Question #1
The root of Ratan Tata’s inspiration was described during the unveiling ceremony at the
9th Auto Expo in New Delhi. This is where Ratan spoke about his observations of the
transportation situation for many middle class Indian families. “I observed families riding on
two-wheelers—the father driving the scooter, his young kid standing in front of him, his
wife seated behind him holding a little baby.” This observation, combined with data of the
amount of passenger cars sold versus the amount of motorcycles and scooters sold, lead to
the impending question, “[can] one conceive a safe, affordable, all-weather form of
transport for such a family?”
There was a need for an inexpensive car in India, because at the time an affordable car had
yet to enter the market. Before Tata Motors, no one had gone above and beyond to develop
a car specifically adapted for middle-class Indian families at bottom dollar. From there, Tata
Motors’ engineers and designers turned Ratan Tata’s inspiration into what is now known as
the People’s Car: affordable, built to meet safety requirements, fuel efficient, and low on
emissions. The Nano covers all the basic qualities needed in an inexpensive car for lesser
developing countries:
● To keep families from having to travel with as many as four people on a scooter
● Minimizes previous safety concerns
● Brings mobility to middle class families
By emerging into a market that was once dominated by motorcycles and scooters, Tata
Motors
is providing millions of people a regulated and affordable way to purchase a vehicle to be
mobile at last.
Question #2:
(quick intro here)
Step 1: “Tata motors began by studying and trying to understand the customer. What do
the customers need? What do they really want? What can they afford?” (Case 3.1, pg. 403)
Step 2: Tata set a price of $2500 because that is what it thought customers could afford →
then they worked backwards from there(fix)
Step 3: Tata then asked their engineers and suppliers to redesign many components of the
car to use less part, thus cutting costs(fix)
Examples: (fix)
● The placement of the speedometer
● the suspension
● the levelers
● the connection of the steering wheels to the axles
● the use of an aluminum engine
● lightweight steel use
Step 4: Evaluating the target customers’ lives for cost-cutting ideas
Example:
● smaller engines bc packed cities. no need for more horsepower bc they would be
wasted (fix)
Step 5: Construction of the car. The nano has a modular design, meaning it can be
assembled in a variety of locations. It is being sold in kits that are distributed, assembled,
and serviced by local entrepreneurs (Case 3.1, pg. 403).
Because of the way Tata produces their parts and is able to ship them in mass quantities it
leads to the development of satellite assembly operations. Entrepreneurs who are looking
for jobs can establish assembly operations, Tata Motors will train their people on the total
quality assurance process, to produce the car, and ultimately creating a chain reaction for
the disbursement of wealth.
People tend to reason different and how they think impacts how they perceive a price
but not on how they buy the product. It is up to the buyer to decide whether a low price
means poor or high quality. To explore this statement, low price does not automatically
mean poor quality because Tata Motors is applying low price on its Nano model cars so as to
fulfill customer’s satisfaction and needs. However, the other aspects explores that the lower
the price, more rewards will be provided to customers who are involved in small profit
businesses since they won't have to spend much.
How did Tata Motors address the quality issue while developing its budget car? (fix)
Tata Motors has gone beyond the Gandhian engineering principle to administer quality cars.
Towards developing its budget, Tata Motors addresses that it begun studying and trying to
understand customer. It analyzes what the customer needs, what do customers want and
what the customers are able to afford. The issues are addressed in a way that, there is
presence of the customer in the development of the budget car. It plans to acquire land and
built plant for sole purpose of producing Nano. It addressed that better idea of future input
costs and demand could not predict how soon cars would be. The reason is that steel prices
progresses to rise, prices may have been adjusted. However, Tata Motors announced its
launching distribution in six new provinces where Nano had not yet been available.
Question #3
Tata Motors experienced delays in their launch due to unexpected problems at Tata’s
Manufacturing plant in Singur, India. (State West of Bengal) Problems began in September
2008 after Tata’s purchase of the property in Singur because the government did not
actually own the land, but acquired it from local farmers by force of eminent demand. The
government took over 1,000 acres of farmland for the factory and they offered
compensation for the farmers but most refused compensation and demanded land to be
given back to them. 30,000 activists began to protest and claimed the land was forcibly
taken from farmers with inadequate amounts of compensation. The highway leading to
Singur was blockaded and caused delays of productivity. Later, the protests got more
serious and employees failed to show up to work after threats and heavy traffic due to
these protesters. Finally, Tata Motors announced that violent protests had forced it to
suspend all work at the plant in Singur. They decided to relocate the plant to Ahmedabad in
October 2008 to begin the project once more.
a. What important features of the Indian economic environment were the key factors that
caused the problem?
i. 2nd paragraph
ii. 7th paragraph
b. What does this story teach about the risks of doing business in India?
i. Don’t invest until you know all the details and how society around you will react
ii. land is a huge deal
Question #4
a. Would you agree the introduction of the Nano to the world auto market will be setting
new trends in the auto industry, and possibly reshaping the industry?
i. The Nano has definitely created an entire new market within the worlds low
income segments who could not conceive of the idea to personally own a car before.
Furthermore, other companies may take note of Tata Motor’s success and develop their
own models, which would spur competition and further advances in this market.
a. What did Tata Motors teach other automakers in terms of leadership and innovation?
i. Tata Motors taught the other automakers that there is further room for adapting their
products to low income regions.
ii. Providing consumers with a light-weight, fuel efficient car that contains only the basic
utilities needed to perform safely; accompanied with a deluxe version that does offer a
more comprehensive utility package that includes more luxury options such as air
conditioning.
Question #5
Do you agree that there is a future for low budget cars like Nano in other markets besides
India?
There is a future for the low budget cars like Nano in other markets besides India, because
the Nano itself is identified as a global race towards low cost cars. This car model
has focused on the new developing world of the consumers (Aaker,2011).← Source The
other possibility of future budgeted cars like the Nano to be distributed to other markets
besides India is because of the emergence of Tata Motors on Globe auto scene which has
marked advert of India as one of the global center of small cars production. It also
represents a victory over other companies who produce cheap cars for potential customers
at bottom line in most of the emerging markets globally.
Tata Motors is going in the right direction by trying to develop and adapt its low cost Nano
model to the European and U.S. markets. Reason being, Tata is focusing on the
demographics for leverage across different markets in order to easily establish a
manufacturing plant for Tata Motors. Secondly, Tata Motors is focusing on product and
services as a platform for future growth and treating the Nano as a bundle of capabilities, so
as to not overwhelm the market with every small feature (Parikh, 2010).← Source ( this is
directly from the case too pg. 406) Therefore, it is a good decision for Tata Motors to have
the Nano Model adapted in both European and U.S markets to allow Tata Motors to tap into
the American consumer market. Because of the simplistic design of the Nano, this car will
appeal to those in the market looking for a vehicle that is budget friendly, economically
efficient, and able to fit in their simple lifestyle.
How would you evaluate a likelihood of success of the Nano on the U.S. market?
The success of Nano in the U.S. markets seems to face challenges, because in the United
States every car has to meet a high standard of safety measures. It is identified that, the
likelihood of the Nano’s success in the U.S market involves bundle of capabilities and a
strong platform to drive the Nano model. Economy is another factor to be considered, Tata
has to appeal to economy-driven consumer in the U.S. (Aaker, 2011).← Source The reason
as to why the Nano Car has to be a well designed for the economic-driven consumer is to
overcome struggles during prolonged times of economic crises combined with the ever
rising price of gasoline.
What should Tata Motors do to win American consumers?
In order for Tata Motors to win the American consumers, it has to have sorts of
features ((example here)) on Nano before getting the official green light to
successfully launch in the U.S. Its model has to be nicer insider so as to attract most of the
buyers (Parikh, 2010). ← Source (from case too, who is parikh?)The other aspect for Tata
Motors to consider is to develop low-cost models for the U.S consumers which are below
the price of the used cars. Tata Motors would need to consider upgrades in its model cars in
order to win the American consumers. (Please go to pg 403 & 406 in case: Start at “Secrets
behind the Low Price” → Bottom of the very first paragraph are good examples of the things
american consumers need in a car! I think it would be good to tie those things in. Use the
examples on pg 406 in the opening. [ipod connector, cup holders, comfort])