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Tata nano the peoples car presentation


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Tata nano the peoples car presentation

  1. 1. Tata Nano – The People’s CarMaking the bet..Carla KingstonMarc NisbetLindsey FairOtilia Vides-Alfaro
  2. 2. Overview of the People’s Car •Worlds Cheapest Car •Only made & sold in India currently •Launched in 2009 •Designed and manufactured by Tata Motors
  3. 3. What makes it so cheap?
  4. 4. Other Tata Products
  5. 5. Tatas Market ShareCommercial Vehicles Passenger Vehicles
  6. 6. PESTLE AnalysisPolitical•Tax reductions applied to the specific vehicle segments(utility vehicles and multi-purpose vehicles)•The growth of exports in the industry are strongspecifically in Asia and Africa•FDI rules have been left quite open to allow businessto prosper in the country•Labour regulations should be closely monitoredspecifically if doing business with other countries(i.e. any acquisitions, joint ventures)•Different parts or regions of India offer incentivessuch as tax and excise duty benefits
  7. 7. PESTLE AnalysisEconomic/Financial•Fastest automotive market in Asia•Global recession had an impact on the industry andcaused for funding to be limited, this would also havean impact on plants that have employees beingrepresented by unions, and therefore eliminating jobsdue to low productivity•Pricing and currency would have an effect on theproduction of vehicles and would define on its worthof exporting to other countries
  8. 8. PESTLE AnalysisSocio-cultural•India’s population 1.14 billion•The focus to shift on how to serve the bottom of thepyramid is quite crucial as they represent about 250to 300 million people of the Indian population•By 2020 disposable income will grow significantlyallowing the population to have a greater purchasingpower
  9. 9. PESTLE AnalysisTechnological•India has approximately 4 million vehicles on Indiansroads, this shows that infrastructure is there and hasa potential for the industry to grow.•Qualified engineers in India have allowed theindustry to focus on R&D initiatives and focus on howto build innovative productsLegal•The end result of the production of a vehicle has tofollow regulatory and safety requirements•In India, the requirement is to achieve Euro 4emission regulation•Numerous patents related to small car
  10. 10. PESTLE AnalysisEcological•This industry is building vehicles that are environmentallyfriendly, which would mean that if a product is cheap itwould not attain such requirements. Depending on thecountry, in this case India there is a specificenvironmental requirement, and if not will it meet theneeds of other countries (the rest of Asia and Africa).
  11. 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. 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. 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. 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. 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. 16. Value Chain AnalysisInbound R&D Product MarCom Sales / ServiceLogistics Missed Delivery Unique Segment PoorWin-win Building on features needs Pre-booking responserelationship success of time towith suppliers ACE Cheapest of Shaky price Traditional customer the low cost point delivery needsCheapest Innovation cars by 37%location + culture – Promo: 1 lahk Distributedsupplier co- weekly Reliable + promise manufacturing?location meetings fuel efficient 220 M value Profit?Opportunity Development Two cylinder 80% of Customers 156,000to learn to of unique engine, drive segment pay upfront Cars onaccess b-o-p drive train train chose higher to book a back orderProtected end models Nanosatey of Rear engine of the Nano Lost ¼ salessuppliers 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
  17. 17. Diversified Suppliers
  18. 18. Pricing Strategy Cost Leadership StrategyTrade-Off Concept Strategy Price Penetration Strategy (vs skimming) Double the price ≠ Double the value
  19. 19. TOWSExternal 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 economiesInternal 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 presenceInternal Weaknesses• Safety concerns• inability to produce products to meet demand in timely manner• People dont want to buy worlds cheapest car, customers want trendy
  20. 20. TOWS strategiesWO Mini-Maxi" Strategy•Minimize weaknesses, maximize opportunity•Form strategic alliances to ramp up production (W2) and address safetyconcerns simultaneously (W1)•Have first mover advantage but not able to capitalize on it, theyhave opportunity, so work on building capacity quickly (W2)•If they can do this, then quickly need to go to ST and minimize threat ofcompetition•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 theyre 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. 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: Maruti Suzuki
  22. 22. Case Conclusions1. 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....