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  1. 1. Tata Motors acquisition of Daewoo Commercial Vehicles, Korea Feb – March 2004 Dhiraj Gaur Manoj Agrawal Manu Agrawal
  2. 2. “This year we will also be focusing on expanding our business internationally. This will demand that our products and services are globally competitive and that our enterprises operate to international standards in terms of quality and customer service. We will need to be extremely aggressive in the marketplace and much more proactive than we have been in the past in order to be leaders in our fields of business. We need a change of mindsets that break with past tradition in welcoming rather than resisting change.“ Mr. Ratan Tata, Chairman, Tata Group, January 2004 "We were keen on the Daewoo acquisition, as it would give us an opportunity to get into a fairly advanced market. There were also tremendous synergies between the two companies.“ Ravi Kant, Managing Director, Tata Motors
  3. 3. Daewoo Commercial Vehicles Company • Established by Daewoo Group in 1982 and built into the second largest automobile and truck manufacturer in Korea • Daewoo Group’s bankruptcy lead to the bankruptcy of Daewoo Motors in 2000 • Car business of Daewoo Motors sold to GM in Nov 2002 • Daewoo Commercial Vehicles Company (DWCV) had an installed capacity of 20,000 vehicles from a state-of-the-art plant built in 1995 • Produced more than 90 truck models in the heavy commercial vehicle range (210 –400 hp engine) • DWCV had the second largest market share in heavy trucks in Korea in 2003
  4. 4. Strategic Fit for Acquisition • Opportunity to overcome cyclicality of Indian CV market • Enhance product portfolio through catering to increasing demand for heavy vehicles • Managing business in developed markets • Access to technology and complementary product range • Lead a change in the domestic
  5. 5. The Challenge • Lack of Management Support  A Daewoo middle-level manager frankly told that he didn't think an Indian company could help them with technological inputs or financial resources — two things they needed badly and which they believed, only an American or European company could supply. • Within 48 hours, communication material pertaining to the Tata Group and Tata Motors was made available in Korean and shown to the Daewoo Commercial Vehicle employees and Daewoo management which explained the Tata Group philosophy of trusteeship, as opposed to ownership
  6. 6. The TATA Way – Employee Integration • Beyond the bid price -Winning acceptance of DWCV employees  Structured program to educate DWCV about India, Tata Group and Tata Motors  Communication (in Korean) to management, unions and employees emphasizing Tata Motors capabilities and Tata Group’s reputation for good corporate governance  Respecting strong work ethics of Koreans through significant efforts during the Due diligence process  Building the psyche “TATA is more strategic partner than a venture capitalist” • Managing the Korean culture  Respecting hierarchy and values  Managing Unions
  7. 7. The TATA Way – Employee Integration • Keep executives in place  Instead of dispatching legions of Indians to the new company, Tata set up a joint management board, which decides on issues ranging from growth targets to the development of new talent. Working groups find common goals, and managers of the acquired company are asked to help smooth out any cultural differences • Key TATA employees underwent 6 month Korean language course • The Korean employees are now studied English, following company president Mr Chae's announcement that English would be the medium of communication in TDCV after three years
  8. 8. The TATA Way - Process Integration • Brand Equity and Business Promotion (BEBP )Compliance Plan • Balance Scorecard "The Tata Group introduced BSC in TDCV. This year, we will do the team-level BSC sheet. Next year, we will do the individual- level BSC sheet. We have already done the company-level BSC sheet” Seong-Kook Kim, business excellence champion, • TATA Business Excellence Model • SAP Integration • CAD and PLM Integration
  9. 9. The TATA Effect "I was wrong in thinking that an American or European company would have been better. With Tata Motors, we have a just partnership. We have retained our voice; the company has grown and employees have benefited." Ki-Hee Won, MD, Administration Division "Initially our people were afraid of joining the Tata Group. Now, thanks to their international business, our export volumes have increased. Our members feel that if we had not joined the Tatas, our future would have been unclear. This is the first time since 2002 , that we have made a profit.“ Sang-Joon Lee, Deputy GM, Business Planning Team
  10. 10. Measuring success • TDCV launched a new range of medium trucks in 2006 –first major product launch since 2000 • Doubling of exports in 2004 and 2005 accounting for 66% of heavy truck exports from South Korea • Launch of “Novus” in Indian market • Increased market share in HCVs from 25% to 28% and achieved market share of 13.5% in MCVs
  11. 11. Thank You