Business Case Studies, Microeconomics Case Study, Tata’s Nano, Large Consumer Surplus

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Case Title:

Tata’s Nano: A Small Car with Large Consumer Surplus?

Publication Month and Year :  June 2009

Authors:  Akshaya Kumar Jena

Industry: Car

Region: India

Case Code: ME0012

Teaching Note:  Available

Structured Assignment:  Available


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Abstract:
The case is a compelling study of the concept of consumer surplus with reference to the launching of Nano, the cheapest car in the world. With INR 1 lakh or thereabouts, Tata's Nano is all set to conquest the low-end segment of the car clientele. Nano is the cheapest car, only in terms of cost and price but not in terms of quality and consumer satisfaction. This promises loads of consumer surplus that will goad the hitherto car-deprived denizens to drive one. Whether this low-end smart car will prove as a tribute to Tata's enlightened business acumen or remain a pointer to adverse environmental consequences - only the future will tell. But that entails an intelligent evaluation of the cost and benefit to the society with the help of consumer surplus, the concept that this case so lucidly articulates.

Pedagogical Objectives:

  • To understand the meaning of utility and its significance in business
  • To analyse the concept of consumer surplus
  • To explore the applications of consumer surplus

Keywords : Utility, Marginal Utility and Total Utility, Money as Measuring Rod of Utility, Cardinal Measurement of Utility, Consumer’s Equilibrium, Maximization of Satisfaction, Consumer Surplus, Relationship between Price, Demand Curve and Consumer Surplus, Tata’s Nano, Intelligent Engineering, Innovations, ‘Nanomics’, World’s Cheapest Car, Mass Personal Transport and Environmental Consequences, Private Cost and Social Cost, Consumer Behavior, Economics for Managers, Microeconomics, Business Economics, Behavioral Economics, Environmental Economics

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