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Project Management A Multi-Project View

TATA MOTORS: New Product Development Process
Case of Tata Nano

Master of International Business Economics and Management
Academic Year: 2015-2016
Deadline: January 24, 2015




As an Indian innovative company, Tata Motors implemented the State Gate Model (X-Press Scale) in its
project management, which is a technique that leads projects to go through a series of gates to be successful
(Noronha, 2004). Indeed, the top management of Tata expected that this institutionalization would help the company
to develop right products for the market (Tata Motors, 2009). To determine the worthwhile of a project
commercialization, relevant steps mainly include idea generation, idea screening, development & testing, and
commercialization (Chaturvedi, 2010).
Unveiled in January 2009 (Aaker et al., 2009), Tata Motors presented Nano as Peoples car by highlighting its ecofriendliness and its selling price of USD 2,500 that ranks it as the most low-cost manufactured cars of the market.
Actually, Nano was a milestone for a new chapter in product development of the company (Mahadevan, 2010).
Three requirements were important for the Nano product development team: be low-cost, adhere to regulatory
requirements, and achieve specific performance targets. This team of people all below 28 has helped to flatten
Tata Motors [] management structure, which has resulted in an unexpected side-benefit called organizational
innovation (Vamsi, 2009).
Idea Generation Nano came out from a dream. It began when Ratan Tata, the founder of Tata Motors, observed
in India entire families riding on small two-wheelers with the father driving the scooter, the kid standing in front,
and the wife behind with the baby. All of these getting even more dangerous on slippery roads and during the night.
Such situations led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport
for such a family. (Vamsi, 2009). Indeed, Tata would be applauded for making a family of four safer on Indian
roads (Vamsi, 2009). Actually, on the one hand, Tata Motors had some strengths for such a project: low cost price,
fuel efficiency, and brand name. And on the other hand, it had some opportunities: it would be the first car ever in
low range, for a large Indian market, with market awareness, and with export possibilities in Asia (Vamsi, 2009).
Hence, Ratan announced his intention to bring to market in India a car for less than INR 100,000 (Wels, 2010).
Idea Screening How was this dream actually feasible? What could Tata make? There were many possibilities: a
scooter with two extra wheels, a three-wheeled car, an auto-rickshaw with four wheels However, the attention of
Ratans dream was about a car because the market wanted a car, and peoples car had to be a car (Vamsi, 2009).
According to him, getting in this will to build a cheap car for buyers of motorcycle look obvious today but appeared
crazy years ago. They are still saying it cant be done. [] After we get it, there will be a new definition of low cost
(Vamsi, 2009). Moreover, Girish Wagh was a key figure in Nanos development. He engaged in something no one in
the company did before: talking to customers. In his discussions, the real motivation of customers for a four-wheeled
car was that drivers of three-wheelers are looked down upon in India (Vamsi, 2009). So four-wheel cars also have
an emotional feature besides the practical utility. Hence, Tata went for producing a car.
Development & Tests The team led by Girish Wagh determined some requirements for the car: (1) meet all
safety standards, (2) be low-cost, (3) attain some performance levels in fuel efficiency and acceleration capacity
(Vamsi, 2009), (4) the car must be designed-compatible for national market and for export in case the national
market does not materialize, and (5) it must be the showroom for the Indian car industry around the world. However,
teams experienced failures in reality. For instance, the bars replacing doors and plastic flaps to keep out the
monsoon rains were not successful (Vamsi, 2009), and the engine was too big for the car size. Failures of this type
led Wagh to organize meetings everyday of five engineers, each specialized in a field. These meetings solved many
other failures like the length to care about tall people getting in the car (Rainer, 2010).
Commercialization Launched in April 2009 in India with an annual capacity of 250,000 units, the target was the
lower- and the middle-class (Wels, 2010), with the assumption that the car would restructure the whole four-wheeler
segment. Actually, many people were expected to transit to four-wheeler thanks to the crucial commercialization
price of INR 100,000, approximately USD 2,500 (Koontz, 2010). Three models exists: (1) the basic model without
options nor interior trim, (2) the CX middle gamme, and (3) the LX model high gamme (Rainer, 2010).
As a New To The World Product, Nano has marked history being the cheapest car ever manufactured without
compromising quality. Nanos success resides in its strategy for new product development and innovation (Hollensen,
2008). Actually, the demand for Nano rose because of its ability to develop new products, and this has helped to
create a brand name and image, as well as customer loyalty. Indeed, The innovation wasnt in the technology, but
in the mindset (Weihrich, 2013).

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Aaker, D. A., McLoughlin, D. (2009) Strategic Market Management: Global Perspectives, John Wiley & Sons,
p. 316
Chaturvedi, M., Kumar, A., Rahul, M. (2010) Managing Innovation and New Product Development.
PHI Learning, p. 33
Hollensen, S. (2008) Essentials of Global Marketing. Pearson Education, p. 198
Koontz, H. (2010) Essentials of Management. Tata McGraw-Hill Education, p. 91
Mahadevan, B. (2010) Operations Management: Theory and Practice. Pearson Education India, p. 181
Rainer, R. K., Cegielski, C. G. (2010) Introduction to Information Systems: Enabling and Transforming Business.
John Wiley & Sons, p. 287
Weihrich, H., Koontz, H., Cannice, M. (2013) Management: A Global, Innovative, and Entrepreneurial Perspective.
Tata McGraw-Hill Education, p. 153
Wells, P. E. (2010) The Automotive Industry in an Era of Eco-austerity: Creating an Industry as If the Planet
Mattered, Edward Elgar Publishing. p. 112

Noronha, C. (2004) The age of the idea. Retrieved 30 December 2014 from!$$$!yk=/TLYVr3YPkMU=
Tata Motors (2009) Corporate Sustainability Report. Retrieved 30 December 2014 from
Vamsi, K. (2009) New Product Development Process (Tata Nano). Retrieved 30 December 2014 from

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