Report on Tata Nano “the people’s car”

About Tata Motors:

One of the main divisions of Tata Group is Tata Motors. Be it real estate media, telecom, outsourcing and retailing Tata group has a commanding presence in all the major sectors. Beginning its venture in 1868 in a form of textile wholesaler, the company subordinated into developing luxury hotels the owner of the firm was turned down by the posh society because of his skin color. Soon after the regional power changed and British left India Tata emerged as Tata Motors and begun the production of locomotives and further, autos.

With the passing of time Tata Group emerged and transformed into a global company by acquiring international businesses and equity. They got the possession of tea company Tetley in 2000 and further pushed themselves to buy Anglo-Dutch steel giant Corus in 2007. It has established Tata Consultancy Services offices which are situated in different places including Boston, New York, and San Francisco as well as the addition of luxury hotels. Tata Motors made a huge step in 2008 when the acquired the possession of two major automobile companies which are known as Jaguar and Land Rover from the company which was then financially strangled Ford Motors. Tata Motors gained their place in the New York Stock Exchange in 2004.

In the end of 2006 Tata gained a revenue of $116 million on $1.55 billion. Their annual revenue surge to $5.2 billion for the financial year ending in the month of march 2006. Currently Tata Motors limited is India’s biggest manufacturer of automobile with a accumulated revenue of US$14 Billion. It is the driving force in commercial vehicle in each sector and also in between the top in the area of passenger vehicles with various winnings variants. In the world standing of production and capacity Tata Motors stands 4^th biggest manufacturers of trucks and second largest bus producer. The company holds a strength of 24000 employees which are structured and managed by the idea to become be “best in the adequate in which we perform, best in the products we provide, and best in our value system and ethics.”

Tata’s Inspiration for the Nano

Cars could give a safe ride instead of two wheelers-motorcycles or scooters. Middle-class Indians are not able to buy cars and they bought and transported their entire families on scooters. While India’s population is more than 1 billion people, only around 1 million passenger cars were sold in the country in 2007, one-tenth as many as in China. By contrast, more than 7 million motorcycles and scooters were sold. These are some statistics which are according to the Mumbai-based credit-rating agency Crisil. According to Tata Motor’s Chairman Ratan Tata, an incident inspired him to build the Nano. Which he explains in a ceremony at 9^th Auto Expo in New Delhi that ‘once 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 baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family. Tata Motors’ engineers and designers gave their all for about four years to realize this goal. Today, we indeed have a People’s Car, which is affordable and yet built to meet safety requirements and emission norms, to be fuel-efficient and low on emissions. We are happy to present the People’s Car to India and we hope it brings them joy, pride, and utility of owning a car to many families who need personal mobility.” However, Tata Motors introduced to the Indian public its ultra-cheap car “Nano” that was expected to retail for as little as the equivalent of $2,500, or about the price of the optional DVD player on the Lexus LX 470 sport utility vehicle. Nano increases the pool of potential auto owners by 65% which goes beyond the economics and class which crosses the urban-rural divide. And now middle-class Indians can easily afford a safe ride in all-weather

Tata’s Innovative Steps for Nano Design

Nano has passenger compartment along with leg space and head room and it is comfortable for 4 persons. With all sheet metal body, it has a strong passenger compartment with certain safety features. It also has tubeless tires for ensuring further safety in it. The main focus was environment friendliness. The car is available both in deluxe well as standard version. Both these versions also offer a wide range of colors and accessories and also the car can be made customized according to the desire of the customer. Lean design strategy is applied on engine making, no air bags, no radio, no passenger side mirror. Only deluxe version has facility of air conditioner in order to cope with summer season of the country.

 Tata’s Quality issues for the Nano

The idea of producing less expensive vehicles which are easily affordable to normal living person is a major key in the vast production of Tata Motors. This low cost is achieved by analyzing the “Gandhian engineering” principles in depth frugality with a determination to outcome conventional views. The basic features which consumers often don’t value includes air conditioning, radios, power brakes etc. are not available from the least common model.  The idea to succeed on building a low production price affordable vehicle, the first think they went for is to understand the needs of the customer. By getting the answers for some basic questions which included What do the customers requires? What do they really expect from a vehicle? What can they afford or how much can they afford?

The consumer was always ready in the production of the Nano. Tata didn’t accumulate the cost of the Nano by calculating the cost of production and then adding a margin instead of this they set the price of the vehicle to be $2,500 as it was the price which was resulted out of the analyses they took by those questions.

More significantly, the engineers were performing more with less. Tata took out the capacity by slashing the price by requesting his engineers and suppliers to restructure the new parts to less the costs. The speedometer for instance is placed in the center of the dashboard which is over the air vents, mostly it’s behind the steering wheel but in this way, dashboard was able to be built with fewer parts. The morality of the description was tata engineers successfully designed and restructured their vehicles by cutting cost. A example of the above description can be further explained  by comparing  two models one is Nano other is Maruti, mostly same but nano is less area occupying which is also higher priced low cost competitor assembled in India but it provides a capacity surge of 20% as compare to Maruti which is a brief example of the low cost and high effectiveness. The nano is further lighter as compare to other models due to the main reason of less use of steel

This an area which innovates a wider structure of innovation which is putting its head up in India offering a vast range of markets which are categorized from diesel engines and agricultural products leading down to financial services.

Political risks for building in India:

Even though Tata was struggling so much to meet the needs of poor India transportation system and the aim was that the price of the car will not exceed more than $2,500, company has to face a major challenge regarding the proposed manufacturing plant in Singur in West Bengal, India. This site can stop the process of manufacturing right at the start.

The plan was to build a plant where the purpose is to start production of Nano but the entire project including the 60 acre of the land cost about $350 million to Tata motors. The land was under the ownership of government which government got from the local farmers by imposing force on them. This state was poor and government was very interested in bringing tata motors there. Government offered compensation but some farmers refused to take it.

The protest raised against the tata motors and they were forced to return 400 acres of land surrounding the nano factory but company cannot do that as it was necessary to maintain nano at low cost. Employee failed to show up on work after the threats from the protestors. This protest also affected the traffic like food trucks were stuck on highway where the food kept on rotting under sun. according to the spokesperson of tata motors, the company at West Bengal was at risk and he said that there is no way for the plant to work effectively. The country where two third of the total population depends on agriculture, it was so difficult to part with the land. After all this, Tata motors decided to put detailed plan on relocation of the plant and machinery and started to evaluate options for manufacturing nano at other company facilities. Tata finally abandoned the Singur factory where they had initially invested $350 million.

Even the Gujrat government assured about safe and friendly business environment in the state, the rebuilding of the plan at even that state was not easy and painless. Farmer arose again for protesting against Tata motors and Gujrat government. Ultimately Tata motors decided to begin the manufacturing of Nano at existing factory in Pantnagar.

Nano popularity outside India:

For the sake of millions of new developing consumers of the cars worldwide, Nano became the part of the global race in order to lower the prices of entry level cars. Countries like India, China, Brazil, lowest price cars are the best sellers. Maruti Suzuki India Ltd., has dominated in India for decades, its lowest price right now is $5000.

Now when Tata motors are launching something better with passing days, competitors are rising to offer their own budget vehicle. There are certain examples like Nissan Motors Co. has strategies to make a car as low as $7,000 and then maybe $5.000 in next few years. By the end of 2020, millions of low-price cars will crowd on way of Tata motors Nano throughout the world. This vehicle evolution could change the fate of taxi business overnight in India and also for small time entrepreneurs by giving new world of mobility, social status and carrying capacity. There is a serious concern imposed by analyst on profitability of budget car manufacturing. With increase in competition, cost pressure also increases which cause small profit margin.

Analyst says that as long as Nano runs as good as it looks and avoid major quality problems. Hundreds or thousands of families in India can get this advantage as long as they want. But still, with low cost it will take some time for Tata motors to recoup its investment in manufacturing world’s cheapest car. A senior research analyst, Vaishali Jajoo estimated that with profit margin of 5%, it will take five years for the project to be in black. Business language “the first mover advantage” is on the side of Tata motors which give them benefit as compared to their competitors. If the company want to leverage the product or its services as a platform where the future can grow, it is vital to treat it as a bundle of capabilities, and not to get overwhelmed by current features, branding, targeted customers etc. underlying capabilities can get upgraded with new capabilities to create a new product or services. This is how iPod lead its future to iPhone. It is highlighted by Gupta and Wang that many companies don’t look toward aspects of global marketing and production. But Tata motors is taking this advantage on the platform of Nano production for it further growth. The entrance of Tata Nano into global market is potentially a greater step toward its sustainability and future growth.

Ethical leadership of tata motors:

Tata group has long standing reputation in ethical leadership and the group is well known for its corporate social responsibility and rules and principles like tata’s don’t bribe and Tata’s don’t indulge in politics. Under the leadership of Ratan Tata, the group of Tata continue to carry out this legacy and to grow the business in India while also planning to have global footprint.

India like other markets, is passing through the period when most of the power is concentrated in the hands of politics. This eventually led to have a government dominated economy that is also surrounded of nepotism corruption. Despite of this kind of the market, tata group managed to have an organization which stand on two pillars of trust and integrity so much that become a key feature of brand of Tata. But in 2010, the company along with his owner Ratan Tata were dragged in to 2G scam that also have broken India. The major challenge that the company faced is CORRUPTION. This was the problem that weather the corruption will get encourage. This is an important phase in development of modern capitalisms in emerging markets. Ethical leadership is answer while working in emerging markets

Tata’s Advantage of an Auto Alliance

The first advantage is related to the introduction of new technology. It can be noted that this company is moving towards applying new technologies in the car. This is because other automobile companies are working on it. The next advantage is that this company is going to remove the industry gap. It can be seen that many automobile companies are moving towards electric cars technologies and due to this strategic plan gap will be overcome easily.

Conclusion of Tata Nano “the people’s car”

Summing up all the discussion from above, it is concluded that Tata motors is one of the biggest automobile brand in India. Beginning its venture in 1868 in a form of textile wholesaler, the company subordinated into developing luxury hotels the owner of the firm was turned down by the posh society because of his skin color.

Tata Motors made a huge step in 2008 when the acquired the possession of two major automobile companies which are known as Jaguar and Land Rover from the company which was then financially strangled Ford Motors. Tata Motors’ engineers and designers gave their all for about four years to realize this goal. Today, we indeed have a People’s Car, which is affordable and yet built to meet safety requirements and emission norms, to be fuel-efficient and low on emissions. The idea to succeed on building a low production price affordable vehicle, the first think they went for is to understand the needs of the customer. The consumer was always ready in the production of the Nano.