Mahindra & Mahindra was considering acquiring Jiangling Tractor Company in China to enter the Chinese market. A feasibility study was conducted that included a SWOT analysis of JTC. The analysis found strengths like JTC's focus on quality and skilled workforce, but also weaknesses such as high overhead costs. Acquiring JTC aligned with M&M's objectives to expand globally. A joint venture between M&M and JTC was recommended, which would provide M&M entry into China through JTC's existing brand and facilities. Recommendations included improving processes, training employees, and focusing on the Chinese and export markets. M&M ultimately signed an agreement to acquire Jiangling Tractor Company.

1. Guide: Dr Abhijit Gangopadhyay
CASE STUDY:
Mahindra & Mahindra Ltd. – Farm Equipment Sector:
Acquisition of Jiangling Tractor Company
by
Bihag Shah N. KrishnaKumar
Gowri Sundarmurthy Nivedit S. Mathur
Date:4th June 2010

2. Outline of the presentation:-
1. Introduction of Case
2. M&M’s Vision and Mission
3. OD & Business Strategies
4. JTC
5. Feasibility Study of JV – SWOT Analysis
6. Recommendations
7. JV of M&M and JTC

3. Mahindra & Mahindra : A to Z
• Established on 2nd Oct 1945 jointly (Mahindra & Mohammed)
J.C. Mahindra K.C. Mahindra Gulam Mohammed
•Mahindra & Mohammed changed to Mahindra & Mahindra.
• Diversified business in other sectors such oil drilling, bearings, times-share
resorts and instrumentation in addition to Jeeps & tractors.

4. Vision & Mission
Vision:-
Indians are second to none in the world. The founders of our nation and
of our company passionately believed this. We will prove them right by
believing in ourselves and by making M&M Ltd. known worldwide for
the quality of its product and services.
Mission:-
“We don’t have a group-wide mission statement. Our core purpose is
what makes all of us want to get up and come to work in the morning”
-Anand Mahindra

5. Organizational Development: The need for Change:
Business Strategy
Automotive
Trade
Restructuring
“Any &
into
in Farm
Company would not remain overtime, Equipmentbusiness that did not
have a global Financial
potential.” – Anand Mahindra. Services
Services
4 SBU’s
IT
Services
 Each headed by President – part of group Management board.
 Lateral Recruitment in company.

6. Organizational Development: The need for Change:
Business Strategy:
In Dec 2001, company identified FES (Farm Equipment Sector) as a core
business.
• In 2002, Operation Blue Chip was implemented.
It aimed at strengthening domestic operations as a precursor to going
global.
“ GO HOME THEN GO ABROAD”
Operation Blue Chip:-
• Replaced performance measures into two new benchmarks
Market Share Free Cash Flow
Sales
Profits Return On Capital Employed (ROCE)
• Reserve of INR 7 billion generated by Apr 2004.

7. Organizational Development: The need for Change:
Anticipation of Market & Business Strategy:
• In2000, Project Vishwajeet was implemented, conceptualized by
McKinsey & Company.
•Bring down the break-even point from 54,000 units to 35,000 units by
2003.
•Only company to make profit in 2001 when the domestic market
collapsed.
• In 2003, won Deming Prize for major advances in quality improvement;
the only tractor company in the world to win the award.

8. Organizational Development: The need for Change:
Business Strategy: Globalization Template - Filters
For Market Selection For Company Selection
•Industry Filter •Product Portfolio
•Product/Technology Filter •Product Technology
•Price/Earning Filter •Market Reach
•Quality Systems & Processes
•Scalability
•Attractive But Low Volume Market •Openness Of Management
•Price Sensitive But High Volume •Liabilities
Market
•High Tech & High hp Market
USA, China, Australia & Africa Jingling Tractor Company (JTC)

9. CHINA MARKET – ENTRY STRATEGY
Step 1:
A team & tractors were sent to China from India
to test the market opportunity.
Step2:
The team targeted a single province having large
land holdings suitable for company’s 25 – 75 hp
range of tractors.
Step 3:
Sold tractors at a price 20% higher than the
rivals (John Deere), sending strong message
of, “Superior Quality & Performance”.
Step 4:
Tie – up with a local partner

10. Jiangling Tractor Company : A to Z
HISTORY
•Part of government owned Jiangling Motor Company (JMCG).
•30 % stake of JMCG was owned by U.S Ford Motor Company.
•Factory located at Nanchang with production capacity of 10,000 units &
3,000 engines annually.
•Operated in 20 – 30 hp range with 42 dealerships.
•Work force of 710 people which was 50 % more than the requirement.

11. DOWNTURN IN TURNOVER
•Problem of low-capacity utilization, surplus labor & escalating costs.
3000
0
2500
500
2000
1000
1500
1500
1000
2000
500 2500
0 3000
Budget 2004 Jul-04 2003
•Contribution of JTC in JMCG turnover fell from $1billion to $3.5 million.
•JMCG decided to de-focus on JTC by offloading 80% of tractor affiliate.
•Government was also interested in exiting the tractor business.

12. BUSINESS STRATEGY OF JTC TO OVERCOME DOWNTURN
•Concept of, “Reverse Engineering” was implemented.
•Partnering with local universities for new technology development.
•More focus on global market inspite of only 2.5% domestic market
share.
•Still struggled to sustain in the market.

13. Feasibility Study of JV

14. Strength Weakness
 Extended product portfolio of M&M (20-30hp).  Restructuring of JTC.
 JTC - Focus on Quality SWOT Analysis & surplus resources of JTC.
 Over head cost
 State owned enterprise –local brand name readily  Lack of Efficiency in new plant layout.
available “Feng Shou”.  Multi franchise.
 Technically skilled team of JTC readily available.
 Ineffective Dealership – often switched to
 Govt. Support competitors.
 Influence on manufacturing facilities from Ford &  JTC global focus.
Isuzu who were collaborated with JTC.  Cultural barriers like language & food habits.
 Good Chemistry with Management & Straight
forward Mang. style
Opportunities Threats
 Can fulfill M&M’s goal to be global player.  Undeveloped Banking facility in China.
 Easy entry to Chinese market with support of  Legal considerations.
local partner.  JTC was part of JMCG & even Ford holding 30%
 To export the Chinese tractors range to India & stake, so 3 companies were involved in JV.
Indian tractor range to China to suit the demand  Distant location of the Manufacturing units from
respectively. the city.
 If M&M provided after sales services they can
be more competitive in Chinese market.
 Expected growth of 13.2% 2004 to 2008.
 Further open door to US market where FS254
of JTC was already doing well.

15. Reasons for Going for JV
M&M Objective Fulfillment by JTC
1) 20% turn over by 2009 2.5% in Chinese Market and 13% in
<25hp category.
2) Product range Complementary to M&M’s range. 18-
33hp of JTC – requirement of growing
Indian Market and higher hp from
India to China
3) Chinese Market entry “Feng Shou” brand was popular
already.
4) Management JTC – Straightforward and Cooperative
Management.
5) Manufacturing facilities Influenced by Ford
& Isuzu
6) Company focus Quality focus & Readiness to M&M’s
quality practice.

16. • Process of JV – JV Recommendations
agreement, securing approval of
company name, business license. (Star Fish Analysis)
• Asset transfer contract.
• Protocol for takeover of plant
• Training of the employees
equip., inventory, land & building.
• Improve the existing accounting and
• Finalizing contracts with suppliers
costing system.
and dealers of JTC.
• Mapping skills of employees.
• Game Changer – After Sales
Services.
• Restructuring.
• Improve Over head cost. Start Doing Keep Doing
Stop Doing More of
• Study of the Chinese & Export
market.
• Entry through Less Of
Green field projects. • Establishment in Chinese market.
• Hi-tech & High HP • After Sales services.
product as the • Exclusive Franchise.
demand is less.

17. M&M ACQUISITION OF JIANGLING TRACTOR COMPANY
Signing of the MOU in China. Jiangling Tractor facility.
Mahindra officials with the JTC team. Mr. Anand Mahindra, VC & MD, M&M,
visits the Chinese facility with JTC officials.

18. JIANGLING TRACTOR COMPANY - CHINA
Inside view of the JTC facility. Inside view of the JTC facility.
Scouting for a partner in China. The China Task Team.