HRM610
Submitted by:
Mastura naz shammi
ID: 19164034
BRAC University
Answer to the Question no:1
The external and internal forces played vital role for Ratan Tata and TATA group to take
initiative to design TATA Nano, which was initially be thought as people’s car of India.
According to the case “Tata Nano: An inspiration from an Indian conglomerate” Forces of
Changes caused by External Environment are mentioned & explained below.
1. Economic Forces:
India, without any doubt, one of the fastest growing economies in the 21st century. The
burgeoning economic success along with increasing per capita income of indian middle class
made the market suitable for introduction of new car.
2. Technological Forces:
Tata had that expertise to take the challenge of building the cheapest car. Advancement of
technology and improvement in knowledge structure along with innovation of new instruments
helped and influenced Tata Nano to step ahead in the competitive automobile industry of India.
3. Increased Global & Local competition
Back in 2005-2008, companies like Bajaj Auto and Mahindra-Renault planned to introduce small
cars by considering the consumer research. Tata stepped forward and took role of pioneer in this
regard. Moreover, Tata had plan to be the price leader in this segment in which Maruti Suzuki
has been holding the position for long time.
4. Changing Consumer Requirements, Expectations & Tastes including
Social
Indian middle class people, massive part of the whole population there, have the struggle to
switch from two-wheeler to four-wheeler. Moreover the segment of market was lucrative enough
to target with tailored car according to their need. Additionally, economic boom experienced at
that time in India, middle class have enough buying power for apparently less costly car.
5. Government Forces
At that time, Government took major reform programmes to construct highways and rural
expansion which made the target segment larger and motivating to take decision for Tata.
Moreover Indian government takes always lenient position in addition of safety features in
automobiles, which helped TATA to exclude feature like airbag from their design of Nano.
Internal Forces:
Ratan Tata, the chairman of Tata group had that empathy for the indian middle class struggling
to ride on two-wheeler with their family, which sometimes lead to accident. However, Ratan
Tata envisaged to change the scenario with Nano. From the inception, Ratan Tata was closely
attached to the project and somehow Tata research team missed some significant point before
alacrity of their chairman.
1. Management & Leadership including Person Focused Change:
As we know that Nano was the vision of Mr. Ratan Tata, he was backed by a large pool of
employees who made the dream of Mr. Tata to be true. The project was led by Mr. Tata. He
formed a large cross-functional team where there was a mixture of experienced and young. Nano
was the result of perfect teamwork, alliance of all units & visionary leadership.
2. Structure Focused Change:
Since Nano had a compact design & produced on a very competitive budget, Tata Motors took
steps to change its production process and always invited suppliers to make new innovations.
Nano had different versions so that it can be afforded by various groups of people. They follow a
modular policy of design as well. It was easy to ship, distribute & assemble the parts of the car in
any area.
Answer to the Question no:2
The reason behind the failure of Tata Nano:
1. Strategic shortcomings
The explanation behind this was the absence of a correct strategy for such a product. First
because their dealer network was concentrated only in urban areas, while the target market was
located in towns and villages, Tata engines could not meet their target market. Their target
market was not familiar with the experience of car-buying and that gap could not be remedied by
the business. When the project faced an eighteen-month delay as the production unit had to be
shifted, this situation further escalated.
2. Customer’s perception
Tata Nano was a commodity right from the beginning that Tata Motors claimed was what the
customers wanted and was never the result of an evaluation program of what the customers
would need. This strategy did not bode well for the Nano's sales.
The "cheapest car in the world" was advertised by Tata Nano. Unfortunately, this approach did
not work in favor of the Nano, as it quickly acquired a reputation among consumers who do not
want to be associated with a "cheap car".
Another Tata group positioning glitch was that Nano was put in the mind of people as an
alternative to motor bikes. As an idea, but not as a marketing slogan, the whole thing about it
being an alternative to a motorcycle was fantastic. Even today in India, car has 'aspirational
appeal'. The success of a man is measured by society by the kind of car that he drives. A
individual can buy any sort of car in America, and no one can say anything but the car brand
matters in India.
Shoddy build-quality
In its initial production run, the car faced a number of technical problems that further led to its
failure. Several Tata Nano cars were claimed to catch on fire within the first two years due to
defective wiring. Due to the lightweight body, the Nano had poor ride comfort and stability
problems. Tata concentrated on making the car as inexpensive as possible, so much so that it
affected the use of cheap and inferior materials that resulted in a very poor quality of
construction.
Answer to the Question no:3
Now that Tata Nano is on its way out, it’s time to learn lessons from the brand's fall from grace.
1. The 'Solution' lesson
Tata focused more on building a product rather than a solution through Tata Nano. Successful
companies always address their customer's problems and subsequently solve the problem,
whereas nano had to be the cheapest and somehow misjudged the potential market's underlying
situation.
2. The 'Value' lesson
An addition of the lesson of solution, value is about what customers are searching for and
needing. Comprehension of value in its entirety allows organizations to move beyond the
boundaries of considering value only as a utility. Worth is far beyond mere usefulness, you see.
Quality includes components that in essence are sociological and psychogenic. In other words,
consumption has social and psychological facets of it. A car is about a 'place in society' as much
as it is about transport. Again a car is about individual exhibits as much as it is about versatility.
Stepping into such value zones is to see value in its entirety. Unfortunately for the Tata Nano, it
was merely utilitarian in its delivery of value.
3. The 'Competition' lesson
A consumer's estimation of value is never a 'absolute' one. In reality, in a competitive
marketplace, value judgments are arrived at in a 'relative manner. Without pitching it against
other models, no customer considers a car brand for purchase. What may seem like value to the
seller when such comparisons happen, may not be the 'best value to the buyer from among the
options he/she has. The Tata Nano may have scored on the price parameter relative to competing
brands, but it underperformed on every other value factor. Thus in budget vehicles, consumers
find better proposals, and they were able to pay a higher price.
4. The 'Positioning' Lesson
Marketers also prefer to assume that positioning is only about contact in marketing. Wrong to
Dead. Positioning includes using any potential marketing stimulus available to occupy a different
space in the minds of customers. In theory, that means all variables in the marketing mix. The
Tata Nano was trying to encourage its way of positioning itself. It just hasn't worked. First the
company ran Advertisements to cater to families, and when it didn't do the job, to appeal to
Indian youth, it used Masaba Gupta and the 'Twist' avatar. It failed again. What happened was
that every other stimulus, including the product itself, worked at the intersection of what the
Commercials were attempting to represent. Truth be told, the product's unattractive looks
negated all advertisement was trying to pitch because of its absence of status value. All that
promotional effort was wasted.
A car which was thought to revolutionize the economics of transportation in India failed
miserably in the market. Tata Nano in spite of being a well designed car was actually a big
marketing failure. People in India view a car as an extravagant vehicle and Nano was totally
opposite of it. A product must have both monetary and psychological value. People wanted a car
with the look and design of a Jaguar but at the price of Nano.
