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7/31/2019 Porters Five Force Model Tata Nano
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Presented ByKundan Kumar Jha
AMF-16Kamal Kumar Mishra
AMF-15
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Michael Porter developed Five Forces model toanalyze the economic and market forces that willultimately influence an industrys profit potential.
Those Five Forces areThreat of New entrantsBargaining power of Suppliers
Bargaining Power of BuyersThreat of Substitute products or servicesDegree of Rivalry among existing competitors
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The company that we have taken intoaccount to analysis the Porters FiveForces is the Tata Motors.The Specific product that we will betaking into analysis is the NANO CAR.This segment has a great growth
potential in developing countries ,especially in a country like India.
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The Tata Nano is a rear-engine four-passenger city car built by Tata Motors , aimedprimarily at the Indian market .The sales of the car will begin in July 2009, with astarting price of Rs 115,000 ( rupees ), which is
approximately equal US$ 2,421 as of June 2009.This is cheaper than the Maruti 800 , its maincompetitor and next cheapest Indian car priced at184,641 Rupees.
Tata had sought to produce the least expensiveproduction car in the world aiming for a startingprice of Rs. 100,000
http://en.wikipedia.org/wiki/Tata_Motorshttp://en.wikipedia.org/wiki/Transport_in_Indiahttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/Maruti_800http://en.wikipedia.org/wiki/Production_carhttp://en.wikipedia.org/wiki/Indian_Rupeehttp://en.wikipedia.org/wiki/Indian_Rupeehttp://en.wikipedia.org/wiki/Production_carhttp://en.wikipedia.org/wiki/Maruti_800http://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/Transport_in_Indiahttp://en.wikipedia.org/wiki/Tata_Motors7/31/2019 Porters Five Force Model Tata Nano
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Threat of new entrants isinfluenced by
OverallRating:
LOWFactors Tata NANOAdvantages Threat of newentrantsEntry Deterring Price Yes, The Price is Rs
130,000.Low
Retaliation by TATA in
case of competition
Yes, because of large
resources.
Low
High Entry Costs Yes TATA spent Rs17oo* crores as initialinvestment + 4 years onresearch
Medium because of reverse engineeringprocess andavailability of resources.
Experience HIGH because of itsparentexperience(TATAMotor)
Low
Other Cost advantages Yes** Low
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By the cost of the entry we mean the
initial capital required to set up a newfirm is very high, it makes the chancesof the chances of new entrants are veryless. The TATA motors have greatknowledge/ experience in theautomobile industry and has renowned
technological advantage because of therecent acquisition and mergers.
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Bargaining Power of Buyers is influenced by
allRatin
g:LOW
Factors Tata NANOAdvantages
Buyer Power
Differentiation Price , Durability ,Brand equity
Low
Concentration Large number of consumers
Low
Profitability Easy Availability of loans
Low
Quality Car has passed thefull frontal crash andside impact crashPassed Govt. Test of emisson, noise andvibration
Low
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All this can be clearly seen in the case
of NANO car the price tag at which ithas been offered or the quality of theNANO car no compromises has beendone at any front.The brand image of the TATA and thesegment in which the NANO has beenthe most attractive thing in the entirepackage.
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Suppliers is influenced
byFactors Tata NANOAdvantages Supplier Power
Number and Size of Suppliers
Medium High
Switching Costs High Low
Unique Service /
Product
No High
Diversification of supplier products
No Medium
OverallRating:
LOW
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Suppliers products have high switchingcosts. In many case even whensubstitute are available its not that easyto opt for substitute as the next product
in the assembly line depends upon it.If the change in the any part is broughtabout the long list of depended partsalso have to be changed , which inmost cases is not feasible to do.
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Threat of Substituteproduct is influenced by
Factors Tata NANOAdvantages Threat of substitute
Availability Same category -NO low
Other Category
substitutes
Yes, but, minimal
extent e,g. High endbikes and other car models like Reva,
Alto
Medium
Time Lag inavailability of samecategory product
High Low
Quality of substitute Quality influences thecustomer.
Low in short term
OverallRating
Low
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Tata Nano Std BSIII cost Rs.1,54,541Mileage 25.4Only close substitute of Nano car isMaruti 800 Std BSIII Rs. 2,20,107 wherenano is Rs.1,54,451 mileage 16.1
V/S
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ycompetitors is influenced
byFactors Tata NANO
AdvantagesRivalry amongexistingcompetitors
Brand Image Brand equityinfluences thecustomer
Low among samecategory
No. of Competitors Negligible in shortterm
low
Size of payoff Depends on Volume Low
Switching costs Medium ascustomers canswitch to other products
Medium
Origin of competitors Diverse High
OverallRating
Mediu
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