Enterprise Risk Assessment Final 1 Essay

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BPP Business School Assignment Cover Sheet
Please Print in Capitals in either Blue or Black ink
Programme: BSc Business Management
Module Title: Enterprise Risk Management

Title: Tata Motors Limited
Tutor: Sharon Wheatley
Word Count (if applicable): 2908
SRN: 1041510
Number of pages: 16
Site: London City

I hereby declare that I have read and understood BPP’s policy on plagiarism and that the work presented herein is my own.

Received by:
Signed: 1041510

Enterprise Risk Management

Tata Motors Limited

Content Page

Key for Risk Register……………………………………………………4

Threats to Tata Motors Limited…………………………………..5

Opportunities for Tata Motors Limited……………………….13

References………………………………………………………………….15

Key for Risk Register
Likelihood

Impact

1
Very Unlikely
1
Negligible Impact
2
Likely
2
Moderate Impact
3
Almost Certain
3
Catastrophic Impact

Risk Score
Classification
Mitigation
Logic
Less than 10
Low Risk
No
A factor of risk that is considered to be less than 15 in value is not considered to be a big risk that need a mitigated plan as even their occurrence may create catastrophic impact or their likelihood of occurrence may be low or both
10 to 15
Moderate Risk
Yes

More than 15
High Risk
Yes
Any risk, which falls in this risk, is considered to be serious enough to call for a detailed mitigation plan and action. If these risks become reality, the results could be catastrophic or their likelihood of occurrence may be high or both

Threats to Tata Motors Limited
S No
Risk
Likelihood
Impact
Risk Score
Mitigation
1
Global economic conditions effectively dictate the health of the global automotive industry. The industry saw severe stress for volumes and profits during the 2008 depression in India and around the world (Sturgeon & Van Biesebroeck, 2010). The economic depression in India caused major setbacks in demand for Indian automotive manufacturers, though the impact was not as hard as the American and European markets (Sturgeon & Van Biesebroeck, 2010). The Indian economy, which represents a major share of the business of Tata Motors Limited, is experiencing subdued economic conditions that are characterised by cyclical demand, high inflation rates sustaining a high interest rate regime and consequent lack of availability of consumer financing options to spur sales growth (Tata Motors, 2014). These factors in the Indian market are a serious concern for Tata Motors.
2
2
18
The global economy and the macro economic conditions of high inflation mean high interest rates and the fact that the Indian market faces increasing difficulty in financing purchase of new cars, the fact that the company has its own vehicle financing arm in the form of Tata Capital and Tata Motors Finance. Though these are independent companies in the Tata group, the latter is dedicated to the financing of Tata brand vehicles alone (Tata Motors, 2014). The company will have to develop its own vehicle financing strategy to develop and sustain the Indian market demand for Tata Motors, especially since the company has fared poorly compared to competition since 2008 (Economic Times, 2012). 2 Input costs of raw material and supplies are a major component of the costs incurred in the manufacture of automobiles. The commodity markets that deal with the procurement and supply of these raw materials have been very volatile for the past five years. This volatility ensures that Tata Motors has had to absorb cost increases, which cannot be supported by price increases in a subdued demand condition. Therefore, the stability of commodity prices plays a key role in the profitability of the company. Even though the company makes productivity and efficiency improvements to offset these fluctuating costs, the volatility has been too high for the company to mitigate in the past (Tata Motors, 2014). Among the many triggers to the loss of profitability is the fact that the small or medium commodity price fluctuations are not passed on to
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