June

une 2022
Assignment of Operational Management

Prepared By: Firanol Bekele

ID No: 217814
Submitted to: Dr. Mulachew H.
 What was major OM issues addressed in this video?
In India, only 15 out of 1000 are owners of a car. Mostly they use motorcycles for
transportation. Ratan Tata, Chairman of Tata Sons, saw a family riding motorcycle where a
kid is in front, the father is driving and the mother is sitting in the back and holding a child,
and he realizes that it's not safe for them and promises them to provide the world's cheapest
car, the Tata Nano, with 100,000 rupees.

It was the first 100,000 rupees car globally, showcasing India’s design, manufacturing and
technological ability. The immediate response from the media and the market was
tremendous, and the company collected advance deposits from interested customers. Amid
some media reports of engine fires, the initial sales spike ebbed quite rapidly. It dropped
significantly below the normal expectations of the company. In the next four years, the
company made multiple attempts to address the product features and brand imagery to stem
the declining sales. Such initiatives included redefining the target market, the value
proposition, positioning and consumer communications. However, the situation was even
more challenging, and the management pondered on what all possibly went wrong and
decided the way forward for Tata Nano.

Understand the challenges in developing an innovative, cost effective product Study

the Tata Nano project with a focus on design and development process of car
Understand the efforts put in by TATA motors to cut down the costs at every stage of
development and production of Nano.
What were the major challenges faced by the organization?
When Mr. Ratan Tata plans to build 1lack (100,000 Rupees) car many company of
car like Suzuki didn’t believed they make fun of him. Also there are lots of doubt and
challenges with company employee.
The product brief would have given the details of the target consumer and their
expectation based on their current product usage, along with a target price. Since this
was meant to be a low priced product, the development team would have resorted to
value engineering and focused on the product’s core benefits, delivering the basic
product and some elements of the expected product.
The Nano’s marketing problems began with its product positioning. And by
emphasizing its cheapness rather than its basic but appealing qualities, it deterred
slightly better-off consumers who could afford one but aspired to more sophisticated
vehicles.
While building new plan in Bengal the company face different challenges also
conflicts with Local Farmers. Tata Motors defended its strategy for producing the
Nano. The company issued a statement to the Bombay Stock Exchange on saying the
Nano's concept received global interest for its affordable pricing but a change in its
manufacturing location (due to protests by farmers led by West Bengal) and the
perception of a cheap car hurt production and sales.
Tata Group was in passenger cars and commercial vehicles for many decades. It had a
good understanding of the transportation needs of the market. However, they had no
direct experience of their initial target segment of two-wheeler customers. The basic
assumption was that Tata Nano solved their functional need of safe transportation and
aspiration of becoming a car owner, which was possibly correct. However, in
practice, Nano was functionally a transportation solution, but the car for this customer
segment had to meet their inspirational requirement. The idea of a cheap car doused
the inspirational element of the Nano appeal completely. What is important to note
that, for this customer, even `100,000 was still a very big price tag, which they could
not afford to meet only their safe transportation need.
Some of NANO car are catch fire in public this made damage on public relationship.
 How did they handle the challenges?
While designing in order to reduce the actual cost of cars, they reduced the supply cost of
individual components by using a minimal approach, and also rearranging component
positions.
They did investigation and analysis of the situation they also goes some forensic experts
from abroad / from UK/).In cases they had found that a foreign piece of cloth was left
onto the exhaust system of the car. Also the customers had tapped the electrical system
for some accessories and that had also led to some short circuit in the electrical system.
So Team NANO decide to make the car more robust and add additional protection like
additional protective cover to unsure that such a case doesn’t lead to car catching fire.

What were lessons from the video?

Finally, I have got a lot of experience from these cases. Some of them are:

In these cases, the company was trying to make a car for the average family man who was a two-
wheeler buyer. They were trying to solve their functional needs of a safer and more comfortable
ride with a desire product category, which was beyond the customer’s financial capability. Thus,
the company wanted to offer something desire that was affordable at the same time. Therefore,
the affordable, desire product was an inherent contradiction in Tata Nano’s core value
proposition to the target market. This contradiction possibly led to many compromises made in
every stage of product development and marketing.

Nano was a basic, economical car, which offered much better safety and comfort than a two-
wheeler, at a price point, which the existing two-wheeler owners could arrange to possess their
first car. They were using operational management in order to improve their production process.

The company, to its credit, accepted the challenge and worked relentlessly to come up with a
viable product design, manufacturing it to meet the necessary specifications and continuously
evolving its marketing programmers to win the acceptance of the market.