Tata Motors—rethinking Strategy Case Studies Example

The Nano, is the world's cheapest car, and was meant to migrate thousands of Indians from two wheelers to four. It was aimed to prove India's strength in frugal manufacturing similar to what Henry Ford's Tin Lizzie established the moving assembly line. That price initially for Nano was interpreted to be 'cheap'. There are many things that went wrong in the case of Nano. If this could be fixed, the car can be one of the best sellers. First we will look at certain aspects that went wrong with the car at the beginning.
Idea of Cheap: Usually when an idea is conceived, the prices of the final products are calculated based on the raw material, labor, manufacturing, marketing and sales activities going into that. In case of Nano, the price was fixed to be 1 lank INR and then there was back calculation done on how that can be achieved. This is where things went wrong as far as price was concerned. Secondly, nobody wants to tell his friends and neighbors he has bought a cheap car. The brand image of the car was damaged from marketing perspective. The perception of a better car for Indian roads by Tata would have worked better if that was fixed.
Other issues: When cars hit the road some of them were catching fire. The low price tag was useless if the product is of low quality, lacks reliability, and has absence of safety.
Design changes needed: Nano is up only for its price. It cannot be compared with other cars. People call it “TOY CAR” at times. There are many design issues and improvision needed in the car. Some of them are:

Silencer makes noise and vibrates

Engine CC Power
Power steering
CNG version
Interiors and exteriors and
Better fuel efficiency (Tech2, 2013)
The new version LX tried to fix many issues like having (extracted from Tatanano.com, 2015)
“Integrated music system with four speaker. It also comes with Bluetooth, Aux-in connectivity and USB
Comes in 12 new colors including Dazzle Blue, Cornflower Blue and Royal Gold
Chrome Strips comes on the front and rear
Two varieties of interiors
Two glove-boxes for additional storage
New console for gear arrangement with holders for cup and bottle.
Remote entry and central locking system for convenience
Large 3-spoke steering wheel makes it easy to steer
New design mesh bumper at the rear for sporty look
Dimming effect in the cabin light
Antenna mounted on the roof
Mileage of 25kmpl
New improved AC
4 year and or 60,000 km warranty given by the manufacturer

But the challenge is that the existing Nano cannot be upgraded to the new Nano mechanically because of technical limitations.

There are some more changes needed in the car for making it a “Next Generation Car” such as
Air intake restriction need to be reduced by replacing the duct work to the throttle body. This can be done by using a high flow air filter element.

Port and polish of the throttle body to be done to make it smooth.

Removing emissions equipment.
Exhaust to be thermal wrapped and silicon coolant lines covered up in exhaust wrap.
Externally located oil cooler.
Heating springs either with torch and compressing or cutting it to lower the suspension.
Upgrading the fuel system will give a wide band of air to fuel ratio.
With a reputed organization like TATA, implementing the idea of Nano, things already are in place for the car, it just needs some extra push because it was perceived wrong. The idea is to let the car prices similar be similar to some basic models of other brands. Once these design changes are done and the “cheap” perception is resolved, safety measures are in place, I am sure it will one of the best sellers.

References

Tech2,. (2013). After fall in sales, Tata Nano to be souped up, positioned as smart city car - Tech2. Retrieved 3 April 2015, from http://tech.firstpost.com/news-analysis/after-fall-in-sales-tata-nano-to-be-souped-up-positioned-as-smart-city-car-214842.html
Tatanano.com,. (2015). Tata Nano Twist FAQs. Retrieved 3 April 2015, from http://www.tatanano.com/faqs-features.html