To: Mr. Ratan Tata, Chairman TATA Group of companies, India
Date: Fall 2008
The issue that TATA Motors Inc. is facing right now is to predict the viability of the Project Nano. Also, TATA Motors Inc. wants to know what other steps it can adopt to improve the chances of success for its newest venture- The Nano. Overview
TATA Motors Inc., part of one of the most respected Business Houses in India-TATA Sons INC., is currently in a phase of producing the world’s cheapest car-TATA NANO. The company has made efforts in manufacturing a cheap car priced at around USD 2200 (INR 100000-Approximately) while still not forgoing the quality and environmental efficiency of the vehicle. Viability
The step taken by TATA Motors to produce a car that would be the cheapest in the world was taken as one of the pivotal decisions in the history of car manufacturing for the past century by strategists. TATA Motors wanted to manufacture a car that would resolve the problems of the ever-growing middle class population in emerging economies specifically India. The company wanted to compete on the low cost segment and also, with 2 and 3 wheelers in the segment. TATA Motors applied the strategy of vertical integration for the process of manufacturing and assembling the car TATA Nano. This process has helped to reduce the costs greatly and has also, managed to keep up with the modern environmental standards. TATA Motors has also made sure that the new car has passed all passenger safety related tests. TATA Motors faces little direct competition. The closest competition to Nano is a car called Sitara, in Pakistan which is cheaper than the Nano but does not have the necessary infrastructure that the small car consumer section demands. Further, the Indian Import duty structure which levies an import duty of around 120% on cars imported from foreign nations makes it impossible for Sitara to compete with Nano in India....
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