Mahindra & Mahindra (M & M) is a major player in the tractor and certain segments of the automobile market in India.
CASE STUDY (20 Marks)
Mahindra & Mahindra (M & M) is a major player in the tractor and certain segments of the automobile market in India. After an impressive growth for a few years, the tractor market in India has been stagnating during 1998-1999 to 2000-2001. M & M has been
selling its tractors and utility vehicles in foreign markets including USA. Some of the components for its products have been sourced from abroad. M & M has a 100 per cent subsidiary in USA, Mahindra USA, with a strong network of 100 dealers. Mahindra has a five per cent market share in the US market in the 20-30 horse power (HP) range. As a part of the strategy aimed at building a global supply chain, Mahindra USA has signed a memorandum of understanding (MoU) with the Korean tractor major Tong Yang, a part of the $ 2 billion Tong Yang Moolsam group, according to which Mahindra will source high horse power (mostly 25-40 hp range) and sell them around the world under the M & M brand name. To start with, the premium range of tractors will be sold in the US. M & M’s current tractor range is more utility-oriented and lacks the aesthetic appeal that Tong Yang’s tractors have a must for a strong presence in the US market.
Answer the following question.
Q1. What are the advantages and disadvantages of global sourcing?
Q2. How will the foreign market expansion help M & M?
Q3. How does the strategic alliance with Tong Yang benefit M & M?
Q4. What are the possible risks of the alliance? How can they be overcome/ minimized?
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