Assignment on the answer of the

Questions of
Case Study of Strategic Evaluation and
Control
Course Name: Strategic Management
Evening MBA 05, Section: B

Prepared For
Prof. Dr. M. Ekramul Hoque
Course Teacher

Prepared By
Md. Mohiuddin
Md. Asadullah-Al-Galib

(ID# 1405042)
(ID# 1405076)

Md. Maruf Billah

(ID# 1405010)

Rumana Rahman

(ID# 1405040)

Sumedh Chakma

(ID# 1405050)

Date of Submission: 08th August, 2015

CASE STUDY 01
Tata Nano Ever Lowest Priced Car in the World
Answer to the question no 1
Cost Leadership Strategy is the strategy that Tata Motors following
regarding Nano in this case study. This Cost Leadership Strategy is
describes a way to establish the competitive advantage. Cost leadership, in
basic words, means the lowest cost of operation in the industry. Here Tata
motors also use this strategy for Tata Nano.
We think this strategy gives a competitive advantage to the Tata Motors
company because by this product they shows that they have better
technology, better supplier of raw materials and increasing Brand image.

Justification of achieving competitive advantage

As per our opinion, This Cost Leadership Strategy is very helpful for achieving
competitive advantage. Because:

Price of the Nano was lowest which causes the biggest competitive
advantage in the emerging competitive market. They had managed to
grow interest in peoples mind by announcing that Buy a brand new
car with a cost of only $2000. As a result, they got so many response
from customers and customers started to make booking before even
launching the car.

Green environment concept by producing a car having less Carbon-DiOxide emission which was environmental friendly.

This car also having the technology of less fuel consumption with a
greater mileage. Tata Nano required only one gallon to travel 55.5
miles (23.6 kilometers per liter). This makes Tata Nano a fuel efficient
vehicle, which will save money in the long-term. This mileage comes
with a powerful engine of 623 cc with a maximum speed of 105
Kilometers per hour.

Answer to the question no 2:The problems Tata Motors face in Producing and Marketing Nano are given
below:-

Problem during production:

1) Land Acquisition Controversy: - Tata forcefully acquired
agricultural land of Gujarat to set up Nanos manufacturing unit. As
because of that, violent protests by farmers and opposition political
party leaders forced Tata to change plans which not only resulted 18
months delay to first buyer and also huge cost.
2) Safety issue: - Five of the thirty thousand cars had engine fires
causes customers to back out on the verge of buying.
3) Lack of features: - Lack of basic features made it just as usual car
but not a complete car. Below features were not included for making
the Nano cost efficient.
The trunk only accessible from inside the car as the rear hatch
doesnt open.
No power steering, Radio or Music can be fitted as accessories.
No air bags.
No air conditioning.
To ease the assembly, body panels are glued instead of welded.
4) Price hike: - Rising prices in the global economy pose a threat to
Tata Motors on a couple of fronts. The price of steel and aluminum
along with fuel price is increasing putting pressure on the cost of
production.

Problem during Marketing:

1) Tata Nano did not carry enough prestige to be a passenger car. This is
a result of lack of positioning taken by marketing managers.
2) The brand managers positioned the car as the next upgrade for a
family of four with a two wheeler. But every such household had an
aspiration to move to something better and not necessarily cheaper.
Even if the consumer was in that income bracket, he aspired for
something smarter.

3) Marketing was done only by showing price benefit instead of

maneuverability, Mileage or Performance.
Due to the above reasons Tata Motors faces slow sales which will result less
than projected cash flow. The competitors become overly aggressive which
can lead to their weak actions.

Answer to the question no 3

Future Strategies:Future strategies should be taken by Nano in the face of upcoming
competition from the new entrants are given below:1) Clean up the Brand Image: - Nano first of all needs to reestablish itself as a credible brand. This might be the hardest thing to
do given the beating the brand image has taken because of the fires.
Nano would need to aggressively work on its PR and show how the
accidents are not because of flaws in Nanos design but because of
some unfortunate external factors.
2) Define a clear Marketing Strategy: - Nano needs to have
marketing strategies to target its real consumer segment which is the
masses of India and showcase the Nano as an aspirational product for
them instead of coming across as an accessory for the rich.
3) Rework on Pricing: - when Nano started, a major challenge was to
prove whether it was possible to manufacture a car which can be sold
at the price of Rs. 1 lakh. That point has been proven. The real
challenge now is creating profitable car business. If Tata starts pricing
its Nano in a range where it is more cost-effective, it would first, reduce
the losses Tata incurs per car, as well as give the brand a facelift.
4) Innovate new segments and ideas: - Tatas Nano can be
powered with MDIs compressed-air engine which will potentially bring
about sweeping changes in the automobile industry.
5) Focus on Other Countries: - Export Nano to Indonesia, Eastern
Europe and also Brazil as well as Southeast Asia where it can be sold
without the bad name it has earned in India.
6) Exchange offer for getting more customers: - Tata should
give exchange offer against a two/four wheeler so that those
consumers can be easily converted to Nano users.

7) Enhancing safety measures: - Safety measures can be

enhanced, because people consider it as their prime concern while
purchasing. Including some basic safety features like: - Air bag,
Antilock, Double brake and better quality that dont burns out.
8) Option for Customization: - An option for customization should
be available.
Creating a functionality advantage is at the core of product development. The
development of the NANO shows that it is possible to build cars for the poor
without compromising on safety and comfort.

CASE STUDY - 02
Production and Marketing of a Global Car: The Strategic
Issues
This is about the manufacturing and marketing of a world car or global car
of an automobile manufacturing company in the United States of America.
The company has been in the automobile industry since the beginning of the
last century with varying market shares at different times. The company has
to complete with at least two other giant automobile manufactures in the
country and many others from japan and Europe. It produces different types
of cars but it does not have any car that everyone can buy all over the world
people prefer to call it world car or global car. A world car is a car that can
be manufactured and sold everywhere with few or no substantial
modification. A world car would have a universal consumer product design
that would cost less to make than would multiple versions of cars. A world
car is expected to enable its manufacturer to leverage resources and balance
currency fluctuations better than can be done with multiple models for
different countries.
The company tried twice to develop a world car in 1960 it developed a small
economy car for the world market. It proved far too expensive to build a
world car. So the company discontinued its development. In 1981 it again
tried to develop a world car of different type but finally it did not happen. But
the company dream lived on. The company with a determined commitment
endeavored to build a world car again in 1993. With well coordinated teams
engineers and designers from around the world, the company finally
produced the car. The V-6 engine, transmission and climate system were
developed in the USA. The four cylinder engine, interior, suspension and
electronics were developed in London and structural engineering was done in
Germany. The company first began to sell the world car in Europe in next year
in the USA. But big question remained the profitability of the whole project.
The car was a mid sized car in the price range of $ 15000 to $20000 in us
market but much higher in European market. The car was having problems in

the European market. But the company still hopes to be successful because it
thinks that the newly developed engines and other aspects of the design and
technology would be usable in other cars to develop by the company in the
future.

Question 1:
Is the company new car really a world car? Why or why not?

Answer:
The new car that the company came up with after a few tries in last few
decades, all of which were in vein, cannot be considered as a world car.

The first reason for the car not being a universal one is the Price which
is way too high of the affordability range. For being a world car which will be
bought all over the world must have a price which is within almost the
average affordability.

The second reason against the car for not considering a world car is the
sourcing of the parts from different regions of the world. This is a reason for
which the car is not feasible for the average people to afford.

The third reason is the type and engine capacity of the car. The car was a
mid sized sedan which is not common as well as popular in all the regions of
the world. The engine capacity is also not suitable for everywhere especially
the places where the fuel price is higher.

Question 2:
What are the advantages and disadvantage of trying to develop a single
product for a global market?

Answer:The advantages of having a single product for a global market:-

1. Economies of scale
Economies of scale are the cost advantages that enterprises obtain
due to size, output, or scale of operation, with cost per unit of output
generally decreasing with increasing scale as fixed costs are spread
out over more units of output. Often operational efficiency is also
greater with increasing scale, leading to lower variable cost as well. So,
the cost for making a global car is less due to production of bulk
amount.

2. Leverage of the available resource

Leverage of resources means the ability to influence a system, or an
environment, in a way that multiplies the outcome of one's efforts
without a corresponding increase in the consumption of resources. In
other words, leverage is the advantageous condition of having a
relatively small amount of cost yield a relatively high level of returns.
So, leverage of their available resources can be done if an automobile
company decides to make a global car.

3. Less perplexity in design

Since, same platform is set up for the consumers all over the world, so
there is less perplexity in design and easy to implement the design.

4. Similar consumer product design

Similar product design is established for the consumer all over the
world.

5. Balance currency fluctuation

Since, a global car is produced for all over the world at the same price,
so it solves the problem of currency fluctuation of the different regions
of the world and balance them.
The disadvantages of having a single product for a global market:1. High price
2. Cosset of people from diversified areas of thoughts in the build up
3. More lead time in production

Since, the facility has to receive hundreds of orders from all over the
world, so it requires more lead time during production. Also, it requires
more time to deliver.
4. Less interest among a big consumer segment who prefer variety
Not all the consumers seek for the same product. There are varietylovers who want to gain new experience all the time. Global car is
definitely not for them as it has no variety at all.
5. Nearly impossible due to the type of the commodity. Cars are not
homogenous in nature as commodities.

Question 3:
Should an automobile company have a strategy for developing such a
product? Will the same car be suitable for a country like plain land
Bangladesh or a country like sandy Saudi Arabia or a country like hilly Nepal
or a country like snowy Switzerland? Why or why not?

Answer:An automobile company should never have strategy for developing a world
product. Following are the reasons:

1. The heterogeneous nature of the product.

A car is not a homogeneous product in nature because not all the
landscapes of different portions of the world are same. A low
suspension car may be okay for a plain land country like Bangladesh
but for hilly place like Nepal requires high suspension in cars which
gives more ground clearance (at least 30mm in height from the
ground). Again, in a hot and sandy place like Saudi Arabia, a car must
have air cooling system and tires which have bigger diameter so that it
can easily move on sands. But in a snowy place like Switzerland, a car
must have a heating system. So, different type cars are needed for
different countries of the world.

2. Difference in taste and preference

All the consumers may not like the same car. Some may prefer sedan
cars, some may prefer SUVs (suburban utility vehicles), and some may
prefer sports cars. So, an automobile company should produce
different types of cars, keeping in mind of the different taste and
preferences of different consumers.

3. High price

The car price is so high which is beyond the affordability range of most
consumers.

4. Problem of managing inter-regional specialization.

Different regions of the world requires different types of cars which
have the special facility to serve the purpose in that particular region.
Since, a global car will be consumed all over the world so it should
have all the features in one car to meet the requirements of all the
consumers from different regions of the world. But it will increase the
complexity and cost of the car.