Tata Nano - Maximiliano Olivares mo343, 2423144 AEM 2200...

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Maximiliano Olivares mo343, 2423144 AEM 2200 Tata Nano – The People’s Car 08/29/11 Tata Motors, the creator of the world’s cheapest car the “Tata Nano”, faces problems that involve the expansion in production of the Tata Nano and the debt created by increased production. In order to continue its dominance in the Ultra Low Cost (ULC) segment, Tata Motors has to decide whether it can expand into another location in order to increase production, but risk falling into more debt, or it can remain exclusively in India and risk being trampled by the increasing competition. Tata Motors has several alternatives it can take in order to continue its run in the ULC segment and the automobile industry. The first alternative Tata Motors has is to not expand its capacity of cars and remain in the market hoping its current annual production will allow them to continue to dominate the section. The main advantage of not expanding the capacity of cars is that Tata Motors will not have to spend money in building a new firm to produce more Tata Nanos or invest in more workers for the increasing production of more cars, This allows Tata Motors to expand in other sections, such as the luxury car section with its Jaguar Land Rover acquisition, and invest more time into further developing the Tata Nano. Another great advantage Tata Motors will have is that it will be able to manage its way out of debt in order to continue growing as a company and compete against its rivals. While reducing its overall debt, it will not risk filing for bankruptcy in case its Tata Nano project had failed and it can remain as a solid competitor against other companies. However, by not expanding its capacity of cars, Tata Motors is risking its head start in the ULC section that is currently emerging. By not capitalizing on its competitor’s slow starts, Tata Motors will not be able to dominate the ULC market, a market that it could have dominated if it would’ve invested properly. Another disadvantage is that Tata Motors might start losing its
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This note was uploaded on 10/21/2011 for the course AEM 2200 taught by Professor Perez,p.d. during the Spring '07 term at Cornell University (Engineering School).

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Tata Nano - Maximiliano Olivares mo343, 2423144 AEM 2200...

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