TATA Motors Expanding to the Canadian Market

Question

Task: What factors and competitive dynamics should TATA Motors consider when expanding into the Canadian market?

Answer

Introduction

Trade theory and Porter's Five Forces framework may be used to analyse TATA Motors' choice to enter the Canadian market. According to trade theory, businesses should enter foreign markets to take advantage of scale economies, market demand, and comparative advantages. Let's investigate TATA Motors' decision-making process and analyse the competition using Porter's Five Forces.

First off, TATA Motors could have discovered elements that appeal to the Canadian market. According to the principle of comparative advantage, nations should focus on creating commodities and services in which they have a comparative advantage (Tien, Phu, & Chi, 2019). When it comes to making automobiles that are fit for the Canadian market, TATA Motors may have the technological know-how, the production prowess, and the cost advantages. The stable economy, high income levels, and hospitable business climate of Canada may also contribute to the country's attractiveness as a market with high demand for vehicles.

The entry of TATA Motors into the Canadian market will also benefit from economies of scale. TATA Motors can spread its fixed expenses over a bigger output and achieve cost savings by increasing production and sales volumes. This may make it possible for the business to provide competitive pricing, improve profitability, and increase market share.

Porter Five Forces of Canadian automobile sector

Threat of New Entrants:

There are several well-established firms in Canada's relatively crowded automobile sector. However, if they offer cutting-edge technology or have a solid financial foundation, new competitors might be a threat. Considering that TATA Motors is an established worldwide player, it could encounter some competition from recent entries (Han, 2021).

Bargaining Power of Buyers:

Consumers in Canada have a lot of alternatives when it comes buying cars, which gives them a lot of negotiating power. Customers may quickly compare costs, features, and brands. To entice and keep consumers, TATA Motors must offer competitive pricing, high-quality products, and after-sales services.

Bargaining Power of Suppliers:

TATA Motors' capacity to negotiate with suppliers in the Canadian market will be influenced by its market share, its access to economies of scale, and the presence of rival suppliers. If TATA Motors establishes a sizable market presence, it may bargain with suppliers for advantageous conditions. However, the business may have some difficulties in the beginning in getting advantageous supplier arrangements.

Threat of Substitute Products:

The Canadian market provides a variety of alternatives to cars, including ride-sharing services, bicycling, and public transit. To lessen the danger of replacements, TATA Motors must distinguish its goods and emphasise their value proposition.

Competitive Rivalry:

There are a number of well-established domestic and foreign firms in the highly competitive Canadian automobile sector. Brands like General Motors, Ford, Toyota, and Honda will be fierce rivals for TATA Motors. TATA Motors must differentiate its products, deliver products of the highest calibre, and concentrate on marketing and branding activities if it is to prosper (Isabelle, Horak, McKinnon, & Palumbo, 2020).

The choice of TATA Motors to enter the Canadian market was probably influenced by the country's advantageous business climate, the market's demand, and the company's capacity to take use of its technological know-how and economies of scale. TATA Motors can overcome the market's difficulties in terms of competition from established competitors by focusing on product differentiation, giving competitive pricing, and supplying top-notch customer service.

Bibliography

Han, J. (2021). How Does Tesla Motors Achieve Competitive Advantage in the Global Automobile Industry. Journal of Next-generation Convergence Information Services Technology, 10(5), 573-582.

Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. (2020). Is Porter's Five Forces Framework Still Relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6).

Tien, N. H., Phu, P. P., & Chi, D. T. (2019). The role of international marketing in international business strategy. International journal of research in marketing management and sales, 1(2), 134-138.