FIAT-TATA Joint Venture: Case Study
Joint Venturing is one of the most promising methods of entering a foreign market. The venture provides firms with an opportunity to explore markets in other Countries. In the process of joint venturing, two or more firms decide to share ownership and management of a joint business. Several reasons explain the need for a joint venture. Firstly, the strategy provides Companies with an opportunity to join new markets quickly. Secondly, the joint venturing process allows businesses to share risks and control of the joint business. Thirdly, individual firms benefit from skills and expertise from the other firm. Fourthly, through joint venturing, firms are exempted from too many foreign ownership rules. Finally, joint venturing provides firms with an opportunity to share the cost of the business.
However, it is vital to consider several factors before entering into a venture joint business. Firstly, firms must consider the nature of their potential partners. The success of a joint venture business depends on individual firms forming the venture. Secondly, individual firms must be willing to commit their resources to the joint business. Thirdly, a joint venture business is supposed to reduce the market risk of individual firms. Fourthly, firms must also agree on the management and control of the joint business.
The case of FAIT-TATA presents several advantage and disadvantages of the joint venture. The advantages of the joint venture included the following. Firstly, the Italian Company Fiat gained access to the Indian motor industry. Through the joint partnership with Tata, Fiat Motors was able to enter the Indian motor market. Secondly, Fiat also took advantage of Tata’s well-established market networks. For example, Tata Company had a good sales, service and distribution network across the Country. As such, Fiat Company hoped to utilize its joint partner’s market networks to access the fastest growing motor market. Thirdly, the joint partnership provided Fiat Motor Company with an opportunity to access the rapidly growing motor market. Fourthly, Tata Motor Company also took advantage of Fiat’s manufacturing capacity.
However, despite the benefits gained from the joint partnership, the following limitations were evident. Firstly, the joint venture faced severe competition from other motor Companies. At the same time, there was internal competition between the firms’ products. For example, some car products performed better compared to others. This created an internal rivalry between the two Companies. Secondly, the emerging internal competition between the two firms opened an opportunity for potential conflict. Things would only get worse between the two firms. Thirdly, issues to do with management and control of the joint venture emerged. For example, Fiat motors were not comfortable with the management of commercial and distribution operations. Fourthly, the joint venture was experiencing financial loss. For example, both Companies’ sales were dropping significantly with time.
Role of STP in Marketing Plan: MAMAS AND PAPAS Case Study
Segmentation, targeting, and positioning plays a significant role in marketing. The process allows organizations to establish a potential market for the products/services. In particular, the STP played a significant role in the MAMAS AND PAPAS marketing plan. Using the STP approach, the Company was able to align its brand with the target market. The following is the definition of STP and its role in the creation of MAMAS and PAPAS marketing plan. Firstly, segmentation id defined as the process of grouping customers based on their demographics (Douglas and Craig, 2015). Through segmentation, the Company can identify the needs of its potential customers. The Company’s marketing strategic focuses on several market segments. The segments include local, national and international markets.
Secondly, targeting involves the process of focusing on a particular market segment. After segmentation, the next step involves targeting. Through targeting, a Company can concentrate on a specific market. For example, in the case of MAMAS and PAPAS, the organization focuses on both local and international markets.
Thirdly, positioning is the final stage of STP. The process involves aligning an organization’s brand to the target market. Positioning plays a vital role in the development of a Company’s brand. Through the positioning process, a Company can create awareness about its products/services to its target customers. It is paramount to note that the three steps work together in the establishment of a marketing plan.
MAMAS and PAPAS, present an ideal example of a Company, which applies the STP technique in its marketing plan. Firstly, the Company starts by identifying several potential market segments. Secondly, the firm selects a specific market segment. Thirdly, the Company positions its brand to the selected market segment.
The South African market is multiracial. As such, the market contains customers from different races and cultures. Some of the groups include Black, Indian, White and colored customers (Demangeot, Broderick, and Craig, 2015). The multiracial market feature is special to the South African market. The market attribute is not found in most developed Countries. Such a market presents enormous opportunities to businesses. As such, businesses should take advantage of the special feature. MAMAS and PAPAS is a good example of Companies who have taken advantage of the multiracial market in South Africa.
Douglas, S. P., and Craig, C. S., 2015, “Developing and Managing an International Brand Portfolio,” In Global Perspectives in Marketing for the 21st Century (pp. 372-372). Springer International Publishing.
Demangeot, C., Broderick, A. J., and Craig, C. S., 2015, “Multicultural marketplaces: new territory for international marketing and consumer research,” International Marketing Review, 32(2), 118-140.