1. Land Rover and Jaguar, To
Acquire or not to Acquire?
ENRIQUE J. MARTINEZ

2. Presentation Outline
Recommendation
External Environment
Internal Environment
Justifications
Technological Advancements
Diversification of Markets
Synergy with other group firms
Completing the product portfolio
Critical Success Factors for the Success of the Acquisition
- Managing the Current Level of Debt
- Manage the Unions in both companies
- Leverage existing distributor network and use with own
- Prepare to undertake global competition
- Upgrade corporate culture

3. Recommendation
Tata Must Acquire Land Rover and Jaguar.

4. What are the External Environment factors to
Consider?
India
- Relaxation of trade barriers new multinational competitors competing
for the local market.
- Government has approved up to 400% capitalization FDI investment
for Indian Companies
- India’s economy is still vulnerable to volatility.
- There is an overall boom of the Indian Economy
- Indian companies are increasing outside direct investments.
Asia
- Generally Asia has been propelling the world’s growth in the 1990’s
and 2000’s
- New markets and increasing affluence of its population
Europe and North America
- Slow growth but very mature markets

5. What are the Three main company thrusts to Consider?
- The Thrust of Ratan Tata for an even More
Globalized Tata Group though market diversification
and entrance to other niches.
- The thrust to focus on core industries to maximize
profitability and market share.
- The need for inter company cooperation and
synergy.

6. Justifications for Acquiring Land Rover and Jaguar
1. Technological advances
2. Diversification of markets
3. Synergy with Other Group Firms
4. Completing the Product Portfolio

7. 1. Technological Advances
The transfer of technology
eventually helps the
Transfer of
company’s products compete
Technology in the local and global
markets.
Technology
gets used in
Tata Motors
Tata gains the following
1. Improved
manufacturing across
different product lines
2. Increased
competitiveness in design
and manufacturing

8. 2. Diversification of Markets
Scenario if Land Rover and Jaguar
is not Acquired
Company Saves This contributes Tata Motors bears Failure of the Thrust
money in the to the failure in undiversified for Market
Short Run diversification economic risk Diversification
Scenario if Land Rover and Jaguar
is gets acquired
Success of the
Company experiences Company is able to use Tata Motors risk gets Company’s Thrust
Short term Cash Jaguar and Land Rover diversified . for Market
Outflow and increased to enter North International market
debt American Market Knowledge Acquired Diversification

9. 3. Synergy with Other Tata Groups
Lower cost of Steel (primary
component for vehicle
Tata Steel production)
Contribution to
More competitive
Economies of Scale
spare parts
costing, expertise in Jaguar and Land
durability, more
Rover
 Tata Motors efficient operations
Global
Network, Technology
Reinforced credentials by , Aesthetic designs for
association with top hotels. diversified markets
Mutual Brand Image
 Tata Hotels
Effects through
association

10. 4. Completing the Product Portfolio
 Tata Motors is Currently in passenger cars, light trucks , medium and
heavy trucks as well as buses.
 For the passenger car segment, Tata Motors serves the low income to
middle income market
 It does not have an existing luxury brand to compete with foreign
counterparts such as Lexus, BMW, Mercedes Benz etc.
 Creating a Luxury Brand from scratch is difficult and takes
years. India DOES NOT HAVE a good reputation for luxury
car brands
 The most practical solution is to acquire well established
brands to tap the luxury segment. A FAST GROWING
segment in Asia.

11. Critical Success Factors for effectively Managing Land
Rover and Jaguar
1. To be able to find a source of financing for the 1-2 Billion Dollar
acquisition of Land Rover and Jaguar.
2. To be able to integrate Land Rover and Jaguar to Tata’s Global
Strategy, debt liabilities of the mentioned companies must be managed.
3. Acquiring Jaguar involves dealing with its union, Tata must be able to
handle them and manage these future employees productively.
4. Tata must be able to leverage on the Existing distribution network as
well as manage foreign competition
5. Corporate culture must be addressed to be able to execute this
acquisition as part of the company’s global strategy.

12. 1. Financing the Acquisition
 Since Tata Motors corporation has a negative cash balance
(2.321 Billion Rupees in 2007) alternatives must come
from other business units.
 The financing will mainly come from the cash flow of Tata
Steel as it has 96.950 Billion Rupees in cash flow in 2007.
This translate to an cost of 43.16-86.32 Billion Rupees.
 External financing would be recommended to the level
where credit rating is not compromised.
* (Exhibit 6 Indian Hotel 2007 Revenue in Rupees divided by Exhibit 7’s Indian Hotel
Revenue in 2007 Dollars ) Given the conversion rate of 43.16* dollars per rupee and the
cost of the acquisition is 1-2 Billion Dollars,

13. 2. Managing the Liabilities of Jaguar and Land Rover
Tata Motors Acquires Jaguar and Land Rover
Need: Jaguar must be operated Profitably Need: Land Rover profitability must improve
Consider restructuring the loans
To enable Jaguar to be profitable though less Enable Land Rover to invest in capital expenditures
interest payments that will ultimately improve profitability
Sustain the Company’s Growth
Stabilize the debt of Jaguar and continuously work Land Rover could now optimize its debt structure.
on its profitability To give maximum shareholder value

14. 4. Managing the Labor Union (Jaguar)
Jaguar’s Existing employees are an asset to the firm, because of their skill base and
experience. However, before taking over the company mutually beneficial
agreements must be first established.
Establish
• Reassure them of Job Security
Communication • Gain the Trust of the Union
with the Union
• Establish Productivity goals
Establish Goals for and policies
the Union • Inform them about the
situation of the firm.
• Consult with Union and set an
Reward and accepted performance reward
scheme
Controls • Reward and impose sanctions
as necessary

15. 5. Leverage Existing Distribution Networks and
Manage Competition
Scenario if Land Rover and Jaguar is Not Acquired
Presence in North Presence In Europe Presence In Asia
America
Present No No Yes- Concentrated in
India
Cost of Large. Large Moderate
Building Investment in Investment in Geographical access
network Distribution Distribution and market structure
Infrastructure and Infrastructure and is nearer to India
growing own luxury growing own luxury
vehicle brands vehicle brand
Implication Very difficult to grow Very difficult to grow Market growth
organically as the organically as the potential is not
company needs new company needs new maximized
manufacturing manufacturing
technology and updated technology and updated
designs designs.

16. Leverage Existing Distribution Networks and
Manage Competition
Scenario if Land Rover and Jaguar is Acquired
Presence in North Presence In Europe Presence In Asia
America
Present? Yes Yes Yes and easier
expansion
Cost of Building Moderate. Moderate. Moderate.
network through Existing distributor Existing distributor Land Rover and
organic growth network is present. network is present. Jaguar needs to be
Improvements still Improvements still aggressively
needed. No need for needed. No need for marketed to Asia, but
extensive marketing extensive marketing the two brands have
budget as brand budget as brand already good brand
reputation is reputation is recall- market
established established opportunities are
tapped.
Implication A good entry strategy A good entry strategy Tata is able to exploit
for Tata in North for Tata in Europe Asia’s emergence.
America.

17. 6. Corporate Mind Set Must be Addressed
 A global cultural mindset must be adapted by the company. This ensures
alignment with the vision of the chairman to the execution of the strategy.
Current Mindset
Rank and File Staff of
Results to conflict with
Senior management Is Risk Execution of Global
Chairman’s Ratan Tata’s
Averse. Extremely Strategy is compromised
Global Mindset
Conservative
Change to Global Mindset
Overall Global Mindset is
Minimal Conflict with Excellent execution of
undertaken with a balance
Chairman’s Plan of Action Tata’s Global Strategy
for managing risks