This report looks at the feasibility study and entry strategy for Tata Pick Up truck Xenon to enter in Malaysia. This study covers the basic principles of a management course such as PESTEL Analysis, HOFSTEDE Culture, 5C Analysis, Value Chain Analysis, SWOT Analysis, 4P Analysis, and the Business Environment Analysis

1. TATA XENON
COUNTRY ENTRY STARTEGY IN MALAYSIA
GROUP 8 B
[Shiv Methil, Sumedha Sharma, Siddharth Ravishankar, Vivek, Viswanath]

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TABLE OF CONTENTS
EXECUTIVE SUMMARY..................................................................................................................3
BACKGROUND.................................................................................................................................. 4
MACROECONOMIC ANALYSIS......................................................................................................4
PESTEL........................................................................................................................................................ 5
HOFSTEDE CULTURE.............................................................................................................................. 6
BUSINESS ENVIORNMENT ANALYSIS........................................................................................7
GLOBAL MARKET OPPORTUNITY ANALYSIS:.................................................................................8
TATA MOTOR’S ORGANIZATIONAL READINESS.............................................................................8
TARGET MARKET – WHY MALAYSIA.................................................................................................9
INDUSTRY MARKET POTENTIAL:.................................................................................................... 12
COMPANY INTERNAL ANALYSIS:.............................................................................................12
5C’s ANALYSIS........................................................................................................................................ 12
VALUE CHAIN ANALYSIS:.................................................................................................................... 15
SWOT ANALYSIS.................................................................................................................................... 16
COUNTRY ENTRY STRATEGY:..................................................................................................17
4 Ps............................................................................................................................................................ 17
PARTNERSHIP STRATEGY: ............................................................................................................... 18
CONCLUSION.................................................................................................................................. 18

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EXECUTIVE SUMMARY
The South Asia Market is witnessing a strong growth in the automobile sector.
Malaysia is one of the most stable economies in the South East Asia. Although until now
Malaysia was following strict government regulation to promote national brands but it
has now opened up its market under National Automotive Policy 2006 to promote
Malaysia as a manufacturing hub for automobiles and also to increase the presence of
foreign automobile players in the market. As per the Malaysian Automotive Association
(MAA), sales of commercial vehicles is expected to grow 4.6% to 68,000 units in 2012
from 65,010 units a year earlier. Moreover, Tata Motors has set up its Pick Up truck
manufacturing in Thailand and is looking at expanding in Malaysia.
This report looks at the feasibility study and entry strategy for Tata Pick Up truck
Xenon to enter in Malaysia.

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BACKGROUND
Traditionally, the pick up vehicle market in Malaysia was dominated by Toyota
Hilux and the Ford Courier. These were just utility vehicles for people to carry heavy
tools and machinery. The first company to add comforts and good looks in the pickup
segment was Ford Malaysia with the Ranger in nineties. Mitsubishi launched Storm in
the market which became Ranger’s top competition.
Almost a decade after the introduction of the Ranger, Nissan launched the
Frontier. Toyota made few changes in the Hilux to suit city drivers, and Mitsubishi
launched Triton. Also Isuzu launched D-Max in the pickup truck category. As of now
there are around eleven major players in the Pick Up category in Malaysia. The breakup
of the pickup segment is given in the graph below in which Toyota leads with almost
50% market share of the market.
MACROECONOMIC ANALYSIS
Source: http://www.cbt.com.my/2012/04/03/sedans-are-out-lifestyle-cars-are-in/

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The macro economic analysis of any country can be done through a PESTEL
analysis and the cultural analysis can be conducted using Hofstede Analysis.
PESTEL
Political Factors:
Malaysia is a constitutional monarchy with a parliamentary system of government.
Political system is dominated by native Malays and though there are tensions among the
different races, a competitive but collaborative governance is prevailing in Malaysia. A
political risk index of 8 on a scale of 10 (Higher the index, lesser the political risk) is
given for Malaysia which shows that political conditions are stable and conducive for
business in the country.
Economical Factors:
Malaysia is the third largest ASEAN automobile market. Automotive industry in
Malaysia registered a marginal decrease of 7.5% in sales during 2011 and it is expected
to increase to 615000 units in 2012. Domestic investments in automotive industry
amounted to RM 1350.4 million contributing to 70% of the total investment. (The
Malaysian Automotive and Supplier Industry, 2012) The real GDP growth rate is
estimated to be 5 % in 2012 and the inflation will be 3.3 – 3.5% (est. 2012 IMF). Imports
of Commercial MPVs from ASEAN countries will be subject to only 5% import duty as
they are declared as ASEAN Free Trade Area (AFTA).
Social Factors:
Owing to its near-universal primary enrolment, Malaysia’s literacy rate stood at 92.8%
in 2009. In spite of the slow economic growth, the unemployment rate is only 3% which

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indicates the availability of huge labour force. The average per capita disposable income
income is $ 4552.
Fig: % of income against age group
A – Above 200%, B – 150%-200%, C- 100%-150%, D- 50%-100%, E- Less than 50%
Technological Factors:
Innovation and new technologies in manufacturing has improved the productivity by
44% between 2001 and 2006.
Environmental Factors:
Energy efficiency is given utmost importance and the Government encourages such
cars. Excise and duty tax exemptions are granted for hybrid energy efficient cars.
Legal Factors:
According to National Automotive Policy (2012), the freeze on issuance of new
manufacturing licenses will be lifted for pick-up trucks and commercial vehicles.
Malaysia is ranked 23rd out of 183 countries in the World Bank’s Ease of Doing
Business 2010 report. It takes just 11 days to start a business in Malaysia as against the
37 days it takes in China. It stands at 4th place in protection of its investors through
effective investment and security laws.
HOFSTEDE CULTURE

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Malaysia Culture is a very high context culture where lot of emphasis is given on
relationships. Therefore, it is important for Tata to leverage on its brand image and
build a relationship with the customers.
BUSINESS ENVIORNMENT ANALYSIS

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The business environment analysis will be done by analyzing if there is a market
for TATA Xenon in Malaysia. Given below is the framework of Global Market
opportunity Analysis.
GLOBAL MARKET OPPORTUNITY ANALYSIS:
TATA MOTOR’S ORGANIZATIONAL READINESS
Tata Motor’s is one of India’s largest car manufacturer With the Indian car

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market slowing down owing to the increasing costs of ownership and the ever-
increasing cost of fuel, Tata is now looking for greener pastures abroad. Tata Motors
currently has manufacturing facilities in the UK, South Korea, Thailand, Spain and South
Africa.
Sr.
No
Facility Acquired in Collaborator Manufacturers
1 UK 2008 Jaguar Land Rover LV & SUV
2
South
Korea
2004
Daewoo Commercial
Vehicles Company
Trucks
3 Spain 2005 Hispano Carrocera Bus & Coach
4 Brazil 2006 Marcopolo Bus & Coach
5 Thailand 2006
Thonburi Automotive
Assembly Plant Company
Pickup vehicles
6
South
Africa
2008
Tata Africa Holding (Pty)
Ltd
Medium and heavy
commercial
vehicles
In 2006, Tata Motors entered into joint venture with Thonburi Automotive
Assembly Plant Company of Thailand to manufacture and market the company's pickup
vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of
the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008. Tata
Motors is an international motor manufacturer and has a global footprint with its
commercial and passenger vehicles already being marketed in several countries in
Europe, Africa, the Middle East, South East Asia, South Asia, CIS, Russia and South
America. Further, it has franchisee/joint venture assembly operations in Bangladesh,
Ukraine, and Senegal.
With a deep understanding of economic stimuli and customer needs, and the
ability to translate them into customer-desired offerings through leading edge R&D Tata
Motors is definitely ready to enter into a new market.
TARGET MARKET – WHY MALAYSIA

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Malaysia has traditionally been a middle-income country but now Malaysia has
transformed itself into an emerging multi-sector economy spurred on by high
technology, knowledge-based and capital- intensive economy. It is one of the 20 largest
trading nations worldwide. After Singapore, Malaysia is EU‘s second largest trading
partner inside ASEAN, with bilateral trade in goods reaching 31.9 billion Euros in 2010.
The automobile customer market is the biggest in Malaysia in South-East Asia
due to the recently increased spending power of the consumers. Traditionally Malaysia
has protected its auto industry from foreign competition. They have introduced trade
barriers and high import tariffs on foreign brands of vehicles, which have protected its
two national carmakers, Proton and Perodua. Together, these two companies have
dominated the auto industry commanding close to 59% of the local mid size car market.
However, recently the government has taken certain measures to reduce trade barriers,
due to its obligations in the World Trade Organization (WTO) and in the ASEAN Free
Trade Agreement (AFTA)
Although the mid car segment is still dominated by the likes of Proton, Perodua
and Toyota, there has been relatively no major standout player in the pickup truck
market. To add to it with Tata’s Xenon manufacturing facility in Thailand, this market
seems a very good market to penetrate. With the Xenon already a success in Thailand,
and with Thailand and Malaysia sharing similar economic and geographic backdrops,
the Xenon seems a perfect fit.
(Reference: “Market Watch 2012” The Malaysian Automotive and Supplier Industry)
The graph by Frost and Sullivan below shows that Malaysia is a steady market to enter
into.

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INDUSTRY MARKET POTENTIAL:
Malaysia has a growing potential for Pick Up trucks. The commercial vehicle
break up is given in the figure. Pickup forms the biggest segment in Commercial
vehicles. Also there is a big difference on the tax levied between SUV and pickup trucks
which is giving a thrust to the growth of lifestyle pickup trucks as compared to SUV
segment.
COMPANY INTERNAL ANALYSIS:
5C’s ANALYSIS
A. Company:
Tata Motors is a subsidiary of Tata group. Tata Motor’s product line includes:
 Passenger vehicles: Tata Indica, Indigo, Nano
 Sport Utility vehicles: Tata safari
 Commercial vehicles: Tata Sumo, Tata Xenon
 Trucks & Buses
Tata motors acquired Jaguar and Land Rover business from Ford Motors, this
acquisition helped them to gain entry into European market, and also helped boosting
the brand image of Tata Motors. Also, Tata Motors saw immense potential in the Land
Rover as a premium Sports Utility Vehicle and have turned around the fortunes of the
LR in three years. In Malaysia, Tata motors forsee growth potential in the commercial
vehicle segment as this is a growing market in Malaysia and also because of lower
competition from local players. Tata will introduce Tata Xenon as there is an assembly
plant in Thailand and can be directly imported from Thailand.
Also, Tata Motors can also leverage the ASEAN free trade agreement (FTA) as
they have an assembly plant in Thailand.

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B. Collaborators:
Tata can get into contract agreements with the local distributors in Malaysia.
Tata can partner with Isuzu Hicom Malaysia Sdn. Bhd to gain entry. It can also get into
agreement with component manufacturers for supplying spare parts and other critical
components.
C. Customers:
The commercial vehicle market has increased by 12.1% YOY compared to June
2011 quarter (Malaysian Automotive Association, 2012).
Source: Malaysian Automotive Association, 2012
As in the above graph pickup truck share is higher and is about 68%. This gives a
good opportunity to get into pickup truck market. Most customers are small business

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owners who requires to transport goods locally i.e. inside the cities and sometime
outside the city borders. As this truck will be imported from Thailand and this will be
under the laws of FTA, the price can be made very competitive, this will attract more
customers.
The urban Malaysians are also driving Pickup. It has a become a fashion statement in
the Malaysia automobile market.
D. Competitors:
The main competitors are:
Mitsubishi Triton, Nissan
Navara, Isuzu and Toyota
Hilux. The market share is
as as per the attached
graph.
Source: EU Delegation to Malaysia –
Trade & Economic Section, Jan 2012
E. Climate:
The climate or macro
environment factors are as detailed in the PESTEL analysis.

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VALUE CHAIN ANALYSIS:
The Analysis below summarises which activities are important for Tata and
should be kept in house and which can be carried on in Thailand in the initial period or
can be transferred to third party and dealers. Since its a established product therefore
there is not much R&D needed, the component and manufacturing as of now is being
done in Thailand plant. If the market size increases considerably a manufacturing plant
can be started in Malaysia which is encouraging companies to set up its manufacturing
facilities. Initially marketing and customer service can be kept in-house as it’s crucial to
make an early impact in the market. The sales, distribution and logistics can be shifted
to outside vendors.
VALUE CHAIN ANALYSIS
R & D Design
Component
Manufacturing
Manufacturing or
Assembly
Importance of this
activity to the firm
as a strategic asset
Low importance :
Already proven
product to be
launched
Low importance.
Currently
outsourced in
Thailand.
High importance since
the cost and quality of
manufacturing is
essential

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Likelihood of
Internalizing rather
than outsourcing
High importance for
an already proven
product with
continuous
innovation to
customize to the
local market
Low importance as
the process is
already outsourced
at Thailand
Low importance since
the product is
manufactured at
Thailand
Geographic
configuration:
Home or abroad
Concentrated at
Thailand
Produced at
Thailand
Concentrated at
Thailand
Marketing &
Branding
Sales, Distribution
& Logistics
Customer Service
Importance of this
activity to the firm
as a strategic asset
Very important for
the launch of a new
product
Very important as
the products are
imported from
Thailand
Very important as this
is a new product
Likelihood of
Internalizing rather
than outsourcing
High importance as
it is for a product
launch for a totally
new market
Medium importance
since the product is
distributed in
Malaysia
High importance as the
product is new to the
market
Geographic
configuration:
Home or abroad
Branding and
Marketing
concentrated in
Malaysia
Mainly
concentrated in
Malaysia and
partially at Thailand
in terms of exports
Customized to suit the
market with local call
centres
SWOT ANALYSIS

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COUNTRY ENTRY STRATEGY:
4 Ps
Though the automotive policy of Malaysia is still not very open as compared to
other ASEAN countries, but there is a growth potential for pickup trucks and increase in
consumer base. The 4Ps have been given in the analysis below.

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PARTNERSHIP STRATEGY:
Strategic partnership with Dealers and third party logistics to take advantage of
the following skills
 Existing customers in terms of loyal customers
 Sales and service expertise
 Reputation/brand equity
 Market access/knowledge
CONCLUSION
Though the market in Malaysia has traditionally been a closed one to foreign
carmakers, however recently the government has taken certain measures to reduce
trade barriers, thanks to the World Trade Organization (WTO) and in the ASEAN Free
Trade Agreement (AFTA). Also, owing to the robust nature and reputaions of Tata
Motors and their cars in general Tata Motors seems a really strong player to be entering
the Malaysian pick-up truck market.
Add to this the detailed analysis done above, it clearly shows that Tata Motors
will only stand to gain by entering the Malaysian market with its successful model; the
Tata Xenon.