Tata Nano Company - Case Study Example

India’s GDP was low, and the vast majority of the population could only afford two-wheeler vehicles. The strategies employed in ensuring that the Nano met all demands of the non-four-wheeler customers included ensuring that it was affordable for this portion of the population. It was priced at only 1 Lakh making it the cheapest car. In addition, it met high fuel efficiency standards and met all safety standards that the two-wheelers could not meet. For these reasons, people placed orders before they had even seen the car.
There were several hurdles that the Nano had to address in the market. First, the Nano had to ensure that it offered better services than the two-wheeler by becoming a safe, all-weather vehicle. In addition, it had to be affordable. Second, the car had to be designed in a way that promised upward social mobility. Third, the designers could not compromise with the buyers to ensure low-cost cars. For instance, they could not design it as a two-door vehicle since this would reduce accessibility to rear seats.

Despite the enormous initial orders, some obstacles resulted in poor sales. First, Tata did not have its distribution channels; therefore, it resorted to using traditional dealerships, which had limited space. Although this was a main issue Tata resulted in using other outlets to make the showrooms available in many cities in India. For instance, the company tied up with Big Bazaar to display vehicles in smaller towns. Additionally, two-wheeler customers who were the main target were turned off by the perception of the Nano being the cheapest car as people wanted to upgrade their social status. Second, Tata also had a production problem since the interim facilities’ production was low.
Third, the company had issues with local communities who protested the use of arable land for industrial use. This is one of the main obstacles that affected the progress of the Nano project since the company had to relocate the plant which was almost complete. The daunting task led to lost time. However, Tata managed to deal with this issue by reaching an agreement with the state government of Gujarat that enabled the company to acquire a parcel of land to which it relocated the firm that w in dispute. When dismantling and transporting the equipment, the company used anti-rust protection procedures and tagged the materials to make them easier to retrieve. This reduced the time required to construct the new plant by approximately 10 months.
Since competition from other companies has stepped into the market and begun producing other models, Tata must undertake countermeasures since a red ocean market is not highly profitable. Such measures may include customizing the vehicles and improving their efficiency further while maintaining the price range since the models introduced by the competitors are priced higher than the Nano. The company can also seek and take advantage of other uncharted territories before the competitors do. Read More