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Mahindra and mahindrastrategy - PresentationTranscript

1. 2. CASE STUDY:Mahindra&Mahindra Ltd. ± FarmEquipment Sector: Acquisition of Jiangling Tractor Company Outline of thepresentation:Introduction of Case M&M¶sVision and Mission OD & Business Strategies JTC FeasibilityStudy of JV ± SWOT Analysis Recommendations JV of M&M and JTC 3. Mahindra&Mahindra : A to Z o Establishedon 2nd Oct 1945 jointly (Mahindra& Mohammed) K.C. Mahindra Gulam Mohammed J.C. Mahindra Mahindra& Mohammed changedtoMahindra&Mahindra. Diversifiedbusiness in othersectorssuchoildrilling, bearings, times-share resorts and instrumentation in additionto Jeeps &tractors. 4. Vision&Mission Vision:Indians are secondtonone in theworld. Thefounders of ournation and of ourcompanypassionatelybelievedthis. Wewillprovethemrightbybelieving in ourselves and bymaking M&M Ltd. knownworldwideforthequality of itsproduct and services. Mission:³Wedon¶thave a group-widemissionstatement. Ourcorepurposeiswhatmakesall of uswanttoget up and come towork in themorning´ AnandMahindra 5. OrganizationalDevelopment: TheneedforChange: Business Strategy ³AnyCompanywouldnotremainovertime, in businessthatdidnothave a global potential.´ ± AnandMahindra. o EachheadedbyPresident ± part of group Management board. o Lateral Recruitment in company. 6. OrganizationalDevelopment: TheneedforChange: Business Strategy: In Dec 2001, companyidentified FES (FarmEquipment Sector) as a corebusiness. o In 2002, Operation Blue Chip wasimplemented.

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Itaimed at strengtheningdomesticoperations as a precursor togoing global. ³ GO HOME THEN GO ABROAD´ Operation Blue Chip:-

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Replaced performance measuresintotwo new benchmarks

Market Share Free Cash Flow Sales ProfitsReturnOn Capital Employed (ROCE) Reserve of INR 7 billiongeneratedbyApr 2004. OrganizationalDevelopment: TheneedforChange: Anticipation of Market& Business Strategy: o In 2000, Project Vishwajeetwasimplemented, conceptualizedbyMcKinsey&Company. o Bringdownthe break-evenpointfrom 54,000 unitsto 35,000 unitsby 2003. o Onlycompanytomakeprofit in 2001 whenthedomesticmarketcollapsed. o In 2003, won Deming Prizeformajoradvances in qualityimprovement; theonly tractor company in theworldtowintheaward. 8. OrganizationalDevelopment: TheneedforChange: Business Strategy: GlobalizationTemplate - Filters ForCompanySelection

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sendingstrongmessage of. o Factory located at Nanchangwithproductioncapacity of 10. surplus labor &escalatingcosts. . o Operated in 20 ± 30 hp rangewith 42 dealerships. o Workforce of 710 peoplewhichwas 50 % more thantherequirement. ³Superior Quality& Performance´.000 units& 3. BUSINESS STRATEGY OF JTC TO OVERCOME DOWNTURN o Concept of. o More focuson global marketinspite of only 2. DOWNTURN IN TURNOVER o Problem of low-capacityutilization. 13. o JMCG decidedto de-focuson JTC byoffloading 80% of tractor affiliate. o Partneringwith local universitiesfor new technologydevelopment. o Stillstruggledtosustain in themarket. o Governmentwasalsointerested in exitingthe tractor business.5% domesticmarket share. 12. Jiangling Tractor Company : A to Z HISTORY o Part of governmentownedJiangling Motor Company (JMCG).000 enginesannually. o 30 % stake of JMCG wasownedby U.5 million.o o o o o o o Product Portfolio ProductTechnology MarketReach QualitySystems&Processes Scalability Openness Of Management Liabilities ForMarketSelection o o o o o o IndustryFilter Product/TechnologyFilter Price/EarningFilter AttractiveButLowVolumeMarket Price SensitiveBut High VolumeMarket High Tech& High hp Market Jingling Tractor Company (JTC) USA. o Contribution of JTC in JMCG turnoverfellfrom $1billion to $3. Step 3: Soldtractors at a price 20% higherthantherivals (John Deere). Step 4: Tie ± up with a local partner 10. FeasibilityStudy of JV 14. China. Step2: Theteamtargeted a single provincehavinglargeland holdings suitableforcompany¶s 25 ± 75 hp range of tractors. 11. ³Reverse Engineering´ wasimplemented.S Ford Motor Company. Australia &Africa CHINA MARKET ± ENTRY STRATEGY Step 1: A team&tractorsweresentto China from India to test themarketopportunity. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Sell more in existingMarkets INCREASING RISK ANSOFF MATRIX ANALYSIS PRODUCT DEVELOPMENT Sell new products in existingmarkets MARKET EXTENSION Achievehigher sales/market share of existingproducts in new markets 9.

o Technicallyskilledteam of JTC readilyavailable. Multifranchise. o GoodChemistrywith Management &Straight forward Mang. ³High tech&high hp market´. businesslicense. style Weakness o o o o o o o Restructuring of JTC. Cultural barrierslikelanguage&foodhabits. o JTC . SWOT Analysis Opportunities o o o o o o Can fulfillM&M¶sgoalto be global player. ToexporttheChinesetractorsrangeto India &Indian tractor rangeto China tosuitthedemandrespectively. o Govt. Legal considerations. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Highestdomesticmarket share of 25. Over head cost& surplus resources of JTC.DIVERSIFICATION Sell new products in new markets 15.9% in 2004 INCREASING RISK ANSOFF MATRIX ANALYSIS PRODUCT DEVELOPMENT NIL MARKET EXTENSION o Exportto SAARC o AttractivebutlowVolumeMarket o Price sensitivebuthighvolumemarket DIVERSIFICATION No focuson. 17. JTC global focus. 16. so 3 companieswereinvolved in JV. Lack of Efficiency in new plantlayout. EasyentrytoChinesemarketwithsupport of local partner. o o o o . If M&M providedafter sales servicesthey can be more competitive in Chinesemarket. securingapproval of companyname. JTC waspart of JMCG &even Ford holding 30% stake. Expectedgrowth of 13. o Asset transfer contract. Strength o Extended product portfolio of M&M (20-30hp).FocusonQuality o Stateownedenterprise ±local brandnamereadilyavailable ³Feng Shou´. Recommendations o Process of JV ± JV agreement. Further open doorto US marketwhere FS254 of JTC wasalreadydoingwell. Support o Influenceonmanufacturingfacilitiesfrom Ford & Isuzu whowerecollaboratedwith JTC. ReasonsforGoingfor JV 18.2% 2004 to 2008. Threats UndevelopedBankingfacility in China. Distantlocation of theManufacturingunitsfromthecity. IneffectiveDealership ± oftenswitchedtocompetitors.

19. land&building. Signing of the MOU in China.o o o o o Protocolfortakeover of plantequip. Exclusive Franchise. Mappingskills of employees. visitstheChinesefacilitywith JTC officials. The China TaskTeam. After Sales services. M&M ACQUISITION OF JIANGLING TRACTOR COMPANY JianglingTractorfacility. inventory. Mr. Scoutingfor a partner in China. Establishment in Chinesemarket. ImproveOver head cost.. 20. M&M.CHINA Insideview of the JTC facility. Less Of Entrythrough Green fieldprojects. GameChanger ± After Sales Services. (StarFishAnalysis) o o o Training of theemployees Improvetheexistingaccounting and costingsystem. o o . Hi-tech& High HP product as thedemandisless. Restructuring. VC & MD. Mahindraofficialswiththe JTC team. Insideview of the JTC facility. Finalizingcontractswithsuppliers and dealers of JTC. AnandMahindra. JIANGLING TRACTOR COMPANY . KeepDoing StartDoing More of Stop Doing o o o o Study of theChinese&Exportmarket.