Case #3 Tata Motors
1. What inspired Tata Motors to build the Nano? Why was there a need for an inexpensive car in India? The idea of Nano–The People’s Car was inspired by the middle class Indians who bought and transported their entire families on scooters. To most middle class families in India owing a car is a far cry. Rattan Tata, Tata Motor’s Chairman said that the tiny car is aimed at keeping the families of India’s growing middle class from having to travel with as many as four people on a scooter. It led him to wonder if a safe, all weather form of transport for a family can be conceived at an affordable price. It took Tata motors four years to realize this concept which today is a People’s Car, which is affordable and yet built to meet safety requirements and emissions. The advent of Nano has seen an increase of about 65 percent of Indian families who can now afford to purchase a car. When Ratan Tata of Tata Group looked out over this scene, he saw a critical job to be done: providing a safer alternative for scooter families. He understood that the cheapest car available in India cost easily ﬁve times what scooter did and that many of these families could not afford one. Offering an affordable, safer, all-weather alternative for scooter families was a powerful value proposition, one with the potential to reach tens of millions of people who were not yet part of the car-buying market. Ratan Tata also recognized that Tata Motors’ business model could not be used to develop such a product at the needed price point. By developing an inexpensive car, Tata could attract more consumers who were riding scooters or motorcycles. He believes that it could help increase pool of potential auto owners by as much as 65% to 30 million. 2. What innovative steps did Tata undertake to design the Nano in a way that would meet the $2,500 price tag? Do you think the low price automatically means poor quality? How did Tata Motors address the quality issue while developing its budget car? First Tata did the research to see how many people could afford the car. What these customers needed, wanted, and could afford were of high importance when designing the vehicle. In order for Tata Motors to create a car to meet a cheap price tag of $2,500. Moreover, the engineers worked to do more with less. Tata has been able to slash the price by asking his engineers and suppliers to redesign the many components to cut costs. For example, the speed meter is in the center of the dashboard over the air vents, not behind the steering wheel, so the dashboard can be built with fewer parts. I don’t think the low price automatically means low quality. There are so many product have low price but bring excellent quality. When consumers view a low price as an indication of shoddy quality or good value depends on many factors. For example: On Christmas season, when the products come with low prices, consumers try to purchase as many product as possible, and other times consumers are scared off by an item because its price is low and they think it will be bad quality. Consumers can’t know everything about a product, we try to fill our mind with our own theories to help us make a decision whether we should purchase the product or not. The Nano has a roomy passenger compartment with generous leg space and head room, and it can comfortably seat four persons. Four doors with high seating position make ingress and egress easy. With a snub nose and a sloping roof, the world’s cheapest car can hold five people if they squeeze. Nano’s design allows the car to effortlessly maneuver on busy roads in cities as well as in rural areas. It has mono-volume design, with wheels at the corners and the power train at the rear, enables it to combine both space and maneuverability. The Nano has a fuel-efficient engine powered by the lean design strategy that has helped minimize weight, maximize performance per unit of energy consumed,...
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