comfort. On the basis of product there is a huge variation on the products like usage of engines – when there is an original parts of engine then they use penetration pricing but with the change in the engines or some other parts or coming up with new innovations make them use a higher rate accordingly which is sometimes also known as prestigious pricing. Still being the premium product Land Rover prices are a little high and it has been preferred more by the customers who are in love with the brand and quality more than the price of the product. Not only its base price but its usage and maintenance cost which is way high also makes it as a premium product. 8.1.3 Place Land Rover has got a global presence which can be seen from its strong place & distribution strategy in its marketing mix. To prevent the post purchase problems for consumers like in service and maintenance, Land Rover has built up a channel which consists of various international networks and more than 2000 franchise sales dealers. As now Land Rover has been purchased by Tata Motors which is an Indian company so Land Rover is focusing on its further expansion in Asia. Like to penetrate in China it has done a partnership with a localize company cherry automobiles which will help it in distribution of products. Land Rover is also focusing to open up their exclusive Land Rovers showrooms in Asian subPage 26

continent part especially in India in order so that their vehicles visibility increases and also they will be able to pitch their products to more audience. 8.1.4 Promotion Land Rover is one of the companies who don’t need a very big promotion but still Land Rover lot of its effort to keep up with the brand name and make up an image of adventure spirits in the mind of customers, for promotion apart from the traditional way of TV advertisement, newspaper, magazines etc. Land Rover is famous for its different campaigns. It has organized various live campaigns like off-road challenge showing the supremacy of their model while driving off road, various fun drives etc. It also promotes its brand different sponsorship according to the interest of nations and participating in various rallies. To promote its theme spirit of adventure Land Rover has also opened a club – LROC. Apart from this Land Rover is also promoting its brand by doing various CSR activities which is very much an approach to make customers aware about their products and increase their revenue. Also Land Rover has been doing pretty good in promotion on social media sites while coming up with various innovative videos and online campaigns to increase awareness about their new products and services. Hence, this completes the marketing mix of Land Rover.

About Land Rover Land Rover is classy SUV rolling on the streets since 1948 who was earlier owned by British company Jaguar but few years before in 2008 was acquired by Tata Motors. Land Rover has always displayed the will of innovation by building the first its first range rover which had steering wheel in middle to a SUV with its compelling cleanliness and loaded with modern technology including design cues. Land rover is known for its best designs, technology, luxurious and comfort. Overall Land Rover has never broken the image of quality products which comes up in the mind of users on the name of Land Rover. Land Rover design and products are mostly influenced by the military vehicles, if we go through the timeline of products launched by Land Rover we will be able to find out many Land Rover products were close enough to military vehicles. Jaguar Land Rover covers around 10% market share which they are expecting to grow this year. Major competitors of Land Rover are Audi, Ford, and BMW etc. Other Details: Product Image: Our product will be the first of its kind. It will be the world’s most environmental friendly car and this will be its unique selling point. It will be marketed as the world’s first fastest sedan because of the advantages of hydrogen technology. A heavy Page 27

budgeted marketing plan will be needed, as this product will be the next biggest innovation to hit the industry after the TATA Nano. Corporate image: Jaguar is famous for years for manufacturing quality luxury and sports cars for upper and upper middle segment of the market. With the takeover by TATA, it will be benefited by the reputation that TATA enjoys of an innovative company. Mix of Advertising: Our car will be advertised through Ads on T.V, Internet. Big boards and banners will be displayed in the main and commercial areas in cities of U.S and U.K. Promotions- policies and procedures relating to: Tag line – ‘The Greenest Leaping Cat’ It will be marketed with an expensive marketing budget of GBP 100 million through all possible promotional sources, as the world’s most environmental friendly car ever. Display and launch- Our car will be first displayed and launched in Auto Expo in U.S and U.K in 2015 and all other major automobile expo’s held in all parts of the world. It will be available for test-drives at Jaguar showrooms in U.S and U.K. It will also be put on display for public at major airports in U.K and U.S. Servicing- As this is an all new product and technology, servicing could be a biggest challenge that JLR will face. All arrangements will be made for after-sale servicing of our new car at all the service centre for Jaguar in U.S and U.K. Also auto parts will be made available with the dealers for replacements in case of damage by accidents. (Harvard Business School)

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9. Change in Marketing Strategies 9.1 TATA’s advertising in its early years

On Sept. 09, 1925, Jehangir Tata wrote a letter to his father Ratanji Dadabhoy Tata from the barracks in the south of France. The 21-year-old had come up with a way to help the family business. He wanted Pathé News, a famous newsreel maker of the time, to produce short films about current events in India to be shown in the country’s cinemas. The young Tata scion believed that footage of Mohandas Gandhi’s visit to their steel factory in Jamshedpur in 1925 would be “excellent and free propaganda and advertising.” “Too many people in India believe that steel works are just the same as a cotton mill, a foundry or a power station,” he wrote. “That is why they are all so amazed when they see that people who have seen this marvelous plant and the fine town we have built don’t wonder afterwards or shout where the (Rupees) 21 crores have gone to!” Gandhi had made the trip to Jamshedpur to resolve labour disputes and ask that the Jamshedpur Labour Association be recognised by the company. Jehangir Tata had been informed that Gandhi’s preconceptions were shaken after he visited the factory and believed sharing the footage with the public would quell any similar distrust among them. In 1969, the year of Gandhi’s birth centenary, his Jamshedpur visit finally made it to promotional material. A Tata Steel advertisement from that time said, “…we proudly recall

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that, when (Gandhi) visited Jamshedpur in 1925 and 1934, he was happy to see the cordial relations there and felt their further extension would help to achieve a ‘Miniature Swaraj’.” Jehangir Tata, who would later be popularly known as JRD Tata, apologised to his father in case he was “talking rubbish.” “It is the best way to talk sense one day, isn’t it?” he wrote. The letter was but a small glimpse into events that would transpire in the future. JRD Tata took charge as chairman of the Tata group in 1938. During his 53-year tenure at the helm, it published numerous advertisements asserting its contribution to the country. Long before its companies were asking consumers to “Jaago Re” (Wake up) or add a pinch of “Desh ka Namak“ (Country’s salt) to their food, they were communicating—in a variety of ways—their alignment with India’s mission to be a self-sufficient and expanding economy with a high standard of living. Over 200 vintage ads of the conglomerate, from the early 20th century up to 1990, along with the letter that JRD Tata wrote to his father, are on display at the Tata Central Archives in Pune. And if there is one theme that runs right through them, it is nation-building.

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“The exhibition (Tata Vintage Advertising and Publicity) showcases not only the genesis and history of the Tata group, but also highlights in parallel the integral role that the group has played in India’s industrialisation and progress,” says the press release. The foundation of the Tata group was laid by Jamsetji Tata in the 1870s with a textile mill. The young Parsi had made a tidy profit of Rs40 lakh sending supplies to the British troops in the Abyssinian war, and had held nationalist sympathies. After his death, Lord Curzon, the viceroy of India between 1898 and 1905, said that “no Indian of the present generation had done more for the commerce and industry of India.” The Tatas continued to be regarded by many as patriots after Independence. But the Indian leadership at the time also held strong socialist ideals, and both advertising and large private enterprises were viewed with suspicion. Early in 1968, JRD Tata, in a letter to World Bank adviser George Woods, wrote: “I am afraid that in spite of all the lessons of the past twenty years, there’s no real change in Delhi’s attitude toward “big business”, nor have our politicians and bureaucrats realised that what seems big business to them would be little more than peanuts elsewhere.” Companies in the private sector faced strict government controls and often felt that they were at the mercy of politicians’ caprices. Author and researcher Claude Markovits observes in his essay The Tata Paradox that the group lost the unique position it held before Independence, when it enjoyed the protection and support of the colonial state and benefited from patriotic enthusiasm simultaneously. “When British rule came to an end, other big Indian firms had a more intimate connection to the Indian state as a result of the support they had given the Congress during the independence struggle,” wrote Markovits. “This was particularly true of the Birlas and some of the Ahmedabad textile magnates.” Against this backdrop, it’s clear from the advertisements that the company wanted to be seen as a force for good—one that wasn’t focused on accumulating wealth and power for its owners and shareholders, but devoted to improving the country.

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Veteran adman Roger Pereira, whose early assignments involved working on Tata advertisements at J Walter Thompson in the 1960s, mentions a time when advertising helped the company navigate political hurdles. In 1977, George Fernandes, the industry minister at the time, wanted to nationalise Tata Steel. In response, the company ran a campaign that detailed its philanthropic work and added, almost in passing—”we also make steel.” “They said, ‘we’ve built these hospitals, we’ve done this and this…and we also make steel. This is how we spend our money’,” said Pereira. “(The Tatas) weren’t profiteering for the sake of profiteering; they were investing in the country. That was a brilliant campaign, the most brilliant advertising campaign of all time in India. That’s what made Fernandes really look like a fool.” This brand positioning is also seen in a Tata Iron and Steel Company advertisement from October 1955 that was created by J Walter Thompson. It portrays a man in a loincloth holding a long sheet, and says that India has come from importing the bulk of her textile requirements 30 years ago to having the second-largest textile industry in the world. Written in a larger font size below this, it reads, “Private Enterprise Serves the Nation.” An advertisement announcing the opening of the Trombay Power Thermal Station in 1956 said it was “yet another Tata contribution to a higher standard of living through an expanding economy” and an “example of the work of enlightened Free Enterprise.” Earlier in 1949, Tata made the connection between steel and agriculture in an advertisement that talked of the mechanisation of agriculture. It had a photograph of Nehru watching a tractor in operation. That same year, the company ran an ad that said, “Steel links India’s Frontiers,” and described how 7,000 tonnes of steel were used in the newly-laid railway line connecting Assam to the rest of the Indian Union. Indian companies at the time strove to distinguish themselves from multinationals by emphasising their swadeshi credentials, and Tata was no exception with its Hamam soap— “Tata’s Hamam is a bigger soap—it’s truly swadeshi, too,” read one advertisement. Another reminded consumers that Jamsetji Tata had set up the Swadeshi Mills Co. in 1886, twenty years before theswadeshi movement gained prominence.

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“Winning the government’s approval was important during the Licence Raj days—this meant appearing to serve the people,” said Arvind Rajagopal, professor of media studies at New York University. “Large companies also began to reflect aspects of national developmentalist ideology. Advertising agencies all publicly avowed support for the planned economy, for example, and the biggest ones were all foreign.” “Nation-focused ads were released not only by Tata but by all companies,” said Arun Chaudhuri, head of the marketing research company BRAND and the author of Indian Advertising: Laughter and Tears. “Obviously, all these ads helped to support the government line that India was on a rapid path of progress. The reality was that the majority of the people lived pitiable lives hardly managing a square meal a day.” According to Chaudhuri, another reason why advertisements tended to focus on the country and its progress before liberalisation may have simply been a lack of creative output from agencies. Since demand for goods was greater than supply in most industries, companies didn’t need bigger markets and didn’t care all that much about the content in ads. They were bought to keep newspapers—an important tool for public relations—happy. Also in short supply were Tata Mercedes Benz trucks, which were “speeding prosperity to the countryside,” according to an advertisement from August 1960. The truck was compared with the Gwalior Fort that played a role during the Indian Mutiny (“Stalwarts Both”) and the India Gate (“Gateways to Prosperity”). The messaging was clear: Tata wasn’t just driving India to a brighter future; it was also taking her back to her illustrious past. An ad for Tata Exports Limited, talks about “reviving the age-old glory of Indian exports.” Other Tata Iron and Steel Company advertisements refer to “implements of steel used by master craftsmen of ancient India”, “exquisite swords of Indian steel” used in the past and admired by outsiders and Indian ships being “once again on the high seas.” If this rhetoric sounds familiar today, it is because it is used by politicians to invoke a sense of nationalist pride. But for the Tatas, that was not the only motivation. Even today, according to a recent survey, Tata Motors, a company that was founded 73 years ago, is viewed by Indians as the second-most patriotic brand in the country.

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9.2 Advertisement of JLR

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(Land Rover advertising, marketing campaigns and videos)

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10. International channels of Distribution & Logistics Logistics providers have played a key role in the global growth of Jaguar Land Rover, and the OEM (Original Equipment Manufacturer) wants to extend co-operation even further. The growth of Jaguar Land Rover (JLR), the UK-based, Tata-owned, premium carmaker, makes for common reading nowadays in the British press. Land Rover plants in Halewood, near Liverpool, and Solihull, near Birmingham in the Midlands, are being expanded and have moved to three-shift production. The Jaguar factory in Castle Bromwich, also in the Midlands, is slated for upgrades and new models. A walk around the Solihull plant reveals a veritable building site, as it is in the middle of a two-year expansion project that will extend the production line, add offices and warehouse space. The unassuming brick building that currently houses assembly for the Range Rover Sport and Defender—the dark red of the ground floor exterior still the original, camouflaged colour from 1937, when it was built as a ‘shadow factory’ to produce Spitfire engines—will be redeveloped later this year as the line moves across the road to a new assembly hall. It’s a dramatic change considering that JLR and Tata were planning to close either Solihull or Castle Bromwich less than three years ago. Profits from JLR reached a record £1.5 billion ($2.35 billion) in the last financial year, but Tata is not lining its pockets—along with expanding the current plants, a £355m engine factory is planned for Wolverhampton, while this May the company took over a former Vauxhall warehouse at Ellesmere Port to support production of the Range Rover Evoque and the Freelander 2 at Halewood. As impressive a ‘local’ story as JLR’s rise is, even more important has been the global nature of its success, ambitions and supply chain. JLR exports to 177 markets, with sales brisk in China, Russia, North America and Germany. Although its plants are in the UK, JLR’s Indian ownership gives it a foothold in a market with considerable potential—last year, for example, JLR opened a knockdown kit assembly plant for the Freelander in Pune (its fifth globally after Turkey, Kenya, Malaysia and Pakistan), and is exploring adding more models. It has also announced a joint venture with China’s Chery and its intention, pending government approval, to build a new factory in China. Contracts of Trust Growth on this scale naturally creates supply chain complexity and logistics demand. But it is more than numbers driving JLR’s logistics team. David Dyke, global logistics director (pictured above), has helped change how the company works with providers, including Page 46

more technical methodology—with a system of monitored performance and computergenerated models—and a shared, ‘open book’ approach with partners. Dyke says that business with suppliers is now based on ‘contracts of trust’. Insofar as an outside observer can tell from reviewing the OEM’s logistics, this is not mere management patter. JLR has a logistics outsourcing strategy that stands out for the responsibility it devolves to lead logistics providers (LLPs). JLR has pulled together virtually its entire inbound network and integrated it under the control of DHL, which manages transport, stock handling and line feeding at the three plants. Similar control has been arranged with speciality provider Priority Freight for premium freight movements, and for outbound logistics with Ford in the UK; Volvo Logistics in Europe; and other providers, such as WWL, for some markets. The LLPs work in tandem with JLR, as DHL’s management works with inbound logistics manager Al Jeory’s team to make joint purchasing and strategy decisions. The same applies for Volvo Logistics and others who work with Gareth Williams, outbound logistics manager, and his team. For Dyke, these relationships save on cost and increase flexibility, but they must be built on openness. “We must share confidential data sometimes with providers such as forward volumes so that they can plan on our behalf,” says Dyke. “There is no benefit to keeping providers away from the table.” Dyke suggests that the next step will be to form even longer partnerships. “We see that if you drive 12-month contracts, you get 12-month solutions. In future we’re trying to form key relationships for a longer period aligned with our business plans, which can typically be five years in advance,” he says. Given its growth, there has been no better time for providers to align themselves with JLR’s business plans. “If a provider delivers excellence and overachieves, I see another opportunity, such as an offsite sequencing centre, or a plant in another country, then the provider could become part of that development,” says Dyke. As a recent example, JLR has outsourced the management of the Ellesmere Port warehouse to DHL. Upcoming projects, including the Wolverhampton engine plant and especially the China factory, could open up a trove of opportunity, although JLR says it is too soon to discuss these projects in detail.

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“We want to work with the supply base on things like partnership and collaboration because that is what we see driving efficiencies,” says William “At JLR, our size also means we can be more flexible and approachable in many ways, including for things like contract duration for the right, innovative partners.” The supply chain and its history A closer look at JLR’s supply chain reveals that it is informed partly by its ownership history, which has included the Rover Group, British Leyland, British Aerospace, BMW and Ford before Tata. BMW heritage can partly be seen from the huge range of options available on a build-to-order basis, while Ford has left not only engineering fingerprints but supply agreements, including powertrain deliveries from its UK plants for diesel engines from Dagenham and petrol from Bridgend, and even Mexico for some models (although the new engine factory will change this mix). It is also an LLP for the company for outbound logistics. JLR’s supply chain is highly regionalised, with 350 suppliers in the UK and 450 suppliers across Europe, according to Al Jeory. There are about 50 global suppliers, split between North America, Japan and China. There has been no notable shift in sourcing towards India or South-East Asia under Tata, with only a few suppliers in India, and one each in North Africa and South Africa. “Low-cost country sourcing has not been a driver for us,” says Jeory. Despite its ownerships, JLR’s logistics management has always kept a measure of independence, which is perhaps truer today under Tata given that it has no other automotive presence in Europe. The development of the LLP contracts and JLR’s supply chain engineering demonstrate this entrepreneurial approach. Tata even recognised JLR’s logistics management globally last year with one of its Inovista awards for reducing carbon emissions in the supply chain. “Tata has been a phenomenal opportunity, and very supportive,” says Dyke. “If we have an idea that makes business sense, we’re able to action it and get on with it very quickly.” A complete LLP strategy JLR isn’t the first to adopt an LLP-style approach; interestingly its former owners also have contracts with DHL, as BMW uses the provider for its less-than-truckload (LTL) network and Ford for inbound management. But JLR has gone further, with DHL responsible for around 85% of global inbound freight, including all of Europe and the UK, with a common service for the three plants through LTL and full-truckload (FTL) shipments that hinge across three principal crossdocks in Europe. JLR shares its schedules with DHL, which then does its own Page 48

route planning and carrier management. DHL is also responsible for stock management and line feeding at the plants. DHL is also responsible for stock management and line feeding at the plants. DHL has direct access to the loading decks at factories, where it delivers the parts and manages stock with its own staff at the ‘marketplaces’. When line-side stocks are low, workers press a button that prompts a DHL worker to replenish supplies. “It is a total, accountable supply chain from start to finish where we understand total cost and we can drive and share best practices across our plants and get the synergies because of the size of the operation,” says Dyke. Thanks to computerised modelling and high levels of visibility, Jeory says the network is highly efficient, with FTL utilisation rates around 91% and LTL at 88%. “We have very good computerised monitoring tools that are giving us an edge in terms of improving those figures, including GPS tracking and in-cab technologies,” he says. “We monitor them daily and monthly with DHL.” Furthermore, the LTL model across Europe has opened doors to inbound collaboration with other carmakers, reveals Jeory. “About three or four years ago, we began actively engaging in sharing routes with other manufacturers,” he says. “We are currently working with two other OEMs and sharing DHL facilities in the UK and Europe.” Jeory and Dyke each stress that both companies have made adjustments to work from a mainly “open book” cost model, where purchasing decisions about transport and resources can be made together. As well as understanding the cost basis of what DHL manages for JLR, Dyke says it is important for the carmaker to appreciate that the LLP needs to make a profit. “Both of our companies need to be successful and once you work to find the right balance, you can focus your energy on finding efficiencies,” says Dyke. Such a close alignment can be as risky as it is bold. During lengthy and protracted pay negotiations earlier this year between DHL and Unite, the union that represents DHL drivers and workers in the UK, industrial action threatened supply at JLR. While JLR will not comment on the situation, citing it as an internal DHL matter, Dyke stresses that it does not represent a hitch in the JLR-DHL relationship. Indeed, Dyke says that JLR’s increased inbound flexibility has been essential to its ability to nearly treble volume over the past three years. As an example, Dyke says that in the past, JLR used to be

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locked into a three-month planning cycle for freight deliveries. “Now, I can replan my whole freight plan every two weeks,” says Dyke. Likewise, JLR has needed to be fast when it comes to ramping up production and supply chain capacity. For the Ellesmere Port warehouse, Dyke reveals that the company has only eight weeks to start active operations. “It’s quite an exciting journey,” says Dyke. Reducing premium freight spending by 80% Another area in which the company has extended the LLP concept has been for premium freight shipments with Priority Freight. “Similar to DHL, we deliberately set about the process of setting up Priority Freight as a bespoke team to us, so that they would understand our needs,” says Jeory. Rather than a generic freight company used to contract expedited shipments, Priority Freight monitors and addresses situations before they arise, according to Jeory. But while Priority Freight operates as an LLP, an element of competition remains as JLR will also use DHL for some shipments. “Before we book a shipment, we do a cost comparison between the two,” Jeory says. With more controls in place across the entire supply chain, the results have been impressive, with JLR’s budget for premium freight declining even as volume soars. “We’ve made massive inroads with premium freight, and I think we’ve probably reduced the annual budget by about 80% during the past seven years,” says Dyke. “That is all about having confidence in your data integrity and stock control, and having people who manage your parts correctly.” Global systems for order to delivery JLR’s logistics innovations are not limited to inbound material movements. Outbound logistics has been characterised by a focus on several areas, including gaining better control and visibility over the order-to-delivery (OTD) cycle, as well as decreasing lead times for exports, in particular for fast growing markets like Russia and China. The company is also testing further advances, such as a two-speed distribution model that could prioritise certain vehicles. JLR sells on a build-to-order basis for most markets, including for the UK, Europe and China. However, even for exceptions such as the US, where dealers usually order in stock, providing reliable delivery dates is a prime objective, according to Gareth Williams. He adds

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that this reliability has been important not only for customer satisfaction but for managing inventory and cash flow in terms of wholesale and retail deliveries. To improve the OTD cycle, JLR has installed new global ordering, pipeline and distribution systems. According to Williams, the OTD systems have come together during the last year to provide an enhanced dashboard view across the entire cycle. “The three systems enable dealers at the point of order to come through to our pipeline system to check on constraints, build slots and availability within allocations, and ultimately, based on the lead time to market and distribution offsets, to give a date when customers can expect to get the car,” says Williams. Following from the initial date, the system links to JLR’s logistics monitoring and is updated with the vehicle’s progress, including anything that would anticipate an early or late arrival. “We can now do this monitoring and communication for 98-99% of our dealers around the world,” he says. JLR has also spent considerable time developing a vehicle tracking system aligned to these three systems, providing updates at every segment of the distribution process and allowing statistical analysis of outbound metrics. “It’s about process control rather than waiting for someone to ring up and complain about delays,” says Williams. The OTD systems have been integrated across marketing, manufacturing and distribution. According to Dyke, the metrics to improve the reliability of the ‘ABS on time’—which is when the vehicle is slated for release from the plant for distribution—are thus driven across the entire organisation. “We work across all the manufacturing teams. The plants, for example, have clear metrics in terms of building the car on the right day, the level of work in progress and its age,” says Dyke. “We’ve managed to get those responsibilities disseminated right through the management down to the track team leaders, and it’s on everyone’s corporate scorecard.” Williams reveals that JLR is also exploring a two-tier distribution model. Currently, the company treats sold and stock vehicles the same. But with more focus on providing customers with reliable delivery times, JLR has created the ability in its OTD system to expedite sold cars. While not yet implemented, the system is being piloted in some deliveries. “We’ve developed two routes to markets in the system, almost like a first and second class post,” says Williams. “It can be completely different transport modes and providers.” Page 51

A collaborative outbound strategy JLR runs a mixed model between centralised distribution, LLPs, national sales companies (NSC) and importers. Williams and the JLR purchasing team generally have central control over carriers and contracts in the UK and Europe, for example. In larger overseas markets, like the US, there are NSCs, but these organisations work with the UK in a “networked alignment”, according to Williams. A large amount of the purchasing and logistics decisions are carried out jointly according to strategies developed centrally in the UK. Further afield, specialised importers control certain markets and take responsibility for the vehicles at ports of entry. However, as a market develops JLR will often develop an NSC and align it more closely with the central organisation—this was the case in China in 2010 as well as in Russia. JLR’s management is supplemented by LLP contracts for different regions. In the UK, for example, JLR uses Ford, an arrangement agreed when the company was sold to Tata, which has worked well for several years. As a volume seller, Ford has a certain economy of scale in the UK, including an in-house fleet of car hauliers and its own jetty and terminal in Dagenham (see Finished Vehicle Logistics p16). While JLR exports many cars from the UK, Ford imports a lot of them, allowing backhauls between ports. “Our relationship with Ford is an excellent example of an effective working partnership where we’ve built trust with another OEM,” says Dyke. For continental Europe, JLR uses Volvo Logistics, the 3PL arm of the Volvo Group, as an LLP for contracting short-sea carriers and land transport. Williams says that volumes are often combined with those of Volvo Cars, as well as other manufacturers. “We don’t mind coloading with other OEMs if it improves efficiency,” says Williams. JLR uses LLPs in other export destinations as well, depending on the business case and if the provider might have better capabilities to exploit the market. “When we tender lanes, we offer the possibility to quote on one leg of the journey, or on the complete route, or to operate the whole region with an overseeing route manager or LLP,” says Williams. An example is the use of WWL to distribute cars in China. WWL takes control of the vehicles from the port of Southampton, arranges shipping with Eukor (a sister company), handles import documents, terminal management and final delivery. Williams says that it works well, in part because it has given JLR a simplification of IT systems and visibility, as well as eliminating certain damage ownership issues.

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But he admits that the LLP approach is not right for every market. “We did the same quotation process with Russia, but ultimately we decided to keep it separate and to manage it ourselves,” Williams says. “We’ve also looked at [this] for other markets, such as Australia, but have kept a direct sourcing model. But every time we re-tender, we look again at whether or not an LLP would be applicable.” While working with LLPs is a way for JLR to get competitive capacity despite its relatively small size, Williams believes that good carrier relationships have made it attractive to logistics providers. “Providers want our brand on their portfolio. Because we’re small in relation to other big volume OEMs, we can be more approachable in some ways,” says Williams. “We know that our rates are competitive but they are also not the cheapest, as we recognise the importance of a quality service that we need to meet our premium expectations and growth.” Network planning JLR uses up to 12 ports of exit from the UK, with European exports moving on a daily basis. The predominant ports are in the Humberside area of the north-east, Portbury in the west and the Thames Estuary in the south-east. Most deep sea exports leave from Southampton on the south coast. JLR uses mainly road to the ports, but also uses some rail services. While it uses a considerable amount of short-sea shipping, JLR currently has no regular rail services from the UK to Europe. In the past it used the channel tunnel to rail cars to Italy, but Williams says that cost has become prohibitive. With the increase in volume for exports, JLR has seen some capacity issues. Williams points to congestion at UK ports, while he is also worried about a lack of investment in the car transporter fleet across Europe. “With the lack of money in the distribution world, there are some capacity issues and the quality of the current transporter fleet is degrading,” he says. JLR wants to work more closely with carriers and port authorities to address the situation, including sharing longterm forecasts. “We are in dialogue with the ports and carriers to share our volume forecasts over the next five or six years, to make sure that they are looking to invest,” Williams says. Just as JLR reengineers its inbound network, outbound flows are also subject to changes, including shifting ports and routes to markets. JLR recently made more fundamental overhauls for two of its most important markets, China and Russia. Page 53

JLR previously relied on four importers for distribution in China, and sent its vehicles by container to four different ports. In 2010, it switched to an NSC, changing also to ro-ro shipping and consolidating at the ports of Shanghai and Tianjin (close to Beijing), using WWL as the LLP. Midway through 2011, with volumes at record levels, JLR added the port of Guangzhou, in the south. “By adding the third port, we’ve significantly reduced lead time and emissions by reducing land transport,” says Williams. In Russia, JLR used to import vehicles via Finland by truck to St Petersburg and Moscow. Last year, together with the newly-formed NSC, JLR held a joint tender to import directly through the port of St Petersburg, with inland distribution handled by five Russian carriers. “The change has taken about five or six days out of our total supply chain, as well as 500 tonnes of CO2,” Williams says. “It’s a good example of how we can work with our NSCs to align our distribution strategies.” The recruitment challenge Returning again to headlines, there has been much celebration around JLR’s job creation in a UK economy that has entered a double-dip recession. But the structure of JLR’s logistics, including outsourced warehouse and line feeding, means that nearly 1,000 of those jobs have been in logistics both within the company and mostly at providers. What have been most exciting —and challenging—for Dyke has been the need to recruit talented logistics managers? “From a logistics perspective, we have phenomenal global opportunities,” says Dyke. “We’re keen to get people interested in logistics here. We believe logistics is often the lifeblood of our organization.” A search on the JLR website brings up logistics-related job offers, and Dyke makes a direct call to both applicants and potential suppliers to the company to get in touch with him. He stresses, however, that the old image of logistics management as a reactive or stagnant function is long dead at JLR. “You have to have a high degree of business acumen, and be prepared to work in a very dynamic and fast changing organization,” he says. “It’s exhausting, but very rewarding.”

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11. Role of WTO in acquisition Britain's traditionally feisty and combative trade unions, to a man, have been cheering Tata's one-billion pound purchase of Jaguar-Land Rover in a remarkable coup for the Indian conglomerate as it snapped up iconic British brands in its push towards a global footprint. Just hours after Tata issued a low-key announcement to confirm it had "entered into a definitive agreement with the Ford Motor Company for the purchase of Jaguar Land Rover, comprising brands, plants and intellectual property rights," the top bosses of Unite, the UK's largest trades union, said the deal "is really good news for the UK automotive industry". Roger Maddison, national officer for the automotive industry on Unite, which has over two million private and public sector members, told TOI that Tata's acquisition was good news because "Tata are into making cars, not just making money". Dave Osborne, national officer for Unite's Amicus arm, which represents the manufacturing sector, added that British workers were confident "Tata recognise the Britishness of the two brands and have no intention of closing any plants in the UK. In fact, they are committed that after 2011, all JLR products will still be designed and manufactured in the UK". Osborne added: "We are only sad because Jaguar has been part of the Ford family since 1989 and between now and 2010, Land Rover's projected profits would have been more than they got from selling the business, so it is sad that Ford has chosen this moment to offload JLR." Unite, whose membership comprises 16,000 of JLR's 16,500 workers said it had "unequivocally supported Tata" all along in the battle between three preferred bidders because it felt Tata could be trusted and the others, JP Morgan-backed private equity group OneEquity "was just in it to make money" and the third, Mahindra , "was capable but a bit small". The unions say they expect to hold Tata to its promises, including retaining jobs and existing employee contracts for at least the next five years as well as putting money into JLR to "grow the business" as well as allowing other Unite members in Ford to "continue to supply Jaguar Land Rover for differing periods with power trains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies". British trades unions say Unite's three-cheers for Tata is based Page 55

purely on the Indian company's "excellent" record in terms of management, worker relations and "keeping its promises", 14 months after it purchased Anglo-Dutch steelmaker Corus. Maddison and Osborne insisted Tata had a done deal with respect to the JLR purchase '' as early as November 20, 2007, in the event Ford would sell Jaguar and Land Rover because we contacted our colleagues in Corus and in Tetleys, the other British companies acquired by Tata''. Trades unions' investigations revealed "Tata had not off shored or outsourced any jobs," stressed Osborne. Maddison added: "Tata's record with Corus was impressive". He stressed that "Unite has secured guarantees for five UK plants on staffing levels, employee terms, including pensions, and sourcing. The sale ensures our members futures and we look forward to working with Tata.”

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12. Recommendations  The Jaguar subsidiary needs drastic reform quickly to cure the fall in demand for its smaller sedans the XE and XF.  On February 8, JLR said that stripping out one-off items, it made a loss of 273 million pounds ($310 million) in the latest quarter ended December 31. It said it was taking a 3.1 billion pound ($3.5 billion) accounting charge related to what it called muted demand in the car industry. JLR announced last November it would implement a plan, called “Charge and Accelerate”, to slash 2.5 billion pounds ($3.2 billion) in costs over the next 18 months. Analysts wondered then if this might not be enough to turn JLR around. It faces harsh competition from German manufacturers like BMW, Mercedes and Audi which all have much greater scale to forge efficiencies. Therefore, JLR needs to offers some promotional benefits to its customers in order to regain the trust & stop the downfall.  Land Rover’s operation for undermining its own success by persisting with an overlapping product range which confuses buyers and cannibalizes profits should be taken into account in order to regain the top position in the market.  JLR need a manufacturing plant in China in order to face the downfall that is being seen due to Chinese economy. A manufacturing plant in china will decrease the cost for Chinese market and customer will be more likely to buy the product.

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THANK YOU! Page 58