Launching Tata Motors Ltd.'s Nano in the United States

Launching Tata Motors Ltd.'s Nano in the United States

Table of Contents

Background of Tata Motors Ltd.

Background of the Nano

Analysis of the company's and the product's current Strengths and Weaknesses

Tata's Strengths and Weaknesses

Nano's Strengths and Weaknesses

Opportunities and Threats in today's Unites States based on PEST analysis

Political Factors

Economic Factors

Social Factors

Technological Factors

Opportunities and Threats in the Current Competitive Environment of the Automobile Business in India

Porters Five-Forces Model

Tata's direct and indirect competitors

Opportunities and Threats derived from i & ii

Identification of Main Concerns

International and Competitive Strategy Recommendations

Skills and Competencies Required for Implementing the New International and Competitive Strategies

Top Six Steps for Immediate Actions

Top Six Steps for Future Actions

I. Background of Tata Motors Ltd.

Tata Motor Ltd. (Tata), founded in 1945, is one of over 90 independently operating companies that make up the Tata Group. The Tata Group is a multinational enterprise based in Mumbai, India that encompasses companies in the fields of communications, information technology, engineering, energy, and consumer products among others. Through its subsidiaries the Tata Group operates in over 80 countries, exports to 85 countries and had an operating income of over $67 billion in 2009 to 2010.1

Tata is one of the Tata Group's major companies and certainly one if its most prominent ones. Tata has developed its business through a series of strategic partnerships and acquisitions. Some milestones include: collaboration with Daimler Benz AG from 1954 to 1969; the development of hydraulic excavators with Hitachi in 1985; and a joint venture with Cummins Engine Co. Inc. to develop powerful and emission friendly diesel engines in 1993. Utilizing skills learned through these partnerships as well as extensive research and development performed in the parent country, Tata was able to launch its first passenger car in 1991 for the domestic market.

During the last decade Tata acquired a number of well-known automobile brands such as Daewoo Commercial Vehicles Company in 2004, Jaguar Land Rover in 2008 and Hispano Carrocera, a Spanish bus manufacturer, in 2009. These acquisitions and partnerships helped Tata establish itself internationally. They also helped better serve the Indian market by attaining and utilizing knowledge from successful associated firms.2

Today Tata is India's largest automobile manufacturer. It has over 25,000 employees, a yearly operating income of over $20 billion, it competes with the world's best in manufacturing trucks and buses and is one of the top three passenger car manufacturers in India.

i. Background on the Nano

In March of 2009 Tata launched its much lauded Nano model, dubbed the People's Car. The Nano is a small passenger car that seats four people. It is 10 feet long and almost 5 feet in width. It has a two-cylinder engine, 33 horsepower and a max velocity of 65 miles per hour (mph). Intended for the Indian home market, it provides an average Indian middle class family with transportation, comfort and safety while also striving to meet emission norms and fuel efficiency.3

Long before the car was available for sale much hype surrounded its design to cost only 100,000 rupees or about $2,000 USD. Additional features, such as air-conditioning, sun visors and radios are optional and cost extra. While the base price of 120,000 rupees for the low-end version was slightly above the intended 100,000 rupees, the Nano is still praised as the world's cheapest car. 4 This low price approach has made the Nano affordable to Indian families who could previously only afford two-wheelers such as scooters and motorcycles.

With its visionary and innovative Nano concept, Tata is currently hoping to gain a foothold in the international passenger car market, particularly in Europe and in the Unites States. A customized version of the Nano, the Nano Pixel, is to enter the European market this year. This version is expected to cost only $4,000. A U.S. market entry is expected by 2013.

To succeed in this endeavor, Tata will need to overhaul the Nano significantly to meet U.S. safety standards and regulations and must provide American-preferred features while maintaining a low price point. Additionally, Tata is trying to develop a Nano-hybrid model that runs on alternative fuel to service the corresponding up-and-coming green niche market.

II. Analysis of Tata's and the Nano's current Strengths and Weaknesses

i. Tata's Strengths and Weaknesses

Strengths 1: Strong market position in domestic market. Tata is a well known company in India with a strong brand in the automobile industry. Even though Tata is relatively new to the small car segment, its market share between 2009 and 2011 was around 13%. The Indian domestic car sales accounted for only around 30% of market share in that time period. While the market share fluctuated somewhat the overall number of domestic cars sold in India is constantly increasing.5 Tata has enormous growth potential in its home market.

Strengths 2: Part of a powerful family conglomerate. Even though each company within the Tata Group operates independently with its own board of directors and shareholders, being part of the conglomerate lends weight to Tata's business dealings. Tata can tap into conglomerate contacts and goodwill, use its influence in negotiations and make use of shared information resources.

Strengths 3: Great reputation. Tata is well known for its strong values, emphasis on traditions, ethical behavior, corporate social responsibility (CSR) and philanthropy throughout India. It has an immense amount of goodwill apart from the Tata Group. Tata is a company for which Indians and people from around the world