Wednesday, April 10, 2013

Blog #1 - Tata Nano Strategic Planning

Strategic Planning has been used over the history and has become an integral part for any types of organization. Strategic planning comes in many forms and is a widely accepted practice in each step of a product, process and in other things. In 2008, Tata Motors unveiled a very low budget car called Nano which cost about $2500. This was a major break through in the motor industry and was deemed impossible by their competitors Maruthi-Suzuki. The pioneer of this project, Ratan Tata had made a claim to make a car inside 1 Lakh Rupees ($2500) and at the end of the Nano debut show - he ended with quote saying "A promise is a promise."  Before Nano, Maruthi-Suzuki was the cheapest car, the retail price of about $5000 dollars.

Tata's spark for the Nano came when he saw families of 3-4 people using a motorbike for transportation. There are millions of bikes in India and it has always posed safety concerns for the public. In combination with the poor road conditions in India and carrying a full family on a two-wheeler, bikers are involved in many accidents. Tata thought if there is a way to make a car cheap enough that these bike riders will make the switch to a car, it will be a huge success. His strategical view led the idea of making a low budget car and decided that the 1 Lakh Rupee price tag will be attractive to the target market. Tata's genius approach was to target the two-wheeler market rather than the automobile market to cause a shift in paradigm in the automobile market. Strategic planning can come at anytime and in Tata's case was a very spontaneous observation helped him to plan an attractive proposition.

Making a car for $2500 has never done before in the world and the engineers of Tata had a huge challenge they faced. Their strategy plan was broken down into three things: cost, regulatory requirements and performance acceptance. Each part of this production process has to be redefined to meet all three criteria and required immense strategical planning. The model, engine parts, aerodynamics, stability and other key components of the Nano had to made from scratch to reach the price tag. The plant engineers completely revolutionized the manufacturing of cars by constructing a mega-factory with the best equipments for the most efficient production. Tata Motor's innovations stretched from the bare basics of the car, to engineering of parts, manufacturing, marketing, sales and distribution. They looked into any and all aspects where cost can be reduced and recreated a complete production process from scratch. The development of this process took close to four years and the people behind this car had to intelligently plan their strategies before they execute to avoid any mishappenings.

In the Delhi Autoshow where the Nano was presented, it came out with a huge bang and named itself 'the people's car.' Tata's innovative observation followed by proper strategic planning and execution gave millions of families not only cars, but safety, happiness and more intangible values. This case relates to what we learned in class about strategic planning and how planning around the odds, but directly into the opportunities can create revolutionary paradigm shifts. I would like to ask the class - do you know any inventions that stemmed from a simple observation? What are the important aspects when transforming an idea to a strategical plan? How do think collaboration plays a role in strategic planning?

Reference

Faruque, Sadat. "TATA NANO - Brief History and Case Study Analysis." TATA NANO - Brief History and Case Study Analysis. Slide Share, 11 Oct. 2012. Web. 10 Apr. 2013.


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