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Tata nano the peoples car presentation

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The document discusses Tata Nano, the world's cheapest car launched in India in 2009. It provides an overview of the Nano, what makes it affordable, Tata's other products and market share. It then performs a PESTLE, 5 forces, value chain and TOWS analysis of Tata Motors and the Indian automotive industry. A financial analysis compares Tata and Maruti Suzuki from 2008-2012. The document concludes that Tata's vision for the Nano was not fully realized, resulting in value erosion, and they need to ramp up production capacity to address opportunities while minimizing threats from new competition.

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Tata Nano – The People’s Car Making the bet.. Carla Kingston Marc Nisbet Lindsey Fair Otilia Vides-Alfaro
Overview of the People’s Car •World's Cheapest Car •Only made & sold in India currently •Launched in 2009 •Designed and manufactured by Tata Motors
What makes it so cheap?
Other Tata Products
Tata's Market Share Commercial Vehicles Passenger Vehicles
PESTLE Analysis Political •Tax reductions applied to the specific vehicle segments (utility vehicles and multi-purpose vehicles) •The growth of exports in the industry are strong specifically in Asia and Africa •FDI rules have been left quite open to allow business to prosper in the country •Labour regulations should be closely monitored specifically if doing business with other countries (i.e. any acquisitions, joint ventures) •Different parts or regions of India offer incentives such as tax and excise duty benefits
PESTLE Analysis Economic/Financial •Fastest automotive market in Asia •Global recession had an impact on the industry and caused for funding to be limited, this would also have an impact on plants that have employees being represented by unions, and therefore eliminating jobs due to low productivity •Pricing and currency would have an effect on the production of vehicles and would define on its worth of exporting to other countries
PESTLE Analysis Socio-cultural •India’s population 1.14 billion •The focus to shift on how to serve the bottom of the pyramid is quite crucial as they represent about 250 to 300 million people of the Indian population •By 2020 disposable income will grow significantly allowing the population to have a greater purchasing power
PESTLE Analysis Technological •India has approximately 4 million vehicles on Indians roads, this shows that infrastructure is there and has a potential for the industry to grow. •Qualified engineers in India have allowed the industry to focus on R&D initiatives and focus on how to build innovative products Legal •The end result of the production of a vehicle has to follow regulatory and safety requirements •In India, the requirement is to achieve Euro 4 emission regulation •Numerous patents related to 'small' car
PESTLE Analysis Ecological •This industry is building vehicles that are environmentally friendly, which would mean that if a product is cheap it would not attain such requirements. Depending on the country, in this case India there is a specific environmental requirement, and if not will it meet the needs of other countries (the rest of Asia and Africa).
5 Forces Analysis Threat of New Entrants •Extremely High Risk in the ultra low cost car segment Suzuki 800 is already on the market Ford will release at car for $7,600 Toyota will release a car for $10,826 Hyundai will release a care for $3,700 Dodge will release the Dodge Hornet Renault Nissan will release a $3,000 car *everything can be duplicated
5 Forces Analysis Bargaining Power of Buyers •Moderate Risk Buyers already forced the closer of one location due to uproar of farming community With more options being released on the market the customers will have the power to insist on more value added options while going for low pricing.
5 Forces Analysis Threat of Substitutes •Moderate Risk Walking 2 wheel vehicles Car pooling/sharing As India’s economy continues to grow a public transit system may become an option
5 Forces Analysis Bargaining Power of Suppliers •High Risk 70% of the suppliers are local and can easily supply the same concept parts to the other manufacturers Suppliers were heavily involved in the design process of the Tata Nano Increased demand for parts may result in higher prices
5 Forces Analysis Rivalry Among Existing Competitors •Extremely High Risk It appears that both Hyundai and Renault Nissan are in the same price bracket and making a play for the same target customers With respect to the Tato Nano going to the US, in order to meet stronger regulations the price will increase and there is already a large supply of low cost vehicles in the US.
Value Chain Analysis Inbound R&D Product MarCom Sales / Service Logistics Missed Delivery Unique Segment Poor Win-win Building on features needs Pre-booking response relationship success of time to with suppliers ACE Cheapest of Shaky price Traditional customer the low cost point delivery needs Cheapest Innovation cars by 37% location + culture – Promo: 1 lahk Distributed supplier co- weekly Reliable + promise manufacturing? location meetings fuel efficient 220 M value Profit? Opportunity Development Two cylinder 80% of Customers 156,000 to learn to of unique engine, drive segment pay upfront Cars on access b-o-p drive train train chose higher to book a back order Protected end models Nano satey of Rear engine of the Nano Lost ¼ sales suppliers Firm Infrastructure Production and warehousing.. Human Resources Lateral recruits + Ravi Kant - marketing Tata owns tech companies + Strong focus on Technology R&D (2000 engineers) Operations Strangle hold on inputs for their suppliers
Diversified Suppliers
Pricing Strategy Cost Leadership Strategy Trade-Off Concept Strategy Price Penetration Strategy (vs skimming) Double the price ≠ Double the value
TOWS External Opportunities External Threats • recession / hard economic times • fuel costs • BRIC economy growth • recession / hard economic times • demand for smaller cars (congestion and env’t) • head hunters / poachers • growth of local car buying market • volitality and pressure of competition high in • opportunity to expand model to other BRIC auto industry economies Internal Strengths • able to up capacity in previous case so proven it’s doable (pg 4 of case) • brand strength / awareness = strong domestic player 64% market share in India, leader in commercial market) • first to market advantage R & D (37 patents for Nano, over 3000 engineers) • supplier / partner relationships demand driven • large portfolio with global presence Internal Weaknesses • Safety concerns • inability to produce products to meet demand in timely manner • People don't want to buy 'worlds cheapest car, customers want trendy
TOWS strategies WO Mini-Maxi" Strategy •Minimize weaknesses, maximize opportunity •Form strategic alliances to ramp up production (W2) and address safety concerns simultaneously (W1) •Have first mover advantage but not able to capitalize on it, they have opportunity, so work on building capacity quickly (W2) •If they can do this, then quickly need to go to ST and minimize threat of competition •Keep low price point, same product focus, change positioning (O1, O3, W3) •seek potential other markets to 'try again' (O2, O4) WT Mini-Mini" Strategy •If they're not careful they may need to fall to retrenchment strategy or merge so they can quickly change and expand to meet market demand / opportunity
Financial Analysis   Mar-12 Mar-11 Mar-10 Mar-09 Mar-08 Short-Term Solvency Current Ratio 0.51 1.02 0.53 1.47 0.44 0.91 0.44 1.51 0.64 0.91 Quick ratio 0.4 0.89 0.54 1.14 0.44 0.68 0.58 1.26 0.66 0.66 Long-Term Solvency Debt Equity Ratio 0.57 0.07 0.8 0.02 1.12 0.07 1.06 0.07 0.8 0.11 Asset Management Inventory Turnover Ratio 13.37 22.8 13.86 33.33 13.5 30.47 13.47 30.46 14.44 22.93 Profitabilty Return On Capital 10.36 13.52 10.19 21.69 10.37 27.89 6.41 17.37 18.96 26.18 Market Value Measures Tata Earning per share 3.91 56.6 28.55 79.21 39.26 86.45 19.48 42.18 52.63 59.91 Source: http://www.moneycontrol.com Maruti Suzuki
Case Conclusions 1. Not what they thought. Value Erosion – Egotism & Growth for Growth sake. 2. Ramp Up NOW but unlikely... 3. Exit via merger but probably not viable.... so just....

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Tata nano the peoples car presentation

  • 1. Tata Nano – The People’s Car Making the bet.. Carla Kingston Marc Nisbet Lindsey Fair Otilia Vides-Alfaro
  • 2. Overview of the People’s Car •World's Cheapest Car •Only made & sold in India currently •Launched in 2009 •Designed and manufactured by Tata Motors
  • 3. What makes it so cheap?
  • 5. Tata's Market Share Commercial Vehicles Passenger Vehicles
  • 6. PESTLE Analysis Political •Tax reductions applied to the specific vehicle segments (utility vehicles and multi-purpose vehicles) •The growth of exports in the industry are strong specifically in Asia and Africa •FDI rules have been left quite open to allow business to prosper in the country •Labour regulations should be closely monitored specifically if doing business with other countries (i.e. any acquisitions, joint ventures) •Different parts or regions of India offer incentives such as tax and excise duty benefits
  • 7. PESTLE Analysis Economic/Financial •Fastest automotive market in Asia •Global recession had an impact on the industry and caused for funding to be limited, this would also have an impact on plants that have employees being represented by unions, and therefore eliminating jobs due to low productivity •Pricing and currency would have an effect on the production of vehicles and would define on its worth of exporting to other countries
  • 8. PESTLE Analysis Socio-cultural •India’s population 1.14 billion •The focus to shift on how to serve the bottom of the pyramid is quite crucial as they represent about 250 to 300 million people of the Indian population •By 2020 disposable income will grow significantly allowing the population to have a greater purchasing power
  • 9. PESTLE Analysis Technological •India has approximately 4 million vehicles on Indians roads, this shows that infrastructure is there and has a potential for the industry to grow. •Qualified engineers in India have allowed the industry to focus on R&D initiatives and focus on how to build innovative products Legal •The end result of the production of a vehicle has to follow regulatory and safety requirements •In India, the requirement is to achieve Euro 4 emission regulation •Numerous patents related to 'small' car
  • 10. PESTLE Analysis Ecological •This industry is building vehicles that are environmentally friendly, which would mean that if a product is cheap it would not attain such requirements. Depending on the country, in this case India there is a specific environmental requirement, and if not will it meet the needs of other countries (the rest of Asia and Africa).
  • 11. 5 Forces Analysis Threat of New Entrants •Extremely High Risk in the ultra low cost car segment Suzuki 800 is already on the market Ford will release at car for $7,600 Toyota will release a car for $10,826 Hyundai will release a care for $3,700 Dodge will release the Dodge Hornet Renault Nissan will release a $3,000 car *everything can be duplicated
  • 12. 5 Forces Analysis Bargaining Power of Buyers •Moderate Risk Buyers already forced the closer of one location due to uproar of farming community With more options being released on the market the customers will have the power to insist on more value added options while going for low pricing.
  • 13. 5 Forces Analysis Threat of Substitutes •Moderate Risk Walking 2 wheel vehicles Car pooling/sharing As India’s economy continues to grow a public transit system may become an option
  • 14. 5 Forces Analysis Bargaining Power of Suppliers •High Risk 70% of the suppliers are local and can easily supply the same concept parts to the other manufacturers Suppliers were heavily involved in the design process of the Tata Nano Increased demand for parts may result in higher prices
  • 15. 5 Forces Analysis Rivalry Among Existing Competitors •Extremely High Risk It appears that both Hyundai and Renault Nissan are in the same price bracket and making a play for the same target customers With respect to the Tato Nano going to the US, in order to meet stronger regulations the price will increase and there is already a large supply of low cost vehicles in the US.
  • 16. Value Chain Analysis Inbound R&D Product MarCom Sales / Service Logistics Missed Delivery Unique Segment Poor Win-win Building on features needs Pre-booking response relationship success of time to with suppliers ACE Cheapest of Shaky price Traditional customer the low cost point delivery needs Cheapest Innovation cars by 37% location + culture – Promo: 1 lahk Distributed supplier co- weekly Reliable + promise manufacturing? location meetings fuel efficient 220 M value Profit? Opportunity Development Two cylinder 80% of Customers 156,000 to learn to of unique engine, drive segment pay upfront Cars on access b-o-p drive train train chose higher to book a back order Protected end models Nano satey of Rear engine of the Nano Lost ¼ sales suppliers Firm Infrastructure Production and warehousing.. Human Resources Lateral recruits + Ravi Kant - marketing Tata owns tech companies + Strong focus on Technology R&D (2000 engineers) Operations Strangle hold on inputs for their suppliers
  • 18. Pricing Strategy Cost Leadership Strategy Trade-Off Concept Strategy Price Penetration Strategy (vs skimming) Double the price ≠ Double the value
  • 19. TOWS External Opportunities External Threats • recession / hard economic times • fuel costs • BRIC economy growth • recession / hard economic times • demand for smaller cars (congestion and env’t) • head hunters / poachers • growth of local car buying market • volitality and pressure of competition high in • opportunity to expand model to other BRIC auto industry economies Internal Strengths • able to up capacity in previous case so proven it’s doable (pg 4 of case) • brand strength / awareness = strong domestic player 64% market share in India, leader in commercial market) • first to market advantage R & D (37 patents for Nano, over 3000 engineers) • supplier / partner relationships demand driven • large portfolio with global presence Internal Weaknesses • Safety concerns • inability to produce products to meet demand in timely manner • People don't want to buy 'worlds cheapest car, customers want trendy
  • 20. TOWS strategies WO Mini-Maxi" Strategy •Minimize weaknesses, maximize opportunity •Form strategic alliances to ramp up production (W2) and address safety concerns simultaneously (W1) •Have first mover advantage but not able to capitalize on it, they have opportunity, so work on building capacity quickly (W2) •If they can do this, then quickly need to go to ST and minimize threat of competition •Keep low price point, same product focus, change positioning (O1, O3, W3) •seek potential other markets to 'try again' (O2, O4) WT Mini-Mini" Strategy •If they're not careful they may need to fall to retrenchment strategy or merge so they can quickly change and expand to meet market demand / opportunity
  • 21. Financial Analysis   Mar-12 Mar-11 Mar-10 Mar-09 Mar-08 Short-Term Solvency Current Ratio 0.51 1.02 0.53 1.47 0.44 0.91 0.44 1.51 0.64 0.91 Quick ratio 0.4 0.89 0.54 1.14 0.44 0.68 0.58 1.26 0.66 0.66 Long-Term Solvency Debt Equity Ratio 0.57 0.07 0.8 0.02 1.12 0.07 1.06 0.07 0.8 0.11 Asset Management Inventory Turnover Ratio 13.37 22.8 13.86 33.33 13.5 30.47 13.47 30.46 14.44 22.93 Profitabilty Return On Capital 10.36 13.52 10.19 21.69 10.37 27.89 6.41 17.37 18.96 26.18 Market Value Measures Tata Earning per share 3.91 56.6 28.55 79.21 39.26 86.45 19.48 42.18 52.63 59.91 Source: http://www.moneycontrol.com Maruti Suzuki
  • 22. Case Conclusions 1. Not what they thought. Value Erosion – Egotism & Growth for Growth sake. 2. Ramp Up NOW but unlikely... 3. Exit via merger but probably not viable.... so just....