Importance of Innovative Ideas in Tata Motors - Case Study Example

Case Study for Tata Name Institution Introduction One of the advantages of technological advancements is that it has improved living standards of people. Different manufacturing companies do manufacture products that are highly quality products and continual innovations in these companies, with the existing quests for new discoveries, make man a very comfortable animal in existence (Humes, 2007). The transport sector is one of the sectors where advancements of knowledge have been enhanced. Upon the wake of the period when many customers could not manage the expenses that are attached to expensive cars, the Tata Motors came up with a new model of car, Nano, which was projected to revolutionize the auto industry. The projections and the retail costs of Nano car were designed to be inexpensive so as to come to the aid of the million customers who had been locked out of the car market, both in India and in the world market. This was the sole inspiration of the Tata Motors to build Nano. One of the characteristics of emerging and existing markets is that they contain potential customers at different levels of consumptions. Customers with high consumption index are placed high on the consumption pyramid, and customers of low consumption index are placed at the bottom of the pyramid (Hanson et.al, 2008). Conversely, the latter customers are the majority, and the Tata Motors’ emergence with production of small cars in the global auto market scene has created the expected attention in the world. It gives millions of people a chance to drive cars and also to manage cheaper means of transport. By that time, 2007, India presented a nation where there were as few as ten cars for thousands of people, particularly when compared to china and U.S. which had 40 for thousand people and four hundred and fifty cars for one thousand people respectively. This was case where only the very rich people could manage to easily transport themselves and their families. With the emergence of the Nano car, its price tag would make it very appealing to many Indians who at the time were driving on motorcycles and scooters. The realization of the transport menace in India was the first step in the need to design Nano by the Tata Motors according to Ratan Tata. The need for a safe, affordable and the all weather form of transport for family and the public majority was very eminent. A period of four years was all the Tata Motors designers and engineers needed to come up with Nano which enable the realization of this goal. People’s perception of the car and the motivation to design a fairly cheaper, quality and yet very economical in fuel consumption was another huge steps towards building Nano. A country with average household income per capita of between $6,000 and $3,000 would comfortably have many people own cars of roughly $2,500 in terms of cost. It worked four years later as eight million Indians now own cars according to the Mumbai based credit rating agency Crisil. With the advancing technology in the automobile industries, it is very unfair and very untrue to associate low price with poor quality. Depending on the nature of products, except for goods and services of ostentations, customer demands and the technical applications on a product is what determines its price. Nano was design to arrest the transport problem in India and according to the Tata Motors managing director Ravi Kant; this would go beyond class and economics, since it would serve both in rural and urban places as well. Therefore low price does not automatically means poor quality considering the type of a car Nano is to Indians. The first impression of its quality came by its design. The design of Nano was developed with family in mind. Many people in the world and particularly in India consider low priced, adequate comfort, fuel efficiency and a safe car as the type of a car they would need for their family. This was the perspective of Nano design so as to match these characteristics. It has a fuel efficient engine that is powered by a lean design strategy that makes it minimize weight and maximize performance in terms of units of energy consumed. Nano has a roomy passenger compartment with a more spacious part for legs and head. Four people can comfortably sit in this car and its dimension to suit four doors, high seating positions and sloping roof makes it effortlessly strive through the busy roads in urban and rural areas. A three point one meters car in length, a height of 1.6 meters and a width of 1.5 meters is a car that is very compact and cannot fail in terms of the expectations of its quality. To enhance more quality, Nano was mono-volume designed with its wheels at the corner and the power train at the rear that makes it move with ease at any speed. In pursuit to develop Nano, Tata motors made steps to acquire land in areas of Singur located in the West Bengul in India. The company used in excess of $350 million for over 600 acres of land which was mainly for production of Nano. However, the problem which began with the west Bengal government after the purchase of the land led to many uncertainties. This was one of the important features of the Indian economic environment that was among the key factors that caused the problem The government of West Bengal, characteristically poor and depended entirely on farming, was very much interested in bringing the Tata motors to its state because they saw Tata Motors as a rejuvenation of its industries. They had forced ownership on the land from farmers within the area and this led to protest against Tata alleging they should return 400 acres of land they had originally bought for the Nano factory. Constant threats from protesters scared away employees, mainly composed of the young people from around the area, made the Tata motors to suspend the work at the Nano plant. Despite the agreement signed by the Gujarat government that saw the Tata Motors given 11,000 acres of land, the plans had been delayed according to schedule. Nano’s launched was therefore delayed for the circumstances of the land disputes that ad lasted for over six months. Manufacturing capacity constraints coupled by the global race to lower prices of entry-level cars for developing countries like India was a threat to sales of Nano. The political turmoil and governmental exploitation of the people in such areas poses many threats to the business communities in India since business success depends mainly on such external environment. The arguments by analysts suggest that as long as Nano avoids major quality issues, the Tata motors will have no trouble selling to millions of people around the world. Already looking to set new trends in the auto industry, Nano has shown grasp of concepts in development of cheaper, but quality cars for the many people who lives on fairly low income. While some other competitors are still struggling to develop low cost models for the Indian and world market, Nano has broadened its scopes of the low budget cars to other markets. Leadership is a dynamic-characteristic quality of leaders which is needed in mostly situations of difficulty. Innovation may come to the rescue of many leaders, but this should be coupled with strategic arguments and decision making among leaders (Mead, 1998). When the Nano factory was faced with production site difficulties, the leadership of the Tata Motors which had authorized and invested in this innovative initiative did not stagger in the issues of the sites, but quickly looked into other alternatives that would ensure the achievements of their goals. Auto makers should learn from the innovative and decision making skills of the Tata Motors management in the process of achieving their objectives. It is true that while other competing auto mobile industries are still striving to develop low budget cars, Nano will be penetrating other markets. Innovation changes and improves with time and they will be advancing in increasing the efficiency of Nano cars to suit the need of different auto markets in the world. In addition, the aim of technology is improve efficiency at low cost as possible since that’s the idea of making work easier. Therefore, other than India, Nano and other low budget cars have a future in other auto markets other than India. The automakers in the European and the U.S. markets for instance Ford and GM are already struggling with financial capabilities. Designed to suit the Indian market, Nano present a decent technology, supplier relationship and bundles of mindset which are equivalent to the frugal engineering. When they are applied to the needs of the rich European and the North American markets may result in more upgraded cars that may be sold according to the capabilities of such markets. With this in mind, it is viable to argue that Tata Motors is going in the right direction by trying to develop its low cost Nano models adapted to European and U.S. markets. The likelihood of the success of Nano in the U.S. is fairly dependent on the existing cost effectiveness and quality of the cars that are produced by the auto industries in the U.S. U.S. present a segment of rich needs of cars. Majority may be in the middle class wit others at other levels, but an upgrade of Nano to suit their needs may be the best direction that Tata Motors can take to ensure their success in this market. Advancements in marketing strategy, continual improvements of the quality and the quality assurance may improve the Tata motors’ goodwill in the American market thus their success. Conclusion Company’s competitiveness depends on the company’s ability to employ technological advancements to their production system. The automobile industry is one of the industries that used technical knowledge to help solve social, economical and business problems that are constant in the day to day activities of man. The use of such innovative ideas, coupled with the transport need in India has made Tata Motors to strive well in the auto market in India and advance in other markets in the world. This is a special innovation case which encourages the technical ideas and knowhow to make the world a better place. Reference Hanson,D.:Dowling,P.J: Hitt,M.A;Ireland,R.D; Hoskisson,R.E. (2008). Strategic management: Competitiveness and globalisation (3rd ed.). Cengage Learning. Humes, S. (1993). Managing the multinational: Confronting the global-local dilemma. Hemel Hempstead: Prentice Hall. Mead, R. (1998). International management: Cross-cultural dimensions. Oxford, UK; Malden, Mass : Blackwell Business. Walker, Danielle Medina; Walker, Thomas; Schmitz, Joerg, and Brake, Terence (2003).Doing business internationally: The guide to cross-cultural success(2nd ed.). New York: McGraw-Hill. Read More