FOREIGN MARKET ANALYSIS

Foreign Market Analysis

Foreign Market Analysis

Introduction

Despite the global tendency for the significant fall of car sales there are certain car segments which experience dynamic growth. According to Datamonitor (2006b) the sales of commercial motor vehicles and port value motor vehicles were very healthy. Windecker (2005) demands the consequence of socio-cultural compels which profiled the enhanced preferences towards more fashionable, sport-type, SUV bearing arms car. The tremendously high growth of SUVs was recognized in US and UK.

The purpose of Tata's market submission will be UK. There were numerous justifications for picking UK as the objective market. These favourable elements were the position of India as the favourable monetary branch, UK Car market dynamics and capability, terminology similarity. The other countries which were considered as potentially attractive were: the USA - the largest market size in the world, Russia - emerging market with significant sales potential. The option of the USA as target market was declined due to extremely high quality requirements and other non-tariff barriers which make it hard for a new entrant to enter this market. Besides, this market is highly mature and familiarity greatest stage of competent pressure. With regards to Russia, there were several unfavourable factors which made it less attractive then the UK - the uncertainty of the further economic state, high entry barriers and no well—developed dealership network.

Political factors

Political and legal factors play the role on the development of the industry. These factors shape the governs of competition, operational expenses and provide chain requirements.

Oil prices resulting from international instability - The special attention shall be given to oil prices and its affect on the market requirement. According to Mintel (2006) the increase of oil prices has created a strong tendency towards small engines, hybrid engines and diesel engines. Current high level of oil price increase the strain on the sales of luxury and premium cars, the majority of which are equipped with large-size engines (more then two litres).

The political relationships between countries of operations (regimes of favourability/protectionism) (Hill, 2002) - India cooperates with the UK within the regime of favourability which implies the certain benefits as reduced tariff and non-tariff barriers.

 

Economic factors

One of the major location choice determinants is the current and future demand conditions as they will affect the market growth potential, pricing strategy and operations margin and the potential of the return on investment.

The target market size - According to Mintel (2006) since 2001 there has been a steady market growth by size and value. The current UK car parc is estimated to accommodate 31 million units. The market value was contributed by the steady growth of average price level. The present market value is estimated to reach the level of £31 billion

 The maturity of the target market - The UK market is viewed (Mintel, 2006) as highly mature. The current maturity causes overcapacity issue and significant sales fall of particular car segments.

 

Social factors

Demographic factors - Demographic factor is one of the key social ...