BMO6622 - Managing Innovation & EntrepreneurshipASSIGNMENT 1Case StudyIntroductionIn January 2008, the cheapest car in the world made its first debut in India. Tata motors had developed a vision several years back and had build hype for a car that would cost a mere $2500 and bring automotive transportation to the ordinary Indian population. The Nano car has received many nick names including “the people’s car”, “poor man’s car” and “the micro car” to signify its small size and affordability to mainstream people. The initial perception about the Nano car was that, being a basic, small, poor man’s car, it would cause a mere ripple in the automotive market.
Nevertheless, Nano car’s tremendous success defies these notions- it represents a radical innovation that will substantially revolutionalize automobile distribution and manufacturing (Aaker & McLoughlin 2010). When launching the car, the CEO of Tata motors stated that “Nano is not just a concept car or a prototype; it is a production car that will roll out of Singur factory and make major changes in the company”. The car incorporates three major innovations that make it huge and superior relative to others.
This case study aims at exploring ways in which Tata has managed to develop one of the most innovative automobiles with the least price tag in the world (Juft 2009). Nano car innovation backgroundProfile Indian automotive car Until the dawn of 1980’s, India had few players in the automobile industry with the example of Hindustan motors and Premier automobiles. The industry was a seller’s market with little to no contribution of customers about the choice of models and their prices. Nevertheless, the industry grows immensely each passing year.
The 2007 fiscal year marked the peak of growth when the industry grew by over 18% over the previous fiscal years. Cars exported from India comprised of about 13% of the total number of cars exported from the Asian continent. The growth of the Indian auto market was rated the fastest in the world during the 2004 fiscal year. Small cars comprise of the largest section of the Indian auto market, enjoying a nearly 2/3rd of the market share. In addition, the Indian market is the second largest in the sale of small cars behind Japan.
However, growth fell drastically to 9% in 2009 and this has not been fully recovered due to the ongoing global financial recession (Rajmanohar 2007). Sales of the automobile industry have shown devastating figures as clear reflection of the detrimental effects of the recession. However, there is prevailing hope for the industry since there are several factors working in its favor. India is blessed with an economically strong working class who are certainly potential customers for the industry in the years to come.
Besides that, the Indian has demonstrated considerable stability amidst the tremors of financial meltdown. The workforce in the industry is quite competitive in terms of skills, knowledge and innovations. Much of this optimism roots from appraisals from foreign countries. For instance, the Japanese car industry regards India as the ‘a global car manufacturing hub of the future’ (KPMG 2010).