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NANO in US
INTRODUCTION
 Tata’s International Presence
    • First Indian engineering company to be listed on New York Stock
    Exchange
    • Acquired international companies Daewoo (South Korea), Carrocera
    (Spain), Jaguar Land Rover (Britain)
    • Commercial and passenger vehicle cars marketed and exported in
    Europe, Africa, Middle East, South East Asia, South Asia and South America
                                                         High Fuel

 Vision : Best in the manner in which                   Efficiency


we operate, best in the products we deliver, and
best in our value system and ethics

                                            Roomy
                                           Passenger
                                                        PEOPLE’S      Minimum
                                                                       Weight
                                          Compartment     CAR




                                                          Low CO2
                                                          Emissions
SWOT ANALYSIS
            STRENGTHS                           WEAKNESSES

• Cheap car                          • Does not comply with US safety
• Compact, cute and adorable         standards
• Use for a year and change          • Labeled as “cute death trap” in
attitude                             US
• Other smart car brands expensive   • Unfit for travel on highways
like Mercedes                        • Labeled as a kids use car
• Easy parking


          OPPORTUNITIES                        THREATS


• Fuel Efficient                     • Low profit margins
• Environment friendly               • Safety low as compared to large
• Large single population            heavy cars
• Large Generation Y
• Budget conscious buyers
• Sexy factor
MAJOR EVENT                                        EFFECT OF THE    PROBABILITY OF
                                                      EVENT ON OUR     THE EVENT
                                                      BUSINESS(+3      OCCURING (0 TO
                                                      TO -3)           100)
Termination of Cash for Clunkers program – POL1                   -1                80

Obama’s second term /Democrats – POL2                             1                 60




USA emission cut target by 2020 for Copenhagen meet
leads to new emission standards for new cars – ECL1               1                 60

Global protest on resource wastage – ECL2                         2                 50

Hybrid cars becoming technologically superior &
cheaper – TEC1                                                    -2                50

Increased penetration of Information Technology for
consumers – TEC2                                                  -1                60
Change in cultural norms – SOC1                                   2                 70

Change in consumer attitudes – SOC2                               2                 60
Revival of Economy – ECO1                                         -1                70

Depreciation of USD with respect to INR – ECO2                    -2                70
SCENARIO MAPPING
OASIS – Most Optimistic Scenario   •Based on consumer awareness and
                                   regulatory requirements
                                   •Environmental Friendliness
                                   •Safety
                                   •Cost efficiency




NOSTRADAMUS – Most Likely          •Cash for Clunkers
Scenario                           •Preference for US products
                                   •Depreciation of USD with respect to
                                   INR
                                   •Nullification of the cost advantage
                                   enjoyed by Indian and Chinese car
                                   manufacturers


CURSE OF BLOSSOM – Most            •Increase in purchasing power due to
Pessimistic Scenario               end of recession
                                   •Increase penetration level of IT
                                   •Breakthrough in Hybrid technology
COMPETITOR ANALYSIS
              OPTIMISTIC        MOST LIKELY         PESSIMISTIC

KEY SUCCESS     Cost of          Customer’s         Design
FACTORS         ownership        brand              Convenience
                Environmental    perception         Variance
                friendliness     Customer value     Fuel efficiency
                Safety           for money
                                 Fuel efficiency
                                 and
                                 environmental
                                 friendliness
MAIN            Chinese cars     US Brand cars      US Cars
COMPETITORS     US cars          imported from      Japanese Cars
                Japanese Cars    India & China      Hybrid/ Electric
                                 Chinese & Indian   Cars
                                 Cars
                                 Japanese cars
OPTIMISTIC
                        SCENARIO - OASIS
  Very
Important

                             US cars                        Chinese cars          NANO
                                         Japanese cars
 Cost of
Ownership

                                                                                  US cars
Environment
 Friendliness
                       Chinese cars           NANO           Japanese cars



   Safety                 Chinese cars   NANO            Japanese cars       US cars




   Less
 Important

                Weak                                                     Strong
MOST LIKELY SCENARIO -
                     NOSTRADAMUS
     Very
   Important

                             Chinese cars                            Japanese cars       US cars
                                            NANO
    Brand
  Perception
                                                                US cars                  NANO
Value For Money
                                                 Chinese cars         Japanese cars


  Fuel efficiency          US cars          Japanese cars        Chinese cars         NANO




     Less
   Important

                    Weak                                                        Strong
PESSIMISTC SCENARIO –
                           CURSE OF BLOSSOM
     Very
   Important
                           Chinese cars       NANO            US cars                              Japanese cars
     R&D


                                                                                                   US cars
  Environment
   Friendliness
                                                  NANO Chinese cars             Japanese cars



                     NANO                                             US cars              Japanese cars
Purchasing factor                         Chinese cars




      Less
    Important

                    Weak                                                                  Strong
1
                        OPTIMISTIC                            MOST LIKELY                          PESSIMISTIC
Point of   Lowest price, fuel efficient              Fuel efficient, convenience           Mass customization and
difference                                                                                 convenience
Brand/        •Inexpensive                           •Small                                •Convenient
Image
              •Safe                                  •Efficient                            •Hip
Propositi
on            •Fuel efficient car for short distance •Less pollution car - caters to the   •Affordable
              travel primarily within the city       needs of all the low income
                                                     customers
              •Budget car with a superior
              performance



Product       -Basic Model: Comes in 5 different     -Nano comes with Basic and            -Meet existing US automobile
              colours.                               Micro-Hybrid versions.                emission standard and safety
                                                                                           standard
                                                                                           - More colour variance
              - Tata should also speed up its R&D - 5 different colors.
              on hybrid technology to launch
              hybrid version along with gas-                                           - Allow customers to customize
                                                  - Add some accessories to appeal
              powered version                                                          the car stickers or to add
                                                  to university students
                                                                                       accessories to appeal to the
              - Leverage brand image of Jaguaar
                                                                                       young and modern customer
                                                     - Leverage brand image of Jaguaar segments
                                                                                       - Leverage brand image of Jaguaar
OPTIMISTIC                     MOST LIKELY                        PESSIMISTIC
Price           •Recommended price is            •Target customers – Price         •Target Customers - Less price
                USD2600                          Sensitive. Hybrid version to be   sensitive. Price is USD3000
                                                 sold at USD3500 with the
                •Target profit margin is 8%                                        • The profit margin is 15%
                                                 promise of mileage of 65 mpg
                (compared to 2-3% for current                                      (compared to 2-3% for current
                                                 based on EPA fuel efficiency
                model)                                                             model). The hybrid version will
                                                 test.
                                                                                   be sold at USD3700.
                                                 •Recommended price is
                                                                                   •Price can be increased to raise
                                                 USD2800
                                                                                   the contribution margin.
                                                 •Target profit margin is 10%      Higher margins would make
                                                 (compared to 2-3% for current     mass-customization viable.
                                                 model)




Place/      - Use dealers for distribution, competitive distributor margin is given
Distributio - Selective strategy in the short term, start with smaller cities
n           - Increase the Intensity gradually to reach throughout the country
            - Set up show rooms and service centers at major cities
            - Customers can also book their cars through internet website and select the required features.
OASIS
                               Oasis (in USD '000s)
                            2010               2011        2012
No of Units Sold              80                120         180
Profit Margin Per unit       0.4               0.45          0.4
Revenue                   208000            312000       468000
COGS                      176000            264000       396000
Gross Profit               32000             54000        72000
Marketing Expenses
TV, Media                   5200               7800       11700
Internet                    6240               9360       14040
PR                          5200               7800       11700
Road Shows Etc.             4160               6240        9360
TOTAL Marketing Exp        20800             31200        46800
Other Expenses              8320             12480        18720
Net Profit                  2880             10320         6480

Cummulative Profit                           13200    $19,680.00
Break Even                    73                 97         164
NOSTRADAMUS
                                 Nostradamus (in USD '000s)
                                2010                2011           2012
No of Units Sold                  46                   51            60
Profit Margin Per unit           0.6                 0.55           0.55
Revenue                       138000              153000         180000
COGS                          101200              112200         132000
Gross Profit                   27600               28050          33000
Marketing Expenses
TV, Media                       3450                3825           4500
Internet                        4140                4590           5400
PR                              3450                3825           4500
Road Shows Etc.                 2760                3060           3600
TOTAL Marketing Exp            13800               15300          18000
Other Expenses                  5520                6120           7200
Net Profit                      8280                6630           7800

Cummulative Profit                                 14910      $22,710.00
Break Even                        32                   39            46
CURSE OF BLOSSOM
                           Curse of Blossom (in USD '000s)
                            2010                2011              2012
No of Units Sold              20                   22               19
Profit Margin Per unit       0.8                 0.75               0.7
Revenue                    60000               66000             57000
COGS                       44000               48400             41800
Gross Profit               16000               16500             13300
Marketing Expenses
TV, Media                   1500                1650              1425
Internet                    1800                1980              1710
PR                          1500                1650              1425
Road Shows Etc.             1200                1320              1140
TOTAL Marketing Exp         6000                6600              5700
Other Expenses              2400                2640              2280
Net Profit                  7600                7260              5320

Cummulative Profit                             14860         $20,180.00
Break Even                    11                   12               11
OASIS




         CONSUMER BELIEFS


        Low Price   52%

        Environment 15%
        Friendly

        Safe        33%
5
                              NOSTARDAMUS
                                                     50%
                                                                       Market share
3                             7                                        1.5%of small
                                          30                     70
                                                                        Car market
                                          %                      %


1                             1                                         Units sold
        EVA ( in $ ’0,000 )   0            1                     100
                                               Relative market           35000
                                           %                     %        Units
                    5                               share



    3                             7




    1                                 1
         Payback period(in            0
              years)

                    NOSTRADAMUS – Most likely Scenario
5         CURSE OF BLOSSOM
                                           50%

3                       7       30                     70    Market share
                                %                      %     2.5%of small
                                                              Car market

1                       1        1                     100
                        0        %                     %      Units sold
    Brand Development
                                     Relative market           59000
    Index
                                          share                 Units
              5



3                       7




1                           1
       Percent Good         0
           Value

                NOSTRADAMUS – Most likely Scenario
THANK YOU !!

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Nano in America

  • 2. INTRODUCTION  Tata’s International Presence • First Indian engineering company to be listed on New York Stock Exchange • Acquired international companies Daewoo (South Korea), Carrocera (Spain), Jaguar Land Rover (Britain) • Commercial and passenger vehicle cars marketed and exported in Europe, Africa, Middle East, South East Asia, South Asia and South America High Fuel  Vision : Best in the manner in which Efficiency we operate, best in the products we deliver, and best in our value system and ethics Roomy Passenger PEOPLE’S Minimum Weight Compartment CAR Low CO2 Emissions
  • 3. SWOT ANALYSIS STRENGTHS WEAKNESSES • Cheap car • Does not comply with US safety • Compact, cute and adorable standards • Use for a year and change • Labeled as “cute death trap” in attitude US • Other smart car brands expensive • Unfit for travel on highways like Mercedes • Labeled as a kids use car • Easy parking OPPORTUNITIES THREATS • Fuel Efficient • Low profit margins • Environment friendly • Safety low as compared to large • Large single population heavy cars • Large Generation Y • Budget conscious buyers • Sexy factor
  • 4. MAJOR EVENT EFFECT OF THE PROBABILITY OF EVENT ON OUR THE EVENT BUSINESS(+3 OCCURING (0 TO TO -3) 100) Termination of Cash for Clunkers program – POL1 -1 80 Obama’s second term /Democrats – POL2 1 60 USA emission cut target by 2020 for Copenhagen meet leads to new emission standards for new cars – ECL1 1 60 Global protest on resource wastage – ECL2 2 50 Hybrid cars becoming technologically superior & cheaper – TEC1 -2 50 Increased penetration of Information Technology for consumers – TEC2 -1 60 Change in cultural norms – SOC1 2 70 Change in consumer attitudes – SOC2 2 60 Revival of Economy – ECO1 -1 70 Depreciation of USD with respect to INR – ECO2 -2 70
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  • 6. SCENARIO MAPPING OASIS – Most Optimistic Scenario •Based on consumer awareness and regulatory requirements •Environmental Friendliness •Safety •Cost efficiency NOSTRADAMUS – Most Likely •Cash for Clunkers Scenario •Preference for US products •Depreciation of USD with respect to INR •Nullification of the cost advantage enjoyed by Indian and Chinese car manufacturers CURSE OF BLOSSOM – Most •Increase in purchasing power due to Pessimistic Scenario end of recession •Increase penetration level of IT •Breakthrough in Hybrid technology
  • 7. COMPETITOR ANALYSIS OPTIMISTIC MOST LIKELY PESSIMISTIC KEY SUCCESS Cost of Customer’s Design FACTORS ownership brand Convenience Environmental perception Variance friendliness Customer value Fuel efficiency Safety for money Fuel efficiency and environmental friendliness MAIN Chinese cars US Brand cars US Cars COMPETITORS US cars imported from Japanese Cars Japanese Cars India & China Hybrid/ Electric Chinese & Indian Cars Cars Japanese cars
  • 8. OPTIMISTIC SCENARIO - OASIS Very Important US cars Chinese cars NANO Japanese cars Cost of Ownership US cars Environment Friendliness Chinese cars NANO Japanese cars Safety Chinese cars NANO Japanese cars US cars Less Important Weak Strong
  • 9. MOST LIKELY SCENARIO - NOSTRADAMUS Very Important Chinese cars Japanese cars US cars NANO Brand Perception US cars NANO Value For Money Chinese cars Japanese cars Fuel efficiency US cars Japanese cars Chinese cars NANO Less Important Weak Strong
  • 10. PESSIMISTC SCENARIO – CURSE OF BLOSSOM Very Important Chinese cars NANO US cars Japanese cars R&D US cars Environment Friendliness NANO Chinese cars Japanese cars NANO US cars Japanese cars Purchasing factor Chinese cars Less Important Weak Strong
  • 11. 1 OPTIMISTIC MOST LIKELY PESSIMISTIC Point of Lowest price, fuel efficient Fuel efficient, convenience Mass customization and difference convenience Brand/ •Inexpensive •Small •Convenient Image •Safe •Efficient •Hip Propositi on •Fuel efficient car for short distance •Less pollution car - caters to the •Affordable travel primarily within the city needs of all the low income customers •Budget car with a superior performance Product -Basic Model: Comes in 5 different -Nano comes with Basic and -Meet existing US automobile colours. Micro-Hybrid versions. emission standard and safety standard - More colour variance - Tata should also speed up its R&D - 5 different colors. on hybrid technology to launch hybrid version along with gas- - Allow customers to customize - Add some accessories to appeal powered version the car stickers or to add to university students accessories to appeal to the - Leverage brand image of Jaguaar young and modern customer - Leverage brand image of Jaguaar segments - Leverage brand image of Jaguaar
  • 12. OPTIMISTIC MOST LIKELY PESSIMISTIC Price •Recommended price is •Target customers – Price •Target Customers - Less price USD2600 Sensitive. Hybrid version to be sensitive. Price is USD3000 sold at USD3500 with the •Target profit margin is 8% • The profit margin is 15% promise of mileage of 65 mpg (compared to 2-3% for current (compared to 2-3% for current based on EPA fuel efficiency model) model). The hybrid version will test. be sold at USD3700. •Recommended price is •Price can be increased to raise USD2800 the contribution margin. •Target profit margin is 10% Higher margins would make (compared to 2-3% for current mass-customization viable. model) Place/ - Use dealers for distribution, competitive distributor margin is given Distributio - Selective strategy in the short term, start with smaller cities n - Increase the Intensity gradually to reach throughout the country - Set up show rooms and service centers at major cities - Customers can also book their cars through internet website and select the required features.
  • 13. OASIS Oasis (in USD '000s) 2010 2011 2012 No of Units Sold 80 120 180 Profit Margin Per unit 0.4 0.45 0.4 Revenue 208000 312000 468000 COGS 176000 264000 396000 Gross Profit 32000 54000 72000 Marketing Expenses TV, Media 5200 7800 11700 Internet 6240 9360 14040 PR 5200 7800 11700 Road Shows Etc. 4160 6240 9360 TOTAL Marketing Exp 20800 31200 46800 Other Expenses 8320 12480 18720 Net Profit 2880 10320 6480 Cummulative Profit 13200 $19,680.00 Break Even 73 97 164
  • 14. NOSTRADAMUS Nostradamus (in USD '000s) 2010 2011 2012 No of Units Sold 46 51 60 Profit Margin Per unit 0.6 0.55 0.55 Revenue 138000 153000 180000 COGS 101200 112200 132000 Gross Profit 27600 28050 33000 Marketing Expenses TV, Media 3450 3825 4500 Internet 4140 4590 5400 PR 3450 3825 4500 Road Shows Etc. 2760 3060 3600 TOTAL Marketing Exp 13800 15300 18000 Other Expenses 5520 6120 7200 Net Profit 8280 6630 7800 Cummulative Profit 14910 $22,710.00 Break Even 32 39 46
  • 15. CURSE OF BLOSSOM Curse of Blossom (in USD '000s) 2010 2011 2012 No of Units Sold 20 22 19 Profit Margin Per unit 0.8 0.75 0.7 Revenue 60000 66000 57000 COGS 44000 48400 41800 Gross Profit 16000 16500 13300 Marketing Expenses TV, Media 1500 1650 1425 Internet 1800 1980 1710 PR 1500 1650 1425 Road Shows Etc. 1200 1320 1140 TOTAL Marketing Exp 6000 6600 5700 Other Expenses 2400 2640 2280 Net Profit 7600 7260 5320 Cummulative Profit 14860 $20,180.00 Break Even 11 12 11
  • 16. OASIS CONSUMER BELIEFS Low Price 52% Environment 15% Friendly Safe 33%
  • 17. 5 NOSTARDAMUS 50% Market share 3 7 1.5%of small 30 70 Car market % % 1 1 Units sold EVA ( in $ ’0,000 ) 0 1 100 Relative market 35000 % % Units 5 share 3 7 1 1 Payback period(in 0 years) NOSTRADAMUS – Most likely Scenario
  • 18. 5 CURSE OF BLOSSOM 50% 3 7 30 70 Market share % % 2.5%of small Car market 1 1 1 100 0 % % Units sold Brand Development Relative market 59000 Index share Units 5 3 7 1 1 Percent Good 0 Value NOSTRADAMUS – Most likely Scenario