POSITIONING THE TATA NANO

CASE FACTS:
Tata

Motor Limited:

Establishment : 1945, as Tata Engineering and locomotive company (TELCO). TELCO renamed TATA MOTORS in 2003. Acquisition: Daewoo Commercial vehicle (Korea) & 21% stake in Hispano Carrocera (Spain) . Joint Venture: Marcopolo Brazil, Thonburi Automotive assembly plant Company (Thailand) , and Fiat Auto(Italy). Purchased automotive brands : Jaguar, Land Rover from Ford Motor Company in 2008. TML Manufacturing Units : UK, South Korea, Spain, Morocco, Thailand and Bangladesh , and Export to, Europe, Africa, Middle East, Australia, South East Asia, and South America.

CASE FACTS:
Positioning: Worlds Cheapest, and most Fuel Efficient Car. Models: Nano, Nano Cx, and Nano Lx. TML abandoned construction on Singur plant, taking substantial Financial loss. Nano Shifting the plant from Singur to Sanand( Gujurat) led to delay production for 18-24 months. Maruti 800; most affordable and remained uncontested until release of Nano. Maruti Share Segment: 58.8%, whereas Indica(Tatas sole segment had 17 %)

Tatas Competitor: Mini Cars and 2 wheeler Segment. Public image for Nano was Public transportation. 80% bookings were from current automobile owners,and 20% were from 2 wheeler owners. Half bookings for Nano Lx, 30% for CX, and 20% for Basic model. Safety Concerns Issued when half dozen Nano caught fire. Nano bought as 2nd hand car for use by wife or college age child in household. Poor ad Design.

PEST ANALYSIS
POLITICAL FACTOR:

ECONOMICAL FACTOR:
Government liberalization of regulation on foreign trade and restriction on 1991 led automobile company to flourish with growth rate of 17 % annually. India rapid economic growth in 1991 reduced poverty and created middle class people. Increasing disposable income of middle class people and devotion to expend in transport is increasing from 17% - 20% expected in 2025. Joint ventures and Acquistion

SOCIO CULTURAL FACTOR:

Social Class Target: ie, middle income group of people. Social image: upgrading social status from 2 wheeler owner to 4 wheeler. Generation: Youth attraction toward fashion, and style. Esp; college students. Life style: High aspiration middle sized people are changing and upgrading themselves.

TECHNOLOGICAL FACTORS
Customer desire for Compact Car. Environment ethics affecting development of hybrid and electrical cars. Increasing concern on Safety features while buying a car. Technological advancement such as technology transfer, use of automation , robotics and pace of technology .

INDUSTRIAL ANALYSIS
Automotive sector in India is one of the largest growing market in the world. Indias passenger and commercial car manufacturing is the 6th largest in the world with annual production of more than 3.9 millions. In 2009, India emerged as Asias 4th largest exporter of passenger car behind japan, south Korea, and Thailand. In 2010, India beat Thailand to become Asias 3rd largest exporter of passenger car. More than 3.7 million automobiles were produced in 2010(increase of 33.9%) making the country second after china in growing automobiles.

Automobile sector of India contributes 5% GDP acting as a prominent player in the market. Automobile sectors are highly influenced by 2 wheeler segment( 2nd largest 2 wheeler in world). Increasing concerns on environment(Green Initiative) is affecting automotive industry in production of 4 wheelers. Indian automotive has 3 clusters of market; South, West and North. Where southern consist of Chennai with 35% of market share, western as Mumbai and Pune with 33% and northern as National capital region with 32%.

PORTERS 5 FORCES MODEL

Competitive rivalry: Automotive Segment is unattractive if already contains numerous strong/ aggressive competitors. Conditions can be seen like: Price wars, Advertising battles, New product introductions etc.

THREAT OF NEW ENTRANTS

New firms enter and poor performing exit from industry.

High entry barriers and low exit barriers, where firms enter during good times and find it hard to leave during bad times. Factors can be: 1) Customer loyalty on existing product. 2) Government policy. 3) Economies of scale. 4) Brand equity. 5) Access to distribution.

THREAT OF SUBSTITUTE:
Substitutes for 4 wheelers are 2 wheelers. Buyers switching cost. Relative product/price performance of substitute. Number of substitute products available in the market. Substandard product. Quality Depreciation. Ease of substitution.

BARGAINING POWER OF BUYER

Buyer information availability . Availability of substitute product. Buyer switching cost over firm switching cost. Degree of dependency on existing channels of distribution. Buyer concentration to firm concentration.

BARGAINING POWER OF SUPPLIER:

Supplier switching cost to firm switching cost. Presence of substitute inputs. Strength of distribution channel. Presence of labor unions. Supplier concentration to firm concentration.