Tata Nano

Kanwaldeep Singh
Course: MBA International Management Module title: Entrepreneurship Module code: MBAE05 - Entrepreneurship
Module leader: Andrew Pearson

College ID: MCC900528

STATEMENT OF AUTHORITY I have read the College Regulations relating to plagiarism and certify that the above piece of coursework is all my own work and do not contain any unacknowledged work from any other sources. Signature: Kanwaldeep Singh Submission Date:
[Word Count: 2373] (Excluding appendices/bibliographies, tables and diagrams)

Contents
1. Introduction 2. Seeing the window 3. Locating the window 4. Measuring the window 5. Opening the Window 6. Conclusion 7. References

Introduction This report is on Tata Nano a product of Tata Motors in India and discusses in detail how Nano came into existence from the point of just an idea into reality. In order to understand better and in sequential way we will be using sing Philip Wickhams model of the strategic window, depicting 5 stages of initiating and developing Tata Nano. 1. Seeing the window: scanning for new opportunities It is like a solid wall of its offering in a market and needs to be further explored in order to find out the gaps which represents new opportunities for which requires innovation in return. Opportunity Rattan Tata, Chairman of the Tata Group wanted to create safe and low cost family car for Indian families, this idea struck him when he saw the Indian families using two-wheelers as mode of transportation and then he decided that there should be a better way of transportation for Indian families. Rattan Tata wanted to build a car that is in reach of all the families in India, which in turn he wanted to build the worlds cheapest car which should be available nowhere else other than India only. Innovation/Benefits Rattan Tata at first had the idea and he saw the huge opportunity for it in the Indian automobile market and to help him with the backup he had the technology and immense power in terms of labor, international/ national engineers, research and development and resources available within its own company such as steel, Tata steel company headquartered located in the eastern Indian state of Jharkhand. Making use of its own resources to full extent further helped company in bringing down the car prices. Engineers with the help of technology give actual shape to his ideas to as we know today as Tata Nano the worlds very low cost and cheapest car which was meant for middle class families in India. Tata Nano innovated both in technology and cost. It was designed keeping in mind middle class families of India. It is spacious and four people can comfortably sit in it. Its safety performance is more than what is required by Indian auto

administration. Its tailpipe pollution is within the requirements of pollution authority of India. Tata Nanos lean body shape has helped in reducing weight, as a result of which it has high performance on per unit of fuel consumed and proves more fuel efficient car. The cost of the car is $2,500 and has been known as the worlds cheapest, due to size, efficiency in fuel which is completely made for Indian masses. 2. Locating the window: the positioning the new venture: Further understanding requires where the market is located and how to place your new offerings in the market to get maximum benefit out of it in comparison with your competitors. Nano was made keeping in mind the middle class families of India however that was not only the targeted market major sector, Nano lower cost and cute looks with different colors was another attraction for youngsters who just got their new jobs and could easily afford it with the help of multiple PSU bank financers who were promoting Nano. Nano car were easily available not only at Tata motors dealers but also through conventional retail outlets. Tata fully exploited media for its Nano advertisement in news-papers, televisions, radios, and internet for capturing more attention. Nano being a smallest and cheapest car in the world was already word of mouth in India. 3. Measuring the window: Measuring the demand for new offerings in the market, who are the actual buyers and how to achieve this project or idea of new offering to that market. Who are the buyers? Rattan Tata saw that on Indian roads people with two wheelers were five times more as compared to the people who were using car. Tata actually focused on middle class families who were driving two wheelers but had dream to be on their own four wheelers one day, only if it was in the reach of each middle class in terms of purchasing power. Basically Tata focused on inventing low cost vehicle which was in the reach of middle class families who used two wheelers in their daily lifes, by doing this they also wanted to improve the quality of life of people in India.

What was Tata Motors offering? Tata shown that this country has the capability to be truly innovative in manufacturing the world's cheapest, is a compact, fuel-efficient vehicle meant for India's middle class families. Not only the car meets the comfort, fuel efficient and standard safety requirements, it also meets global pollution standards as driven by Euro 4 and has proved a lower degree of pollution as compared to most of the two wheeler such as scooters/motorcycles that are running on the Indian roads today, and this makes Tata Nano pioneer in cost and technology.

How was Tata Motors going to achieve this? Research and Development: The research and development team consist of hundreds of its engineers who worked hard to build a low cost engine which was fuel efficient and had standard 623 CC horse power. Tata was readily accepting ideas from all the level of hierarchies in its company from foreman to highly qualified engineer to bring down the engine size without compromising on engine power and fuel efficiency and acceleration capacity. Traditional Suppliers: Tata focused on its traditional suppliers who helped Tata in bringing down the price of Tata Nano. Low Cost: The main objective was to invent worlds low cost vehicle and not in any other country but in home country only, India. In order to build such low cost vehicle Tata Motors used adhesive and plastics. Tata Motors instead of making whole Nano metal body car it used economical polymers or bio-degradable plastics to bring down the manufacturing cost on it. Tata brought traditional contractors in making Nano such as RG India and GKN Driveline India. Rane Group and GKN Driveline India helped in bring down the cost of the Tata Nano. Rane Group, for instance paid attention in making light weight material that will be used in making a pinion steering system and rack, steel tube was used in steering wheel instead of steel rod which proved to be major

reduction in cost. Generally, the product was made out of one piece to save cost on assembling and machining expenditures. GKN on the other hand focused on the driveshaft of Nano which is used for transferring power from engine to the wheels. GKN spent well over a year developing perfect driveshaft for the Nano. With the help of French and Italian operations who altered the design, Tata Motors was further able to make Nano easier and lighter to produce. GKN designed Nano's rear-wheel drive system in way that shaft had a smaller diameter, which made it lighter and hence reduces cost on martial involved in making it. To further reduce the cost Tata Motors implanted only one arm windshield wiper instead of two and provided only one side rear view mirror instead of two. The wheels for instance had only three bolts instead of usual four. There is no power steering, unnecessary due to its light weight. The 624cc rear engine has only 2 cylinders so the weight and cost of the engine was further reduced. Tata Motors gave out facilities to its manufacturing distributers in order to establish near the Nano manufacturing plant so that further reduction in transportation cost is achieved. Quality: Tata Motors used technology, engineers, research and development to full extent in bringing the cost and size down to what Rattan Tata was expecting. Nano engine had to go through change in design for three times in order to achieve standard power of 624 CC . Keeping in mind the quality standards of all the cars available in the market Tata Nano body was designed to fit in over six feet tall person, Tata wanted it to be easy for tall people to get in and out of the car In order to create more legroom space the foot pedal was realigned so that even tall people could drive Nano comfortably. The car had a speed of 105 max (65 miles per hour) with fuel efficiency of 22 km within the city in just one liter (50 miles per gallon) of petrol and 26 km with the same quantity of fuel on the highway roads or motorways. Not only had that Nano come with four years of factory warranty which further build quality relationship with its customers.

Tata gave options to its buyers like it came with three models like Nano Base, Nano CX and Nano LX top end with wide range of colors in each such as for Nano base on can go for summer blue bright red, ivory white and for Nano CX with more colors like summer blue, champagne gold, lunar silver, bright red, ivory white and at the end Nano LX sunshine yellow, champagne gold, lunar silver. Base model had all the standard features with space, comfort and from safety point of view as well however Nano Lx model was basically made for people who could stretch little more on their pockets to have more additional benefits attached to their cars such as the top-end Nano LX had more added features such door handles, front power windows, cup holder in front console, as premium beige fabric seats, central locking, rear spoiler, full wheel covers and tip-tap mirrors on driver and passenger side , booster-assisted brakes provision for 12V socket, body colored bumpers, fog lamps and electronic trip meter.

Power and Performance: Tata never compromised on power of Nano engine that is why the engine was redesigned three times to successfully have an engine of a 624 CC, , 2 cylinder, MPFI petrol engine, which generates 38PS at 5500rpm power and 51Nm at 4000rpm torque and had speed of 105 max with fuel efficiency of 22 km within the city in just one liters of petrol and 26 km on the highway roads or motorways.

Safety: Tata Nano was developed keeping in mind all the safety and comfort features which are standard safety requirements in India. For example car frame was designed to deform and crumple at the time of collision in the front, it has strong doors to prevent passengers from side collision and cabin was given more space for maximizes survival at the time a collision or accidents. Nano body i.e. interior and exterior was designed in a way that there are no sharp edges and all was round and smooth to prevent any damage to occupants and pedestrians. Nano doors were made in such a way that they wont get jammed after accidents or collision. Car has strong roof to prevent passengers from collapsing which could prove fatal for occupants. Its pollution performance also exceeds regulatory

requirements. Car comes with radial tubeless tyres for giving perfect grip along with front disk brakes and seat belts for passengers. Environmental Friendly: Tata Nano emits less carbon than two-wheelers so it will prove to be more ecofriendly car. Also this car meets emission standards of Euro 4 equivalent.

4. Opening the Window: Gaining Commitment Opening of window explains as an entrepreneur starting of business or production or making of product with help of stakeholders, employees, investors. Finance: Tata started Nano manufacturing plant in Gujarat, India with the loan of Rupees Nine thousand seven hundred and fifty Crore and that too at an amazing simple rate of interest of 0.1% for a period of 20 years and they also got exemption on electricity duty. Government gave subsidies such as allocation of about 1,100 acres of centrally located land in Gujarat for opening up a huge plant which the company could easily pay off per annum in installments at a very low interest rate of 8% only. 5. Closing the Window: Sustaining Competitiveness Closing the window means closing the doors for its competitors so that they cannot copy its invention in a way that the product comes with long term competitive advantage which acts as barriers to its competitors. Competitive advantage

Pricing Strategy: The main competitive advantage of Tata Nano was its price which was in the reach of middle class Indian families. Tata Nano low cost strategy gave it an edge not only in India but also worldwide. People overseas were looking forward for this car to be launched in their countries too because this was worlds cheapest car.

Size : The hatchback body type of Nano gave advantage of small in size and enough room for four people who could sit comfortably. The roof had enough space to fit in tall people who could sit comfortably. Small size of the car gave an added advantage because in large cities like Mumbai , New- Delhi, Bangalore, Kolkata finding a space for parking cars is a hassle. Small car like Nano requires a very small space for parking.

Technology: Tata Nano invented smallest and cheapest car in four years on the other hand Japanese took 30 years to do it. This proves that Tata used efficient designing software, off shoring, reverse auctions, new techniques, skilled engineers, research and development to full extent in bringing out worlds smallest and cheapest car. Tata Nano manufacturing plant includes high speed production lines and sophisticated robotics.

Brand: Tata Motors ranks top five in passenger vehicle producers globally. Tata has been roaring Indian roads for so many years. Tata is well known company among the people of India and across the nation as well. Tata has acquired various acquisitions around the world for example Tata acquired Daewoo's truck manufacturing unit in South Korea.

Affordable: Tata Nano was cheapest car in the world with its cost starting from 1 Lakh rupees or 2, 000 Euro. It is almost half the price of the current cheapest car Maruti Suzuki 800 in India, which is priced around 2 Lakh or 4000 Euro. Tata Nano is perfect for Indian families who want to jump from two-wheeler to four wheelers.

Conclusion: Tata Nano conquers what most Indian people dreamt of a small, affordable and low cost fuel efficient car. There is no doubt that this car completely serves the needs of Indian families and can strongly face disreputable traffic and terrible road conditions in India. This completely proves that this car was in total revolution in the automobile industries globally.

References:

Philip A Wickham, Wickham, 2006. Strategic Entrepenursship. 4th ed. England: Pearson Education Limited. Economic Times of India/Nandini Sen Gupta . 2009. Nano to Ride on Innovative Marketing. [ONLINE] Available at: http://www.businessweek.com/globalbiz/content/mar2009/gb20090323_636187.ht m. [Accessed 30 March 12]. BusinessWeek.com . 2008. The story behind the Tata Nano. [ONLINE] Available at: http://www.rediff.com/money/2008/may/14tata.htm. [Accessed 20 March 12

Buisness Standard. 2010. Now four year warranty for Tata Nano. [ONLINE] Available at: http://www.bsmotoring.com/news/now-four-year-warranty-for-tatanano/2898/1. [Accessed 21 March 12]

Tata Motors Limited . 2011. Nano khushiyo ki chaabi. [ONLINE] Available at: http://www.bsmotoring.com/news/now-four-year-warranty-for-tata-nano/2898/1. [Accessed 22 March 12].

BusinessWeek . 2009. How safe is the Nano?. [ONLINE] Available at: http://www.bsmotoring.com/news/now-four-year-warranty-for-tata-nano/2898/1. [Accessed 21 March 12]

AUTOMOTTO . 2011. Tata Nano :Specifications,Review and Price in India. [ONLINE] Available at: http://www.automotto.com/tata-nano.html. [Accessed 23 March 12]

Wikipedia. 2012. Tata Nano. [ONLINE] Available at: http://en.wikipedia.org/wiki/Tata_Nano. [Accessed 24 March 12]

Tata Motors. 2011. Tata Motors. [ONLINE] Available at: http://www.tatamotors.com/. [Accessed 20 March 12]

Auto Express. 2012. Tata Nano. [ONLINE] Available at: http://www.autoexpress.co.uk/carreviews/firstdrives/251236/tata_nano.html. [Accessed 21 March 12].

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BBC NEWS ASIA. 2011. Revamp for India's Tata Nano - the world's cheapest car. [ONLINE] Available at: http://www.bbc.co.uk/news/world-asia-15815850. [Accessed 23 March 12]