Mahindra and Mahindra

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MAHINDRA AND MAHINDRA

Case Analysis

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MAHINDRA AND MAHINDRA

Case Analysis

        Mahindra and Mahindra (M&M) is a multinational automotive manufacturing company that is headquartered in Mumbai, India and is a manufacturing leader in the utility vehicles segment in the automotive industry.  M&M has been exporting utility vehicles to South Africa since 2004; South Africa is the only country in Africa that has a significant middle-class population.  M&M established a fully owned subsidiary in South Africa as well as a servicing and spare parts infrastructure and dealer network.  In 2007 the company went into a three-year slump as a result of the automobile recession that encompassed the global automotive industry.  Numerous global automotive companies have established either manufacturing or trading outposts as a result of the favorable means of doing business in that country.  As of 2011, with the industry now picking-up, M&M needs to plan its next steps in South Africa.          

Parvin Shah, Chief Executive, International Operations has to make a decision concerning the growth strategy for M&M in the South African market. Shah must choose between four alternatives.  The first alternative is to continue with its prevailing business model which is importing completely built units from its Indian operations to meet local demands and use South Africa as a re-export hub and target markets in sub-Saharan Africa.  Second, he can choose to collaborate with a local vender to assemble vehicles locally from completely knocked down components imported from India.  Third, M&M could choose to set up a manufacturing facility in South Africa; which is what a lot of M&M’s competition has done. And fourth, M&M can choose to wait and watch until there are definite signs that the market has fully recovered and the subsidiary had logged a critical mass of vehicle sales volumes that would be sustainable in the long term.