1. Tata Nano – The People’s Car
Making the bet..
Carla Kingston
Marc Nisbet
Lindsey Fair
Otilia Vides-Alfaro

2. Overview of the People’s Car
•World's
Cheapest Car
•Only made &
sold in India
currently
•Launched in
2009
•Designed and
manufactured
by Tata Motors

3. What makes it so cheap?

4. Other Tata Products

5. Tata's Market Share
Commercial Vehicles
Passenger Vehicles

6. PESTLE Analysis
Political
•Tax reductions applied to the specific vehicle segments
(utility vehicles and multi-purpose vehicles)
•The growth of exports in the industry are strong
specifically in Asia and Africa
•FDI rules have been left quite open to allow business
to prosper in the country
•Labour regulations should be closely monitored
specifically if doing business with other countries
(i.e. any acquisitions, joint ventures)
•Different parts or regions of India offer incentives
such as tax and excise duty benefits

7. PESTLE Analysis
Economic/Financial
•Fastest automotive market in Asia
•Global recession had an impact on the industry and
caused for funding to be limited, this would also have
an impact on plants that have employees being
represented by unions, and therefore eliminating jobs
due to low productivity
•Pricing and currency would have an effect on the
production of vehicles and would define on its worth
of exporting to other countries

8. PESTLE Analysis
Socio-cultural
•India’s population 1.14 billion
•The focus to shift on how to serve the bottom of the
pyramid is quite crucial as they represent about 250
to 300 million people of the Indian population
•By 2020 disposable income will grow significantly
allowing the population to have a greater purchasing
power

9. PESTLE Analysis
Technological
•India has approximately 4 million vehicles on Indians
roads, this shows that infrastructure is there and has
a potential for the industry to grow.
•Qualified engineers in India have allowed the
industry to focus on R&D initiatives and focus on how
to build innovative products
Legal
•The end result of the production of a vehicle has to
follow regulatory and safety requirements
•In India, the requirement is to achieve Euro 4
emission regulation
•Numerous patents related to 'small' car

10. PESTLE Analysis
Ecological
•This industry is building vehicles that are environmentally
friendly, which would mean that if a product is cheap it
would not attain such requirements. Depending on the
country, in this case India there is a specific
environmental requirement, and if not will it meet the
needs of other countries (the rest of Asia and Africa).

11. 5 Forces Analysis
Threat of New Entrants
•Extremely High Risk in the ultra low cost car segment
Suzuki 800 is already on the market
Ford will release at car for $7,600
Toyota will release a car for $10,826
Hyundai will release a care for $3,700
Dodge will release the Dodge Hornet
Renault Nissan will release a $3,000 car
*everything can be duplicated

12. 5 Forces Analysis
Bargaining Power of Buyers
•Moderate Risk
Buyers already forced the closer of one location
due to uproar of farming community
With more options being released on the market the customers will
have the power to insist on more value added options while going for
low pricing.

13. 5 Forces Analysis
Threat of Substitutes
•Moderate Risk
Walking
2 wheel vehicles
Car pooling/sharing
As India’s economy continues to grow a public transit
system may become an option

14. 5 Forces Analysis
Bargaining Power of Suppliers
•High Risk
70% of the suppliers are local and can easily supply the
same concept parts to the other manufacturers
Suppliers were heavily involved in the design process of the Tata Nano
Increased demand for parts may result in higher prices

15. 5 Forces Analysis
Rivalry Among Existing Competitors
•Extremely High Risk
It appears that both Hyundai and Renault Nissan are in the same price
bracket and making a play for the same target customers
With respect to the Tato Nano going to the US, in order to meet
stronger regulations the price will increase and there is already a large supply
of low cost vehicles in the US.

16. Value Chain Analysis
Inbound R&D Product MarCom Sales / Service
Logistics Missed Delivery
Unique Segment Poor
Win-win Building on features needs Pre-booking response
relationship success of time to
with suppliers ACE Cheapest of Shaky price Traditional customer
the low cost point delivery needs
Cheapest Innovation cars by 37%
location + culture – Promo: 1 lahk Distributed
supplier co- weekly Reliable + promise manufacturing?
location meetings fuel efficient 220 M value Profit?
Opportunity Development Two cylinder 80% of Customers 156,000
to learn to of unique engine, drive segment pay upfront Cars on
access b-o-p drive train train chose higher to book a back order
Protected end models Nano
satey of Rear engine of the Nano Lost ¼ sales
suppliers
Firm Infrastructure Production and warehousing..
Human Resources Lateral recruits + Ravi Kant - marketing
Tata owns tech companies + Strong focus on
Technology R&D (2000 engineers)
Operations Strangle hold on inputs for their suppliers

17. Diversified Suppliers

18. Pricing Strategy
Cost Leadership Strategy
Trade-Off Concept Strategy
Price Penetration
Strategy (vs
skimming)
Double the price ≠
Double the value

19. TOWS
External Opportunities External Threats
• recession / hard economic times • fuel costs
• BRIC economy growth • recession / hard economic times
• demand for smaller cars (congestion and env’t) • head hunters / poachers
• growth of local car buying market • volitality and pressure of competition high in
• opportunity to expand model to other BRIC auto industry
economies
Internal Strengths
• able to up capacity in previous case so proven it’s doable (pg 4 of case)
• brand strength / awareness = strong domestic player 64% market share in India, leader in commercial
market)
• first to market advantage R & D (37 patents for Nano, over 3000 engineers)
• supplier / partner relationships demand driven
• large portfolio with global presence
Internal Weaknesses
• Safety concerns
• inability to produce products to meet
demand in timely manner
• People don't want to buy 'worlds cheapest car, customers want
trendy

20. TOWS strategies
WO Mini-Maxi" Strategy
•Minimize weaknesses, maximize opportunity
•Form strategic alliances to ramp up production (W2) and address safety
concerns simultaneously (W1)
•Have first mover advantage but not able to capitalize on it, they
have opportunity, so work on building capacity quickly (W2)
•If they can do this, then quickly need to go to ST and minimize threat of
competition
•Keep low price point, same product focus, change positioning (O1, O3, W3)
•seek potential other markets to 'try again' (O2, O4)
WT Mini-Mini" Strategy
•If they're not careful they may need to fall to
retrenchment strategy or merge so they can
quickly change and expand to meet market
demand / opportunity

21. Financial Analysis
Mar-12 Mar-11 Mar-10 Mar-09 Mar-08
Short-Term Solvency
Current Ratio 0.51 1.02 0.53 1.47 0.44 0.91 0.44 1.51 0.64 0.91
Quick ratio 0.4 0.89 0.54 1.14 0.44 0.68 0.58 1.26 0.66 0.66
Long-Term Solvency
Debt Equity Ratio 0.57 0.07 0.8 0.02 1.12 0.07 1.06 0.07 0.8 0.11
Asset Management
Inventory Turnover Ratio 13.37 22.8 13.86 33.33 13.5 30.47 13.47 30.46 14.44 22.93
Profitabilty
Return On Capital 10.36 13.52 10.19 21.69 10.37 27.89 6.41 17.37 18.96 26.18
Market Value Measures
Tata
Earning per share 3.91 56.6 28.55 79.21 39.26 86.45 19.48 42.18 52.63 59.91
Source: http://www.moneycontrol.com
Maruti Suzuki

22. Case Conclusions
1. Not what they thought. Value Erosion – Egotism &
Growth for Growth sake.
2. Ramp Up NOW but unlikely...
3. Exit via merger but probably not viable.... so just....