CASE STUDY 4
Tata Nano: The people’s car
Mayank Singh Mudgal
Ph11B0005
3rd March 2015
Introduction
This is the fourth report for the course ED5317: Strategies for Managing Innovation. The report requires us to study the case by INSEAD titled “Tata Nano: The people’s car that promises to reconstruct the Automobile Industry”. The following questions will be answered:
• What was the thinking behind Nano’s inception?
• What were the innovations involved in the design of the car?
• What were the challenges faced by Tata in the car’s launch?
• Was the product successful? What would you have done differently?
What was the thinking behind Tata Nano’s inception?
The development of the middle class of
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The first challenge faced was the design itself. The team realized there were basic features which could be removed to increase the cost reduction by a large margin. However, this also implied that the car would not be a desirable substitute two wheelers any way as it would not be changing their socio-economic status in any way. Nano would be perceived as a cheap car and would lose the target market.
The year 2008 also saw massive increase in the price of all the metals. This was indirectly caused due to oil being US$200 per barrel. Hence, manufacturing, processing and transportation of raw materials became costlier. This price rise was checked as Tata convinced the parts suppliers to continue the deal with the already decided prices and look for additional cost reduction.
The biggest challenge came in the form of protest against the method of land acquisition for the Nano plant in Singur in West Bengal. The land acquired was a fertile one and the local resistance got violent posing serious threat to the Tata employees. The plant had to be shifted even though 95% of the construction was completed. The dislocation cost the company a lot of