Mahindra & Mahindra is considering acquiring Jiangling Tractor Company in China to expand into the global farm equipment market. A feasibility study found strengths in complementary product portfolios and technical skills, but also weaknesses in JTC's restructuring needs, inefficiencies, and cultural barriers. A joint venture would give M&M access to the growing Chinese market and a local partner. It is recommended that M&M focus on after-sales service, restructuring JTC's costs and processes, improving skills mapping and training, and establishing itself in China before considering exports or new markets. A joint venture agreement and approvals would need to be finalized to acquire JTC's plant, inventory, and dealerships.

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

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

7. Bring down the break-even point from 54,000 units to 35,000 units by 2003.

8. Only company to make profit in 2001 when the domestic market collapsed.

10. Product Technology

11. Market Reach

12. Quality Systems & Processes

13. Scalability

14. Openness Of Management

16. Product/Technology Filter

17. Price/Earning Filter

18. Attractive But Low Volume Market

19. Price Sensitive But High Volume Market

20. High Tech & High hp MarketJingling Tractor Company (JTC) USA, China, Australia & Africa

21. 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

23. 30 % stake of JMCG was owned by U.S Ford Motor Company.

24. Factory located at Nanchang with production capacity of 10,000 units & 3,000 engines annually.

25. Operated in 20 – 30 hp range with 42 dealerships.

27. Contribution of JTC in JMCG turnover fell from $1billion to $3.5 million.

28. JMCG decided to de-focus on JTC by offloading 80% of tractor affiliate.

30. Partnering with local universities for new technology development.

31. More focus on global market inspite of only 2.5% domestic market share.

33. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Sell more in existing Markets INCREASING RISK ANSOFF MATRIX ANALYSIS PRODUCT DEVELOPMENT Sell new products in existing markets MARKET EXTENSION Achieve higher sales/market share of existing products in new markets DIVERSIFICATION Sell new products in new markets

35. Attractive but low Volume Market

36. Price sensitive but high volume marketDIVERSIFICATION No focus on, “High tech & high hp market”.

38. JTC - Focus on Quality

39. State owned enterprise –local brand name readily available “Feng Shou”.

40. Technically skilled team of JTC readily available.

41. Govt. Support

42. Influence on manufacturing facilities from Ford & Isuzu who were collaborated with JTC.

44. Over head cost & surplus resources of JTC.

45. Lack of Efficiency in new plant layout.

46. Multi franchise.

47. Ineffective Dealership – often switched to competitors.

48. JTC global focus.

50. Easy entry to Chinese market with support of local partner.

51. To export the Chinese tractors range to India & Indian tractor range to China to suit the demand respectively.

52. If M&M provided after sales services they can be more competitive in Chinese market.

53. Expected growth of 13.2% 2004 to 2008.

55. Legal considerations.

56. JTC was part of JMCG & even Ford holding 30% stake, so 3 companies were involved in JV.

59. Asset transfer contract.

60. Protocol for takeover of plant equip., inventory, land & building.

61. Finalizing contracts with suppliers and dealers of JTC.

62. Game Changer – After Sales Services.

63. Restructuring.

65. Improve the existing accounting and costing system.

67. Establishment in Chinese market.

68. After Sales services.

71. 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.