Tata Nano : The Car of The People

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2. Measure : In the second stage, risk managers assess and quantify the potential impact of each scenario on the business. Discounted cash flow (DCF) analysis are used, for example, to estimate the financial impact of specific events as an input to help organizations understand their tolerance levels. Other tools, such as organizational network analysis, can help determine the estimated operational impact of specific risks. Here, risk managers create a model of the company as a network of various inter-dependent business units. One of the most important aspects of measurement is the translation of projected events into readily identifiable and comprehensible metrics, such as dollar figures, an impact index, or an ability-to-influence index. Using these metrics, risk managers can assess whether the risk level surpasses the organization’s risk appetite or tolerance.

3.Manage : Once risks have been identified and measured, an effective system for active political risk management can be put in place. The first element in managing political risks is to map potential risk management methods against the priority risks. Once the organization establishes a course of action, the risk management team can assign responsibilities and establish a schedule for consultation, reporting and review, as with other risk controls. Companies actually have multiple options for addressing identified risks.

Effective management of political risk can enable companies to tap new revenue streams through access to markets and joint ventures that, without careful management, might seem too risky. Clear identification, measurement and management of risk can facilitate organizational growth strategies that target emerging markets and “frontier” markets, while improving the performance of existing businesses.

Ques 3. In your opinion , what are the major causes of TATA NANO’s setback? Did Tata Motors behave in a way that promoted the political health of West Bengal?

Ans 3: Causes of failure of TATA NANO:

- The launch price came in two variants ranging between 1.2 lakhs to 1.5 lakhs. It was 20 – 50% higher then the proposed rates which was a major setback to customers. This was due to rising prices and the promise of Rs.1 lakh car was not kept.

- Within a few months of initial sales, technical problems were found in the product and there were a few reports of Nano catching fire, which further weakened the trust for the brand ‘Nano’ as a whole. Tata also faced political problems from TMC, Mamta Banerjee and had to shift the plant location from Singur district in West Bengal to Sanand in Gujarat which led to production delays. And now due to inflation, Nano’s prices have further increased due to increase in the prices of raw material such as steel, rubber and others. Pre-booking of the cars were badly affected and many were cancelled.

- There were many unexpected protests. The complete transfer from West Bengal to Gujarat was a very difficult task. As said by Mr. Girish Wagh, Vice President of the Tata Nano project that they had to shift the entire plant in 14 months tenure.

- Initially, Tata aimed at the people owning two-wheelers but later it was observed that two – wheeler customers were not willing to purchase a four-wheeler vehicle, so now the target customers were changed to the people already owning a four-wheeler to sell Tata Nano at cheaper rates to them.

A lot of things happened after Tata Nano exited West Bengal, especially in the political environment underwent a complete change. Mamta Banerjee used this event as an opportunity to show case her leadership and became the Chief Minister of the state.

Many people lost their jobs and became unemployed because of the shifting of the plant. The enthusiasm to purchase Tata Nano car was over amongst the people.

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