group 04 mahindra

Industry was dominated by:◦ Big three(GE, Ford and Daimler Chrysler group)◦ Big two(Volkswagen, Peugeot)◦ Japanese players (Toyota, Nissan and Honda)

Japanese model :◦ emphasised on close working relationship with suppliers.◦ Shorter production period (12-18 months)◦ Making highest profits per car reeping between ($1400-$2400)

U.S automakers:◦ emphasised low cost over developing long term supplier

relationships◦ Production period (2-3 years)◦ Profit between $178-$48 per vehicle

GLOBAL AUTOMOBILE INDUSTRY

• Founded by KC Mahindra & JC Mahindra• Imported & Assembled Willys Jeep kits1945• Listed in BSE1956• Started manufacturing Uvs1954• Manufactured LCVs and Tractors1960-80• Mahindra USA was set-up1994• Joint venture with Ford to manufacture Ford Escort1995-99• IDAM was set-up to focus on product development1997• Mahindra Bolero was launched2000• Launched Scorpio from Mahindra2002• Scorpio was awarded car of the year at CNBC AutoCar• Launched Scorpio in Uruguay, Italy, Russia and South Africa2003

MAHINDRA & MAHINDRA: A BRIEF HISTORY

Image Transition Catalyst to make M&M world class Increase in demand for UV’s with 18% & 35% growth in 2003

and 2004 Tap into Growing Indian Passenger Car Market

◦ Growing at approx. 30% annually◦ People/vehicle was 206 in India as compared to Asian average of 32

Availability of easy financing for customers Increase in disposable income from India’s improving

economy Competing against Global automakers in a price sensitive

market Improvement of road networks and reduction in excise taxes

1. What made M&M to create a Globally competitive SUV at low cost?

2. What has Mahindra as a parent leveraged to Scorpio project and what

contribution is made by Scorpio team to the parent company ?• M&M's well established name in India

• Strong image in rural market for rugged and tough vehicle• To target M&M's image in Urban market, firstly Bolero, an UV

was launched prior to Scorpio launch• It helped to test SUV in Urban market • Conduct extensive market researched on customer needs

and potential growth • Low cost as compared to competitors• People are willing to obtain loan due to low price• Ford turned down proposal to do JV for research and

development work

• Designing of Scorpio from scratch• Launching of Bolero used as trial opportunity for various

marketing activities• Distribution Strategy - Separate distribution outlets for both

Bolero and Scorpio• A new 120 member team called IDAM(Integrated Design and

Manufacturing) formed• Focus on Product development• Invested in their own platform and technology as JV Ford

refused offer• Flat Hierarchy• Team Integration, Qualitative research, Evaluating opinions of

automotive experts • Effective close working of sub teams • Cost conscious - When cost exceeded, team identify the

solution to maintain under project's budget

• Company does not bound to stringent policies- builds prototypes for testing

• Collaborative efforts with suppliers which builds relationship of trust

• Company allowed supplier to choose their own collaborators

• M&M consolidate with Lear Corporation for Interior work of Scorpio

• Flexibility to choose own partner, Labour agreement - Does not have internal labour issue

• Guaranteed continuity of Scorpio and easy availability of auto parts

8

Powerful, in control, Sophisticated

Living life at one’s own

terms

A cut above, Expects the best

from Life, Nothing Else Matters.

Styling, International Looks, Power Car Like

Comfort

Styling, International Looks, Power

Car Like Comfort

Successful, new economy

Businessman, Self Made, Evolved Taste

Physique

Relationship

User Image

Persona

Culture

Self Image

Value PropositionBrand Identity Prism -

Scorpio

Product should appeal to Urban customers and compete with existing manufacturers

M&M had no experience in the SUV Market Ford’s refusal to do joint R&D Low bargaining power and high dependence on specific suppliers High promotional expenses for Image transition Susceptible to strikes in supporting Industries Problems in estimation of demand Hiring & Training Personnel to tackle urban market queries Requirement of upgraded outlets Satisfying global environmental regulations (Euro-III) High customization to suit Indian customers (Limits Global Market)

3. What constraints & challenges were created for the company to produce an innovative product like SUV in an emerging market?

4. Should the company expand globally or launch more products in the domestic

market?S TRENGTHS W EAKNESSES

O PPORTUNITIES T HREATS

• Competitive Value and stylish look

• Low R&D cost incurred per unit

• Good Reputation in Indian Market

• Strong domestic performance by Scorpio

• Low Brand Visibility in Global Market

• Low Production capacity as compared to Global automakers

• Improper Demand Forecasting

• Huge investment required for expansion

• Not bound by stringent policies

• High growth forecasts in Asia & Latin America

• Chinese Auto sales grew 70% in 2003

• High Market potential for rugged UVs

• Huge competition• Diverse Customer

preference • Varied Government rules

and policies

Negative

Internal factors

Externalfactors

Positive

M&M should focus on Domestic Market and neighbouring countries like Sri Lanka, Bangladesh, Afghanistan, Nepal

Should focus on increasing market share by competing with Global automakers through volume sales

Achieve economies of scale before venturing into global market

Avoid direct competition with major automakers in developed countries as of now

Outdated models can be launched in lower end markets like Nepal, Bangladesh & African countries

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