The motor industry is one of the most competitive arenas in the business world. Fiat and Tata have been on the forefront in providing diverse car model in the Indian market. This case study considers the dynamics involved in the merger between Fiat and Tata Motors.
Business Opportunity in India
India is a diverse community having rich and poor individuals living in a dynamic community setting. Indian population has been on the rise and the need for more cars to satisfy their needs has been on the rise. India provides the motor industry with a unique taste of cars. According to Dhawan, Swaroop, and Zainulbhai (2012), India is a leading market that offers motor companies to acquire competitive advantage through diversification of its operations.
India has a growing motor industry (Dhawan, Swaroop & Zainulbhai, 2012). The ability to invest in India’s motor industry makes it possible for companies to acquire a unique position. The demand for new car models is increasing. However, this increase in demand for new car models needs to be complemented with models that are fuel-efficient.
Dhawan, Swaroop, and Zainulbhai (2012) notes that India posses the ability for close collaboration within individual industries. The regulatory framework encourages collaboration making it easier for companies to form mergers or partnerships for better market positioning. This is made possible by the ever-increasing competition in the market. Companies that need to increase their market presence in India need to form strategic partnership for better market coverage through production and promotion of unique car brands. Current statistics indicate growth inclined towards inorganic route, which is an inimitable opportunity in the Indian Market.
How Fiat will Benefit from the Partnership
Fiat will benefit from the partnership in several ways. First, Fiat Auto’s reputation has been tarnished in different markets especially in Italy where corruption is rampant. The formation of this partnership will enable Fiat to improve its reputation in a competitive market. Fiat will take advantage of the fact that Tata Motors is an Indian Company that has a considerable market presence and commands a lot of respect in this highly competitive market. This will create an extraordinary opportunity for Fiat to build its brand name under the umbrella of Tata Motor’s name.
From the case study, it is clear that Fiat is a relatively new market entrant. Fiat needs to capture as market share as it can possibly get. This strategic partnership offers Fiat the opportunity to benefit from the merger by improving on market coverage. Fiat does not need to create distribution stores throughout India because this is a huge investment that will drain the company of its ailing financial position. Fiat can use the already established distribution system under Tata Motors to distribute its brands alongside Tata’s products. This will enhance market presence with minimal financial burden.