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Case 1 : Tata Motors

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Case 1: Tata Motors

1. Which barriers to entry contributed most to Tata Motors’ lack of success with the original Nano? Provide a rationale for your answer.

We can explain Tata Motors' failure with its Nano because they had to deal with the problem of fierce concurrence (e.g. Suzuki's Alto which offered more benefits like the storage and a more powerful engine). But also, the brand recognition.

Indeed, the cheap and unsafe image associated with the Nano has prevented from having more buyers like with Volkswagen or Ford. The company also had to face up high regulation and safety (e.g. the car caught fire).

Moreover, create a new product is very expensive in money (e.g. Tata Motors invested hundreds of millions of dollars) but also in time (e.g. production was postponed for about a year and a half). And to conclude, they must have had difficulties selling its product because there were too few distribution systems (unlike the competition).

2. Which macroenvironmental factors did Tata Motors consider when adjusting the marketing and manufacturing strategies to achieve success with the more recent Twist and LX models? Provide a rationale for your answer.

When adjusting the marketing strategy, Tata Motors had to consider environmental factors such as find the right target. Instead of simply targeting people with low incomes, they have decided to focus on young urban customers. But also, to offer what the Nano didn't have: more comfort.

It is no longer a question of offering the cheapest car in the world, but the most affordable with options like power steering or a music system with Bluetooth connectivity. By choosing a strategy that focuses on young urban dynamics, the company wanted to take advantage of India's large population and growing middle class who have an attractive situation (e.g. Nano's price was at $2,000 to $2,500 and now their new products like Twist and LX models are around $3,578).

3. To what degree do you believe Tata Motors will succeed in delivering a successful low-cost vehicle to consumers in India and other developing countries (hint, what are the firm’s strengths and weaknesses relative to their capabilities and do they have an effective strategic and tactical plan?)?

I believe that Tata Motors will be able to provide a low-cost vehicle to Indian consumers, but also to consumers in other developing countries if it maintains their current strategy. To do this, the company must continue to keep a more precise target (such as rural



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