Tata Nano in Usa
7/5/2011 |
Tata Motors | “TATA NANO” in usa |
Executive Summary
This due-diligence report concludes our findings regarding the feasibility of implementing the Tata Nano, the world’s cheapest car, for expansion into the U.S. market. Taking into consideration the general environmental analysis, we have concluded that increasing oil prices and a stagnant economy have coupled to increase opportunities of market demand for vehicles that are; inexpensive, fuel-efficient and compact with very basic features. The Buy American Act and other U.S. Governmental policies and regulations are such that; emissions and safety standards represent a threat to the viability of manufacturing the Tata Nano in the U.S. without major re-engineering processes in order to make them compliant. These improvements and higher U.S. labour costs could potentially increase the price tag of the Nano to $8,000 USD. According to Michael Porter’s Industry Analysis, the Automotive Industry in the U.S. is fairly attractive due to the low threat of new entrants, low suppliers power and the low threat of substitutes. In turn this industry may be fertile for Tata to expand their operations.
The internal resources and capabilities of Tata have been analyzed, and it is determined that their core competencies include operational efficiency and effective design and innovation (fuel and cost efficient). From the Competitor and Competitive Analysis we are able to conclude that the Hyundai Accent and Nissan Versa base models are Tata Nano’s potentially biggest rivals. Moreover, it is plausible to suggest that the Tata Nano would only have a temporary competitive advantage in the U.S. In comparing three potential strategy alternatives to penetrate the U.S. market choosing from; Joint Venture, Merger and Acquisition, Greenfield, or to merely keep the Status Quo, we have identified that the acquisition strategy is most suitable as well as financially feasible.
To conclude, we highly
Tata Motors | “TATA NANO” in usa |
Executive Summary
This due-diligence report concludes our findings regarding the feasibility of implementing the Tata Nano, the world’s cheapest car, for expansion into the U.S. market. Taking into consideration the general environmental analysis, we have concluded that increasing oil prices and a stagnant economy have coupled to increase opportunities of market demand for vehicles that are; inexpensive, fuel-efficient and compact with very basic features. The Buy American Act and other U.S. Governmental policies and regulations are such that; emissions and safety standards represent a threat to the viability of manufacturing the Tata Nano in the U.S. without major re-engineering processes in order to make them compliant. These improvements and higher U.S. labour costs could potentially increase the price tag of the Nano to $8,000 USD. According to Michael Porter’s Industry Analysis, the Automotive Industry in the U.S. is fairly attractive due to the low threat of new entrants, low suppliers power and the low threat of substitutes. In turn this industry may be fertile for Tata to expand their operations.
The internal resources and capabilities of Tata have been analyzed, and it is determined that their core competencies include operational efficiency and effective design and innovation (fuel and cost efficient). From the Competitor and Competitive Analysis we are able to conclude that the Hyundai Accent and Nissan Versa base models are Tata Nano’s potentially biggest rivals. Moreover, it is plausible to suggest that the Tata Nano would only have a temporary competitive advantage in the U.S. In comparing three potential strategy alternatives to penetrate the U.S. market choosing from; Joint Venture, Merger and Acquisition, Greenfield, or to merely keep the Status Quo, we have identified that the acquisition strategy is most suitable as well as financially feasible.
To conclude, we highly
References: Nedra P. (2011) 'Smart Car ' Tech Encouraged in U.S. [Internet], abc news. Available from: <http://abcnews.go.com/Technology/story?id=119657&page=1> [Accessed July 2nd 2011] Pew Social Trends Staff (2008) U.S Qingfen (2011), Chery Auto to build $200m factory in S America [Internet] Available From: < http://www.chinadaily.com.cn/business/2011-05/31/content_12609866.htm> [Accessed June 26th 2011] Sullivan (2008), Air-Powered Car Coming to U.S The Good Car Guy (2011) New Vehicle Market Share by Brand in America – 2010 Year End [Internet], Good Car Bad Car. Available from: <http://www.goodcarbadcar.net/2011/01/new-vehicle-market-share-by-brand-in_05.html> [Accessed July 03rd 2011] U.S Vlasic (2009) When Auto Plants Close, Only White Elephants Remain [Internet] Available From: < http://www.nytimes.com/2009/07/31/business/31factories.html> [Accessed June 26th 2011]