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&MsVision 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:Wedonthave a group-widemissionstatement. Ourcorepurposeiswhatmakesall of uswanttoget up and come towork in themorning AnandMahindra 5. OrganizationalDevelopment: TheneedforChange: Business Strategy AnyCompanywouldnotremainovertime, 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. GO HOME THEN GO ABROAD Operation Blue Chip:-

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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Product Portfolio ProductTechnology MarketReach QualitySystems&Processes Scalability Openness Of Management Liabilities

ForMarketSelection

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IndustryFilter Product/TechnologyFilter Price/EarningFilter AttractiveButLowVolumeMarket Price SensitiveBut High VolumeMarket High Tech& High hp Market

Jingling Tractor Company (JTC) USA, China, Australia &Africa CHINA MARKET ENTRY STRATEGY Step 1: A team&tractorsweresentto China from India to test themarketopportunity. Step2: Theteamtargeted a single provincehavinglargeland holdings suitableforcompanys 25 75 hp range of tractors. Step 3: Soldtractors at a price 20% higherthantherivals (John Deere), sendingstrongmessage of, Superior Quality& Performance. Step 4: Tie up with a local partner 10. Jiangling Tractor Company : A to Z HISTORY o Part of governmentownedJiangling Motor Company (JMCG). o 30 % stake of JMCG wasownedby U.S Ford Motor Company. o Factory located at Nanchangwithproductioncapacity of 10,000 units& 3,000 enginesannually. o Operated in 20 30 hp rangewith 42 dealerships. o Workforce of 710 peoplewhichwas 50 % more thantherequirement. 11. DOWNTURN IN TURNOVER o Problem of low-capacityutilization, surplus labor &escalatingcosts. o Contribution of JTC in JMCG turnoverfellfrom $1billion to $3.5 million. o JMCG decidedto de-focuson JTC byoffloading 80% of tractor affiliate. o Governmentwasalsointerested in exitingthe tractor business. 12. BUSINESS STRATEGY OF JTC TO OVERCOME DOWNTURN o Concept of, Reverse Engineering wasimplemented. o Partneringwith local universitiesfor new technologydevelopment. o More focuson global marketinspite of only 2.5% domesticmarket share. o Stillstruggledtosustain in themarket. 13. FeasibilityStudy of JV 14. 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.

DIVERSIFICATION Sell new products in new markets 15. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Highestdomesticmarket share of 25.9% in 2004 INCREASING RISK ANSOFF MATRIX ANALYSIS PRODUCT DEVELOPMENT NIL MARKET EXTENSION o Exportto SAARC o AttractivebutlowVolumeMarket o Price sensitivebuthighvolumemarket DIVERSIFICATION No focuson, High tech&high hp market. 16. Strength o Extended product portfolio of M&M (20-30hp). o JTC - FocusonQuality o Stateownedenterprise local brandnamereadilyavailable Feng Shou. o Technicallyskilledteam of JTC readilyavailable. o Govt. Support o Influenceonmanufacturingfacilitiesfrom Ford & Isuzu whowerecollaboratedwith JTC. o GoodChemistrywith Management &Straight forward Mang. style Weakness

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Restructuring of JTC. Over head cost& surplus resources of JTC. Lack of Efficiency in new plantlayout. Multifranchise. IneffectiveDealership oftenswitchedtocompetitors. JTC global focus. Cultural barrierslikelanguage&foodhabits.

SWOT Analysis Opportunities

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Can fulfillM&Msgoalto be global player. EasyentrytoChinesemarketwithsupport of local partner. ToexporttheChinesetractorsrangeto India &Indian tractor rangeto China tosuitthedemandrespectively. If M&M providedafter sales servicesthey can be more competitive in Chinesemarket. Expectedgrowth of 13.2% 2004 to 2008. Further open doorto US marketwhere FS254 of JTC wasalreadydoingwell.

Threats UndevelopedBankingfacility in China. Legal considerations. JTC waspart of JMCG &even Ford holding 30% stake, so 3 companieswereinvolved in JV. Distantlocation of theManufacturingunitsfromthecity. 17. ReasonsforGoingfor JV 18. Recommendations o Process of JV JV agreement, securingapproval of companyname, businesslicense. o Asset transfer contract.

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Protocolfortakeover of plantequip., inventory, land&building. Finalizingcontractswithsuppliers and dealers of JTC. GameChanger After Sales Services. Restructuring. ImproveOver head cost.

(StarFishAnalysis)

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Training of theemployees Improvetheexistingaccounting and costingsystem. Mappingskills of employees.

KeepDoing StartDoing More of Stop Doing

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Study of theChinese&Exportmarket. Establishment in Chinesemarket. After Sales services. Exclusive Franchise.

Less Of Entrythrough Green fieldprojects. Hi-tech& High HP product as thedemandisless. 19. M&M ACQUISITION OF JIANGLING TRACTOR COMPANY JianglingTractorfacility. Signing of the MOU in China. Mahindraofficialswiththe JTC team. Mr. AnandMahindra, VC & MD, M&M, visitstheChinesefacilitywith JTC officials. 20. JIANGLING TRACTOR COMPANY - CHINA Insideview of the JTC facility. Insideview of the JTC facility. Scoutingfor a partner in China. The China TaskTeam.

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