Business Management Assignment: Impact of COVID-19 on Tata Motors
Task: Your task is to prepare a report on business management assignmentanalysing the impact of the pandemic on the industry and develop survival and success factors for the industry with consideration to megatrends. Your analysis should be critical and relevant; you should explore timely information and relevant newsletters from the selected brand.
As evident herein business management assignment,the COVID-19's have been well-received in India since early 2020. In foreign countries, however, it started a few days ago. However, no one was immune to the virus at that time. Almost the entire year 2020 seems to have come to a standstill instead of moving forward. The situation is similar with Tata Motors and Tata Group. But Tata Motors waited for the good after the bad and instilled that belief. They have overcome that bad situation. This reporter will also reflect on how their condition stood in that pandemic situation and how they came out of that situation.
Supply Chain: Since the covid 19 originated in Wuhan, China, the lockdown was first issued in that region (Naru, Jain and Raj, 2020). The international airport was also declared locked down. In this situation, restrictions were imposed on the supply chain of Tata Motors, which led to the first deficit in the company's business. In a report, a Tata Motors spokesman acknowledged that their production was being disrupted for commercial and passenger vehicle business units since the covid outbreak in China (Wen et al., 2021).
Tata Motors, like its UK-based wholly-owned subsidiary Jaguar Land Rover (JLR), suffered the Covid-19 supply chain disruption just like any other automotive company. As a result, JLR shut down production at the Halewood as well as Castle Bromwich manufacturing plants in the United Kingdom, causing the company to suffer huge financial losses. Tata Motors' global availability of semiconductors has also had an impact on its production schedule and the global demand for some of its vehicles (Verma and Prakash, 2020). Tata Motors Sensex was down 0.4% at Rs 293.40 per piece due to the COVID 19 effect. But instead of relying on China, Tata Motors sought alternative routes. For which the effect of covid was minimized at that time. About 85 per cent of JLR's sales went down due to Covid 19 situation.
Loss of people: Undoubtedly, the effects of the Coronavirus shook almost all automobile companies. Tata Motors has always been concerned about the wellbeing of its employees and, accordingly, was wary of the Corona outbreak and was concerned about health. Despite their best efforts, they have lost 91 people in this battle(Tata Motors lost 91 people from its ecosystem due to COVID-19: Chandrasekaran, 2021). The company had nothing to do but sympathize with their families and loved ones.
Goal: Corona's outbreak had a profound effect on the company's finances (Bhatt and Varghese, 2020).The company has announced its goal of becoming a zero-debt company by Financial Year 2024. Last year, it was able to reduce debt by Rs 7,500 crore through internal cash flow and strict management. They are steadfast in their goals and committed to fulfilling FY24's goals.
Click to Drive: To address the huge shortfall for Covid, Tata Motors has launched a digital sales platform called 'Click to Drive'. Through this platform, customers are able to buy a car from their portfolio while sitting at home. The platform connects customers with Carmaker's more than 750 outlets throughout the country as well as facilitates next-day home delivery for their new vehicles.
Free Service period: The first priority for Tata Motors is their customers. At the time of the epidemic, the company thought of some initiatives for the benefit of their customers. They extend the warranty period and free service period of their customers' vehicles. The period ending between April and May was further extended to June 2021(COVID-19 impact: Tata Motors extends warranty, free service period, 2021). Needless to say, the customers of the company are very happy with this initiative which has a positive effect on the company. As a result of this initiative, the company has been able to enhance the brand's connection with its customers as well as provide them with a hassle-free experience of ownership.
Tata Motors has also successfully spread over its service network around 400 locations. They have been able to set up more than 608 service centres across the country.
• Business plan: Tata Motors has implemented many business plans to protect its business from the outbreak of the Coronavirus. Notable among them is the implementation of an agility plan. The business plan was launched in April 2021 to restore business to its former state during the second wave of the Coronavirus (Covid-19 lockdown: Tata Motors announces business plan to meet vehicle demand, 2021). At a time when the whole country is in the throes of lockdown, the company is trying to re-increase customer demand and increase the interest of suppliers and dealers through an agility plan. By combining retail demand and supply, Tata Motors ensures that it maintains an all-around good relationship with dealers in order to meet all customer needs. It was also observed that the demand would be restored if the situation returned to normal. Tata Motors announced that it would not stop reviewing and planning raw materials to meet customer demand in this situation. To that end, they will strive to maintain similar good relations with both the customers and dealers.
As a result of this agile plan, in March 2021, Tata Motors' total sales increased by 504.88 per cent, which is truly unimaginable. In the case of passenger cars, it rose 422.44 per cent to 29,654 units in 2021 from 5,676 in 2020 (Anbarasan, 2021). Also, Tata Motors was and still is quite aware of the covid situation. It is also making great efforts to improve the safety of its employees and improve its ecosystem.
Sales analysis: Outbreaks appear to be exacerbated during the Coronavirus pandemic. Its detrimental effects were noticed in all business institutes, companies, markets, and its effects can still be seen in some countries. Outbreaks appear to be exacerbated during this time, as Tata Motors' business has suffered a lot. In the global market, Tata Motors has noticed a lot of deficits in sales. The company released a statistic showing that the company sold 2,31,929 units in global wholesale during January-March. But these sales were down 35 per cent due to the Covid 19 pandemic in the 2019 fiscal year (Sharma, Khater and Vashisht, 2021). As a result of the epidemic, sales of passenger vehicles in the global market fell to 1,59,321 units in 2019, much lower than before, they said. These sales are considered to be 26 per cent lower than the previous year. Sales of Jaguar and Land Rover also decreased. That year, the Jaguar sold only 32,940 units, and the Land Rover sold only 94,039 units. From this, it is clear that how much the company's cell went down at that time. In the commercial vehicle segment, the company's wholesale volume fell by 49 per cent from what it was in the fiscal year 2020 to just 72,608 units.
Every company had to suffer the consequences of this pandemic situation. In the Indian market, the company sold a total of 74,679 units in 2019, down from 12,924 units in 2020, an unprecedented change (Guntupalli et al., 2020). Although the company suffered heavy losses during the Coronavirus and sales fell sharply worldwide as a result of the lockdown, the company's newly launched products received a good response, which helped the company survive the crisis.
Loss analysis: Tata Motors has released a report which presents an analysis of its highest quarterly losses. Unfortunately, the Covid-19 epidemic has largely affected its Indian and foreign businesses. The company has suffered huge losses during the January-March 2020 period amounting to Rs 9,894 crore (Bureau, 2021). The company had a consolidated net profit of Rs 1,108 crore during the same period last year, from January to March. This is in stark contrast to Tata Motors' second-quarter and third-quarter profits, which have been boosted by internal and external growth in the Jaguar Land Rover business. JLR contributes 78 per cent to the company's revenue collection, which is undeniable. There was a fair run around the March quarter, which eroded profits for the second and third quarters.
The effects of the epidemic were significantly responsible for the results of the fourth quarter. Businesses have been forced to make tough calls to navigate this crisis. JLR suffered a loss of £ 501 million in the fourth quarter due to low sales due to the tight security of the lockdown. As a result, the company reported a revenue of £ 5.4 billion. The covid 19 effect on the margin was about £ 800 million. In India, where demand was often affected by the general recession, liquidity pressures and correction as a result of the BSVI transition, the lockdown further affected it. Also, rapid MHCV volume loss negatively affected operating profitability and also its impact on cash flow.
The company has reduced its revenue by about 28 per cent from Rs 62,493 crore in operations. The company's operating income (interest, taxes, depreciation and earnings before payments) declined by 66% to just Rs 2,875 crore (Mohanty, Parida and Khuntia, 2021). As a result, Ebitda margins also shrunk sharply by 510 basis points to 4.6 per cent this quarter. At the year ending of March 31, 2020, the company reported that it had faced a consolidated net loss of Rs 12,000 crore, with revenue from operations falling by 14 per cent to Rs 2,61,068 crore. Above all, they fear that JLR and other domestic, commercial vehicles will suffer further losses this year as the negative effects of the lockdown are still being reflected in their business.
• Safety and wellbeing: The company aims to ensure that all employees in the company are vaccinated and that corona-affected employees and their families are helped as much as possible (Staff, 2021). It is also constantly introducing new protocols for the second wave, with as much activity and cooperation as possible. Employee safety is paramount, given the Covid situation, and standard operating systems have been introduced. When partial lockdowns were introduced in different parts of the country, the demand for cars started to increase again little by little. Therefore, the company launched a comprehensive plan to protect the interests of customers and dealers.
They have also been responsible for reducing the workload, ensuring proper safety in the workplace, introducing vaccinations, sanitizing, etc., and keeping an eye on the families of the workers with adequate awareness.
Market strategy: During the outbreak of the Coronavirus, all shops and showrooms were closed due to the lockdown, curfew, and it was not possible to come to the showroom and buy a car or do a test drive. In that situation, Tata Motors always strives to stay in touch with the customers so that the quality of their business does not go down. The various employees always try to keep in touch with the customers through messages, WhatsApp chats, video calls, emails etc. (Pal et al., 2021). and also keep an eye on this matter so that they are provided with appropriate information. They also create an online platform called Click to Drive so that consumers can select the cars of their choice at home and see if they are affordable. As a result of providing details on the portal with all the features and information, consumers no longer need to come to the showroom to see the car. About 750 outlets were set up across the country, and home delivery was also arranged. They were also able to handle the situation by offering a 100% discount on road funding, offering various discounts, reducing the amount of EMIs and extending the term to 8 years. Also, some BSVI models are being launched through digital platforms this time which have gained huge popularity. They also launched the #ThankYouIndianTrucker campaign for truck drivers (Mishra, Khadse and Srivastava, 2021). It also extends the free service period and car warranty period for CV and P.V. buyers. They also introduce PGI, which gives a fixed amount to the daily wage workers working in the company during this pandemic.
At present, the situation of Corona has become much more normal; although it has not been able to recover from the grip of the world, life has started to return to normal. However, some campaigns some protocols are still being worked on; all the showrooms of Tata Motors have not been opened yet, business is going on in the partial online partial offline process. It is hoped that the company will soon be able to recover from this situation and resume business as a whole.
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