AUTOMOTIVE INDUSTRY

INDUSTRY ENVIRONMENT ANALYSIS (Porter’s 5 forces)

Intensity of Rivalry : High-Number and diversity of competitor- High price competition- High exit barriers - Product quality and features

Bargaining Power of Suppliers : - Switching cost is high - Unique products- Few suppliers- Quality of goods is critical

Threats of Substitute:- Use of Public transport- Differentiated industry Products

Threat of new entrants:- More time and high cost of entry -Knowledge and technology-Government policy-Access to distribution channels

Bargaining Power of Buyers :- More options- Buyers are large in number- Price sensitive- Brand loyalty

Low

ModerateHigh

Moderate

Moderate

RESOURCES

• Financials– Total assets Rs 35,675

Cr– Cash Rs 2633 Cr– Investments Rs 4825 Cr– Low debt/equity ratio

• Physical– Mahindra research &

valley, Chennai (Pro dev, testing, validation)

– Plants at Nasik, Chakan, at 8 different locations

– Mahindra ‘Samriddhi’ (soil & water testing labs)

• Human– Top Management– Centre for Creative

Leadership, USA

• Technology– C2 CRDe engine– In-house gasoline

engine– Applied for 24 patents

& 8 Design registrations

– Micro hybrid technology (Pick-ups)

• Brand & Reputation

– Swaraj, Arjun tractors– Worlds no.1 tractor

manufacturer– ‘Mahindra Tractors’

iconic brand, enjoys strong following

CAPABILITIES(FUNCTIONAL)

VIRU ANALYSISCapability Valuable Costly to

imitateRare Unmatchable Competitive

ConsequencesPerformance Implication

Largest Producer of Tractors in world

Yes Yes Yes No Sustainable Competitive

Above Avg. Return

SUVs: BoleroSales

Yes No No Yes Competitive Parity

Average to above avg. Return

Scorpio: Own R & D;

Yes Yes No No Competitive Parity

Average to above avg. Return

Mahindra Satyam

No No No No Below Average Return

Mahindra Finance

Yes No Yes No Avg. Return

Brand Value Yes No No No Competitive Parity

Average Return

INTEGRATION

1963: Tractors

1965: LCV

1999:Launch of Bijlee, a battery-operated, environmental-friendly 3-wheeler

2007:Mahindra Navistar Automotives Ltd.

1962:Mahindra Ugine Steel Company

1975 :Engine Mafg plant(Igatpuri)

1958:Machine tool Div

1949 :Assembly of Willys Jeep

2002: SUV

2005:Manufacture of gears and transmission shafts

2010: SUV(SsangYong Motor Company)

2009: Electric car segment(REVA)

1995: Mahindra Holding & Finance Limited

1986: Tech Mahindra

Forward IntgrBackward IntgrHorizontal IntgrDiversification

Primary Activities

Supp

ort

Act

ivit

ies

MARG

IN

MARGIN

Simplified Planning Practices to Reduce Planning Costs

Effective Training Programs to Improve Worker Efficiency and Effectiveness

Highly Efficient Systems to Link Suppliers’ Products with the Firm’s Production Processes

Efficient Plant Scale to Minimize Manufacturing Costs

Selection of Low Cost Transport Carriers

Delivery Schedule that Reduces Costs

National Scale Advertising

Products Priced to Generate Sales Volume

Small, Highly Trained Sales Force

Effective Product Installations to Reduce Frequency and Severity of Recalls

Easy-to-Use Manufacturing Technologies

Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes

Systems and Procedures to find the Lowest Cost Products to Purchase Raw Materials

Frequent Evaluation Processes to Monitor Suppliers’ Performances

Located in Close Proximity with Suppliers

Organizational Learning

10% 5% 5% 0%

VALUE CHAIN ANALYSIS(Xylo)

Cost Reduction Of 21%

VALUE CHAIN ANALYSIS

MERGER & ACQUISITIONc• In Dec1999 Mahindra-Gujraat Tractor(60%)• In Jan 2007 Mahindra- Schoneweiss, Germany(90%)• In March 2008 Mahindra- G.R.Grafica Ricerca Design (GRD)• In July 2008 Mahindra-Punjab tractor • In July 2008 Mahindra-Kinetic (80%)• In April 2009 Tech Mahindra – Satyam• In Apr 2010 Mahindra-Logan• In May 2010 c• In May 2010 Mahindra- GippsAero,Australia• In Aug 2010 Mahindra- Ssangyong Motor Company

c• In Dec1999 Mahindra-Gujraat Tractor(60%)• In Jan 2007 Mahindra- Schoneweiss, Germany(90%)• In March 2008 Mahindra- G.R.Grafica Ricerca Design (GRD)• In July 2008 Mahindra-Punjab tractor • In July 2008 Mahindra-Kinetic (80%)• In April 2009 Tech Mahindra – Satyam• In Apr 2010 Mahindra-Logan• In May 2010 c• In May 2010 Mahindra- GippsAero,Australia• In Aug 2010 Mahindra- Ssangyong Motor Company

Joint Venture:• In Nov 2005 Mahindra-Navistar Truck, USA (51:49)• In March 2010 Mahindra + Yueda Group = MYYTCL

Joint Venture:• In Nov 2005 Mahindra-Navistar Truck, USA (51:49)• In March 2010 Mahindra + Yueda Group = MYYTCL

`Year Acquisition Stake %

Dec1999 Mahindra-Gujraat Tractor 60

Jan 2007 Mahindra- Schoneweiss, Germany 90

March 2008 Mahindra- G.R.Grafica Ricerca Design (GRD) -

July 2008 Mahindra-Punjab tractor 63

July 2008 Mahindra-Kinetic cc 80

April 2009 Tech Mahindra – Satyam 100

Apr 2010 Mahindra-Logan -

May 2010 Mahindra- Reva 55

May 2010 Mahindra- GippsAero,Australia -

Aug 2010 Mahindra- Ssangyong Motor Company Proposed

Joint Venture:

Nov 2005 Mahindra-Navistar Truck, USA 51:49

March 2010 Mahindra + Yueda Group 51:49

ACQUISITION

DIVERSIFICATION

AUTOMOBILES

IT

RETAIL FINANCE INFRASTRUCTURE HOSPITALITY

AGRI

ENGINEERING

RELATED & UNRELATED DIVERSIFICATION

AUTOMOTIVE (60%)

IT (24%)

INFRASTRUCTURE(3%)

TRADING FORAY

Finance (12%)

Trucks

Two Wheeler

Electric Car

Defense Vehicles

World City

Lifespace

Powerol

LOGISTIC

Aircraft

Odyssea

Retail

ENGINEERING

Farm Equipments

ProductCurrent Market

Share(%)Key Competitor

Competitors' Market Share(%)

X Industry Growth(%)

Two wheeler 0.8 Hero Honda 59 0.013 26

Three wheeler 10.1 Bajaj 63.6 0.15 25.9

Logon (mid size) 1.9 Honda 17 0.12 14.2

Tractor 41.4 TAFE 22 1.8 28.3

Bolero(UV) 26 Force Trax 13 2 20

Scorpio (SUV) 22.5 Ford Endeavour 19.4 1.15 29.3

Xylo (MPV) 6.8 Innova 31 0.22 40.9

BCG DATA

Relative Market Share

Indu

stry

Gro

wth

(%)

100 X High 0.01 XLow

Low

Hig

h

27.8

Scorpio (1.15 X)

Bolero (2 X)

Three wheelers (0.15 X)

Tractor (1.8 X)

Logon (0.12 X)

Two wheelers (0.013 X)

Xylo (0.22 X)

50

BCG MATRIX

GE MATRIX

MARKET ATTRACTIVEN

ESS

COMPETITIVE STRENGTH

Tech Mahindra

AutomobileAgri Equipments

Two wheelers

Mahindra Finance

Real Estate

Mom and Me

Mahindra First ChoiceDefense

MARKET ATTRACTIVEN

ESS

COMPETITIVE STRENGTH

Tech Mahindra

AutomobileAgri Equipments

Two wheelers

Mahindra Finance

Real Estate

Mom and Me

Mahindra First ChoiceDefense

Internationalization: It is a process of increasing involvement of an enterprise in international markets.

Strategies :

INTERNATIONAL STRATEGIES

Exporting Licensing

Franchising Joint Ventures

Acquisitions Green-Field Development

Production Sharing Turnkey Operations

BOT Concept Management Contracts

Exporting :

• The company exports its products to several regions including Europe, Africa, South America, South Asia and the Middle East.• Exports tractors to Turkey• Scorpio, as Mahindra Goa in Italy• Mahindra Pik Up & Bolero Pik Up (Cimarron) in Africa• Xylo Cargo Van in S. Africa• Mahindra Agribusiness (MSSL) exports grapes, pomegranates and apples to Europe & UK

INTERNATIONAL STRATEGIES

Joint Ventures :

• In Nov 2005, Mahindra signed a JV with Navistar International Corporation known as Mahindra International Engines Ltd. (51:49).• Mahindra Yeuda Tractors Co. (80:20) has setup R&D and Engine facility in China in Mar 2010.• Mahindra is now in talks with Proton, an auto giant from Malaysia for a joint venture.

INTERNATIONAL STRATEGIES

Acquisitions :

• In Jan 2007, Mahindra acquired Schoneweiss & Co., Germany through its subsidiary Mahindra Forgings.• In May 2010, Mahindra acquired Gippsland Aeronautics one of the Australia’s most reputed aircraft producer and Aerostaff Australia, a aircraft component maker.• In Aug 2010, it is planning to acquire Ssangyong Motor Company of South Korea.

INTERNATIONAL STRATEGIES

Franchising :

• Mahindra Ocean Blue Marine Pvt. Ltd. which manufactures powerboats for Indian marine and defence sector is finding international franchisees for enthusiastic customers of recreational boating.

INTERNATIONAL STRATEGIES

MAHINDRA GROUP

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