Blog 1 – Reinventing Your business Model
“Great Business Models can reshape industries and drive spectacular growth” as stated in the Harvard Business Review, Reinventing your business Model. We can think of very successful companies like Apple, Tata Motors, Walmart, Target, FedEx when we talk of a good business model.
The “Reinventing Your business Model” article talks about the success stories of companies and how they had to drastically change their Business Model to cater to a different market. Tata Motors has emerged from being a truck manufacturing company to car manufacturing and then building the cheapest car in the world. The Tata Nano is an inexpensive car aimed at offering an all weather alternative for scooter families.
The article states the following steps for the success of a business model:
1. Customer Value proposition
Mr. Ratan Tata decided to a replace a scooter with a Car when he saw families travelling on a scooter on unsafe roads and in bad weather. He targeted the Indian Market which cannot afford to buy cars but need a safer mode of communication. It was meant to change the way people travel in rural and semi-rural India.
2. Profit Formula
The key to get families to buy the car is to make it extremely reasonable. Hence to generate profit, it was mandatory to make the price very low and ensure there is huge market base. The Nano is half the price of the cheapest car available.
3. Key Resources
The company employed fresh young professionals to get innovative ideas. This team drastically minimized the number of parts in the vehicle resulting in cost saving.
4. Key processes
Tata Motors had to re-conceive how a car is designed, manufactured and distributed.
Tata Motors successfully launched the most awaited car Tata Nano. The sales of Nano has been declining every since its launch in early 2009. Questions are being raised about Nano being a failure Model.
Which part of the Business Model could be responsible for the failure of Tata Nano?