“Failure and Revival Plan of Tata Nano”
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“Failure and Revival plan of Tata Nano” Name of Degree PGDM (2013-2015) Date of Submission:-24/3/2015 Author:-Rajeev kumar Roll No :-20130135 TABLES OF CONTENTS 1 Page No Chapters 1 1. Executive Summary…………………………………………….4 2. History……………………………………………………….......5 3. Company profile……………………….………………………13 4. Vision……………………………………………………..……27 5. Mission…………………………………………………………27 6. Values……………………………………………………..……27 7. New product development………………………………….…27 8. Competitors……………………………………………………32 9. Cost Reduction…………………………………………………34 10. Advantages of Cost Reduction…………………………………..…35 11. Scope of cost Reduction………………………………………35 Chapters 2 12. Market……………………………………………………..…36 13. Graphs ………………………………………………….……42 14. Market Share…………………………………………………45 15. Advertising……………………………………………..……45 16. Channel distribution………………………………………… 48 17. Positioning……………………………………………………49 18. Tata Nano positioning Strategy………………………………51 19. Objectives and issue……………………………………….…57 2 20. Awards Tata Nano Received…………………………………57 21. SWOT Analysis………………………………………………59 Chapters 4 22. Innovation of Tata Nano……………………………………61 23. Tata Nano Revival………………………………………….66 24. Tata Nano Failure…………………………………….…….66 25. Conclusion………………………………………………….69 26. Acknowledgement………………………………….………70 27. Reference……………………………………………..….…71 EXECUTIVE SUMMARY 3 Tata Nano is the cheapest car in the world. It is sold in home country India around Rs 1-lakh i.e. approximately USD 2000. It is manufactured by Tata Motor Limited, the largest automobile company in India. It is Chairman, Mr. Ratan Tata envisions that Tata Nano to become a three Peoples car´ which is affordable by almost everybody. Tata Nano was first launched in India on 1stApril 2009 and expected to be in Indian market by July 2009. Since launching, it has created a huge buzz all over India. Within the first two days of lunching, ithas received 5500 booking. The figures keep increasing every day since the launching. The car was the result of a five year research and development project carriedout by Tata Nano development team. While developing the car, Tata Motors and its SUPPLY CHAIN MEMBER constantly made efforts to reduce the costs while ensuring quality of each and every component including engine, steering, wheels, tires, windshield washing system, gear shifter etc. INRODUCTION 5. Tata Nano -History and Origin 4 The project to create a 1 lakh rupees (3000SGD) car began in 2003, under the Chairman of Tata Motors, Ratan Tata. The strategy behind the project was the awareness of the number of Indian families who had two wheeled transport, but couldn't afford a four wheel car, and was based on the company's success in producing the low cost 4 wheeled Ace truck in May 2005. To discuss the innovation strategy for Tata Nano, we first discuss the constraints as per which the company had to operate. In pursuit of excellence and to keep up to the initial promise made to people that Tata will come out with a compact, quality car within a price tag of Rs.1 lakh(3000 SGD), Tata Motors came up with a design, marketing and operational strategy keeping in my mind the constraints of: Price Market Scalability Customer aspiration Resource efficiency The proposition that prompted Tata to think about a people’s car was a social concern. On a wet August night in 2003 Mumbai. When Tata was driving back home from his office Bombay House in Flora Fountain, he saw a young couple travelling with their two children on a two-wheeler and was struck by the enormous risks of riding on a wet road. The thought of a small car germinated in his mind and a week later, on a visit to the Tata Motor’s plant in Pune, he shared his thoughts with MD Ravi Kant. Instinctively, his first query was whether the two-wheeled scooter could be made safe. The first doodles,” in Tata’s words, “were sketches of a two-wheeler with a bar around it and some weather-proofing. Thereafter, a core team of 500 (including those in charge of setting up the plant) worked on the concept for four years. 5 Indeed the first thoughts centered on a door-less four-seater that was more a quad recycle than a car. 5.1Objectives of the Tata Nano The focused on the following objectives: To understand the concept of positioning and repositioning. To comprehend the positioning strategy adopted by Tata Nano in India. To determine the reasons for failure of positioning strategy adopted by Tata Nano in India. To understand the rationale behind the repositioning of Tata Nano. 5.2Abstract The forces of globalization and technological advancement have rendered the market place highly competitive and complex. The customer's needs, wants and expectations are changing at an exponential rate posing great challenges to the companies. For surviving and thriving in this scenario companies need to develop effective brand positioning strategies .Positioning helps customers know the real differences among competing products so that they can choose the one that is most valuable and useful to term.This is a case study of Tata Nano, one of the most ambitious projects of Tata Motor’s, which was started in 2008. It was envisioned by the Tata Group former chairman Ratan Tata himself. The case focuses on how the initial strategies for launching and positioning Tata Nano as a “People’s Car” backfired and how management recognized its shortcomings and mistakes that led to the wrong positioning of Tata Nano as “Worlds Cheapest Car” among the segment it was created for. And how finally after four years of it commercial launch, understanding the inevitability of positioning management repositioned Tata Nano as a "Smart City Car" by focusing on the youth to rejuvenate its image. Seldom do we see cars that rewrite the history books even before they are seen running around on the roads. And hardly ever do we see cars that vow to 6 put the nation on four wheels. The Tata Nano is one such car that has been in the news for quite a few years, for reasons good and evil. Nano is a car which has breathed into life due to one man. Give credit to Mr. Ratan Tata for his determination to build a low cost family car that has come true, finally. Took long it did, but the Nano came in a beautiful form. Touted as world‘s cheapest car by a far cry, Nano has been the talk of the town around the globe. Head honchos of big organizations have been pouring in by numbers to have a look at this engineering master piece. Nano as a part of a "new breed of 21st-century cars" that embodies "a contrarian philosophy of smaller, lighter, cheaper" and portends a new era in inexpensive personal transportation and potentially, "global gridlock". The Wall Street Journal confirms a global trend toward small cars, led by the Nano. The prefix "Nano" derives from the Greek root 'Nano‘s', meaning dwarf as with nanometer. "Nano" also means "small" in Gujarati, the native language of the Tata family, founders of the Tata Group 5.3How could Tata Motors make a car so inexpensively? No Radio, Power windows, air conditioning, anti lock brakes, air bags, remote locks or power steering. Rear wheel drive: manually actuated 4-speed trans axle that gives the car better fuel efficiency Wheel Bearing: Wheel bearing is strong enough to drive the car at 72kmph but would quickly wear out at higher speeds. Analogue speedometer, odometer and fuel gauge. Single windscreen wiper. Fundamentally, the engineers worked to do more with less. The car is smaller in overall dimensions than the Maruti, but it offers about 20 per cent more seating capacity as a result of design choices such as putting the wheels at the extreme edges of the car. Car Maker Introduction HP Price(USD) 7 Model T Ford 1908 20 19700 Beetle VW 1956 24 11333 Mini Cooper 1961 34 11777 Nano Tata 2008 33 2500 Modular Design Revolution: One of the most significant dimensions of innovation is its modular design. The Nano is constructed of components that can be built and shipped separately to be assembled in a variety of locations. In effect, the Nano is being sold in kits that are distributed, assembled, and serviced by local entrepreneurs. The company could produce the mass items and ship it to them as kits. Open Distribution Innovation: Tata have called this 'open distribution' innovation because it mobilizes large numbers of third parties to reach remote rural consumers, tailor the products and services to more effectively serve their needs, and add value to the core product or service Nano-Lowest ever 1. Increased modularity (both in products and processes) 2. Aggressive leveraging of existing third-party, often non-commercial, institutions in rural areas to more effectively reach target customers 3. Creative use of information technology, carefully integrated with social institutions, to encourage use and deliver even greater value .Modular designs combined with creative leverage of local third-party institutions help participants to get better faster 8 9 The design envisaged the use of plastic weather-proofing of the kind seen in rickshaws and contemplated using new materials. But somewhere down the line, the ideas ran into a conflict with Tata’s brief. It was simple: it would seat four, have a low operating cost and meet all safety and emission standards. The team dumped the nascent design and focused on the process of building what would be a car differently. Nevertheless, Nano was finally unveiled in the 9th Annual Auto Expo on 10th January 2008 at Pragati Maidan in New Delhi, India; its successful development was welcomed with rapturous applause. When it could not be manufactured in the originally envisaged green- field plant at Singur there was disappointment all round that one of the best indigenous industrial marvels of India was being hindered. Nano’s manufacturing journey from Singur in West Bengal to Sanand in Gujarat and appreciated Ratan Tata’s commitment and gumption to commercialize.