Mahindra & Mahindra in South Africa Essay

In May 2011, Pravin Shah, the CEO at Mahindra & angstrom Mahindra, was evaluating four possible picks of alliances growth outline in the southwestward Africa. Those options included ingress into agreement with the topical anesthetic vendor for the aim assembly of M&M vehicles, investing in its own manufacturing plant in southwest Africa, using South Africa as a hub for the further export of the opposite countries and lastly waiting and watching until enough vehicles ar sold for the sustainable long term growth. Once those options were evaluated, Shah needed to present the final chosen one to the board of directors for the final approval on the best strategy for clubs growth in the South African Market.1) Which option should Shah chose?Based on the information presented in this case (and not establish on the class discussion and video presented), I would apprize Shah to wield the wait and watch strategy at a given payoff of time. Shah was faced with this decision in 2011, which was only a few old age after the globular recession took place. so far though they had an outstanding result in 2010 showing the growth of sales at 24% and qualification the projections for the further sustainability, that was only one division of the positive outcome compared to the old age before that. During the time of the recession and specifically in years 2007 done 2009, an automotive foodstuffplace suffered dramatically.It was mainly due to the flow of credit and the spill of the law by the local anaesthetic South African government to leaping further availability of credit. Solely based on the case information, it would pretend sense to make a projection plan for the next 3-5 year to watch the growth of the automotive market and then take redundant necessary steps to further grow the unions overall expansion in the local market. Even though this option has near negative sides such as higher import duty and losing both(prenominal) of the market share to its competitors, in case of the declining auto market fleck it could financially benefit the confederation.2) What is your assessment of M&Ms experience with its South African subsidiary to date? To date, Mahindra & Mahindra shows a very hefty entry-level presence in the local market. In concisely 6 years period, they were able to capture the trust and loyalty of the local populations. Their strategy to manufacture and export vehicles that were suitable for local roads and, at the same time affordable for the locals, made it possible to secure the market share of 1.2% of the SUV and medium range SUV vehicles. Their localization of dealers in nine South African provinces made it possible for customers of all regions to have the direct plan of attack to the vehicle inventory. On the an new(prenominal)(prenominal) hand the fellowship faced a challenge of losing sales because of the time it took to process vehicles orders from India.3) How attractive is the So uth African auto market for the growth and lucrativeness? In the past ten-spot or so, South Africa showed a stable economic growth among the population. Even though the growth rates are somewhat low compared to the other developing countries, it didnt have any decline. With economic growth, more locals are able to afford to own a vehicle. As research submit presented in the case shows, the buying power of the black African consumers, making the largest fragment of the middle-income market, was rising. To the benefit of companies such as Mahindra & Mahindra, unlike discolour South African population, black African consumers were more open and addicted to purchase newly introduced brands to the markets.The research showed that they did not trust the local brands instead than preferred any specific European or Japanese/Korean brand. This presents a colossal opportunity for M&M to slip in the local South African market and continue its growth and profitability by securing the trust of local population. As long as guild considers the growing need and affordability of the vehicle introduced in the future, they have a strong potential in further securing the larger auto market segment in the local market.4) What potential roles can M&Ms South African subsidiary play in the companys global network? With the globalization growing it is very beta for international companies to be able to secure the brand within local markets. In this particular case, a South African subsidiary could potentially mean a large growth for the M&M. They would be able to shorten their delivery time and secure additional market segment by signing with the government. It would also be easier to export vehicles to other locations. The parent-subsidiary operating structure allows for greater diversification and increased efficiencies, partly because old management at the parent company does not have to be involved in the operational details of its subsidiary. It would a lso isolate plastered financial risks because the two companies are separate legal entities.5) What should be Shahs recommendation to M&Ms board of directors? Shah should advise the board of directors that at the current time it would be beneficial for the company to monitor the growth/decline of the automotive market on the global scale as well as in the South African market. With the reasonable proposal to monitor for the next 3-5 years it would allow company to receive securer results for the industry. Further on, based on the collected results, the company should consider moving on to the one of the other three options contract assembly, own manufacturing plant or use South Africa as a hub.