Tata Motors Case Study Analysis Essay Example

few decades. In 2005, only 208 million people in India could afford cars priced between $2,500 and $5,000. By 2020, this number is estimated to double, resulting in a doubling of market demand for Tata Motors in India.

The global ultra-low-cost vehicle market is forecasted to grow from 2 million vehicles in 2008 to around 17.5 million vehicles by 2020 (Alfaro et al., 2009), indicating a permanent shift in the competitive landscape of the global car industry. Due to its advantageous location for sales and manufacturing, India has attracted significant interest from participants looking to produce new ULCCs ever since Tata Motors introduced the Nano within its borders. The low-cost car market in India is expected to experience a compound annual growth rate (CAGR) of approximately 25% from 2010 through 2020. This increasing demand for affordable cars can be observed particularly in Tier II cities and rural areas, reflecting the interest among Indian citizens.Consumer wealth and per capita income levels play a crucial role in driving the growth of Tata Motor's Nano ULCCs. The desire for compact four-wheelers that can address transportation issues is fueled by the growing middle class and young workforce in India (A. T. Kearney, 2008). This demand extends not only to India but also to China, where ULCCs account for 60 to 70 percent of the market. This presents an opportunity for Tata Motors to enter the global ultra-low-cost car production market and generate higher profits. Competitors such as Toyota, Nissan, and Hyundai are also active participants in this market segment. In India specifically, the affordable auto market holds a significant share of three quarters of the country's car market. To maintain

their competitive advantage both domestically and globally, Tata Motors needed to formulate strategies and introduce their efficient Nano vehicle (Meghdoot.Sharon and Gaurav Shah, 2011). The Nano model offers several competitive advantages for Tata Motors in emerging markets due to their core competences in continuously evaluating capabilities, seizing opportunities in the car industry, achieving economic prosperity through technological research and development, and successfully manufacturing affordable yet efficient vehicles.Tata Motors' philosophy and structure incorporate expansion, acquisition, and merger, as seen in their acquisition of Land Rover and Jaguar. This strategic move provides them with a competitive advantage. One of Tata Motors' core competences is its location in India, which allows them to understand market demands and manufacture products accordingly. This not only gives them an edge over global competitors for high-volume production but also helps reduce labor costs.

To fully comprehend further advantages in the car industry, it is crucial to examine the competitive environment surrounding Tata Motors. The growing middle class in India has created a demand for affordable vehicles, leading Tata Motors to introduce Nano cars specifically designed with lower horsepower engines that efficiently provide transportation in congested cities.

By analyzing and implementing cost-cutting strategies and policies, Tata Motors successfully manufactured and delivered standardized and inexpensive vehicles to millions of Indians. This approach of cost-cutting is directly connected to new emerging markets since customers worldwide now prefer less expensive cars due to factors such as low incomes, inflation, and high fuel prices.

In response to this global trend, car industries across the world have introduced affordable cars that enable millions of people to afford their own means of transportation.Although there may be limited profit returns for certain industries,

the small profits still play a role in increasing customer loyalty and product demand. Tata Motors was able to gain a competitive edge by creating the Nano Car, which had an affordable price of $2,500. This made it accessible to individuals in India who couldn't afford a $5,000 vehicle. As a result, Tata Motors experienced higher sales of both commercial and passenger cars in India, solidifying their advantage in the market. They have recently sold numerous units and plan to invest $1.5 billion over the next four years to maintain their competitiveness. Currently, Tata Motors' Nano is leading among its competitors such as Cherry cars' QQ3 from China and Suzuki-Maruti's M800 from India. Geely cars' Merrie Star and S-RV mini SUV are other models that don't directly compete with Tata Motors' Nano due to its $2,500 pricing. However, potential competitors like Hyundai, VW, Toyota in India and China and Russia in the future have expressed their intentions to produce low-cost cars. If these competitors introduce similarly priced vehicles, they could potentially gain an advantage over the Nano.Toyota's low-cost car is priced between $6,900 and $7,850, which does not directly compete with Tata Motor's Nano priced at $2,500 (E. Marelli & M.Signorelli 2011). In order to ensure the sustainability of Tata Motors' IMS process for customers, partners, and employees, it is crucial to meet quality standards and information security measures while also considering environmental factors and service management practices (Baron.David P., 2010). Compliance with relevant procedures regarding environmental sustainability, quality maintenance, and information security is essential for maintaining strong business relationships. Furthermore, Tata Motors places significant emphasis on reducing its environmental impact (Baron.David P., 2010), requiring

continuous improvement in conditions related to ultra-low-cost cars to prevent environmental risks and pollution. Minimizing the use of natural resources and materials plays a vital role in avoiding negative consequences for both the environment and economy. Effectively implementing and integrating service management processes are necessary for enhancing efficiency, ongoing control, and opportunities for continuous improvement. Ultimately, maintaining continuity in business operations is crucial for Tata Motors' reputation and success as it ensures customer and business partner satisfaction. Understanding business needs and improving strategies and policies are key factors in achieving these goals.In addition, expanding into new markets is crucial for Tata Motors' growth. India offers many opportunities for the ultra-low-cost vehicle manufacturing industry, making it an ideal region to expand into. It is important to standardize supply chain activities across India and other countries where Tata Motors operates to ensure a smooth production-to-delivery process with minimal liabilities. Establishing a well-developed supply chain network will greatly benefit Tata Motors in future expansions into larger regions globally, as a comparable network can be easily implemented.

The focus of the Tata Nano business should be on targeting regions and specific countries outside of India and China, such as Europe, North America, and neighboring Asian countries that have high demand but may lack manufacturing capabilities. However, competent industries worldwide can fulfill this need. Tata Motors has an excellent ultra-low-cost vehicle that can be exported to meet the growing demand in these regions and countries driven by population growth and increasing motorization rates similar to India's trends.With increasing populations, there is a shift towards compact and affordable cars as opposed to larger, more expensive vehicles due to the negative impact of

the global recession on economies and living standards. This has led to reduced income levels and challenges in affording a car for individuals. In such financial crises, people may opt for cheaper motorcycles instead of costly five-seater vehicles. The Nano car, available at lower prices in India, caters well to the needs of these customers. Asian countries like those in South Asia, Russia, and some Middle Eastern nations have potential customers who would greatly benefit from ultra-low-cost cars. However, exporting Nano cars to regions such as Europe and North America poses challenges due to stricter safety regulations and emission standards compared to India. Authorities are working on developing and maintaining safety requirements for the Tata Motors Nano including seat belt regulations (frontal, side, rear), roll-over protection measures, and compliance with emission standards. Although these standards have been enforced in North America, Japan, and some Western countries for over ten years now,Tata Motors adopted them with a delay of five years.Nevertheless,the company remains optimistic that the Nano's modest fuel consumption and small engines will meet the emission standards.The success of the Nano may be hindered by obstacles such as tax and export regulations in heavily-taxed nations, restrictions on importing new vehicles in certain countries, and limitations on outsourced manufacturing. However, Tata Motors has an advantage in the market due to increasing demand for ultra-low-cost vehicles, giving them an opportunity to quickly capture the industry. They aim to achieve long-term customer loyalty by meeting expectations and industry standards. Tata Motors' strengths include producing low-cost cars, strategic acquisitions and mergers, as well as advantageous organization location. Nevertheless, customers also expect modern amenities along with affordability. Therefore, investing in

engineering facilities that enhance the performance of their Nano ULCCs is crucial. If all requirements are met, the Nano cars have potential in Europe, North America, and Asia markets. By implementing policies and standards to address global market barriers, Tata Motors can achieve significant economic growth for both the company and the nation. The high worldwide demand for ultra-low-cost vehicles makes efforts in this area important for long-term economic development. In December 2012, Meghdoot.Sharon wrote an article titled "Gujarat's Sanand to go as India's major car hub" for CNN/IBN-Live.
The references section includes A. T. Kearney's publication "A Nano Car in Every Driveway? How to Succeed in the Ultra-Low-Cost Car Market" from 2008. Jonathan Rodden's paper "The Geographic Distribution of Political Preferences" can be found at Annual Reviews of Political Science, published in 2011. T.B. Sheridan is currently working on a publication about humans and automation, which will be published by the Human Factors and Ergonomics Society in Santa Monica, CA and John Wiley in New York, NY.

In 2011, T.B. Sheridan and his team authored a paper titled "An Ultra-Low-Cost Moving-Based Diving Stimulator," available online at hypertext transfer protocol: //www.nads-sc.uiowa.edu/dscna/2001/Papers/Sheridan %20_ %20An %20Ultra-Low-Cost %20Moving-Base %20Driving%20Simulator.pdf as accessed on December 15, 2012.

Other references include Lal.Rajiv and Jeanny Kim's article "Multinationals and Corruption: The Ethics of Public-Private Partnerships" from the Journal of Business Ethics (2009), Thompson.Arthur A Jr., Alonzo J Strickland III,and John E Gamble's book "Crafting and Executing Strategy: The Quest for Competitive Advantage" (2005). V. Valli and D. Saccone also published a paper titled "Structural Change and Economic Development in China and India" in the European Journal of Comparative Economics (2009).

For more information, visit www.tatamotors.com.