The Indian Automobile Market
• smallest cars - MUL made up 24% of the automobile market • two-wheelers – 79% • increasing demand for UVs • Toyota was a major player in the UV segment (Qualis) then Tata Sumo, Tata Safari
Mahindra & Mahindra • brand image – light commercial vehicles and
tractor manufacturer • Anand Mahindra – extensive business process re-engineering
Scorpio
•Won CNBC Autocar Award, 2003 •R&D by internal funding • key to M&M’s image change • Priced at $ 11,000 (people could obtain loans & were willing to pay) • Positioning: Upper end of the cheapest segment of UVs • Major Competitor: Toyota Qualis
Challenges for M&M
• Goal: All M&M companies should derive 20% rev. from abroad • not forayed into US and China – biggest markets • M&M could play in only one segment – other offered a range
Porter’s Five Forces Analysis
• Time and Cost of
Entry were high • High Switching Costs • Not easy to quickly replicate their model • Brand Image of being a tractor manufacturer
• Large no. of buyers
HIGH
• collaborative
relationships • systems were designed & engineered by suppliers • luck & timing
• Indian market &
dominance of twowheelers (79% of all vehicle purchases) • public transport
External Environmental analysis (M&M) Source: PEST Analysis
Political
• Reduction in Excise Taxation Policy • Concession on import duty for establishment of new manufacturing units
Economic
• Sales on Credit • Cheap Interest Rates • Competition among finance companies
Social
• Rising Income Levels • Credit Facilities
Technological
• Improvement of Road networks • Increase in the numbers of models available
Understanding the Value Chain…
Firm Infrastructure: Global expansion through JVs and tie-ups, new labor SUPPORT ACTIVITIES agreements Human Resource Management: small team, well-trained, culture of teamwork, extensive team integration Technology: Design, development and manufacturing capabilities, engine development, component integration capability Procurement: Flexible in choosing partners and suppliers to achieve lower costs, hired fewer people and hence, low manpower costs. Inbound Logistics: •From suppliers •From partners/ collaborators Operations:
•Customized product development
•Assembly •Testing
Outbound Logistics: •Existing dealers to reduce costs •Separate outlets in urban areas
Marketing & Sales: •“Break Free” – Bolero •Scorpio from
Mahindra
Services: •Trained personnel •After-sales service •Procurement of spared parts
BALANCED SCORECARD
Objectives Cut down on personnel & testing costs Maintain project budget • •
FINANCIAL
Measures Limited Workforce (128) Testing fewer units at lower cost Targets To decrease production costs and thus launch Scorpio at competitive price • • • • Initiatives Tested only 75 prototypes Small teams Sourcing from suppliers Flexibility in choice of manufacturer
CUSTOMER
Objectives To change brand identity • Measures Extensive market research Branding Shadow Endorsing Targets Position Scorpio as ‘urban & stylish’ • Initiatives Catchy taglines Press events 29 states in 29 days Objectives To encourage innovation in design process •
INTERNAL BUSINESS PROCESS
Measures Cross functional sub-teams (19) Flat hierarchy high degree of integration Targets Immediate translation of market research to design & engineering of Scorpio • • Initiatives Creation of IADM Kept young agegroup
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Vision and Strategy
• •
Objecti ves Becomi ng a global name • •
Measures Expansion of production capacity (export) Expansion to foreign markets (setting up manufacturing facilities there)
Targets Generating 20% revenues from outside India • • •
Initiatives Launched Mahindra Goa in Europe Tied up with Peugeot for outsourcing engines Ventured in South Africa