Tata NANO The People Car - Essay Example

? Tata "NANO" The People Car Tata “Nano” is an Indian car designed to reach the low s who could not afford high prices of cars. This was actually unbelievable invention that was expected to attract millions of customers globally particularly the low income earners. Tata motors set pace in leadership as well as in innovation by introducing a low cost car that is almost affordable to everyone particularly the middle class group. Nano has impelled many companies in the automobile industry to focus on the low cost cars as a way of increasing their revenues. Tata Motors was inspired by the need to create safety cheap private mobility for the Indian population. According to the case, most people in India were using scoters and motorcycles as a means of transport. However, the scooters and the motor bicycles did not seem to be safe compared to cars. The company thought that by designing a small car for the families that seemed to strain while using the scooters and motorcycles would offer a great reprieve. A nuclear family would at least have a reliable and cheap private means of transport. Nano car was customer friendly because it was designed with customer in mind particularly a family of four (Barrow, 2011). Importantly, Tata Motors wanted to offer a product that would be affordable to the low and the medium income families. A large number of populations in India would not afford cars due to their expensive nature but if a cheaper one could be introduced, many people would buy due to affordability (Barrow, 2011). The company was actually targeting the larger segment of market as a means of conforming to the Ford Motors initiative of offering cheap cars. The company knew that they would increase the number of cars sold per year if they emphasis on affordability and appeal to the many drivers of scooters and motorcycle drivers in India (McLoughlin & Aaker, 2010). 2 Nano car is well designed to fit its intended price. The car is incorporated with fuel efficient engine associated with slim strategy which makes it weigh less but maximizes fuel utilization. Moreover, Nano has a 33-horsepower, 623-cc as well as two-cylinder engine and 5.4 cubic foot trunk which results into unusually proficient 47 miles per gallon with a speed of 65 meters per hour (Srivastava & Verma, 2012). The car’s dashboard is very small and economical in that it is built with fewer parts such as installation of the speedometer at the middle of the dashboard. Also Tata Motors saved $10 by redesigning the suspension to eradicate actuators in the headlights as well as the levelers. The small capacity of the tank however requires frequent pumping compared to other cars (Fisk, 2009). Nano is further designed in an all sheet metal body as well as safety features and robust passenger partition which is consistent with the Indian regulatory requirements. The People’s safety car also has tubeless tires which improve safety and is highly environmental friendly due to its lower pollution level. Nano has proved that indeed low price does not imply poor quality. The car has numerous features that almost resemble the other pricy cars in the market. For instance Nano can maneuver even busy Indian roads which may not apply to the costly big cars (Srivastava & Verma, 2012). Additionally, it is more comfortable than two wheelers and can someone to longer distances as it offers safety that every other car may offer. However, there are a few features which may justify the fact that low price means poor quality especially Nano’s small engine capacity which requires frequent pumping. This may be very irritating particularly where there are no available pump stations thus making the driver or passengers to be stuck. Nano also has very low speed compared to other cars hence may not be suitable during emergency issues such as taking an emergency patient to the hospital (Thatchenkery, Cooperrider & Avital, 2010). Benefit accrued from Nano is amazing because with the low price, it is still very comfortable and spacious due to the available head room and leg space. Furthermore, Nano’s dimensions and mono-volume makes it move anywhere regardless of the degree of the degree of activities taking place on a road. Nano also has high seat positions allowing smooth comfortable exit and entrance from the car. In addition, Nano is designed in both standard and deluxe versions where both versions have wide range of body colors that makes it possible for customer customization (McLoughlin & Aaker, 2010). 3 Delay in Nano’s launch was caused by protests by the local communities against relocation of Nano manufacturing plants. India has a large population that largely depends on farming and therefore would not easily give out their land for other functions different from farming. Land disputes were really intense because the locals felt that their only economic source was taken away from them by Tata Motors (Freiberg, Freiberg & Dunston, 2011). Tata motors had initially planned that Nano cars would be manufactured in new and separate plants but not the existing plants. Even after investing almost $350 million on the proposed Singur site they had to cease their operations right at the start. It was unfortunate that the government of West Bengal did not even own the Singur land but took it from the locals (Freiberg, Freiberg & Dunston, 2011). Although the Communist government had a good intention of improving the region industrially by allowing Tata motors because the region was full of poor farmers, the land owners refused the idea by demanding their land back. Amusingly, the locals even snubbed government compensation. The locals further felt that compensation was not worth the land value since it only comprised of a fraction of the worth of the land. It was apparent that the agitation was beyond the communist government control especially after serious protests were organized that blocked the highway leading to Singur prompting Tata Motors to withdraw (Freiberg, Freiberg & Dunston, 2011). They felt that the aggressive and threatening environment could not support their project and even allow for success and efficiency of her operations. Furthermore, Tata’s attempt to try the invitation by the Gujarait’s government after assurance of good environment and even offering great incentives when they relocated to their land too came to a standstill. The Gujarat farmers claimed that compensation was not worth it and that they demanded better reward. It is ostensible that land issue is a major concern in India which greatly affects operation of businesses in their economy (Freiberg, Freiberg & Dunston, 2011). It is really risky to do business in India because of inadequate or ease of getting a good location. Attempt to identify a business location may be derailed by the locals. Moreover, the local governments in India do not have much authority in controlling business activities in their areas of administration. The higher level of poverty and over dependence on farms denies India many opportunities of business expansion in various regions (Freiberg, Freiberg & Dunston, 2011). Deceptively, the cause of higher demand of compensation by the locals is driven by the value they have for their land which makes them regard employment brought about by businesses as unimportant. Possibly, any business started in India may be suddenly stopped by the locals without strong intervention from the government thus making a particular business to risk losing their property or plants by abandoning the location. Additionally, it is not easy to locate an industry in a strategic position accessible to suppliers since location of a firm largely depends on the locals (Freiberg, Freiberg & Dunston, 2011). 4 For sure Tata Motors set trend in the automobile industry with their introduction of Nano. The Nano idea has reshaped the auto market by taking affordability into consideration. Initially cars were only meant for the rich but introduction of Nano has incorporated even the middle class who are the majority group (Fisk, 2009). Every other car manufacturer now looks for ways in which they can introduce low priced cars for the common man. This is indeed encouraging since it will boost the revenues of those particular companies such as Ford and Toyota. In addition, Tata Motors led by example by considering customer needs and satisfying the needs. Nano is basically built with customer in mind and this creates a difference in the motor industry (Srivastava & Verma, 2012). Likewise, innovation by Tata Motors which includes using cheaper features such as hosepipes, small engines, and low capacity fuel tanks is just amazing in the motor industry. Remarkably, there was great innovation in which Tata Motors priced their $2, 500 Nano which did not include doing the costing and incorporating margin but effort was put towards meeting the price. This was absolutely noteworthy because most industries would not use such an innovative method which first considers the target customers income (Fisk, 2009). Nevertheless, the leadership of Tata Motors through the introduction of the people’s cars may hike the prices of materials due to high demand especially steel thus boosting the cost of doing business in the automobile industry. Demand for fuel will also go high and perhaps pollution resulting from automobile will increase although this may not affect car industry that much (Fisk, 2009). It would only challenge various companies to be innovative while manufacturing their models. Generally, the most important thing in every industry including the motor industry is increasing revenues and getting profit. This is exactly what Nano has done in the market by setting pace for innovation towards satisfying the larger market’s needs (Thatchenkery, Cooperrider & Avital, 2010). 5 Indeed there is a future for low budget cars in several international markets especially in Africa and Asia where there is bigger population of low and middle income earners. Global recession which has led to high unemployment level would make most people to adapt to fuel efficient cars such as Nano. Nano and other low budget cars may be a good preference for students in future and even small families with a constraint budget that cannot allow them to buy expensive cars. Introducing Nano in Europe and U.S markets may not be a good idea but if they are manufactured in a way that fits those particular markets then it would be a better idea. It is worth noting that initially Nano car was made with the Indian customer in mind and therefore selling it to other markets such as Europe and U.S without improving or regarding the respective clients in mind would be inadvertent (Samli, 2013). Additionally Nano can only succeed in U.S market if it takes into account the U.S market necessities and other legal requirements such as safety of their cars. Unless the U.S consumer needs are addressed, Nano may not be the best fit for the market. Tata Motors must ensure that they listen to the Americans and incorporate every other important feature that may be of importance to the U.S even if it means a slight increase in price though lower than their competitors (Chandrasekar, 2010). Notably, it is undeniable that Tata have set pace in the world market. Introduction of Nano was a major relieve in the automobile industry. Nano has actually shaken the Indian market and gained popularity beyond the company’s expectation particularly in India. Tata has taken a memorable step in the automobile industry through her innovation (Thatchenkery, Cooperrider & Avital, 2010). Nevertheless there are a lot that ought to be done by the company to ensure sustainability and wide market coverage in the low budget car. Recommendation The company needs to regard specific need of every market and ensure that Nano contains almost all features deemed satisfactory and important to those definite markets. Cars should be built differently depending on the customers’ needs. For instance, Tata Motors should do thorough research on different needs of various international markets before introducing their Nano into those particular markets. Tata should therefore incorporate features that may be pleasing to Americans. They should also adhere to the America’s insurance and other environmental regulations in order to stay relevant in the business. Tata should then organize for in-depth advertisement and distribution channels. They should open many showrooms and carry out demonstrations in different parts of America to boost peoples’ confidence in their products. References Barrow, C. (2011). The 30 day MBA: [your fast track guide to business success]. London: Kogan Page. Chandrasekar, K. S. (2010). Marketing management: Text and cases. New Delhi: Tata McGraw-Hill. Fisk, P. (2009). Customer genius: Becoming a customer-centric business. Chichester, UK: Capstone. Freiberg, K., Freiberg, J., & Dunston, D. (2011). Nanovation: How a little car can teach the world to think big and act bold. Nashville: Thomas Nelson. McLoughlin, D., & Aaker, D. A. (2010). Strategic market management: Global perspectives. Hoboken, N.J: Wiley. Samli, A. C. (2013). International consumer behavior in the 21st century: Impact on marketing strategy development. New York: Springer. Srivastava, R. M., & Verma, S. (2012). Strategic management: Concepts, skills and practices. Thatchenkery, T. J., Cooperrider, D. L., & Avital, M. (2010). Positive design and appreciative construction: From sustainable development to sustainable value. Bingley, UK: Emerald. Read More