2. M&M was founded as a Steel Trading Company in Mumbai, India, in 1945
Founders: J.C. Mahindra and K.C. Mahindra
M&M Entered into automotive manufacturing by launching Willys, The iconic world war II jeep
M&M had entered the India urban UV segment in 2002 with the launch of Scorpio
The UV and Tractor platform became the company’s core competence
They prevailed in sourcing, Product Development and Quality Control
Products: Utility Vehicles (Uvs), Tractor, Two wheelers, Small turbo prop aircraft, and buses,
pickups, and cars
Diversified sectors: Financial services, information technology, hospitality, infrastructure
3. Bolero pickup Scorpio
Year of Launch: 2004 Year of Launch: 2004
Target Customer Segments: Contractors, Farmers, Target Customer Segments: Urban
Service providers Consumers
4. Scorpio pickup Mahindra Thar
Year of Launch: 2006 Year of Launch: 2010
Target Customer Segments: Contractors, Target Customer Segments: Outdoor
Farmers, small Businesses Customers, Off-roaders, Retro-look
Mahindra Xylo
Year of Launch: 2009
Target Customer Segments: Taxi Operators, Ferry Owners,
Shuttle Providers
5. The Business model followed by M&M was called “Engine Theory”
The company mandated the “50% rule’’ for each businesses, wherein if demand fell by as much as
50%, each business had to remain profitable
Federation of Independent companies, benefiting from both business focus & group synergies
The parent company saw its role as an allocator of capital
6. M&M had six assembly points outside of India and nine manufacturing plants of its own within India
Largest Producers of tractors in the world by volume
M&M entered the India Urban UV segment in 2002 with the launch of the Scorpio
60% Share of the domestic UV market by value and 52% by volume
Acquired majority stake in Ssang Yong Motor Company (Ssang yong)
7. Most important export market for M&M
Good fit between what the customer needs and M&Ms services
Good fit between the price offered and the value perceived by the customers
The Brand savviness of Black Africans provided room for automotive brands other than those from
Europe, Japan, and Korea to strengthen their brand equity so that they could lock in sales from the
growing black African consumers
M&M(SA) saw this situation as an entry-level opportunity
8. • New Products
• Strong Recognizable Brand name
• Brand Loyalty
Strengths
• Economic crashes
• Delays in vehicle ordering cycle
• High Competition
Weakness
9. • Higher chance to spread the
reputation of the new products
• Unfulfilled customer needs
• Advancement of technology
Opportunities
• Shifts in customers tastes&
Preferences
• Trade Barriers
Threats
10. Shah’s dilemma was four fold:
Agreement with a local vendor for contract assembly of M&M vehicles.
Invest in its own Manufacturing Facility
Wait & Watch until the subsidiary logged a critical mass of vehicle sales volume
Importing CBUs from India by using South Africa as the hub.
11. Improved margins by reducing cost of shipping CBUs
Reduced vehicle ordering cycle
Costs reduction
The choice of contract assembly depended upon the:
Availability of surplus capacity
Ability to ramp up capacity consistent with changing needs
Knowledge and Technical Know-how
Financial capability and management bandwidth
12. Merits
It will demonstrate commitment to the customers
It will attract more sales
Opportunity to lock in customers
Demerits
Localization of content
Pressure to sustain high production
13. Using the recessionary period to become stronger and better prepared to face competition which
includes:
By reducing Fixed costs
Streamline operations
Improving Business Processes
Enlarging the reach & quality of dealer network
14. M&M(SA) had an opportunity to develop markets in the 54 countries on the African continent
Companies entering the African continent at the beginning of the new growth period could take the
lead in shaping industry structures, segmenting markets and establishing Brands
This approach would help the company tide over the recession from which it was only mid-way to
recovery
The only constraint is the higher rate of imports duty of 25% compared with local assemblers &
manufacturers
15. The South African automotive industry accounted for about 10% of the country’s manufacturing
export's.
Eight of the top 10 global vehicle makers.
Three world’s largest tire manufacturers.
More than 200 automotive components manufacturers.
Motor Industry Development Programme (MIDP) & Automotive Production and Development
Programme( APDP).
Low import duties under MIDP: 25% for CBUs & 20% for CKDs in 2012.
Duty free imports to the extent of the value of exports for Local manufacturers under APDP.
16. M&M entered South African market in February 2005
51% Subsidiary & 49% was held by a local partner whose investments helped to finance the business
Network of customer service outlets & Collaborations with local logistics company.
Two Fold entry strategy:
Niche in the SUV segment
Offered Value proposition by price
Bolero caught up with Farming and small business segments.
Bolero was identified with ‘’Toughness”
There was need to Build strategies for Urban Markets.
17. The Global launch of Scorpio
M&M (SA) bought out its local partner’s stake in August 2009
M&M (SA) had sold a total of 11,000 vehicles in 2010
$40.3 million turnover for the year March 2010
1.2% market share in the pickup market & low to medium range SUV market
M&M (SA) used different SUVs to target different segments
It competed with Kia, Hyundai and Nissan for SUVs and with Toyota for pickups
Player of choice in the used-car market
Strong Loyalty for the Mahindra Brand
Major constraint faced was the vehicle ordering cycle from India
Volume of sales was not comparable to global players operating in South Africa
18. 50:50 Joint Venture
with Africa
automotive
investment in 2004
Created
Dealers
&
Distribution
Channels
Imported
Vehicles from
India
Launched
“Scorpio’’
Sports Utility
Vehicle
Launched XUV
500 in 2011
Different SUVs
to target
different
segments
20. The potential role of the M&M (SA) is quite an important one for its success in the global market
The subsidiary operating in South African region gives the company global exposure
It attracts new markets (Other African markets), foreign clients ,new skills for the company
Access to latest technology within the company
Ensures quick Delivery to the customers
Helps in diversification and increased Efficiencies
Financial support
21. Shah should recommend that the Board should adopt the wait & watch strategy
The reason is that since the economy has just recovered from the financial crisis its quite difficult to opt for a
particular strategy
The company should play safe & understand the spending patterns of the people
It, is a fact, since Recession 2010 market has shown productive results but still the suggestion of shah should be
to play safe & secure
22. Decision Taken
According to shah:
Africa was an opportunistic market
They were following Bottom of the pyramid products strategy where they will leverage their product portfolio,
which includes Three wheelers, LCVs, Bolero to grow further into the African market
M&M also plans to appoint a country manager who will spearhead its fast-paced expansion plans in Africa
Further a team of 7-8 people have deployed in some key markets in the continent
They formed the strategy of growing through their partners who understands the local market
Mali Assembly plant was set up by New Delhi- based export house Angelique International with support from
local government.
23. Current Scenario
Mahindra & Mahindra South Africa has opened it’s first assembly point in South Africa.
It sees it as a Launchpad to export vehicles to the rest of the continent
The New modular assembly plant which imports car parts and builds the final products
It will have the annual capacity of 2,500 pickup trucks which could be increased to assemble up to 4,000
Mahindra vehicles each year.
It is also considering introducing its tractors into the South African market.