Tata Nano Case Analysis

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The Tata group is one of the largest automobile companies in India and ranks sixth in the commercial vehicle manufacturing in the world. It is a leader in the commercial as well as the passenger vehicle segment. The top three passenger vehicles are sports utility vehicle, mid-size car and mini-truck. In May 2008, the Tata group acquired Ford Motor’s British based automotive icons Jaguar and Land Rover. Lack of safer, comfortable and spacious means of transportation and poor quality of mass transport is a common concern in India.

Decision Problem:
The Tata group come up with a unique concept “Tata Nano: the People’s car” to be built within USD2500 (Rs1 lakh), an affordable, safer, comfortable and spacious alternative to the middle class families and students. The chances of Tata Motors squeezing a drop of profit out of a $2,500 Nano is highly unlikely with the Nano's long promised price staying the same and rising cost for raw materials. Choosing a single culprit for this is impossible, since escalating material costs have raised the price of everything from corn flakes to crude oil. Focusing only on the Nano's steel exterior, it's clear how difficult it will be for Tata to stick to that $2,500 price for long. Tata has faced controversies over developing the Nano as some environmentalists are concerned that the launch of such a low-priced car could lead to mass motorization in India with adverse effects on pollution and global warming. Protests over the land acquisition led Tata Motors to shift its manufacturing plant to Gujarat. While currently the political tensions have subsided, there is no guarantee that in future land acquisition row would not lead to another full fledged political war.

Decisions Alternatives:
Innovative Marketing:
Tata will sell its ultra cheap new car through its own retail outlets as well as auto dealerships. The Nano's overall marketing strategy will use conventional media in an unconventional manner. Innovative Technology:

With the shift to smaller cars for emerging markets, carmakers must develop new technologies and new business models to meet the demands of these markets. Small cars must be lighter and more fuel-efficient, so manufacturers are turning to such technologies as alternate power trains, fuels, propulsion systems, and braking systems, as well as materials not typically used in cars, including plastics for exterior body components such as doors, and strong, lightweight alloys and composite materials for structures. It brings to market a totally different value proposition than the one available and can change the paradigm of a product. Cost Reduction:

Use of alternate materials and reduced consumption of material being used were primary considerations to minimize the cost of production. Alternate Suppliers to get same material at fewer prices as well as establishment of suppliers near the manufacturing facility were key strategies adopted by Tata Group. This helped in reducing the delays in the supply chain and setting up dedicated vendors to supply the raw materials to the Nano plant.

Industry Analysis:
India is well-known for its massive transportation system. As India's transport network is developing at a fast pace, Indian Automobile Industry is growing too and therefore, providing employment to a large section of the population. Thus the role of Automobile Industry is very essential in Indian economy. Various types of vehicles are manufactured by the Automobile Industry. Indian Automobile Industry includes the manufacturing of trucks, buses, passenger cars, defense vehicles, two wheelers, etc. The industry can be broadly segmented into the car manufacturing, two wheeler manufacturing and heavy vehicle manufacturing units. The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private Ltd., Ford India Ltd., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd. Hyundai Motors India Ltd., Skoda India Private...
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