Tata Nano †a Study on Business Challenges in India

TATA NANO A STUDY ON overlap line CHALLENGES ININDIA Introduction Tata Nano, pet project of the professorship of the Tata Group Mr. Ratan Tata was a auto which was evaluate to change the face of automobile sector in India. In the highly competitive humiliated- machine grocery place of India, Tata Nano promised to tidy sum the bar so high that it would become highly difficult for the competitors to match. The dream of owning a automobile for as little as Rupees 1 hundred thousand (Rs. 100,000 or so USD2500) was too tempting for millions of Indians who cigarettenot afford dismantle a small car.The kind of extensive media coverage Tata Nano certain right from the day it was proclaimed through the intact period until the first units were handed over to the owners was some liaison that its competitors woolgather of. However, after two years of launch, the Tata Nano manufacturing plant at Sanand in Gujrat, India is running at around 20% utilization. Peoples political ma chine- It is a common nap in india to compute an entire family of four travel on a two-wheeler in heavy relations and bad road conditions all through the year. Car Ownership across countries Present and FutureAs put forward be seen from the IMF report above, car self-possession in India is expect to grow exponentially in the sexual climax decades. Indias Growth in GDP Per Capita Combining the predictions round car ownership in India with the growth in GDP per Capita in India, we can cl archeozoic see why the automobile sector, especially the small car mart is one of the most competitive sectors in India at present. In a market kindred this, a car like Tata Nano had the potential to rat like hot cakes. But it didnt. Let us now try and understand why Tata Nano was not able to meet industry expectations. Reasons for SetbacksTata Nano (Photo credit Wikipedia) to a fault Many Crises Since its launch with great fanfare in 2009, the Nano has survived from one crisis to an some other. There was opposition to Tatas victor plans to identify the factory in westbound Bengal, as discussed later, forcing a last-minute scramble to switch the site to Sanand. It opened last summer, but not sufficient cars came score the production line to fulfill the early orders. To make matter worse, a few cars detective work fire on road, raising fears ab break the Nanos safety. Price Nanos hurt, which was sup comed to be its USP, is manifestly one of the major reasons behind its low sales.For volume of Indians, owning a car is not more or less utility or mobility it is a dream, ambition and status flick just like a house. So, the low price of Nano does not turn it into an asset. It becomes more like a commodity. Also, the initial merchandise and promotion of Nano gave the average consumer the idea that owning a Nano would somehow be a substantiation of their poverty, and not a bearing to get out of it. Ironically, a big number of Nanos geters buy Nano as th eir second or third car after already owning another car. This segment is not the segment initially printed by Tata.Resale-The re-sale car market gives stiff competition to the Nano. A 3-4 year overaged used car originally costing 3-4 lakh in on-road price (like Chevrolet scintillate and Maruti Alto) can pose a stiff argufy to Nano given the relation back price-parity that emerges when it comes to re-sale. For instance, Nanos Mumbai on-road price for Std BSIII representative pegged at 1. 51 lakhs is a few walks away from the Rs. 2 lakh plus used-car-version Spark. People, who may go for the advanced model Nano Cx BSIII, may consider opting for Spark or Alto given that the said Nano model costs around 1. 2 lakh rupees. In fact, Nano seems to fuddle failed to pose a challenge to the market players in this re-sale car niche segment. Needless to say, at that place is not much value extracted from a Nano upon resale either. Rescuing Nano To improve Nanos market performance, T ata motors is trying to expand to other regions searching new markets for Nano. Given its modular design, Nano can be assembled and manufactured in practically everyplace on the planet. Hence, Tata is aspect at SAARC nations, Latin the States and other regions, where the economic conditions are similar to India.Also, Tata is contemplating coming up with Nano electric models and even a Nano diesel version aft(prenominal) suffering setbacks with the initial market response, Tata Motors hired Carl-Peter Forster, a former boss of popular Motors Europe as head of Tata Motors in February 2010. After taking charge, Forster realized that he will have to reinvent the Nano business model. There was no real national distribution scheme, very little marketing and advertising, and no effective system of consumer finance. The irony was that numerous rural Indians never got to hear bout or have the opportunity to see the car that was say to help transform their lives. Issues with Nano The Na nos marketing puzzles began with its product positioning. The price crept up by around 15%, putting it out of the reach of first-time buyers with no unbendable employment or payslips to back an application for credit. And by emphasising its cheapness rather than its basic but harmonic qualities, it deterred slightly better-off consumers who could afford one but aspired to more sophisticated vehicles, such as those from Tatas biggest rival, Maruti, the attraction in Indias small-car market.Political Controversies Nine months after the Tata Nano was uncover to much fanfare, and with only weeks before the first car was scheduled to tramp off the assembly line, Tata announced it was pulling out of westernmost Bengal where work was burn down complete on the assembly plant. Company moderate Ratan Tata noted that Tata Motors had already invested 15b rupees (US$343m) in the small car project. But they had forgotten a live detail which is a must for big investors looking to start big-idea investments on republic owned by poor, mostly illiterate barbarians in developing countries.At the permeate of the Singur peasant resistance was the need for a get to reform that enables peasants to have real choices on whether to run farming or do something else. For Tata Nano, the government of West Bengal persuaded more than 10,000 peasants in Singur to accept compensation for super acid acres of farmland on which the Nano plant would be built. However, almost right from the start, as many as 2000 peasants refused the compensation, and demanded their land back. Farmers complained that the state communist government forcibly took their land to give to Tata.With the help of the opposition parties, peasants unconnected to the land acquisition filed petitions in court. In January, a Calcutta High Court threw out all the complaints, belief that there was no violation of the Land eruditeness Act or any other regulation by the West Bengal government in acquiring the l and. But never ever underestimate the continuity of angry peasants. When legal avenues were shut, Singur peasants took to the streets, organising daily protests and roughing up workers assiduous of the Nano factory.As the protesters grew more menacing, Ratan Tata was forced to acknowledge the speculation of never seeing a single Nano roll off the plant in Singur. While Tata was contemplating the prox of his pet project, ad one of the most brazen-faced projects in the history of Tata Motors, Narendra Modi the Chief Minister of the Indian state of Gujrat approached him and promised to provide all support needful for Tata to expire the plant form Singur to Sanand. Finally, Tata decided to move to Sanand and the first Nano rolled off the assembly lines at Sanand soon after.Yet, even as it managed to relocate and happen upon the market with slight delay, Tata needs to reflect on what happened in Singur to avoid running into the same problem elsewhere. Part of the problem was lac k of clear and unsophisticated negotiation between peasant representatives, Tata and the government of West Bengal. Although the West Bengal government gave peasants compensation package that was way above the going rate, the lingering perception among the peasant was that a huge chunk of the money was creamed off by corrupt government officials.To avoid this perception, straight or false, Tata should have negotiated directly with peasants, by-passing the West Bengal government. Secondly, even as Tata boasted of an initial start-up of 250,000 Nanos from the Singur plant, providing thousands of jobs to residents, it failed to make Singur residents take ownership of the plant. To the people of Singur, wealthy Tata was coming to grab their land to make billions of dollars for itself. Nano on Fire To make matters worse, triplet Nanos have caught fire because of some reason or the other since its launch raising serious questions about its safety and severely damaging its pit Equity.T hough Tata Motors has not commented on the reasons behind the fires, there has been strong grape vine negative publicity towards the car. Recommendations Tata Nano has been a very evoke case about studying business in India and other emerging markets. It has seen some very evoke highs and lows which are unique to the Indian market. However, following recommendations can be made 1. Clean up the Brand Image Nano first of all needs to re-establish itself as a credible tarnish. This might be the hardest thing to do given the beating the brand image has taken because of the fires.Nano would need to aggressively work on its PR and show how the accidents are not because of flaws in Nanos design but because of some untoward external factors. 2. Define a clear selling Strategy Nano needs to have marketing strategies to target its real consumer segment which is the masses of India and showcase the Nano as an aspirational product for them instead of coming across as an accessory for th e rich. 3. Focus on Other Countries export Nano to Indonesia, Eastern Europe and also Brazil as well as Southeast Asia where it can be sold without the bad name it has earned in India. . Use Shareholder base of Tata Tata Motors have a shareholder base of around 350,000 right now. It could be utilized to boost Nano sales through discounts etcetera 5. Rework on Pricing when Nano started, a major challenge was to prove whether it was possible to manufacture a car which can be sold at the price of Rs. 1 lakh. That point has been proven. The real challenge now is creating profitable car business. If Tata starts pricing its Nano in a range where it is more cost-effective, it would first, reduce the losses Tata incurs per car, as well as give the brand a facelift.