CASE STUDY TATA “NANO”

CASE STUDY TATA “NANO”

Introduction

Nano is an ultra-cheap vehicle that was introduced to the Indian public by Tata Motors in 2008 during the motor show in New Delhi. India has been recognized as the global center in relation to the production of small cars. The vision of Ratan Tata, the chairman of Tata Motors, is to use Nano to face off competitors in the Indian market. While addressing the ceremony during the unveiling of Nano, Tata indicated that the scooters that were being used by families were not safe. This made Tata Motors build a People’s Car that is safe, affordable, and has a limited impact on the environment due to the low consumption of fuel.  Nano was created using unique designs that improved its quality. This paper discusses some of the major issues pertaining to Nano and why it has enjoyed a competitive advantage in India and foreign markets.

Factors That Inspired Tata Company to Create Nano

The income of a middle-class household in India is approximately $6,000 per year. This implies that a car costing $3,000 or less in the form of innovation that would make most people drive and attend to other economic and social activities. Many motor vehicle companies have invested in India since the demand for cars is high as the result of an increasing population. Tata was motivated to build Nano with the objective of dominating the local market and increase its profitability. This made Tata Motors offer a low price for the new brand. In India, most families used motorcycles and scooters while traveling to other places. This meant that there existed opportunities in the transport industry. Tata was motivated to utilize the opportunity and prove the People’s Car as a major substitute in the market (Constantinides, 2006). As noted by the company’s chairman, the means of transport that was used by families were not safe. The need to build Nano was, therefore, based on the goal of Tata to provide a safer mode of transport that would not only be cheaper but also would have fewer implications on the environment.

During the production of its brands, Tata Company values safety, price affordability, efficiency, and comfortability. These features are used by the company as a marketing proposition since they are the qualities that car buyers look for. In this regard, Tata made it create Nano with these features. For instance, the aspect of comfortability is achieved by the brand since it has a headroom where four individuals can sit. Tata Motors also aimed at making its customers enjoy a customized experience making it produce a standard and deluxe version of Nano.

Nano’s Innovations and Design

The needs of Indian families played a key role during the designing of the People’s Car. The design included a leg space, headroom, and four doors with a high seating position that made egress easy. The snub nose and sloping roof made the car to create less atmospheric pressure and attain high speed. The dimensions that were used by the car also made it unique as compared to other types of brands. The car adopted 3.1 metres, 1.6 metres and 1.5 metres, length, height, and width, respectively. The compact dimensions were adopted by Tata Motors to ensure Nano maneuvered effectively along roads in urban and rural areas. In addition, the car adopted a mono-volume design that enhanced the combination of space and maneuverability (Davila, Marc and Robert, 2006). A smaller engine that was used by the brand ensured that less horsepower was wasted in the streets of India besides limited emissions even though the maximum speed of Nano is 65mph.

Quality Issues during the Development of Nano

During the Motor Expo in New Delhi, the issue of safety during the use of scooters and bicycles was put forward by the chairman of Tata Motors. According to Tata, the mode of transport used by Indian families was not safe. To deal with this challenge, Tata embarked on the production of a brand that would guarantee the safety of its customers and the environment (Caywood, 2012). The brand has a fuel-efficient engine and uses lean design. Through this design, the company is able to optimize its energy consumption per unit besides minimal weight. The best weight that was adopted by Tata stood at 1,322 pounds. This weight made the car to be lighter than flyweight Honda with 528 pounds.

The utilization of 33 horsepower and two cylinders having 623 cc was also another technique of enhancing the quality of Nano. The new features that the engineers put on the People’s Car resulted in an uncommonly efficient of about 47 miles per gallon. The entire body of the car is made up of sheet that making the car to be strong and able to withstand any collision with light objects. Other safety measures that were used by the designers to improve the quality of Nano include adjustable seat belts, intrusion-resistant doors, and crumple zones.

Political Risks That Tata Faced While Developing Nano

In 2006, Tata indicated that it was planning manufacturing Nano in Singur. The company acquired land to expand the production of the new brand at the cost of $350 million. Nevertheless, immediately after the company purchased land from the government of West Bengal, I started facing various problems. For example, even though the government offered compensation to farmers who agreed to surrender their land, some farmers refused the compensation and demanded that the land be given back to them. The protests that faced Tata Motors were spearheaded by Mamata Banerjee, the chief of Trinamool Congress, one of the main political parties in West Bengali. The protestors were demanding that Tata should return the 400 acres of land neighboring the Nano production facility to the local farmers. In 2008, more than 30,000 farmers and activists besieged the region of Singur as they rallied against the plant and claimed that the land was taken from them by force, and the compensation was not enough (Cecilia, 2013).

Even though Tata Motors has employed almost 4,000 people at the factory, the company noted that it would be risky to continue its operations in Singur. According to the company’s spokesperson, the situation surrounding the Nano plant was intimidating and hostile. Even though the company came to West Bengal with the objective of adding value and creating job opportunities for local people, the company was getting a negative response from the public and politicians. Additional protects made Tata suspend its operations at the Singur plant and decided to produce Nano from other facilities of the company.

Merits of Tata Forming Alliances with Other Companies in the Automobile Industry

Tata’s expansion has been achieved due to its acquisition and joint venture strategies. For example, in 2005, the company acquired a 21% stake in Hispano Carrocera, a well-established Spanish bus manufacturer. In 2006, the company also formed a joint venture with Marcopolo, a company based in Brazil that specializes in bodybuilding for coaches and busses. Through this joint venture, Tata was able to build bodies for coaches and busses in India and other global markets. This indicates that by engaging in alliance with other automobile firms, Tata would be able to access vital resources and technology that would make it effectively penetrate new markets (Constantinides, 2006). The company would also utilize technology adopted by other companies to expand its production, thus benefiting from economies of scale. This implies that the company will produce its brands in large quantities and meet the global demand for cars.

The popularity of Nano in Other Markets

The safety measures and low price adopted by Tata has made Nano to be popular outside India. For instance, in Brazil and China markets, the brand has emerged as the bestselling lo-cost vehicle. Nonetheless, the popularity of Nano has been impacted by the emergence of competing brands such as Datsun Redi, Figo, and Econ (Caywood, 2012). The company can win the trust of American-based consumers if it undertakes several upgrades in order to meet the safety demands of the market.

Tata Motors as an Ethical Firm

Tata Motors is highly concerned about the safety of the environment and its customers. This is indicated by the production of People’s Car that has fewer emissions and caters to the safety needs of the families (Paul and Elder, 2006). Based on the fact that Nano adopted a design that considered the needs of Indian families, including fuel efficiency and safety, it is a clear indication that its goal is to avoid things that would lead to global warming and cause manmade disasters.

References

Caywood, C. (2012). The Handbook of Strategic Public Relations and Integrated Marketing Communications. Chicago: McGraw-Hill.

Cecilia, S. (2013). Political Risk: Concepts, Definitions, Challenges, LUISS School of Government Working Paper series.

Constantinides. (2006). The Marketing Mix Revisited: Towards the 21st Century Marketing, Journal of Marketing Management, vol. 22, pp. 47-58.

Davila, T., Marc, E and Robert, S. (2006). Making Innovation Work: How to Manage It, Measure It, and Profit from It. Upper Saddle River: Wharton School Publishing.

Paul, R and Elder, L. (2006). The Miniature Guide to Understanding the Foundations of Ethical Reasoning. United States: Foundation for Critical Thinking Free Press.

Tata “Nano”: The People’s car Case.