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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_Motors

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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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