The Tata Nano is a rear-engine, four-passenger city car built by Tata Motors, aimed primarily at the Indian market. The car is very fuel Efficient, achieving around 78mpg on the highway and around 92 in the City. It was first presented at the 9th annual Auto Expo on 10 January 2008, at Pragati Maidan in New Delhi, India. Nano had a commercial Launch on March 23, 2009 and, a booking period from April 9 to April 25, generating more than 200,000 bookings for the car. The sales of The car will begin in July 2009, with a starting price of Rs 115,000 (Rupees), which is approximately equal to UK£1,467 or US$2,421 as of June 2009. This is cheaper than the Maruti 800, its main competitor And next cheapest Indian car priced at 184,641 Rupees. Tata had Sought to produce the least expensive production car in the world — Aiming for a starting price of Rs.100,000 (approximately US$2,000 in Juneprice competition often leaves the entire industry worse off. NANO is the only player so it has the price freedom but as the Maruti and Honda are also planning to launch the car in the
Same segment the price competition will start.
Porter's 5 Forces Model of the NANO car
There is continuing interest in the study of the forces that impact on an Organization, particularly those that can be harnessed to provide Competitive advantage. The ideas and models which emerged during The period from 1979 to the mid-1980s were based on the idea that Competitive advantage came from the ability to earn a return on Investment that was better than the average for the industry sector. As Porter's 5 Forces analysis deals with factors outside an industry that Influence the nature of competition within it, the forces inside the Industry (microenvironment) that influence the way in which firms Compete, and so the industry’s likely profitability is conducted in Porter’s five forces mode.
BARRIERS TO ENTRY
•Time and cost of entry – Time is most essential thing while Launching a product in any market. The launch of the NANO is Quite viable as the demand of the small
Car is on the rise in the market. By the cost of the entry we mean The initial capital required to set up a new firm is very high, it Makes the chances of the chances of new entrants are very less. •Knowledge and Technology - Ideas and Knowledge that
Provides competitive advantage over others when patented,
Preventing others from using it and thus creates barrier to entry. The TATA motors have great knowledge/ experience in the
Automobile industry and has renowned technological advantage Because of the recent acquisition and mergers.
•Product Differentiation and Cost Advantage – The new Product has to be different and attractive to be accepted by the Customers. Attractiveness can be measured in the terms of the Features , price etc. At this level the price of the NANO car was One thing that is attracting customers. And above all this the Image , trust the name TATA carries with it.
•Government Policy and Expected Retaliation - Although
Government's job is to preserve free competitive market, it
Restricts competition through regulations and restrictions. The Government tried to promote the TATA Motors to start a plant by Providing land and tax rebates. But the unexpected retaliation by The local people surface in the setting up of the plant which Costed the company a lot.
•Access to Distribution Channels – When a new product a Launched a well developed distribution is must for its success. The TATA motors had an advantage of well established distribution Channel across the world.
•Switching Costs - If switching to another product is simple and Cheap the customers do not think much before doing it. In case Of NANO car the switching cost from bike to car is too high. Thus Increasing the demand of the car many fold.
•Number of customers/ Volume of sales - If there are few Buyers then they are able to dictate the terms. They pull down The cost by...