Roads to Resilience

Case study: Jaguar Land Rover

Introduction

In 2008, the Jaguar and Land Rover businesses were sold by Ford Motor Company to Tata Motors, a subsidiary of the Indian multinational conglomerate company Tata Group, creating the new automotive company Jaguar Land Rover headquartered in Coventry, UK. Although many believed at the time that this change of ownership would follow a similar pattern to when Ford acquired Jaguar Cars in 1989 and Land Rover from BMW in 2000, i.e. the company would continue to struggle, competing successfully against its significantly larger and better funded German competitors, Audi, BMW and Mercedes-Benz, it became a major turning point for the company’s fortunes. Under Ford, Jaguar Land Rover had been a relatively small subsidiary. For example, in 2007/8 Ford sold globally a total of 5,532,000 vehicles, produced at 90 plants and facilities around the world by 213,000 employees, and achieved $129.2 billion in revenues. Jaguar and Land Rover contributed to these numbers approximately 250,000 vehicles (4.5% of total), built at three UK plants (3% of total) by 15,000 employees (7% of total), and approximately $14 billion/£7 billion revenue (11% of total). To compare the performance of Jaguar Land Rover in 2008 with its main competitors Audi, BMW and Mercedes-Benz, a few key figures have been drawn from the respective 2008 annual reports and are listed in the table below.

Brand

Vehicles Sold

Revenue

Audi

1,003,469

€34,196 million

BMW

1,202,239

€44,313 million

1,125,900

€47,772 million

Mercedes-Benz (cars)

Jaguar Land Rover

250,000 $14,000 million (approx. €9,500 million)

Although the Ford Motor Company looked after its British subsidiary, from 2006 onwards it could not afford to invest in Jaguar Land Rover. Of greater concern to the board and executives in Dearborn, Michigan, were the challenges faced at that time by the Ford brand. To address these and better position the company for future success, while enduring the adverse impacts of a deep recession, a global financial crisis and a dramatic slowdown in all major global markets, their top priority was the successful implementation of the ONE Ford strategy. As the name of this strategy suggests, Jaguar and Land Rover were not part of it, leading to their divestment in 2008.

Key events

Tata Motors’ takeover of Jaguar Land Rover represented, in some respects, a radical change for the British car manufacturer. Under Ford, the company had been operated as a profit centre. This meant that Ford took care of corporate functions such as treasury, finance and enterprise risk management. Further, although Jaguar Land Rover was responsible for marketing, product strategy decisions developed in the UK were subject

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Roads to Resilience: Building dynamic approaches to risk to achieve future success