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Tata Nano & Challenges of US Market Entry

February 2013

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February 2013

Tata Motors & Challenges of US Market Entry Executive Summary The Tata Nano has been viewed by many identifiers: the ultra-low-cost vehicle, the Rs. 1 lakh car, the poor peoples car, and as a means of bringing car ownership to the bottom of the income pyramid (Palepu, Anand, & Tahilyani, 2011). further pursuit of its multi-domestic strategy. This paper further explored (1) Tatas sources of advantage, (2) the challenges in the transferability of this advantage, (3) what to transfer in its US market entry, (4) opportunities and alternatives, and (5) a final recommendation. (1) Sources of Advantage: Tata Motors main sources of advantage come mid-to-upstream in their value-chain, in particular their (i) Operations & Manufacturing, (ii) Procurement & Supplier Relationships, (iii) Research & Development, and (iv) Human Resources Management (Part I) (2) Challenges in Transferability: Challenges in transferability included: manufacturing, By transfer of Tatas manufacturing supplier, distribution, marketing, positioning, environmental, and institutional barriers (Part II). (3) Transferring Advantage to Overcome Challenges: advantage, many further factors are tied together. It allows them quell manufacturing challenges in the US market, allows them to start and gain a supplier network, perpetuates their R&D and human resources strategy, and allows them to position themselves as a low-cost environmentally friendly vehicle if they so choose to do (Part III). (4) Re-Positioning in view of Opportunities: Many opportunities and untapped markets exist for the Nano to re-position itself in the US market to achieve a competitive advantage including: university student market, city-residents, families, eco-friendly market, mass-vehicle sharing, and mass-customization (Part III). (5) Recommendations & Risks: The Nano needs to leverage its ULC advantage but it is clear that this cannot be its main feature and selling point. By establishing partnerships in vehicle-sharing schemes such as Zip Car and Getaround the company not only meets needs of the city-resident market (which requires a small vehicle to easily get-around, park, good fuel economy), but also leverages its eco-friendly proposition which would be more receptive in such markets. However, in order to penetrate the remainder of the US population an overarching mass-customization option allows for them to boldly enter the US market, offering a unique advantage, and clearly differentiating from competitors. This mass-customization option would increasingly capture the university student population as well the vehicle being seen as a personal individual statement. Targeting corporate clients (fleet vehicles) who wish to be received in an eco-friendly light is also another untapped market to be captured (Part IV). Recently, Tata Motors has expressed intentions of pursuing the US market as a means to fulfill their strategic vision, achieve first-mover advantage, and

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Table of Contents The Tata Group . Pg. 3 The Tata Nano ... Pg. 3 Part I Tata Motors Global Strategy & Advantage .. Pg. 4 Part II US Market Entry Challenges .. Pg. 6 Part III Overcoming Challenges, Opportunities, & Re-Positioning .. Pg. 10 Part IV Recommendations & Risks . Pg. 14 Bibliography . Pg. 16 Appendix . Pg. 18

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The Tata Group The Tata Group has a long-history of diversification across its 7 business sectors and with international operations in 80 countries constituting 98 group companies with revenues in excess of US$100 billion (Palepu, Anand, & Tahilyani, 2011). Tata Motors, originally the Tata Engineering & Locomotive Company (TELCO), formalized in 2003 and began a rapid pattern of global expansions, acquisitions, and partnerships to widen their product-range (Palepu, Anand, & Tahilyani, 2011). Having accumulated previous technical experience through a collaborative manufacturing agreement with Daimler Benz (1954), it launched its own passenger car under the Tata name in 1991 (Tata Sierra) with Ratan Tatas (Chairman) vision of developing an all Indian passenger car (Palepu, Anand, & Tahilyani, 2011). In 2007, Tata Motors acquired Jaguar Land Rover (JLR), which was seen as a means of (1) achieving a long-term strategic commitment to the automotive sector, (2) opportunity to participate in both the high-growth premium and compact-car markets, and (3) gaining access to lowcost engineering, design, and component sourcing (Tata Motors, 2008). The Tata Nano The creation of the Tata Nano, the Rs. 1 lakh car (dealer price excluding VAT and shipping) became a sensation soon after Ratan Tatas announcement at the 2003 Geneva International Autoshow by some estimates from 2003-09 it gained US$220 million in free press and marketing (Palepu, Anand, & Tahilyani, 2011). Based on the popularity of two-and-three-wheeled means of transport in India it was envisioned as a safe, affordable, and all-weather form of family transport (Palepu, Anand, & Tahilyani, 2011). Marketed under the banner of empowerment Now You Can it was a means to bring car ownership to a completely new kind of customer (Sorabjee & Kotwal, 2008) by targeting the bottom 70% of the proverbial population-pyramid instead of catering to the top 30% of customers (Figure 1). In 2012, plans of launching the Tata Nano into the US market were announced with

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preliminary estimates indicating a higher price of US$8,000 due to vehicle re-design and additional safety features (Figure 2) (Ramanathan, 2012). The remainder of this report will investigate Tata Motors global strategy and its sources of advantage (Part I), challenges of US entry pertaining to industry conditions, market attractiveness, barriers to entry, and institutional challenges (Part II), how to overcome these challenges via opportunistic alternatives (Part III) and finally a recommendation outlining the risks (Part IV). Part I Tata Motors Global Strategy & Advantage Tata Motors previous strategic track-record is essential to lay the foundation for the remainder of the report their (1) multi-domestic strategy and (2) strong strategic vision sets the stage for US expansion. (1) Multi-Domestic Strategy: Tata Motors multi-domestic strategy can be summarized through the following words: Our international business philosophy is to be seen as a local company in the country of operation (Palepu, Anand, & Tahilyani, 2011) in 2009, international operations accounted for ~65% of total revenues. From the point-of-view of many in the top management team, having a localized presence and country-level strategy in the US is key to becoming a global OEM (NairGhaswalla, 2012). This also increases their local responsiveness (at the cost of efficiency) by catering to customer needs and minimizing parts and manufacturing costs (a key to achieving their costleadership strategy a source of their advantage, as further elaborated). (2) Strategic Vision: At the heart of Tata Motors strategic vision is a wanting, [T]o develop Tata into a world class Indian car brand for innovative and superior vehicles (Tata Motors, 2012). Again, the US is seen a platform to achieve a world class brand. Additionally, the Nano was initially envisioned (by Ratan Tata) as a competitive response to potential foreign market threats in the lowcost vehicle segment, If we dont do that [target the low income segment], I think the Chinese (Chery Automobile/Hyundai) will come and do it for us (Palepu, Anand, & Tahilyani, 2011). Just as first-

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mover advantage was seen to be critical in the Indian market, the same vision holds true in Tatas strategy for the US and its growing compact-car segment (Bennett, 2012). Advantage, Sustainability, & Transferability of Advantage: However, before US expansion can be truly evaluated an internal reflection is required to ascertain what key success factors Tata can claim as its sources of superior advantage relative to competitors. For all of the hype, Tata has failed to translate vehicle sales with only 175,000 units being solid since March 2009 (after commercial launch) (Nair, 2012) and the immediate question is why? From an examination of their value-chain activities (Figure 3), it becomes clear that an illdevised strategy in regards to consideration of their distribution channels and marketing strategy ultimately led to value-destruction in the minds of consumers. According to a report in the Indian Express, an ill-translated distribution strategy, failure to reach their target market (the two-wheel and rural markets), and a lack of available financing for buyers led to a stagnation of sales (Nair, 2012). Therefore, with poor outbound logistics and marketing the company finds its key sources of firm-specific advantage mid-to-upstream in the value chain and specifically from 4 main sources: (1) Operations: including a long-standing history of vehicle manufacturing and know-how obtained through their early Mercedes-Benz partnership, (2) Procurement & Supplier Relationships: leveraging the Tata brand-name, cooperative supplier relationships have led to innovations creating less expensive and light-weight vehicle components, (3) Research & Development: a strong-focus on R&D with multiple research locations worldwide and a workforce of 2,000 engineers has led to a total redesign of the vehicle power-train to reduce costs, and (4) Human Resources Management: all indications point to a collaborative work-force anchored by a strong-vision by the top management team/Chairman and a non-interfering approach taken to global sites. From a business-level strategy perspective, Tata Motors employs cost-leadership to extract their competitive advantage (Porter, 1985). However, with lackluster sales in its domestic market it is clear that a simple cost-focus

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without adequate marketing and attention to performance/comfort will not achieve the sales penetration rates it had initially expected (Nair, 2012). Country-specific advantage also exists for Tata in its domestic Indian operations primarily from: (1) a solid reputation and track-record in vehicle manufacturing in India, (2) tacit-knowledge of how to maneuver through institutional barriers with respect to manufacturing land acquisition and farmer protests (leading to a transplantation of their manufacturing from Singur, West Bengal to Pantnagar, Uttarkhand) (Palepu, Anand, & Tahilyani, 2011), and (3) an extensive and collaborative relationship with local suppliers (suppliers generally would self-locate 1-2 km away from their main manufacturing plants) (Palepu, Anand, & Tahilyani, 2011). While the sustainability of their advantage in Indian operations is dependent upon whether they can re-position the brand from a family car to something that can appeal to urbanites and youth (Nair, 2012) the transferability of their advantage in the US market is subject to many challenges, as outlined in Part II. Part II US Market Entry Challenges The transferability of the advantage from the point-of-view of US market entry is dependent on many challenges that will be faced due to the liability of foreignness and the relative non-existence of brand strength. (1) Manufacturing Challenges: In the US, manufacturing challenges occur due to the lack of localized manufacturing. While the acquisition with JLR provides access to distribution channels neither Jaguar nor Land Rover has built Greenfield manufacturing plants thereby Tata would be relying on European manufacturing and R&D. Furthermore, while manufacturing costs have been kept down in domestic operations via manufacturing plants in Pantnagar and Sanand (Palepu, Anand, & Tahilyani, 2011) in the US, other factors come into play. A unionized work-force in US automanufacturing accumulates to 10% of vehicle costs (United Auto Workers, 2012) with 30-35 hours of

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vehicle assembly time for light-duty vehicles (Delucchi, Burke, Lipman, & Miller, 2000). This creates challenges in honouring their commitment to being cost-leaders in the market. Furthermore, with increased safety requirements, crash-tests, and vehicle modifications prices are expected to increase by 60-90% from the current Rs. 1 lakh benchmark (Eyring, 2011) further affecting the transferability of its low-cost advantage from its domestic domain to the US. (2) Supplier Challenges: Even if Tata was to establish a localized manufacturing-base a dynamic supply chain capable of achieving low-inventory manufacturing would require establishing localized supplier relationships to remain cost-competitive in the compact-car market. Domestically, they were able to tap into the Ultra-Low-Cost (ULC) market by capitalizing on supplier relationships. The low-cost platform drove their suppliers to innovate, at Tatas request, because of the respect the Tata name afforded and the pride in contributing to an Indian-designed vehicle (Palepu, Anand, & Tahilyani, 2011). Furthermore, their suppliers were just as pivotal to the success of the Tata Nano and through collaboration, nearly one-half of the parts were proprietary, i.e. engine, steering-column, instrument panels (Palepu, Anand, & Tahilyani, 2011). However, without direct transferability of this domestic advantage in the international realm, it would be difficult to maintain their cost-leadership strategy. (3) Distribution & Sales Challenges: Distribution has clearly not been Tatas source of

advantage in its domestic realm. While selling through domestic passenger car channels in the Indian market, it also sold through non-traditional channels by leveraging the Tata Groups retail holdings, i.e. Croma and Westside (Palepu, Anand, & Tahilyani, 2011). However, these distribution channels failed to match places of supply with geographical regions of demand creating a mismatched distribution strategy. In the US, however, the distribution model has been remarkably resistant to change (Hirsh, Rodewig, Soliman, & Wheeler, 1999) with well-established franchised dealer networks. The JLR dealer network could be advantageous however, as both Jaguar and Land Rover

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are classed in the premium brand market this could further pose positioning and penetration problems in the compact-car market. (4) Marketing Challenges: Again, a lack of strategic and concentrated marketing ultimately led to views that the Tata Nano was the poor peoples car that poor people arent buying (Eyring, 2011). Marketing did not provide Tata with strategic advantage in the domestic market and the Now You Can slogan embodied disconnect between Tatas target consumer market and the features they ultimately wanted in a ULC vehicle. While the Nano afforded car ownership (with issues regarding extending buyer financing), Tata viewed the vehicle as a means of people to climb up the social ladder, providing pride of owning a Tata, low CO2 emissions (101 g/km), and a low-footprint however consumers were actually interested in achieving a good level of comfort with amenities such as airconditioning and performance but for a low price (50% of bookings were for the higher-end Nano LX model) (Palepu, Anand, & Tahilyani, 2011). This fact convoluted with the fact that the vehicle was only US$800 cheaper than a Suzuki Alto with greater track-record, performance, and comfort, ultimately meant buyers did not materialize as the company would have liked (Eyring, 2011). In the US, key features that are commonly looked for in the purchase of a compact-vehicle are: styling, fuel economy, cost, and safety features (where performance is assumed to be at a given acceptable level) (Plache, 2011). Furthermore, unlike India where 50% of the customers who

purchased the Nano where two-wheeled buyers and the remaining 50% were looking for a second car in the US, compact-car sales are driven by many segments including students, price-conscious individuals, city-dwellers, and the eco-friendly segment. Each has distinctly different needs Tata would need to establish which niche to aggressively focus on first, a strategy which has been shown successful by other manufacturers such as Honda instead of taking a wide paintbrush approach. (5) Competitive Positioning Challenges: The Nano was seen as a replacement for two-wheelers in rural India and Tata pursued emerging economies in the Asia-Pacific region with similar emissions

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and safety standards, even though only 3.3% of Indian-made vehicles were exported (Palepu, Anand, & Tahilyani, 2011). Figure 4 outlines the competitive positioning of the Tata Nano in comparison to compact-cars currently available in the US market. While there is much competition in the compactcar segment, it is clear that a competitive position still exists for ULC vehicles a niche that has not been explored as of yet in full-scale in the US. (6) Environmental Challenges: Even though the need to leverage the Tata Nanos

environmentally friendly emissions have not taken the forefront in Indian marketing (this consumer market makes up a very small fraction of their overall target) it is a key factor that Tata can use upon entry into the US market. The Nano averages 62 miles-per-gallon (mpg) and is approximately 72% more fuel efficient than the Nissan Versa at 36 mpg (US$11,700). It is well-positioned with its current vehicle design to be one of the lowest CO2 emitting vehicles upon entry into the US (Figure 5). However, it is widely been cited that major engine design changes would be required in order to increase the performance and responsiveness of their current engine (Eyring, 2011). The Bosch

Automotive Group in Germany initially created the Nanos 624cc engine in order to comply with Euro 4 emissions regulations which required significant innovation (high-pressure gas injection, new materials, laser machining process) (Palepu, Anand, & Tahilyani, 2011). Whether or not Tata can transfer this advantage in low-engine emissions is dependent on continued R&D in order to meet the needs of the US market. (7) Institutional Challenges: While formal and stable regulatory institutions in the US

theoretically would reduce uncertainty and as well as associated transaction costs for Tatas entry on the other hand Tata will also be faced with many issues of compliance to safety and emissions standards. Tatas proposed 2015 launch of the Nano would require redesign not only for the reason of catering to localized customer needs, but also for issues of compliance to the National Highway Traffic Safety Administration automotive regulations, the Society of Automotive Engineers standards, and the

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Environmental Protection Agencies requirements (US Department of Commerce , 2012). In view of all of these challenges, it can be concluded that the height of entry barriers are moderately high and the intensity of competition is also high (Figure 6). In such a case, Tata Motors need to competitively position the Nano and carve out a new and distinct market for its product (Larmore, 2012). Part III Overcoming Challenges, Opportunities, & Positioning After highlighting the many external and institutional challenges, Tata Motors needs to reposition themselves in order to achieve a fit with the US environment. By carefully selecting (a) what advantage to transfer in order to overcome challenges and (b) how to reposition themselves in order to compensate against the liability of foreignness and lack of brand strength they will be able to come to a coherent US entry strategy. (a) Transferring Advantage to Overcome Challenges: One of the key sources of advantage that the company can transfer over is in regards to their operations and manufacturing. While their strength in this area cannot be transferred one-to-one their proposal for building assembly plants in India to meet demand can be looked at when entering the US market. In this proposal for their domestic operations, Tata would create a distributed manufacturing network (Figure 7) with mother plants that provide all components for knock-down kits that can be easily assembled in smaller and strategically placed plants. By adopting such a model in the US, they can create a centralized hub for manufacturing modularized vehicle components which can be transported to spokes for the purposes of assembly. Ultimately, Tata Motors will require the construction of a centralized Greenfield

manufacturing plant in North America which will allow them to transplant their own company culture and low-cost business model. In the creation of the Nano, they leveraged a collaborative

manufacturing environment, best summarized by the following: Every morning a group of us sometimes up to 30 would meet for sessions

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lasting as long as four hours, an entire morning, where we would express concerns and issues, challenge assumptions, appreciate failures, celebrate achievements, and recognize delays. More important, bringing the team

together allows us to take decisions fast. (Palepu, Anand, & Tahilyani, 2011) The advantage of such a hub-and-spoke model for distributed manufacturing also means that manufacturing can occur outside the US and in particular, Mexico while assembly spokes can be located within the US. This allows for efficiency and customization to different geographical markets in the US i.e. being able to change and adapt to factors such as vehicle colour and the popularity of certain models and features. One-in-ten vehicles sold in the US manufactured in Mexico (Casey, 2012). This fact coupled with greater plant capacities and employee productivity would result in an advantageous arrangement in the manufacture of smaller cars: [A] global shift toward smaller cars has put pressure on profit margins, forcing car companies to find lower-cost manufacturing [in Mexico] (Casey, 2012). While transferring their manufacturing advantage allows them to pursue the ULC vehicle market in the US parts specifications also allows them to also control environmental emissions (i.e. engine upgrades) and leverage their green image that received poor-to-moderate reception in the Indian market. However, the transferring of their manufacturing advantage is contingent upon creating supplier relationships in the US as well as creating a responsive supply chain back-end that is needed for their low-cost strategy. With the long-history of established vehicle manufacturing in India establishing supplier relations in the US would take time, but it is not foreseen to present a major challenge. Furthermore, the transferring of their manufacturing advantage also inherently would lead to a transfer of their R&D as well as their human resources strategy. They should continue to perpetuate their history of multi-domestic operations, hiring locally, and transplanting a few top management

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members. In summary, the transfer of their manufacturing advantage brings many items together it allows them to quell the manufacturing challenges in the US market, allows them to start and gain a supplier network, perpetuates their R&D and human resources strategy, and allows them to position themselves as a low-cost environmentally friendly vehicle if they so choose to do. While establishing what advantage to transfer is one part of the picture Tata Motors must also re-position themselves in view of the current US competitive landscape. (b) Re-Positioning in view of Opportunities: Re-positioning the Nano to pursue untapped US markets and niches would be needed in order to overcoming marketing, sales, and distribution challenges Tata Motors would face. Re-positioning the Nano is perhaps the most critical component of their US entry determining ultimate demand and success of their launch. Dependent on how they position the Nano, this would later feed into their marketing and channels of distribution. Several untapped opportunities in the US market exist for ULC vehicles: (1) university student market, (2) city residents, (3) families, (4) eco-friendly market, (5) mass-vehicle sharing market, and (6) the potentiation of creating a mass-customization market. (1) University Student Market: According to US census information, there were 19.7 million student enrolled in colleges and universities in 2011 with the average income of those with a bachelors degree of $58,613 (2008) (US Department of Commerce , 2012). Therefore, in such a market, students would be assumed to have mostly local transportation needs and require a no-frills type of vehicle within their budget. However, negative associations in this market can also present challenges to target it to the mass-market, and in the end, represents only a small portion of the total US vehicle ownership market of 240 million cars (Tencer, 2011). (2) City Residents: The reception of city-residents to a ULC compact-vehicle is another market to consider. However, the trend of car-ownership in major cities tends to be reversing. Many reports

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state that the US is reaching the peak of vehicle ownership (i.e. just as US oil peaked around 1970), with an unprecedented 2% decline in the car population over recent years (Motavalli, 2010). Additionally, in urban centers, more than half of New York City residents live without a car and only 63% of residents of Washington own a car (Motavalli, 2010). While city residents require vehicles for short-distances and transport of bulky items this can also be achieved via mass-vehicle sharing schemes, as described in Point 5. (3) Families: US households and families in 2011 were 132 million in the US with home ownership at 67% (United States Census Bureau, 2012). However, a more important observation is in regards to per-capita and median income which were approximately $27,000 and $52,000, respectively (United States Census Bureau, 2012). While small and new families require a cost-effective means of transport many opt for mini-van ownership to support family growth, safety, comfort, and reliability. (4) Eco-Friendly Market: The eco-friendly market is certainly one that commands attention in areas like California, with its stringent emissions requirements (Center for Climate & Energy Solutions, 2012). The 35.5 mpg fuel economy standard in California has also been adopted by 15 other states on the east and west-coasts. The Tata Nano (Indian version) has CO2 emissions of 101 g/km (Eyring, 2011), well below the emissions set forth by the New Vehicle Efficiency Standard for Light Duty Cars (153 g/km) and CAFE (172 g/km). (5) Mass-Vehicle Sharing Market: While car ownership is on the decline in urban markets, vehicle sharing is growing in popularity (Fehrenbacher, 2012). Car-sharing schemes such as Zip Car are drawing large investments. Recently, Yahoo!s CEO Marissa Mayer and former Google CEO Eric Schmidt have invested in a started up called Getaround which would not only allow for car-sharing, but also allow individuals to share their personal cars with others (Fehrenbacher, 2012). (6) Mass-Customization Market: The mass customization market is something that is largely untapped with vehicle manufacturing. However, it would be envisioned in the same way Dell

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Computers allowed for complete customizability of their PCs transforming the market.

The

proposed mass-customization market would allow consumers to tailor the vehicle to their needs, change everything from interior to exterior features, and essentially create their own vehicle to their own personal tastes. While a moderate degree of customizability exists in the current US market having full customizability shifts power towards the consumer. Furthermore, the proposal of the huband-spoke distributed manufacturing model would result in modularization of manufacturing to support this mass-customization alternative. Other proposed options could include changes to the exterior, vehicle skins, etc. Part IV Recommendations & Risks The evaluation of these opportunities is further based on the following criteria: size of market, growth potential, and ease of positioning/marketing activities (Figure 8). From the point-of-view of market positioning, the Nano needs to leverage its ULC advantage but it is clear that this cannot be its main feature and selling point. By establishing partnerships in vehicle-sharing schemes such as Zip Car and Getaround the company not only meets needs of the city-resident market (which requires a small vehicle to easily get-around, park, good fuel economy), but also leverages its eco-friendly proposition which would be more receptive in such markets. However, in order to penetrate the remainder of the US population an overarching masscustomization option allows for them to boldly enter the US market, offering a unique advantage, and clearly differentiating from competitors. This mass-customization option would increasingly capture the university student population as well the vehicle being seen as a personal individual statement. Targeting corporate clients (fleet vehicles) who wish to be received in an eco-friendly light is also another untapped market to be captured. Ultimately, the positioning strategy would solidify the nuts-and-bolts of their channel distribution strategy. Leveraging either the JLR dealership network or partnering with a large

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dealership network as in the Penske Automotive Group would give them a platform for sales and service. Risks of such a foreseen strategy mainly come down to market receptiveness to a new and relatively unknown brand, as well as the receptiveness of distribution channels. Therefore, while a full-scale rollout with vehicle-sharing schemes is intended to gain brand recognition in the US, in terms of a full-scale rollout to the US population test markets are needed. This is not to say they should reservedly enter the US market in the end, to achieve their overall vision of being a worldclass car manufacture, the US represents a key and critical stepping stone.

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Bibliography Bennett, J. (2012, October 2). Passenger Cars Lift U.S. Sales, Big Gains for Toyota, Honda, Chrysler; Pickup Weakness Weighs on GM, Ford. Retrieved December 4, 2012, from The Wall Street Journal: http://online.wsj.com/article/SB10000872396390444004704578032123745452896.html Casey, N. (2012, November 19). In Mexico, Auto Plants Hit the Gas. Retrieved December 4, 2012, from The Wall Street Journal: http://online.wsj.com/article/SB10000872396390444083304578018462369529592.html Center for Climate & Energy Solutions. (2012, July 5). Vehicle Greenhouse Gas Emissions Standards. Retrieved December 4, 2012, from C2ES: http://www.c2es.org/us-states-regions/policymaps/vehicle-ghg-standards Delucchi, M., Burke, A., Lipman, T., & Miller, M. (2000). Electric and Gasoline Vehicle Lifecycle Cost and Energy-Use Model. California: Institute of Transportation Studies, UC Davis. Eyring, M. (2011, January 11). Learning from Tata's Nano Mistakes. Retrieved December 3, 2012, from Harvard Business Review Blog Network: http://blogs.hbr.org/cs/2011/01/learning_from_tatas_nano_mista.html Fehrenbacher, K. (2012, August 2). Despite growing pains, peer to peer car sharing is hot for investors. Retrieved December 4, 2012, from Gigaom: http://gigaom.com/cleantech/despite-growingpains-peer-to-peer-car-sharing-is-hot-for-investors/ Hirsh, E. R., Rodewig, L. F., Soliman, P., & Wheeler, S. B. (1999, January 1). Changing Channels in the Automotive Industry: The Future of Automotive Marketing & Distribution. Retrieved December 3, 2012, from Booz&Co Strategy+Business: http://www.strategybusiness.com/article/10102?gko=f738b Larmore, C. (2012, October 31). What Factors Affect Market Positioning? Retrieved December 4, 2012, from WiseGeek: http://www.wisegeek.org/what-factors-affect-market-positioning.htm Motavalli, J. (2010, January 9). America's Incredible Shrinking Car Population. Retrieved December 4, 2012, from The Daily Green: http://www.thedailygreen.com/living-green/blogs/carstransportation/car-population-460110 Nair, A. (2012, April 26). Two Years On, Tata Nano Sales yet to hit Top Gear. Retrieved December 3, 2012, from The Indian Express: http://www.indianexpress.com/news/two-years-on-tata-nanosales-yet-to-hit-top-gear/941736 Nair-Ghaswalla, A. (2012, October 19). Tata Nano to drive into US with $10,000 tag. Retrieved December 3, 2012, from Business Line: http://www.thehindubusinessline.com/companies/tata-nano-todrive-into-us-with-10000-tag/article4013660.ece

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Palepu, K., Anand, B., & Tahilyani, R. (2011). Tata Nano - The People's Car. Boston : Harvard Business School Publishing. Plache, L. (2011, May 31). Top Factors Driving 2011 Auto Sales. Retrieved December 3, 2012, from Edmunds Auto Observer: http://www.edmunds.com/autoobserver-archive/2011/05/topfactors-driving-2011-auto-sales.html Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press . Ramanathan, V. M. (2012, October 16). Tata Nano to Ply On US Roads Mostly by 2015: Report. Retrieved December 3, 2012, from International Business Times: http://www.ibtimes.com/tata-nano-plyus-roads-mostly-2015-report-847137 Sorabjee, H., & Kotwal, S. (2008). Mission Impossible. Autocar India, 66-77. Tata Motors. (2008, June 6). Tata Motors: Investor Presentation. Retrieved December 3, 2012, from Tata Motors. Tata Motors. (2012, December 3). 6. Vision & Mission: Commercial Vehicle Business Unit (CVBU). Retrieved December 3, 2012, from Tata Motors Sustainability: http://www.tatamotors.com/sustainability/CSR-11/pdf/vision-and-mission.pdf Tencer, D. (2011, October 24). Number of Cars Worldwide Surpasses 1 Billion; Can the World Handle This Many Wheels? Retrieved December 4, 2012, from The Huffington Post Canada: http://www.huffingtonpost.ca/2011/08/23/car-population_n_934291.html United Auto Workers. (2012, December 3). What percent of new car price is labor cost? Retrieved December 3, 2012, from United Auto Workers: http://www.uaw.org/auto/12_02_08auto1.cfm United States Census Bureau. (2011, June 27). Profile America Facts for Features. Retrieved December 4, 2012, from US Department of Commerce: http://www.census.gov/newsroom/releases/archives/facts_for_features_special_editions/cb11ff15.html United States Census Bureau. (2012, December 4). State & Country Quickfacts. Retrieved December 4, 2012, from US Department of Commerce: http://quickfacts.census.gov/qfd/states/00000.html US Department of Commerce . (2012, December 4). Automotive Regulations and Standards. Retrieved December 4, 2012, from International Trade Administration: http://www.trade.gov/static/doc_auto_links_regulations.asp

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Appendix
Figure 1: Tata Nano vision of Capturing Low-Income Market Segment in India (Ratan Tata) Population Pyramid

Figure 2:

Tata Nano (US Version) Key Facts & Assumptions By 2015 > $8,000 56-66 37 Nissan Versa: USD$11,700 Hyundai Accent: USD$13,200 Fiat 500: USD$15,500 Toyota Prius C: USD$19,000 Smart Car: USD$25,000

US Roll-Out Cost (USD) Estimated Miles-per-Gallon (mpg) Horsepower Competitor Pricing

Figure 3:

Tata Motors Value-Chain, Value-Adding Activities, & Sources of Advantage

Firm Infrastructure
Human Resource Management Technological Development Procurement
Inbound Logistics Outbound Logistics Marketing & Sales Margin

Operations

Service

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Figure 4:

Positioning Compact-Cars in US, Price versus Fuel Efficiency Price (USD) $ 16,187.00 $ 13,916.00 $ 14,929.00 $ 16,702.00 $ 16,918.00 $ 11,793.00 $ 17,191.00 $ 19,272.00 $ 17,938.00 $ 17,026.00 $ 19,455.00 $ 15,612.00 $ 14,407.00 $ 15,222.00 $ 18,216.00 $ 20,179.00 $ 15,030.00 $ 14,749.00 $ 21,338.00 $ 15,624.00 $ 15,076.00 $ 16,086.00 $ 18,566.00 MPG (City) 27 28 25 26 28 27 22 53 25 25 29 28 29 25 25 31 28 29 27 25 26 36 22 MPG (Highway) 33 38 33 36 38 36 28 46 36 36 37 36 37 30 34 37 37 35 35 30 35 37 31

Compact-Car Honda Fit Ford Fiesta Mazda 3 Ford Focus Hyundia Elantra Nissan Versa Scion XB Toyota Prius C Chevrolet Cruze Dodge Dart Fiat 500 Honda Civic Kia Rio Kia Soul Suburu Impreza Honda CRZ Hyundia Accent Mazda 2 Mini Cooper Nissan Cube Chevrolet Sonic Scion IQ Volkswagen Beetle

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Figure 5:

CO2 Emissions of Tata Nano Compared to Current Standards for Gasoline Miles-per-Gallon 56-66 33.8 30.1 CO2 Emissions per km 101 152.8 171.6

Comparison Tata Nano US New Vehicle Fuel Efficiency CAF Standards Figure 6:

Tata Nano Challenges in US Market Entry and Height of Entrance Barriers Height of Entrance Barrier Moderate Moderate Low-to-Moderate High High Low Moderate-to-High

Challenges in US Market Entry Manufacturing Supplier Relationships Distribution & Sales Marketing Competitive Positioning Environmental Institutional Barriers

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Figure 7:

Proposed Distributed Manufacturing Setup & Mother Plants

Mother Plant (Hub)

Modularized KnockDown Kits

Strategically-Placed Assembly Plants (Spoke)

Figure 8:

Ranking of Opportunities by Evaluation Criteria for Tata Nano US Market Entry

Size of Market Growth Potential Ease of Positioning/Marketing Activities High Moderate Low High Moderate-to-High Unknown Rank

Opportunities

University Students City Residents Families Eco-Friendly Market Mass-Vehicle Sharing Mass-Customization

Small Large Moderate-to-Large Moderate Small-to-Moderate Small

Low Low Low Moderate-to-High High Unknown

4 2 5 3 1 6*

*Presents an opportunity for differentiation strategy for the company.

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