Strategic And Economic Rationale For The Acquisition

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What was the strategic and economic rationale for the acquisition in the case? Acquisition between Tata- Jaguar Land rover was financially beneficial for the Ford company. During the years 2006-2007 Ford lost more than 10 billions of dollars. Acquiring the Jaguar company in 1990 Ford tried to improve the production. Nevertheless the situation was worth than company expected and required constant investments. In 2008 sales of Jaguar cars decreased from 35000 to 17000. However Land Rover sales were better and at the end of the year they rose from 29000 to 46000 cars in US. Even though the Land Rover evaluation was quite good still financial situation of the company has not improved. Finally the CEO of the company decided to sell Jaguar…show more content…
2) What strengths of Jaguar and Land Rover were the most valuable for Tata? Jaguar and Land rover are brands with a long history in luxury car industry that are well known around the world. For TML the acquisition with JLR were beneficial and give them an opportunity to improve their company in several aspects. First of all acquisition with Jaguar Land Rover has enabled Tata to become more recognizable in the world. Before company was not sufficiently well known in automobile industry except in the production of heavy trucks. Acquisition gave them the opportunity to enter new market segments and put them on new competitive level of selling the luxury cars. Also it will improve the image of the company through the acquisition of brands Jaguar and Land Rover Tata will be able to increase cars sales in the middle and the low class. The buyers will trust middle and low class cars sold by the company which also sells luxury cars due to association with the bigger brand names. Secondly, under an agreement between the parties Ford agreed to supply Tata Motors with engineers technology and spare parts of cars which contributed to improving production of automobiles and upgrade the manufacturing process. Tata will have the access to more modified technology that they can use in all of their different production factories. Thirdly, selling luxury cars contributed to enter new markets as well as entering and increasing the
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