Great Wall Motors- Greenfield vs Acquisition

Strategic Alliance Case Study

Submitted by ,

Nandu Krishnan U
P40132
 Company Overview
• Great Wall Motor (GWM) was established in 1984
• GWM is China’s largest SUV manufacturer with more than 80,000
employees around the world. In addition GWM is one of the most
successful Chinese car makers. GWM pursues the strategic goal to
develop leading vehicle technology with intensive investment in
research and development.
• GWM India R & D center has been established in 2016 at Bangalore
India. Main focus of GWM India is Software Development for Hybrid
and Battery Electric Vehicles, Artificial Intelligence for Self Driving Cars.
• The company sells passenger cars and trucks under the Great Wall
brand and SUVs under the Haval and WEY brands. In India, GWM will
carry out its manufacturing and sales operations through the Haval
brand
• HAVAL is one of the four brands of GWM, and became independent
brand in 2013, with its strong product matrix covering all SUV
segments. HAVAL is the first Chinese SUV brand to join the Five-
million-sales Club. Moreover, with its products exported to more than
60 foreign countries, HAVAL is the third global professional SUV brand
after JEEP and LANDROVER
Industry Analysis
• The automobile industry in India is the world’s fourth largest. India was
the world's fourth largest manufacturer of cars and seventh largest
manufacturer of commercial vehicles in 2019.
• Indian automotive industry (including component manufacturing) is
expected to reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by
2026.
• The industry attracted Foreign Direct Investment (FDI) worth US$
24.21 billion during April 2000 to March 2020 .
• The Government aims to develop India as a global manufacturing and
research and development (R&D) hub. It has set up National
Automotive Testing and R&D Infrastructure Project centers as well as
National Automotive Board to act as facilitator between the
Government and the industry.
• The Indian Government has also set up an ambitious target of having
only EVs being sold in the country. The Ministry of Heavy Industries,
Government of India, has shortlisted 11 cities in the country for
introduction of EVs in their public transport system under the FAME
scheme.
• The Government of India expects automobile sector to attract US$ 8-
10 billion in local and foreign investment by 2023.
 Alliances Green Field Investment

Pros Cons Pros Cons

Faster market access Weaker management
involvement or less equity stake
Maximum Flexibility High cost
Lower Maintenance Socio- Political Risk
Gain new skills and technology Fear of market insulation due to
the local partner's presence
Tax Break and other Project overruns
incentives
Share fixed costs and resources Less efficient communication Location of choice Approval and
Enlarge your distribution channels Poor resource allocation
Permissions
Scope of Economies of Land Acquistion and
reduce costs and risks by Difficult to keep objectives on
distributing them across the target over time scale Environmental concerns
members Greater Control Labour issues
greater economies of scale Loss of control over important
issues such as product quality, Image of Long term Competition from
operating costs, employees commitment established companies
join with your rivals to cooperate
instead of compete Press opportunities
create a competitive advantage by Employee Training to
the pooling of resources and skills.
gain entry into a foreign market company standards

“ Considering the Pros and Cons and also from the Industry analysis an Alliance will be the best Option”
 Potential Alliance Partners
Maruti Suzuki
• 51% market share .
• Highest brand recognition and oldest
player in Indian Industry.
• Highest number of assembly lines in
India and has the biggest infrastructure
• Known for its mass and mass premium
products.
• Handles SUVs and pick up trucks-focus
of GWM
TATA Motors
• Indian multinational company . A
conglomerate of Tata group
• Handles SUVs and Pickups and also
entered into the market recently with
Harrier.
• Venturing into Electric cars with the
launch of Tata ace and Indica.
• and SUV/Crossover
Toyota
• Second largest automobile
manufacturer in the world
• Handles SUVs and pick up trucks-focus
of GWM
• Market leader in hybrid cars
• Known for safety and quality products.
Hyundai
• 16.2% market share
• Known for its family friendly cars
• 475 dealers and 1300 service points
across India
• India's largest car exporter for the last
10 years.
• Main models include Hatchback , Sedan
Final Conclusion

• A non equity alliance with Maruthi Suzuki where Maruthi Suzuki will have greater power compared to
GWM.
• This is done considering the 51% market share Maruthi Suzuki holds. This can be leveraged and the
experience from the indian market can be useful for a new entrant like GWM.
• The Trust Indians have with Maruthi as a brand can be utilized by GWM to launch its products in India
• A pooling up of respective resources and capabilities will help GWM and Maruthi as a company will also
be benefitted from the Technological knowhow of cheap production
• The Alliance will provide a low cost entry of GWM to India . Non Equity
• It can also help in Mitigating the risk as GWM is a Chinese player and cannot predict how the market
may respond.
Alliance

• A joint venture between Tata Motors and Great wall Motors( GWM)
• Both the companies will act as a parent company and will create a separate entity which can be
consideres as a child company.
• Both the companies can provide financial support to each other by pooling a portion of their capital.
• Both the companies should have equal number of Board of members so that the involvement in Apex
and operational decisions can be made in consensus.
• The companies can leverage each others strength. Tata motors can leverage the Technological know
how and Great wall can understand about the Indian customers and their preferences and hence device JOINT
a core competency. VENTURE
• By creating a JV the companies can also block a competitive threat and hence reduce the rivalry.
Thank You