Last week, I was in strategy class of my MBA where we were assigned the task to find out the strategy of different automobile companies. While working on that, I realized that there is huge competition going on to be at that top spot in Automobile Industry. This caused continuous stimulating innovation in automobile engineering like speed, comfort, automation, safety, quality, and performance etc. There was so much going for each automobile company where I felt like it’s next impossible for new entrant to survive in this business.
People is striving so hard to gain competitive advantage on each other where they have actually forget that they are doing this businesses to make money for their stake holders and not to be fastest or bestest(another superlative of my Best) in world and I believe that’s one of the reason economical and financial power is shifting from west to East. Here is the example which will illustrate you why is so:
When the whole World is getting crazy behind to make most luxurious, fastest and costliest CAR, TATA was launching the only cheapest car in the world. Sounds strange, isn’t it..??
But, hold on point here is not about making car, point here is making business and earning profits and driving economy. When TATA decided to make NANO as one of smallest and cheapest family car, the whole automobile industry had laugh and forgot about it but I believe Ratan Tata knew exactly what he was doing and hence he still persisted to manufacture NANO. When this idea was launched in India, many people thought neither we have enough infrastructures nor gas where you can allow another almost 10 million people to drive a car. So, they decided to stop this plan. Yes, of course their vision was absolutely right and exactly same thing happened when they rebelled against this massive company and they got, what they wanted. It was quite obvious when you get car for just mere 1300 Pound, then any middle class person can afford to have a car and that too in market of 1.20 billion populations out of which more than 70% people fall under middle class. TATA had got huge customer base, but he had been asked to STOP at this moment.
Now, it was challenge time for TATA to show some extra ordinary sense and business skills to run this project. After a while, TATA management come up with the strategy where they will have their all five fingers in butter. J
TATA decided to sell limited number of cars as government permits and so for first lot they allowed 100000 cars. This allowed them to make exact given number cars, and in a way it actually helped them to manage their supply chain better than before. TATA received 206,000 bookings for their car where they asked customer to keep deposit of at least Rs. 70,000/- because of such a massive demand then within next 4-6 months they pulled out lucky winners from the draw of 2 lac people. After this, they declared the delivery period of each lucky winner’s car which was after 6-8 months. Now, if you look at this business segment carefully, you will realize that around more than 200 thousand people are putting deposits for this car which made huge amount of cash money in the account of TATA Nano where they get to use the whole money for at least next one year without any interest..huge win..!! Later after 6-8 months, they will only return the money of people who has not got car but just remained as invested participants in their draw, whereas people who were lucky to have car paid its down payment almost a year in advance. This “lottery draw” strategy for massive demand actually helped them to brand this car as “The People’s Car”. So, basically TATA Nano got better control over business, huge brand value, no competitors, small investment, huge unstoppable after sell service business and top of it they made a place in the heart of millions by saying “it was the dream of middle class people to have car which we have successfully fulfilled.” Mind this because “Middle Class” is the spinal cord of our country of 1.20 billion people.
Now, after looking at such a successful and huge profitable business, TATA wants to move this style in Bangladesh, Sri lanka and African countries where TATA will surely going to get huge business not because its most luxurious, hi-tech and fastest car but because it’s cheapest..!! J
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