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AUTOMOTIVE INDUSTRY

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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

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Bargaining Power of Suppliers :

  • Switching cost is high
  • Unique products

- Few suppliers

- Quality of goods is critical

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​

​

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Threats of Substitute:

- Use of Public transport

- Differentiated industry Products

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Threat of new entrants:

- More time and high cost of entry

-Knowledge and technology

-Government policy

-Access to distribution channels

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Bargaining Power of Buyers :

- More options

- Buyers are large in number

  • Price sensitive
  • Brand loyalty

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​

Low

Moderate

High

Moderate

Moderate

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  • 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)

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  • Human
    • Top Management
    • Centre for Creative Leadership, USA

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​

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RESOURCES

  • 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

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CAPABILITIES(FUNCTIONAL)

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VIRU ANALYSIS

Capability

Valuable

Costly to imitate

Rare

Unmatchable

Competitive Consequences

Performance Implication

Largest Producer of Tractors in world

Yes

Yes

Yes

No

Sustainable Competitive

Above Avg. Return

SUVs: Bolero

Sales

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

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Avg. Return

Brand Value

Yes

No

No

No

Competitive Parity

​

Average Return

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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 Intgr

Backward Intgr

Horizontal Intgr

Diversification

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Primary Activities

Support

Activities

MARGIN

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%

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VALUE CHAIN ANALYSIS

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MERGER & ACQUISITION

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

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`

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

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DIVERSIFICATION

IT

AUTOMOBILES

RETAIL

FINANCE

INFRASTRUCTURE

HOSPITALITY

AGRI

ENGINEERING

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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

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Product

Current 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

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Relative Market Share

Industry Growth(%)

100 X

High

0.01 X

Low

Low

High

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

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�

GE MATRIX

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�

MARKET ATTRACTIVENESS

COMPETITIVE STRENGTH

Tech Mahindra

Automobile

Agri Equipments

Two wheelers

Mahindra Finance

Real Estate

Mom and Me

Mahindra First Choice

Defense

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�

MARKET ATTRACTIVENESS

COMPETITIVE STRENGTH

Tech Mahindra

Automobile

Agri Equipments

Two wheelers

Mahindra Finance

Real Estate

Mom and Me

Mahindra First Choice

Defense

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

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Strategies :

INTERNATIONAL STRATEGIES

Exporting

Licensing

Franchising

Joint Ventures

Acquisitions

Green-Field Development

Production Sharing

Turnkey Operations

BOT Concept

Management Contracts

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Exporting :

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  • 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

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Joint Ventures :

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      • 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

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Acquisitions :

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      • 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

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Franchising :

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      • 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

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MAHINDRA GROUP

THANK YOU