Tata Nano – a Study on Business Challenges in India

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TATA NANO – A STUDY ON BUSINESS CHALLENGES IN INDIA
Introduction
Tata Nano, pet project of the chairman of the Tata Group Mr. Ratan Tata was a car which was expected to change the face of automobile sector in India. In the highly competitive small-car market of India, Tata Nano promised to set the bar so high that it would become extremely difficult for the competitors to match. The dream of owning a car for as little as Rupees 1 lakh (Rs.100,000 – roughly USD2500) was too tempting for millions of Indians who cannot afford even a small car. The kind of extensive media coverage Tata Nano received right from the day it was announced through the entire period until the first units were handed over to the owners was something that its
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Also, Tata is contemplating coming up with Nano electric models and even a Nano diesel version
After suffering setbacks with the initial market response, Tata Motors hired Carl-Peter Forster, a former boss of General Motors Europe as head of Tata Motors in February 2010. After taking charge, Forster realized that he will have to reinvent the Nano business model. There was no real national distribution scheme, very little marketing and advertising, and no effective system of consumer finance. The irony was that many rural Indians never got to hear about or have the opportunity to see the car that was supposed to help transform their lives.
Issues with Nano
The Nano’s marketing problems began with its product positioning. The price crept up by around 15%, putting it out of the reach of first-time buyers with no regular employment or payslips to back an application for credit. And by emphasising its cheapness rather than its basic but appealing qualities, it deterred slightly better-off consumers who could afford one but aspired to more sophisticated vehicles, such as those from Tata’s biggest rival, Maruti, the leader in India’s small-car market.
Political Controversies – Nine months after the Tata Nano was unveiled to much fanfare, and with only weeks before the first car was scheduled to roll off the assembly line, Tata announced it was pulling out of West Bengal where work was near complete on the assembly plant. Company Chairman Ratan Tata noted that Tata

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