Science

1. Good idea?

• Yes, because the mini vehicles segment had less competition at that time, only Maruti 800 was there (Refer exhibit 2(a))
• Also, passenger vehicle segment was expected to grow at a CAGR of 14.5% from 2009-2013
• There was a shifting preference to fuel efficient and low maintenance cars
• There was a high expected growth in ultra-low cost cars(Exhibit 11)

1. Right approach?

Right approaches were:

• New-market disruptive strategy - Innovating affordable products for the masses
• A dedicated Nano team to nurture disruptive innovation project and hiring new recruits
• Using key resources like people, technology, products facilities, equipment and brand and processes like training, manufacturing, services to deliver the proposed product to targeted customers.
• Redefining supplier strategy, choosing to outsource 85% of components and use fewer vendors which reduced transaction costs.
• Collaborate with almost 800 suppliers to understand and receive desired specification parts
• Collaborate with suppliers, design and sourcing teams (Like they negotiated for steel to help suppliers)
• Ratan Tata directly meeting Nano team, giving feedbacks , this motivated the team
• Keeping manufacturing site, suppliers and customers in close proximity
• Marketing team helping developers in understanding the features which customers find necessary in the car

Wrong approaches

Suggest any other approach if you think he could have done better by implementing this approach.

1. What challenges?

• Competition from global automakers like Renault-Nissan, Chrysler
• Capacity limit – if they should increase the limit or keep it the same
• International expansion like Europe where people’s preferences of speed and comfort were different from that of Indians
• They have dedicated manufacturing platforms especially for Nano- what if new low budget cars which demand new platforms arrive in the market. They have spent so heavily in setting up these plants that moving on to different plants will be difficult for them