business issues in tata nano...

1. JAIPURIA INSTITUTE OF MANAGEMENT
LUCKNOW
BUSINESS ISSUES
PROJECT ON LAUNCH OF TATA NANO
SUBMITTED BY: SUBMITTED TO:
PRIYANKA (JIML-10-98) Ms ARJYA CHAKRAVARTY
NUPUR RASTOGI(JIML-10-FS-31)
NITIN GUPTA (JIML-10-FS-30)
RAJ VARDHAN GAUR(JIML-10-108)
PRADEEP TIWARI (JIML-10-094)
NITIN TIWARI (JIML-10-90)

2. ACKNOWLEDGEMENT
An acknowledgement is the expression of one’s thanks giving to the people who have extended
their help in every possible way. Help is a voluntary fulfillment of duty, which, all the people
mentioned below have performed it to their maximum possible, in a way giving us and our
research the utmost importance.
At the onset, we wish to express our gratitude to Ms. Arjya Chakravarty , faculty at Jaipuria
Institute Of Management for their keen interest, constant support and help in completing this report
successfully.
PRIYANKA
NUPUR RASTOGI
NITIN GUPTA
RAJ VARDHAN GAUR
PRADEEP TIWARI
NITIN TIWARI
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3. CONTENTS
ACKNOWLEDGEMENT………………………………………………………2
INTRODUCTION………………………………………………………………4
IDEA GENERATION…………………………………………………………..5
COMPETENCIES OF TATA NANO…………………………………………6
PROCUREMENT OF RAW MATERIAL…………………………………….7
CONCEPT TESTING AND DEVELOPMENT……………………………….8
PRODUCT DESIGNING ……………………………………………………….9
PRODUCT DEVELOPMENT………………………………………………....10
COST CUTTING FEATURE…………………………………………………..11
VARIANTS OF NANO…………………………………………………………12
PRICING STRATEGY………………………………………………………….13
PROMOTION STRATEGY……………………………………………………13
DISTRIBUTION CHANNEL…………………………………………………..14
OBSTACLES TO NANO……………………………………………………….15
FUTURE PLANS………………………………………………………………...16
CORPORATE RIVALRY………………………………………………………17
SWOT ANALYSIS………………………………………………………………17
CONCLUSION………………………………………………………………….18
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4. INTRODUCTION
Business issues are one of the subjects in management courses. Business issues deals
with the application, synchronization and learning by gaining knowledge applying skill
and practicing right aptitude.
The objective of this course is to comprehend inter connect amongst various functional
disciplines. It is often seen that students, finds it difficult to use concepts, instrument and
techniques to practical advantage for the reason that, they cannot form holistic views and
they try to find solutions using a particular functional concept technique. Often they do
not realize the true value or significance of the concepts in the absence of
interdisciplinary linkages.
Under this project we have taken the launch of tata nano by tata. In this we have tried to
explain the entire value chain in launch of tata nano and various which have been taken
into account or dealt with while launch of tata nano. We have taken into account the
whole process from idea generation to selling of tata nano. This project has helped us a
lot in knowing about various issues which takes place while launch of product.
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5. IDEA GENERATION
“I Saw families riding around on scooters with the kids standing up and the mother
carrying a baby and sitting pillion and decided to do something about it. It started as a
quest for an affordable transportation solution “ Ratan Tata source : - business standard .
Seeing an opportunity in the great number of Indian families with two-wheeled vehicles,
tata motors began development of an affordable car in 2003. The purchase price of this
no frills auto was brought down by dispensing with most non essential features, reducing
the amount of steel used in its construction , and relying on low- cost Indian labor.
It all started with the dream translated into a reality on the 10th of January, 2008 at the
Auto Expo.
The concept behind the creation of the people’s car was to fill the status void that was felt
by the middle class families.
After, the generation of the idea the next step is screening of idea:-
1) A scooter with two extra wheels at the back for better stability?
2) An auto-rickshaw with four wheels?
3) A three wheeled car like a closed auto-rickshaw?
4) A four wheeled car made of engineering plastics?
5) A four wheeled rural car?
6) Rolled up plastics curtains in place of windows?
7) A four wheeled open car with safety side bars?
But the market wanted a car and if they build a people’s car and not something that
people would say, “ ah that’s just a scooter with four wheels or an auto-rickshaw
with four wheels and not really a car “
Trying to build a car cheap enough for motorcycle buyers seems to make sense now
but seemed crazy several years ago when Ratan Tata, long time chairman of Tata
motors, first mentioned his dream of building a one – lakh car in 2003. “ they are
still saying it can’t be done ,” he says, insisting that it can and will. After we get
done with it, there will hopefully be a new definition of low – cost “
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6. COMPETENCIES OF TATA NANO
• Expectations
According to one report, India as well as other nations, such as European nations,
have great expectations from the Nano and are keenly and eagerly eagerly awaiting
it, especially the electric version of the Nano.
• Modular design
In fact, Tata envisions going even further, providing the tools for local
mechanics to assemble the car in existing auto shops or even in new garages created
to cater to remote rural customers. Nano innovations are also there.
• Pricing strategy
Tata initially targeted the vehicle as "the least expensive production car in the
world"— aiming for a starting price of 100,000 rupees or approximately $2300 US
despite rapidly rising material prices
• Export expectation
Being worlds cheapest car it is expected that not only India demand for Nano
will go rise at global level. Since it meeting Euro-4 norms at this price so this is
taking as a future of small car segment .
• Reputation and Acceptance of Tata After launch
TATAs have shown the world what Indian engineering is truly capable of
• Enthusiastic support
Tata Motors is receiving preliminary and some very enthusiastic support in the
media and officials, even from Europe, for the electric-version from India as well as
other-nations. The enthusiasm is even higher than that for the petrol-version
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7. PROCUREMENT OF RAW MATERIAL
The raw material for Tata Nano is being procured from Reliance Industries and Haldia
petrochemicals, currently. Polymer demand is expected to soar in India from 5.4 million
m.t./year in 2007, to 12.5 million m.t./year in 2012. India's economic development
program includes $515 billion of investments in infrastructure including transportation,
communication, and utilities, and it will provide huge opportunities for the petchem
sector.
India will overtake Japan to become the fourth-largest market for polymers by 2012.To
keep up with the pace of demand,a new petrochemical complex will be constructed by
the end of next year in Visakhapatnam. AP Government has acted fast to clear the plant.
One of the investors, by the way is Mittal Energy.
Overseas companies including Bayer, ExxonMobil Chemical, Mitsubishi Chemical, Shell
etc. are eyeing the Indian market, but they can only supply mainly from manufacturing
bases in the Mideast and Asia.
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8. CONCEPT TESTING AND DEVELOPMENT
Before starting the project, wagh did something no one at tata motors ever had: he talked
to customers. The three-wheeler men inevitably insisted on a cheap, dependable truck
that could go from village to market carrying, say, a ton of onions or potatoes, one night,
as sunset approached, wagh stuck with one rickshaw driver. He says, “I kept asking the
question. Why? Why? Why do you want a four-wheeler?” wagh remembered. Finally, he
got the real answer. It turned out it wasn’t really a problem of transportation of vegetable
“if I had a four-wheeler, I would have better marriage prospects in my village,” the young
man said. Drivers of three-wheelers are looked down upon in India. Wagh realized that
four wheels had emotional, not just practical appeal.
Thus the new product was now to be developed.
The car was to cost Ross. 1 lakh on road.
1) The car should be built on a different platform than conventional ones.
2) It must be meeting all the safety and regulatory requirements.
3) The car has to be designed so that it can be exported to other countries as the
domestic demand may not materialize as per projections.
4) The car must be a beacon for the Indian automobile industry and prove to the
world that we are capable to take any challenge and come out worthy winners.
That quest to build the world’s cheapest car hasn’t ended. The mission began back in
2003, when Ratan Tata, chairman of Tata motors and the $50 billion Tata conglomerate,
set a challenge to build a “people car”.
Tata gave three requirements for the new vehicle: it should be low-cost, adhere to
regulatory requirements, and achieve performance targets such as fuel efficiency and
acceleration capacity.
The design team initially came up with a vehicle which had bars instead of doors and
plastic flaps to keep out the monsoon rains. It was closer to a quadricycle than a car, and
the first prototype, even a bigger engine, which boosted the power by nearly 20%, was
still dismal. But failure didn’t stop them they quickly realized it was necessary to bring
everyone on board. Everyone from manufacturers to vendor development teams were
asked to be a part of decision-making.
The body had to be changed because Ratan Tata, over six feet tall himself, wanted it to be
easy for tall people to get in and out of the car. The attention to detail paid off: when the
car rolled onto the dais at the auto show in New Delhi in January, and Ratan Tata stepped
out of the driver’s seat with ease, it made an immediate impact.
The Nano, however, affords both safety and status. “ the innovation wasn’t technology;
it was in a mindset change”
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9. PRODUCT DESIGNING
Since the car had to be built within a cost of Rs. 1 Lac, no conventional design would
work as the costs shall be higher and so the entire car has to be redesigned.
The design has to question the need of each and every component from the point of view
of its necessity of existence and also the minimum requirements of its functionality.
TATA used the concept of Disruptive Technology which was cheaper than existing
Technology, much higher performing, is convenient to use
and brings radical changes.
The Guiding factor was that the cost has to be minimized for each component
Yet maintaining its basic functionality.
The Alternatives are:
1. Reduce Consumption of Material being used.
2. Alternate Suppliers to get same material at fewer prices.
3. Use alternate materials
The design was outsourced to Italy's Institute of Development in Automotive
engineering, but Tata himself ordered changes along the way. Most recently he
vetoed the design of the windshield wipers. His solution: a single wiper instead of two
The target was very clearly defined that within the given cost structure of 1Lakh all the
components have to be allocated a maximum price and the same
had to be achieved using the available alternatives.
The Guiding factor was that the tax structure, on materials and manufacturing,
must support the final cost of Rs. 1 Lakh.
The Decisions were:
1. Establish factory in a tax free zone.
2. Get the tax advantages on infrastructure development.
3. Get the suppliers to establish base near the factory.
4. Get the concessions from state government
In short select a manufacturing location where all the advantages could be achieved.
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10. PRODUCT DEVELOPMENT
And finally the product was developed with the following features.
1. Engine Capacity Bosch 624 c.c. twin cylinder.
2. Low capacity, Lighter, sufficient with better Power Rear Engine to reduce the
transmission length using a balancer shaft.
3. Speed Manual Gear Box.
4. All Aluminum Engine.
5. Higher thermal conductivity than cast iron, Lighter and so better mileage.
6. Engine Management System by Bosch.
7. Superb control over emission and smooth acceleration.
8. Dimensions L: 3.1m, W: 1.5m, H: 1.6m.
9. Less length but more inner cabin space due to height. Comfortable leg room.
10. Independent Front & Rear Suspension McPherson Strut in front & Coil spring &
trailing arm in rear.
11. Better ride than Maruti 800.
12. Single piece ribbed steel body with safety features such as crumple zones,
intrusion resistant doors, seat belts, strong seats & anchorages.
13. Safety requirements are adequately met.
14. Single Wiper in place of two.
15. Cost effective.
16. Tube less Tires.
17. Weight reduced by 2 Kg. Cost reductions 200 Rs. And in line with modern
vehicles.
18. Instrument console in the centre.
19. Elegant to look at and can be used both in Left Hand & Right hand version.
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11. COST CUTTING FEATURE
The nano’s design implements many cost-reducing innovations.
1) The nano’s trunk is only accessible from inside the car , as the rear hatch does not
open.
2) One windscreen wiper instead of the usual pair.
3) No power steering, unnecessary due to its light weight.
4) Three lug nuts on the wheels instead of the usual four.
5) Only one wing mirror.
6) No radio or CD player.
7) No air conditioners
8) No airbags
9) 623cc engine has only 2 cylinders.
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12. VARIANTS OF NANO
The Tata Nano will be available in four variants which are:-
• Tata Nano standard
• Tata Nano Deluxe
• Tata Nano Luxury
• Tata Nano Europa
Tata Nano Standard: The car will be priced at Rs one lakh and twenty three thousand.
The car will have no air conditioning, power windows, central locking etc. This standard
variant will have the following features
• Seat Belts.
• Speedometer.
• Odometer.
• High mounted Rear Stop lamp.
• Centrally placed exhaust.
• Driver seat adjust-sliding
• Folding Rear Seats.
• 2-Spoke Steering wheel.
• Grey bumpers and interiors.
colors: Ivory White, Racing Red and the Summer Blue colour.
Tata Nano deluxe: the deluxe model will have the additional features of air conditioning,
metallic paint, power windows, tinted glasses, central locking and power steering. The
deluxe variant will come in the following colors: Champange Gold, Lunar Silver , Ivory
White, Racing Red and Summer Blue.
Tata Nano luxury: The luxury Tata nano will have additional features of
• Tripmeter.
• Anti lock braking system
• Front Power windows.
• Central Locking.
• Front and Rear fog lamps.
• Floor console with glass holder.
• Anti-Glare inside rear view mirror.
colors: Sunshine Yellow, Champange Gold, Lunar Silver.
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13. PRICING STRATEGY
Tata initially targeted the vehicle as “ the least expensive producting in the world”-
aiming for a strating price of 100,000 rupees or approximately $2000 US despite rapidly
rising material prices.
As of august 2008, material costs have risen from 13% to 23% over the car’s
development, and Tata now faces the choice of :
 Introducing the car with an artificially low price through govt-subsidies and tax-
breaks, or
 Foregoing profit on the car, or
 Using vertical-integration, or
 Partially using inexpensive polymers or biodegradable plastics instead of a full
metal-body, or
 Raising the price of the car.
An increase price on the nano will likely decrease demand.
PROMOTION STRATEGY
Enough use of one of the most important element of promotion mix ,publicity reduces the
necessity of other promotional devices for nano.
Nano got publicity in the following ways:-
• Publicity as “One lakh car” by mouth to mouth.
•Auto expo 2008,New Delhi & Geneva
For other type of promotional activities, cost factor that is 1 lakh price tag is to be
keep in mind.
ADVERTISING:- TV & other mass media will be less effective thus too much money
will not be invested in this regard . Mainly word of mouth advertising will get more
emphasis.
Internet will be a major media for advertising.
SALES PROMOTION:- already a low priced product financing facilities will be
provided through Tata motor financing ltd and other banks.
Online booking facility will be available.
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14. DISTRIBUTION CHANNEL
Distribution network planning and strategising is full swing, despite the current shutdown
at the main Nano plant in Singur, West Bengal. Tata has rejected the agreement between
Trinamool Congress and the CPM-led state government in West Bengal saying that they
could not compromise on project land.
It is being said that Tata Motors is going ahead with its distribution and financing plans
for the Nano car. Besides, the car maker is also given a thrust to the retail and finance
models too. Tata Motors is implementing a ‘hub-and-spoke’ model for Nano’s
distribution, which would mean that it would involve increasing dealership points as well
as adding sales and customer touch points.
Tata Motors has said that dealerships based in bigger cities will be responsible for
looking after these touch points, which could be located even in the remotest corners of
the country. As per the plan, the Tata Nano dealers in the cities would play the role of
hubs. They in turn will undertake the effectiveness of other sales and customer touch
points, which would play the spokes. As per plan, Tata Motors would launched the Nano
across the country.
Tata Motors has reportedly decided to focus on semi urban and rural markets to sell the
people’s car. It may be recalled that Ratan Tata recently had conveyed optimism that
Nano will be launched on time, saying that all obstacles in its path would be removed.
The Tatas are also going in for mass production of the Nano and this is expected to be
done very soon. Though work at Singur has come to an almost standstill, it is expected
that Tata Motors will be able to keep its promise for launching the Nano at the price that
it promised, on the promised deadline. The Singur faciliy, located around 40 kilometers
away from Kolakata, has been seeing ryots on the war path with the government being
urged to return the 400 acres of land taken away from them for the plant.
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15. OBSTACLES TO NANO
 However, Due to the Singur land dispute, the "Stalled Car Factory" is "Costing
Jobs, Splitting Neighbors in West Bengal”
 “ Tata's problems in West Bengal are scaring off other industries hoping to locate
here, including Infosys, a software maker that wanted to build a business park that
would provide 5,000 jobs.
 Due to ongoing opposition to Tata's Singur car-factory by Mamta Banerjee, who
demanded land to be returned from the factory, Tata Motors took decision to pull
out of Singur. Tata Motors is manufacturing Tata Nano at its Pantnagar plant.
 Tata Motors announced it was pulling out its Nano small car industrial project
from West Bengal's Singur and blamed the Mamata Banerjee-led Trinamool
Congress, which spearheaded the protests against the factory, for the 'painful'
decision.
 While existence of Tata Nano could lead to high industrial growth , the exit lead
west Bengal a loss of more than 80,000 crore .How ever Tata has to suffer in
terms of delay and settlement cost .
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16. FUTURE PLANS
After all the applause for being the cheapest car in the world, the Tata Nano is back in the
news again. Tata’s drawing up plans to build an electric and hybrid model using its
platform.
The Nano was built to fulfill the basic transportation needs of a family but the car
compromises on nothing, be it safety, mileage, performance and emissions.
The Tata Nano is compared to legendary cars in the market like the Ford Model-T which
brought a revolution in the automobile industry.
A Tata Group report says ‘It’s not only a car for Tata it’s a platform for some higher end
models too which will be sold at higher prices and will give greater profits.’
Most probably these higher end models will be sold in the international markets. Tata
also have plans to introduce variants in Brazil, Indonesia, China and Russia.
The Bajaj Chetak and Maruti 800 created history in the Indian automobile industry; the
Tata Nano also has all the fire power to redo the same thing.
So there are pretty good chances of India and global markets to have a Tata Nano petrol,
a Tata Nano diesel, a Tata Nano Convertible, a Tata Nano Station Wagon, a Tata Nano
Electric and a Tata Nano Hybrid variants in the coming years.
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17. CORPORATE RIVALRY
Tata nano was envisioned as the four wheelers for those who can only afford two
wheelers, due to its affordable price Nano’s impact on two wheelers sales has been
widely debated, nano will also affect sales of higher priced cars or will motivate
competitors to reduce the prices resulting lowered margins for rest of the industry.
It has been speculated that money to sustain such a prolonged protest involving thousands
of TMC party workers came from rival Two/four wheeler lobby. Bajaj auto is also
developing a low cost car together with Renault-Nissan to rival Tata Nano.
SWOT ANALYSIS
STRENGTH: - price, mileage, style, brand name, all weather
Vehicle, first innovation at such low price.
WEAKNESS:- fiber body, low suspension power, low engine
Low engine capacity, light vehicle, not
Suitable for Hilly areas.
OPPORTUNITY:- bikers can be motivated, auto rickshaw.
THREATS: - Other competitors (bajaj, maruti)
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18. CONCLUSION
• Emerging markets are a fertile ground for innovation. The challenge of reaching
dispersed, low-income consumers in emerging markets often spurs significant
innovation.
• As customers gain more power, they will demand more tailoring and value-added
service to meet their needs. Companies that innovate on this dimension are likely
to be richly rewarded.
• World is getting tougher day by day being unique is a competitive advantage.
Expectations to Nano has proved this .
• After 100 years to Henry Ford , Tata has proved him again not only he came out
of the expectations but also came out with a platform for Indian auto sector .
• So this as per this project conclusion can be draw as a future car not only of
Indian but also if exported than could be to the world.
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