Article
http://news.bbc.co.uk/2/hi/business/7957671.stm
Summary
The Indian car company Tata is going to launch the world's cheapest car next month. The car is called the Tata Nano, is about 100,000 rupees ($1,979; £1,366). With such a low price, Tata hopes it can encourage the Indian people to buy the car. About the car, it is 10 foot long and has five seats. Because of the price is so cheap, the function of the car is not going to be as good as the others. "The basic model has no airbags, air conditioning, radio, or power steering. However, more luxurious versions will be available." says in the article.
Connection
The connection is the increase in the net income. In the last section of chapter 11, it mentions about how to increse the net income. Use Tata as an example, it uses the low price and high sells strategy to increase its net income. It also connects to the JA Titan game that we had played earlier.
Reflection
Some people think it may increase the company's revenur rapidly, because a lot of people are going to buy the car. In fact it is not, "Even if Tata can sell 250,000 models a year, it will add only 3% to the firm's revenues." says Vaishali Jajoo. Although it is not very successful, but personaly I think this strategy is going work well in the future. As we know, the US's car companies are all facing difficulty during the recession. Those companies could try the low price strategy to save themselve.
3 comments:
Hi, Hector. I've heard of this news too, but in a different aspect. Due to the economy recession, many people cannot afford or afraid to buy cars. Tata produced a limited amount of the cheap cars in order to increase sales, but since its about 2000 US, the company would not receive a high profit, instead, this can lead to a downfall of the company. As you've mentioned in your reflection, even tata can sell 250,000 models of those cars, they can only increase its revenue by 3%. Thus, if they sell less, the company will be in an alert status.
I am Leon Hi, Hector. i think this article is very inpressive because i had never seen such thing like this. Wow! I mean a brand new car only cost $2000? In this article, i think TAta is not only focous on earning profits. Since the Economic stars, the crude oil market alos has its own downfall as well. This had never happened before. Today the news says Crude Oil Prices Drop Again. United States crude fell by $3.21, or around 6 per cent, to $49.03 a barrel yesterday, while Brent crude shed $3.00 to $51.06. Well not only the America also the global curde oil markect too is dropping rapidly. If tata can sell 250,000 models of those cars, the world's oil market will be impressed. I mean 250,000 cars and the oil they brun in one year. Think about this.
Hi, although it is a good idea to sell low price products at a high rate, but in the long run it may become a disadvantage. Especially with cars, if the people who buy this car uses it, then an accident will ensue and that almost guarantees fatality. Since there are no safety equipment or system for the car, they will surely die if they were in an accident. Also if people get in accidents so frequently then the people will be afraid to buy this car and that will hurt the economy due to low spending and lost of work force. Lets say that people don't get in accidents and the cars work well, then their sales of other cars will go down because everyone will buy the cheap car, lowering sales and revenue.
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