Product innovation as a critical determinant of foreign market success based on the global automobile industry; case study of Tata and Volkswagen
Product innovation as a critical determinant of foreign market success based on the global automobile industry; case study of Tata and Volkswagen

Chapter Three: METHODOLOGY

3.1       Introduction

The term Research Methodology is indicates as “an organized work to advance understanding”. It refers to the technique of analytically answering the problem of the research. It might be assumed as a skill of learning in what way study is performed systematically. This chapter offers the thorough summary of complete research methodology that is used to conduct the study and to reach the consequences of the study. To attain this, research methodology chapter is distributed in various sections. The first unit delivers the thorough methodology analysis integrating all the related theories and investigation methodologies that can be accepted in the research under consideration. The second segment of the research practices presents the particular research methodology selected for the research under observation. Moreover, each major section is divided into several sub-sections that exemplify diverse theories and overall procedure used for choosing research methodology along with the explanation concerning the choice of methodology.

My study directed on analysis on product innovation as a critical determinant of foreign market success based on the global automobile industry; case study of Tata and Volkswagen.

3.2       Research Philosophy

Research philosophy is a fundamental characteristic of the process of the research as it unlocks minds of the researchers to various prospects that can bring about an improvement in the skills of their study as well as development in their assertion that they are practicing the suitable approach. Essential to the interrogations that “How to study? ‟ and “What to study? ‟ is the viewpoint of the researcher on “Why investigation?” This side is built on the scholar’s norms regarding the inter-connected ideas of human nature ontology, and epistemology. This kind of contradiction is deceptive to study values, thus challenging the type of the study correction (Hughes et al., 1997).

3.3       Research Design

The development of the objective and study question ought to be the reason of selecting the accurate investigation tactic. By means of three ways we can set a suitable strategy of the research that are explanatory, exploratory, and descriptive (Saunders, Lewis and Thornhill, 2011). Within the literature it is discussed that a research can be descriptive as well as explanatory once the research has various points. The strategy towards the research is a consistent and analytical idea set for leading an investigation of the study. The quantitative methodology will be used to gather first-hand information on research aim.  A study design is an organization of circumstance for assortment and exploration of data in a way that aims to associate the significance to the study functions with economy in process. It is the plan which leads the researcher in the course of gathering, examining and inferring data. It is run down to discover the view concerning celebrity endorsement. Illustrative research design is implemented in this study. The research was in line with the main objective which is to look into automobile industry and innovation. This research methodology also explores that in what way these innovations affect the critical determinants of foreign market.

3.3 Questionnaire survey

Survey was a validated set of questions which might acquire the necessary material by the participants. It essentially interprets the information require into a set of particular issues and matter that the defendants can recognize and prepared to reply (Malhotra, 2006).

3.3.1. Questionnaire design

In this existing study, organized questions for example multiple-choice and scale would be used. Hence it possibly will lay down the set of answer choices and the response arrangement. Before the surveys were circulated to the public and the college going student, make sure about the dependability and precision of the questionnaire. So as to attain adequate quantities of answer for the study within a short period, self-administered online surveys were conducted.

3.4. Data Analysis

Data collection was done using a structured questionnaire based on the objectives of the study.

A first version of the questionnaire was developed and previously tested with persons belonging to the target of the study. The test is conducted to assess the understanding of the issues, their logical sequence and quality of the information collected.

Places investigation were chosen according to ease of access to the investigation sought profiles.

We tried to vary the days and hours of the investigation.

Before analyzing the results, we coded the questionnaire according to a coding sheet and proceed to verify the consistency of the data entered.

Data analysis is carried out on SPSS. The statistical treatments which are developed are:

  • Sorting dishes with simple frequencies.
  • Differentiated analysis in the form of cross-tabulation with khi2 hypothesis testing.

As for the presentation of the results we have ensured that it is clear, without drowning the reader in details numbers, focusing on the points that reduce the uncertainty in the interpretations.


3.5       Research Quality

The research quality continues a significant success element of the entire project of the research. New researches usually bring about latest outcomes whose correctness requires to be guaranteed so as to depict accurate suppositions. Consequently this additional purpose allocates with two main aspects that most affect the quality study – Reliability and validity.



Chapter Four: Data Analysis


(Number 14 on the list of 1,000 global companies in Mexico Forbes)

Sales: 254,000 million dollars (mdd).

Market Value: 94,400 million dollars (mdd).

In 2012 Volkswagen sold more than 9.2 million units, representing 12.8% of the world passenger car market. With 104 plants in 27 countries, 37,700 employees produce 550,000 cars a day that are sold in 153 countries.

VOLKSWAGEN Innovation Story

1934 – 1940 and Volkswagen Beetle: a simultaneous birth

The history of the German brand begins July 22, 1934, when the National Association of the German Automobile Industry instructs Ferdinand Porsche to design a “people’s car” (“Volkswagen” in German). A year later, under the strictest silence, the first prototype is built. In 1936 they get other versions of the model, with bodywork sedan and a convertible.

In May 1937 the company Gesellschaft zur Vorbereitung des Deutschen Volkswagens (Society for German car preparation), which in 1938 was renamed Volkswagenwerk is created. Meanwhile, earlier that same year begins in County Wolfsburg plant building that will house the production of the new vehicle. Finally it presented to the public the VW38, a car ironically dubbed by the New York Times as “Beetle” (Beetle) by its original form, reminiscent of the insect.

1941 – 1950 produced 100,000 units

During World War Volkswagenwerk he devoted to arms production: about 20,000 prisoners, including those from the concentration camps, working in the German plant. Following the conclusion of the conflict, the British military government assumed control of the company (June 1945) and under the direction of the major Ivan Hirst, begins mass production of the Volkswagen Beetle. The plant also called Wolfsburg.

In 1947 began the first exports from the hand of Ben Pon a German businessman who sent five cars to Holland. The following year, Volkswagenwerk headquarters, located in Berlin, moved to Wolfsburg; Additional Volkswagen Financing Company is created. The production of the Beetle continues: in 1948 and 1949 are made, respectively, the units “25000” and “50,000”.

A year later, already surpassed 100,000 vehicles, the family expanded with the arrival of Type 2. The van, still known as the “Bully”, soon captures in high demand because of their versatility.

1951 – 1960 reaches one million

The Beetle receives significant technical improvements to the engine (1951) and as a great innovation, comes standard with hydraulic brakes. It is available in three versions: convertible with sunroof and fully closed. Two years later, coinciding with the half million units produced, the brand makes the first significant aesthetic changes in the model eliminates the central pillar of the rear window to improve visibility.

In 1955 one million units is reached: Wolfsbursg 140,000 people celebrated this event. The Karmann Ghia Coupe: parallel a new more elegant and sophisticated model developed with Karmann coach is presented. Finally, the manufacturer sets in Hanover plant for the production of Transporter (1956).

1961 – 1970 Before the crisis, price drop

The most notable event of this decade comes in 1964 with the founding of Volkswagen México in the city of Puebla. The objective is to produce vehicles according to German standards. After a year of activity, the headquarters of South America has 21.8% of market share, with 22,220 cars sold. On this same date, Volkswagenwerk AG acquired subsidiary Daimler-Benz, Auto Union GmbH.

But not all good news: in 1967 the first crisis comes. Production and sales fall dramatically (300,000 and 200,000 units, respectively). In this situation, the car reduces the price of the Beetle. A year later, as a result of agreements between the company and IG Metall, the union of workers in the metal industry, the working day was cut to 40 hours. Finally, comes the VW 411, the largest and most powerful model in the brand to date.

1971 – 1980 A myth: Golf

Volkswagen became the largest automaker in the world in 1972 (15.007.034 units produced). The Beetle and the legendary record exceed Ford T. The presentation of the Passat (1973) is the starting point for the new generation models. It includes front-wheel drive and four-cylinder water-cooled (55 to 110 hp). The family version (Variant) arrives a few months later.

The search for a worthy successor to the Beetle, whose sales are in steep decline, leading to brand devise a vehicle adapted to changing times: in January 1974 Wolsfburg begins building the first Golf. That same year comes another model of sportsmanship, the Scirocco, which will occur until 1981. But not all shots: after 30 years and 11,916,519 units manufactured, the Beetle is discontinued.

The new Golf, which quickly becomes a success, premiered at the Frankfurt Motor Show (1975) its GTI version; is accompanied by a new model of smaller dimensions, the Polo. The first GTI history leaves the factory in 1976, a myth was born.

Two years later, Volkswagen and Audi joined its sales structure worldwide under the brand VAG The construction of the Jetta (1979), a sedan version of Golf, and the second generation of the Passat close this period.

1981 – 1990 Volkswagen reaches Spain

In 1981 Volkswagen set its sales office Madrid, Spain VAG, SA In August of that same year he began making Santana, generously equipped model. It also presents a draft direct injection turbodiesel engine with three cylinders. The partnership agreement entered into with Volkswagenwerk AG Seat allows preparing the opening of the mainland market. Thus, Seat becomes the third company independent of the Volkswagen Group.

The arrival of the Golf II (June 1983) introduced major technological changes in the production process: first, a car is designed for a highly automated robotic assembly support. This ensures a variety of versions and propellants. Soon after, the brand comes standard with multifunction instrumentation and ignition systems. Furthermore, the shareholders approved changing the company name from Volkswagenwerk AG to Volkswagen AG.

The latest news from this decade is the second generation Polo (1986), the third Passat (1987) and the Corrado (1988), a coupe that occupies the void left by the Scirocco. Another highlight is the transfer of production of the new Polo at Pamplona (Spain).

1991 – 2000 The family grows

After controlling for Skoda, the car market of Central and Eastern Europe opens for Volkswagen. The brand presented in Frankfurt (1991) the third generation Golf. That same year, the factory in Palmela (Portugal) began manufacturing the Sharan. Following the appointment of Ferdinand Piëch as chairman of Management of Volkswagen AG (1993), they are launched the Passat and Polo III IV (1994).

After a new Passat (1996) their turn to Golf IV (1997), the first turbocharged gasoline engines; Lupo; Bora (1998), which reinterprets the concept of the Jetta; and New Beetle, a reissue of the legendary model made on the platform of the Golf IV.

Following the acquisition of Rolls-Royce, Bentley, Bugatti and Lamborghini brands, the Lupo 3L TDI (1999) is the first production car with a consumption of 3 liters / 100 km. The same date the construction of the Transparent Factory in Dresden, which assemble models luxury brand and will be screened on “Concept D” prototype that later is named Phaeton, a saloon range starts high.

The opening of the Autostadt, a space that combines entertainment, customer service and delivery point for new vehicles, puts the finishing touch to this period.

2001 – 2009 the Dakar Rally

The Phaeton kicks from the Geneva Motor Show 2001: the most luxurious sedan of the brand known for its excellent performance and equipment. Also comes the most powerful diesel engine, the 313 hp V10 TDI. In 2002, Volkswagen becomes the sole owner of the 12 most important records of distance and speed. That same year the Golf R32, equipped with a 3.2 V6 engine of 240 hp, and the “Tarek”, participating in the Dakar Rally 2003. In the fall comes the Touareg, an SUV jointly developed with Porsche appear. Developments continue to occur: after the New Beetle Cabriolet and the Touran, the Golf V (2003), which focuses on the direct injection TSI engines, appears.

In sport, Volkswagen makes history in the 2005 Dakar Rally in third place achieved by German Jutta Kleinschmidt and Fabrizia Pons Italian driving the Race-Touareg. In February, the Touareg Expedition inscribes his feat in the Guinness Book; It is the vehicle that reaches the highest altitude in the world: 6080 meters. A month later comes the Golf Plus, which combines the character of Golf with the functionality of a minivan.

The May 24, 2005 sale of the Volkswagen assembly lines “100 million” a Touran 1.9 TDI silver. This historic moment reflects the success of a company with more than 133,000 employees worldwide and distributes its vehicles in more than 150 countries. His debut takes place in the 2006 Dakar Rally at the wheel of the Race-Touareg: A month after Carlos Sainz, World Rally champion is tab. In November comes the Golf 24 million, a new record.

Over recent years, the German company has launched new models continuing as the sixth generation of its successful compact (2008).


Sales: 32,600 million dollars.

Market Value: 15,900 billion.

Tata Motors was founded in 1945 and since then has produced over eight million vehicles. With 60,000 employees. Since 2004 the company listed in the NYSE.

According to a study conducted by Tata Consultancy Services (TCS), the changing market dynamics are revolutionizing the automotive industry. Consumers now are not looking for just a car. They are looking for a complex “package of experiences”. Traditionally this experience was based on limited basic services extended warranties, service contracts, insurance, etc. However the emergence of technologies such as cloud, mobility, social networks) and big data have helped to meet the demands of a set of information and entertainment services, rewards for loyalty, support, and so on.

In this reinvention of manufacturing, we highlight some broad trends that lead the transformation of the manufacturing-industry one of the most prominent is the “consumption”. Here, we highlight the changing consumer behaviour and how it affects the automotive industry; carrying automotive involved thinking of innovative ways to please their customers by implementing next-generation technologies. The Indian company has more years of existence of many think. Its beginnings lie in the fourth quarter nineteenth century, although its landing on European soil is more recent, the XXI century.

Innovation Story


Jamsetji Tata founded the group in 1868. At that time India began to shake English proficiency. In 1874 Tata is introduced into the textile secto with Central India, a company of spinning, weaving and manufacturing. A few decades later, Indian Hotels is created, and built the Taj Mahal Tower, the first luxury hotel in India, opened in 1903. A couple of years after the Tata Group company built the first iron and steel from India, located in Jamshedpur to carry out their plans in the field of metallurgy.

Tata Grand Safari


In 1910 built the Hydroelectric Company, the first of three power of the Tata Group, to generate power. Almost a decade later, in 1917, the Tata Group gets into the field of consumer goods with Tata Oil Mills Company in which soaps, detergents and cooking oils were manufactured. The Tata Airlines was founded in 1932 to enhance the aviation sector in India and in 1939 the chemical branch of the Tata Group is created.


Tata Engineering and Locomotive Company (renamed Tata Motors) manufactures locomotives and engineered products in 1945. The company began manufacturing cars in 1954 in partnership with Daimler Benz. In 1968 Consultant Tata Group, India’s first software services company.


In 1998 the entry of the brand in the automotive industry occurs. The Tata Indica, the first vehicle designed, developed and built in India is the car that Tata Motors used to enter the utilities sector. In 2000 Tata Tea group buys the Tetley Group (UK), is the largest purchase a company makes India a foreign brand. In

2001 signing of an agreement between Tata and American International Group Inc (AIG) group, marks the re-entry of the group in the insurance sector.


Tata Nano

In 2004, Tata Motors acquired the heavy vehicle division of Daewoo (South Korea) in 2005 took 21% of the shares in Hispano Carrocera, a reputable Spanish manufacturer of trucks and buses, with an option to purchase also remaining shares, and in 2006 joins the Brazilian company Marcopolo, a leader in the construction of buses and trucks, to manufacture buses and trucks together. That same year, Tata Motors and Fiat Group signed an agreement to manufacture passenger cars, engines and transmissions for the Indian market and other foreign markets; Tata Motors also distributes Fiat brand in India.

At present the models sold are brand (excluding variants): Grand Safari, Indica, Indigo, Nano and Xenon.

Milestones and curiosities

In 1912 Tata Metallurgy introduces the days of 8 hours, which were introduced by law in Western countries.

Tata Motors manufactures its car reaches one million in 1984. In 1998 the two million and three million in 2003.


Core competencies of innovation in car manufacturing

The vehicles that we see in the markets are so complex that no single company has the complete knowledge about the manufacture of products or processes required for the comprehensive design and manufacture of a car in their own facilities. As a result, many manufacturers are dependent on others in incorporating crucial to its value chain elements, and this dependence itself is strategic. Therefore, we talk about different resources and capabilities of some manufacturers over other competing manufacturers with suppliers or innovation and technology, and if these resources and capabilities are a competitive advantage. The real competition comes aside the knowledge and skills that involves dynamic to depend on strategically and in terms of what kind of skills. The way we have built these relationships and organizational routines of supplier-manufacturer technological innovation is one of the core competencies of automakers not only in Europe and the ASIA but also in Japan. The general, one can speak of four races essential in the manufacturing process of an automobile, which are:

  1. The infrastructure management.
  2. The product realization process.
  3. The product architecture.
  4. The innovation management; make or subcontract.
  1. Many companies, especially German and Japanese design their own ” software “that helps them design and manufacture their own products, while others of the same dimensions, particularly in the US, buy this software. This fact is not irrelevant; designing the software is one of many elements of what we call “production infrastructure” that distinguishes it from the design and innovation technology comprising the product itself same. While large automotive industry in Japan designed and not buy more than 30% of the components that are intended for the car, in the United States and Europe for many years, the general trend has been provisioned up to 70% (Table 1).

Table 1.
Buy or make

 Companies in Japan 
“You learn by testing not buy”
Other Companies 
“Our business is making cars not robots”
Product or system componentsBuyDo
Infrastructure components or systemsDoBuy

In Europe, the automotive industry is concentrated more on doing what they do well, there is high activity in outsourcing, and put much emphasis on trade and brand strength aspects. The modular construction of an automobile is dominant from well qualified suppliers, with a high degree of specialization in trades and well-defined responsibilities. Concentrated more Japanese companies, however, tend to understand the way manufacturing a holistic; They know the difficulty of learning and prefer to maintain maximum control over of design processes, engineering, and manufacturing licenses. The vendor relationships tend to be stable or lasting forming real inter-business conglomerates based in long-term relationships. This is because historically they operate in different national and social contexts which help to operate in this regard. Although it is often difficult to draw a clear distinction, we can say that while in Europe are, in many cases, suppliers are carrying out initiatives in innovation, Japan is the manufacturer determines the level and control the improvement and technological change, and on this basis the level of specifications for further outsourcing (Table 2) develops.

Table 2
The competition of vertical integration

 Advantages of vertical integration in Japanese companies automakersDisadvantages of vertical integration
1. Companies that design and manufacture their own teams know what they can do good and best suit their processes. 2. If so, you avoid many problems in the implementation of manufacturing processes, adjustment and maintenance. 3. In addition, these companies are better prepared to buy, and to establish the technical specifications of supply.1. expensive vertical integrations are often of dubious profitability. 2. The vertical integration management It requires some skills and resources which do not always produce synergies or economies of scale. 3. The acquired technology is subject to the and appearance depreciation of new technologies. 4. Vertical integration may involve acquiring skills that over time can become rigid.

Source: Prepared

  1. In order to achieve the effective realization or purchase of a product or component it is essential that there is, by the automaker, a preliminary design of the manufacturing process or assembly. Thus, the drafting of technical specifications innovation, engineering and design are the most important part of this stage and marks the relations between the provider innovation and ultimately manufacturer (Table 3).

Table 3 The product realization

1. Determination of customer needs. 2. Convert those needs in engineering and design specifications. 3. Convert specification processes. 4. Manufacture the vehicle. 5. Check reliability.
  1. The architecture of a modular construction of an automobile product (door, transmission system, transmission, etc.), which consists of different parts and components, requires the definition of a specification to carry both its coupling assembly and its decomposition adjustment levels and delivery functions; difference between modular and integrated architecture. Therefore, a manufacturer’s core competence lies with the ability to define the boundaries of decomposition i.e. define the requirements and specifications required of suppliers. This process is called “decomposition” and has become a true core competency of the Japanese and Germans automobiles the period between the seventies and nineties (Table 4). But for this breakdown to be effective must be met certain requirements that are: 1) identify and write with clarity and precision specifications 2) Identify suppliers able to meet these specifications.

Table 4
Architecture and decomposition of the product

Product design »» »Development of specifications» »» Decomposition Products »» »Make or outsource

Source: from ideas H.Fine and development Whitney, MIT 2000

  1. The companies, in a given moment of the process of defining the product, choose one of two alternatives: buy (outsourcing) or do internally. The essential difference between European manufacturers Japanese, American and falls on the percentage or degree of purchases made ​​in the process and product innovation. The reasons for conducting outsourcing are varied and represent, in any case, a level of dependence (Table 5). About process outsourcing (referred to literature Anglophile, and depending on the depth and intensity of the process, such as outsourcing, lean management, procurement, supply chain management) has developed, in recent decades, a whole network of relationships contracts (license agreements, structure and royalty payments, etc.) and architecture of the different levels of supplier-vendor integration have been the basis for the expansion and globalization of the automotive industry. Also, there by manufacturers, major reasons for not seeking a supplier or because he does not consider strategic, either because they want to maintain control of those powers which can generate competitive advantages to them.

Table 5 Reasons for outsourcing. Dependence classes

CompetitionThe company does not know how the product or can not easily acquire such competence and should look for a provider.
CompetitivenessThe provider has lower costs, immediate availability, etc., for a substitutable product.
TechnologyVendor release of the product is better for different reasons.

Source: Prepared

Table 6 Reasons for not outsourcing

Competitive knowledgeThe Manufacturing procedures, processes, etc., are considered strategic for the performance of the product so it must be managed as an internal knowledge of the company.
Market differentiationThe company must undertake that worries the market, which most distinguishes the product and buy the rest.

Source: Prepared

Not always that ability to know or do things is on the side of the manufacturer but the innovation provider. This dependence if it can be strategic both for one another may be 1) dependence on the ability, you can not 2) Unit of knowledge, you know. For example, automobile manufacturers design, develop and manufacture almost 100% of the engines used in their vehicles. Transmission design but outsource a significant portion of its volume. Manufacturers rely on suppliers to design, development and manufacture of everything related to electronic systems for their vehicles. However, as electronics have become more strategic, there are more prone to develop this knowledge internally manufacturers. Knowledge that can be vital when it comes to developing and innovating for example, computer systems of a car.

Tata Motors is one of the best and most notorious cases of success, in which it was possible to combine vision and innovation to achieve the desired position, led by Ratan Naval Tata CEO. Tata Motors is the first company in the technical sector of India to get listed on the New York Stock Exchange (2004) and has also emerged as an international car company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two British brands that was acquired in 2008 (Kumaraswamy et al: 2012). Tata Motors is also expanding its international footprint and licenses assembly operations of companies joint in Kenya, Bangladesh, Ukraine, Russia, Senegal and South Africa (Ray & Ray: 2011).

The company’s main strategy is to innovate for the poor i.e. it aims for the prosperity of its nation, which led them to emphasize to foster economic production of means of affordable transport of its population. But certainly one of their best decisions was to focus on innovation and sustainability, buying and mass produce an engine that runs on compressed air, without a drop of fuel. One of the strengths that put them as leader in the automotive market is focus and commitment to research and development (Kumaraswamy et al: 2012).

Tata Motors has an engineering center (Engineering Research Centre, ERC) which is focused on products development, environmental technologies and safety of cars. The ERC is characterized by its great capacity for research and development to design a wide range of cars for different markets which makes Tata Motors highly innovative and competitive. `The ERC is responsible for the development of Tata Nano, the cheapest car in the world aimed at the masses at a price of $ 2,500 (Ray & Ray: 2011).

This can be difficult, however, to perceive is how to design such a vehicle need to resume point by point all the achievements and standards of the automotive industry. For example, the engine was created in partnership with Bosch for ultra-simple design for easy maintenance and lowering the cost of production, while maintaining sufficient power. Tata Motors has patented far as 34 innovations in the design of the Nano, which places the team of designers of the company as one of the most developed in recent years. But it is also interesting to note that Tata Motors has chosen a novel method of distribution for the vehicle: it is mostly delivered in kit. These are local plants that receive these kits and assemble them to provide to regional market (Ray & Ray: 2011).

The project has become the main argument for the internationalization of Indian factory, as it has attracted the attention of the specialized media in the Western world due to innovations implemented by the company to develop this car, as well as its decision to keep as a product of fairly low price (Ray & Ray: 2011).

The car itself is to become the main source of income for the country’s economy as well as the cause of the expansion by 65% of the Indian automotive market. This model was designed and renovated by Ratan Tata, CEO of Tata Motors, who has described it as “a car for the people”, repeating that name was given to the classic Beetle of German Volkswagen in the ’30s (Markides: 2012).

Many of the innovations that will shape the coming decades will be designed for the emerging market, often by companies with capital and equipment in these countries; at other times, in laboratories and subsidiaries of Western companies, although based in the most innovative environments in major emerging countries (Ray & Ray: 2011). The reverse innovation or innovation drip refers to advances and technologies developed for the emerging market countries and, once proven their worth, spread to other economies, including developed countries markets, until now absolute rulers of this process (Govindarajan & Trimble: 2012).

The big surprise in the sector has been Volkswagen’s strategy focused on new products and manufacturing outside Germany (66.2% in 2008), to concentrate mainly in emerging countries (Killing: 2012). The stakes of this reverse innovation also lies in the distribution strategies of Tata Motors (Markides: 2012).

Today, the German automotive industry is in a position of opportunity, in which innovation and product engineering are prominent. The automotive sector will have to readjust traditional growth models for market share, mergers and acquisitions and participation in emerging markets (Talke et al: 2009).

Technological innovation is one of the aspects that most distinguishes Volkswagen from its competitors. This gives a net capital gain in terms of quality and long-term value. Ride kit, be better protected in the event of an accident, consume less and cost less globally are all benefits of this innovation policy. However, Tata Motors have faced a lot of criticism internationally regarding the safety of its vehicles (Markides: 2012).

Having been a pioneer in areas such as TDI or DSG gearboxes for example, the XL1 Volkswagen presented the Brussels Salon. The XL1 is probably the most powerful car in the world in terms of energy efficiency, consuming less than 1 liter per hundred, what corresponds to CO2 emissions of only 21 g / km. Innovation is not just about high-end cars of course. Polo has a system called ‘cylinder deactivation’, which saves up to one liter per cent by temporarily cutting off the fuel supply to two of the four-cylinder engine. Innovation also concerns the production sites and design of cars. The plants operate more simple and more flexible thanks to the introduction of the new modular platform called ‘MQB’. ‘MQB’ is a component sharing program between a large numbers of models that will frame motors through electronics (Killing: 2012).


Chapter Five: Conclusion

The world is currently facing very rapid processes of globalization, keeping the dynamics to which it responds by being part of the system (Killing: 2012). In this globalized world, innovation represents the essence of the most successful business leaders. These organizations promote the best environment to allow the generation of ideas and the most risky artistic expressions by their staff, leading to possess a continuous process of innovation in less time and with spectacular results to meet the most demanding requirements of market (Govindarajan & Trimble: 2012). But along with the technological innovations, the current leaders are supposed to cope with new situations of environmental problems, with heavy investment in research and development and a vision based on the needs of the time to be recognized and achieve market share internationally (Kumaraswamy et al: 2012). This paper aims to conduct a comparison of TATA motors and Volkswagen regarding innovation as a critical determinant of their foreign market success.

Thus, product innovation has been one of the key factors in the success of both, Tata Motors and Volkswagen in terms of international market share and recognition. Tata Motors can do the engineering and design of a car with a lower cost than Volkswagen. While Tata has been characterized by low cost, based on a gradual increase in market share, Volkswagen has been characterized through participation in emerging markets. However, the use of the platform ‘MQB’ by Volkswagen has improved all the editing process and thus the overall quality of the brand’s models. In conclusion, product innovation has been the key factor in increasing international market share for both the companies.




Govindarajan, V., & Trimble, C. (2012). Reverse innovation: a global growth strategy that could pre-empt disruption at home. Strategy & Leadership, 40(5), 5-11.

Killing, P. (2012). Strategies for Joint Venture Success (RLE International Business) (Vol. 22). Routledge.

Kumaraswamy, A., Mudambi, R., Saranga, H., & Tripathy, A. (2012). Catch-up strategies in the Indian auto components industry: Domestic firms’ responses to market liberalization. Journal of International Business Studies, 43(4), 368-395.

Markides, C. C. (2012). How disruptive will innovations from emerging markets be?. MIT Sloan Management Review, 54(1), 23.

Ray, S., & Ray, P. K. (2011). Product innovation for the people’s car in an emerging economy. Technovation, 31(5), 216-227.

Talke, K., Salomo, S., Wieringa, J. E., & Lutz, A. (2009). What about design newness? Investigating the relevance of a neglected dimension of product innovativeness. Journal of Product Innovation Management, 26(6), 601-615.

Saunders, M., Lewis, P. and Thornhill, A. (2003) Research Methods for Business

Hughes, John and Sharrock, Wes (1997), The Philosophy of Social Research, 3rd edition, Pearson: Essex.

Yin R.K (2003). Case study research: design and methods, vol. 5, 3rd ed. Thousand Oaks, CA: Sage publications Inc.