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Economic Theory - Cost of Production - Case Study Example

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Tata Motors, an Indian based car manufacturing company planned to put its plant for its new project NANO, which is considered to be the world’s cheapest car, in Singur, a district in India, but it faced heavy opposition from the local population of the district as they claimed…
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Economic Theory - Cost of Production Case study
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Economic Theory - Cost of Production

Download file to see previous pages... On one side, where the construction of the plant would give employment to over 12000 people of the area and would expand the Indian car market by 65%( machinist.in.2008), the construction of the plant would result in a lot of resistance from the local farmers as they would lose their farmlands. Tata Motors would be left with only two options, either to continue with the construction of the plant against all the opposition or close down the project losing $340 million investment which has already been made in the project ( .
Tata Motors developed a car Nano which is considered to be the cheapest car in the world. In order to mass produce the car, Tata chose the district of Singur to construct its plant but the decision invited a lot of opposition from the local farmers and political parties of Singur as they claimed that Tata Motors, with the help of government was taking their lands forcibly. The company is faced by the following external forces which are hindering its decision to construct the plant:
Social forces: The local farmers are the one biggest force which is a hindrance in the development of the plant. The society is against the development of the plant, in spite of the fact that it would provide employment opportunities, because they are not content as they believe that their lands have been forcibly taken by the company to build the plant. Although Tata Motors have claimed that they have provided them with sufficient amount of compensation for the lands but the farmers are not convinced. The opposition is so intense that the farmers have damaged the factory building and have intimidated the employees of the plant in order to prevent them from working (Business Standard .2010).
Political forces: The other threat which has put fuel to the fire is the political agency of the district which has joined hands with the local ...Download file to see next pagesRead More
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