1-A: Describe the various advantages that firms like Tata employ to become large industrial conglomerates.
The Tata Group has already established 90 separate firms in seven distinct business sectors. Because of their success, they have obtained vast financial resources and access to capital on favorable terms which has allowed them to expand their operations and become a large industrial conglomerate. Since the Tata Group uses its sister subsidiary companies to help supply its other companies (i.e. using Tata Steel to provide steel for Tata Motors’ Nano manufacturing) as well as having access to the low-cost Indian labor pool, they have been able to maintain a competitive cost structure which is a major advantage (Cabusgil, Knight, &
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Tamo should target markets with a large sector of low-income consumers for the sale of the Nano. The launch of the Nano has allowed for consumers to purchase a vehicle who would not normally have the funds to do so. Tamo should target the emerging markets in countries such as Thailand, Vietnam and Indonesia (Cabusgil, Knight, & Riesenberger, 2012, p. 277). Countries like those previously mentioned have an approximate per-capita income that is less than that of advanced economies but is greater than developing economies. This income level allows for just enough disposable income for a family to purchase a car such as the Tata Nano because of its small price tag. Not only should Tamo target said countries because of their income levels, but they should also target them because of the large amount of motorcycle-driving consumers. Last year alone, seven million new motorcycles were sold in Indonesia (Brainbridge, 2013). According to Brainbridge (2013) this “bike boom” is due to consumers needing an alternative transport system aside from public transportation. The average price for a motorcycle in Indonesia is about 50 million rupees, and the average price of the Nano is about 130 million rupees. By offering a car that fit twice as many bodies for a slightly larger price tag Tamo can give consumers in emerging markets another alternative to the public transportation system besides motorcycles that is more family-oriented