CASE STUDY ON

TATA-NANO-VATION

 Established in 1945, the company is top 1

automobile manufacturer in India, worlds 4th
largest truck manufacturers and worlds third
largest bus manufacturer.

About
TATA
motors

Tata motors has produced & sold more than 4

million cars in India so far.
It has more than 25000 employees,
engineers and scientists and with R&D.

4500

Tata launched TATA INDICA Indias largest

selling car, which is Indias first fully indigenous
car.
In 2005, they created a new segment mini trucks
with the launch of TATA ACE.
In Jan 2008, TATA unveiled its People car , TATA
NANO the cheapest car.

 Dream of Sri RATAN TATA, a car cheap enough for

motor cycle buyers.

Business
Models for
TATA NANO

For this project, TATA adopted COLLABARATIVE

APPROACH, which usually believes in vertically
integrated approach and company believes it
could do everything better than others
BUSINESS PROCESS OUTSOURCING
Outsourcing was into New product development,
SCM, Design and styling of its products also.
Refined the manufacturing process by breaking
down every component of the car into its
smallest pieces.
eliminating everything that was unnecessary.

 outsourcing its manufacturing

number of suppliers.

Business
Models for
TATA NANO
Continued..

to

limited

NANO was more eco-friendly and affordable with

a millage of 23 KM/ltr.
It even attracted rich individuals.
A Promise is a Promise said Ratan TATA, on
launch of TATA NANO.
The NANO project didnt grab the attention of
only Indians but whole word.

RATAN TATAs
Dream

CHA

NEW PRODUCT
DEVELOPMENT

IDEA
SCREENING

Three major requirement of TATA Motors

engineers is
Low cost ( 1,00,000)
Emission Norms
Acceptable performance standards( 4 wheeler)

 A scooter with two more back wheels for better

stability.

Company
generated
several
ideas,
such as.

An auto rickshaw with four wheels?

A four wheeled rural car?
A four wheeled open car with safety side bar?
Made with openings like auto rikshaw?
And so on
But market wanted a CAR and not something people
would say
Thats just a scooter with four wheels or autorickshaw with four wheels

 Named the project X3 consisting of 5 major team

members from different disciplines.
Girish Wagh one of the 5 members, did something no
one at tata thought of,

RESEARCH &
DEVELOPME
NT

He interacted with customers

He approached with a question, why? Why do you
want a four wheeler?
Interestingly, customers said,
If I had a four wheeler, I would have better marriage
prospects in my village
Drivers of 3 wheelers are looked down upon in India.
Then he understood that
emotional, not just practical.

four

wheels

had

an

BUT
what type
of
product????
?

The car has to be built on a different platform as

compared to the conventional one.
It must meet all the safety and regulatory
requirements.
The car has to be designed so that it can be exported.
The car must be a beacon for the Indian automobile
Industry and prove the world India is capable enough.

 The design team initially came up with a vehicle

which had bars, which was more of a quadricycle than
a car, so a failure.
Wagh used to spend an hour or two on the floor in
order
to
take
suggestions
from
designers,
manufacturing team.

Continued

Then team grew into 500 members, on a daily basis 5

core
members
gathered
to
discuss
about
development and suggestions.
Ratan Tata insisted to change the design, he wanted it
to be easy for tall people to get in and out and the
height was increased by 100millimeters.
The initial two cylinder engine was 580cc, later the
capacity raised to 624cc to have optimum engine
performance.

 The trunk is only accessible from inside the car as the

rear hatch doesnt open
One wide wiper instead of usual pair.

COST
CUTTING
FEATURES

No power steering, radio or music can be fitted as

accessories.
No air bags In any model
624cc two engine cylinder.
No air conditioning.
To ease the assembly, body panels are glued instead
of welded.

Collaboratio
n as a
source of
innovation
.

TATA MOTORS considered COLLABORATION as the

source of innovation from different companys idea to
reduce cost.
TATA divided the components into two types
proprietary design and Tata motors design.
For proprietary design components Tata went with
established suppliers such as BOSCH GROUP.
BOSCH
GROUP,
which
management systems.

supplies

the

engine

 Bosch group decided to take the challenge to be a

part in cheapest car though they (Bosch) developed
systems only for high end vehicles.

BOSCH
GROUP

Bosch again split the development between its design

centers Bangalore and Germany
Using local design capabilities was a crucial decision
and employment took place at higher wage levels.
Bosch developed a software consists of electronic
control unit, fuel injectors, sensors, ignition oil, tank
vent level and throttle body assembly.
Cost effective drum brakes were used.

 There were more than 100 suppliers.

The brief to suppliers was:
Make things smaller and lighter, do away with
superficial parts, and change the material wherever
possible

SUPPLIERS

A few did their own way and few developed with the
tata motors.
Arvind Kapur, CEO of Rico, supplier of blocks to the
engine, decided to use aluminum for engine instead
of traditional cast iron as it was smaller, lighter and
cost was less.
Rico also found a way not to connect the engine with
the rear wheels
Price negotiations from Tata motors side apparently
started from 50 % of what suppliers offered.

 EOS was very crucial factor to reach low cost of the

product.
Tata wanted to build one million Nanos per year.

Distribution
Manufacturi
ng

NANO is constructed of components that can be built

and shipped separately to be assembled in a variety
of location.
So. Tata nano is being sold in KITS.
Any local entrepreneur can establish assembly unit
and can sell in pre-defined locations.

 Though It succeeded in creating huge market hype

before the launch, it took whole 2 years to sell its
1,00,000th car.
Couldnt meet the annual sales expectations of
2,50,000 cars.

TATA NANOA GLOBAL

CAR?

First reason is the forced movement of production

plant from west Bengal to sanand, Gujarat because of
strike.
Hence company was unable to deliver cars to first
buyers in time
Few fire incidents and resulted media sensitivity.
Negative word of mouth from non targeted customers
who bought the car.
Positioning as worlds cheapest car was actually a
disaster in global market.

CASE QUESTIONS

How do you view Tata Nano as an

innovation ?
A differentiated product or a low cost
product

Tata Nano is a both a differentiated product with the

lowest possible price.
Tata Nano is a low cost car by the positioning itself as the
Worlds cheapest Car with a price tag of 1,00,000.

Differentiat
ed+
Low cost
product

Started with the theme A car for everyone

Targeted to 2 wheeler motor cycle buyer who cant afford 4
wheelers
Low cost product with complete entry level features.
Tata Nano is differentiated in a very different manner,
Stating itself as worlds cheapest affordable car
Nano born with the emotional touch and that created a
huge market hype.
Collaborative approach with more than 100 suppliers for
this project is truly uniqueness
Also targeting is differential factor.

Tata Nano could not have seen the light of the day had it
not embarked upon a policy of collaborations and
alliances.
Do you agree? Justify?

Without
collaboration
s and
alliances,
NANO
wouldnt
have
reached
customer.

Bosch being a major player in supplier took a challenge

and succeeded in providing with the least cost technology.
Giving free decision making to the suppliers made them
innovators.
Without the suppliers the Nano would have been costlier
in several factors.
The innovation was faster as each supplier produced
simultaneously.
Innovation from different suppliers.
The plants and employment might have increased the
price of end product.
Breaking down of components and outsourcing them gave
an option to concentrate more on that particular product.
Tata Motors bargained up to 50% with the suppliers.

Despite
the huge
market
hype and
the first
mover
advantag
e, it
appears
that
company
has not
able to
cash
upon in?
do you
agree
with this?
What are
the
reasons
for this?

Because,
The annual sales expectations of 1 lakh per year was
not reached.

Yes, TATA
MOTORS
was unable
to cash
upon it.

It took 2 long years to reach its 1,00,000th car.

Strikes in west Bengal resulted in movement of
production plant to sananda, Gujarat which not only
resulted in 18 months delay to first buyer and also
huge cost.
It also resulted in heavy inventory costs.
Few fire cases made customers to back out on the
verge of buying, safety does matter.
The sound of 2 cylinder engine was a major negative
factor which made it sound like a auto.
Negative word of mouth by non targeted customer
group.

 Lack of basic features made it just plane product but

not a complete car.
The price gap between Nano and Suzuki alto was only
around 50,000 after equipping Nano with necessary
accessories.

Continued..

The positioning was a unable to attract customers as

they still looked car as a status of symbol.
No one wants to own a car, that showcases as
cheapest car.
Style
Craze over 2 wheelers and convenience of travelling
in rural areas with two wheeler in lands.
Well, the launch of 2012 model, is a success.

What is the role of leadership and strategy execution in

bringing out such zero- base products? Justify your answer.

Team work

A team of 500 members lead by 5 core members

made Nano into reality.

Suggestions
from
everyone

Mr. wagh used to take suggestions from every person

in the plant to make it better and better with least
cost.

freedom to
suppliers in
R&D

The suppliers are allowed to research for their

particular part so that they can come up with
innovative ideas.

STRATEGIES
Collaborative
approach

For this project Ratan Tata believed Together more

can be achieved

Open distribution

More than 100 suppliers, everyone trying to reduce

the cost.

Cost reduction
(Low cost provider
strategy with
manufacturing
strategy)

Anyone with an assembly plant can become a

distributer for that particular region.
Cost reduction of each and every part resulted in low
price.
Economies of scale is a strategy that they have
planned but failed.

EOS

Tata Nano targeted to motor cycle buyers instead of

car buyers.

Niche market

Penetration pricing.

QUESTIONS
?

Thank YOu