Beruflich Dokumente
Kultur Dokumente
MANAGEMENT OF
MAHINDRA&MAHINDRA
Submitted to
Dr. Haribandhu Panda
Course Facilitator
Submitted by
Aruna Kumar Sahu (S0805)
Deviprasad Das (S0813)
Julfukar Khan (S0823)
Pratik Kumar Das (S0841)
Sitansu Sekhar Sahu (S0860)
Contents
1. INTRODUCTION.3
1.1 Rational of the project
1.2 Tractor Industry
1.3 Manhindra Tractor
1.4 Chapter Plan
2. INDUSTRY ANALYSIS OF TRACTORINDUSTRIES 4
2.1 PESTEL Analysis of Tractor Industries. 4
2.2. DIAMOND Analysis of tractor industries..6
2.3. Five force analysis of tractor industries..8
2.4. Key players.. 10
2.5. Drivers of Change 12
2.6. Opportunity and Threats 13
3. ORGANIZATIONAL ANALYSIS14
3.1 Mission, Vision, objective and strategy followed....14
3.2 BCG Matrix....16
3.3 Critical Evolution...16
3.4 New Mission and vision..17
3.5 Resource Analysis17
3.7 Strength and Weakness...20
3.8 Strategic clock..21
3.9 Ansoff Matrix..22
4. RECOMMENDATION23
5. CONCLUSION.24
Introduction:
This project is as the part of assignment for the partial fulfillment of Strategic Formulation
Management course of fourth trimester, where the objective is to know and analyze the
various strategic concept of Mahindra & Mahindra tractor.
The tractor industry in India has developed over the years to become one of the largest tractor
markets in the world. From just about 50,000 units in early eighties the size of tractor market
in the country has grown up to over 200,000 units. Today industry comprises of 14 players,
including 3 MNCs. The opportunities still are huge considering the low farm mechanization
levels in the country, when compared to other developed economies across the world. Key
concern for the industry is its dependence on agricultural income in hands of farmers and the
state of monsoon. The key players are Sonalike, Jhon Deer, Mahindra, New Holland etc.
Mahindra and Mahindra Limited was incorporated on October 2, 1945 as a private limited
company under the Indian Companies Act of 1913 by two brothers, Mr. J.C. Mahindra and
Mr. K.C. Mahindra. It was converted into a public limited company on June 15, 1955.
Mahindra & Mahindra Ltd, one of the largest private sector company in India, is the flagship
company of the Mahindra Group. The company commenced operations in 1945 to
manufacture General Purpose Utility Vehicles and later on entered into manufacturing of
Tractors and Light Commercial Vehicles (LCVs). Over the years, the company has expanded
its operations from automobiles and tractors to steel, trading and manufacturing of Ash
Handling Plants & Traveling Water Screens. The company is focused to become a world
giant in the tractor business. It has already made its presence felt in countries in Europe, Latin
America, Africa and United States of America.
Chapter Plan:
I.
II.
Introduction
Industrial analysis
III.
Organizational analysis
IV.
Conclusion
3
Industry analysis: There are various analysis are being done to know both immediate and
extended environment.
PESTEL analysis: There are many factors in the environment that will affect any
organization. Tax changes, new laws, trade barriers, demographic change and government
policy changes are all examples of macro change. To help in analyze these factors we can
categorize them using the PESTEL model. This classification distinguishes between political,
economical, social, technological, ecological and legal factor. By PESTEl analysis we can
know about extended environment and key drivers of change of an organization.
Political factors: These refer to government policy such as the degree of intervention in the
economy. What goods and services does a government want to provide, to what extent does it
believe in subsidizing firms, what are its priorities in terms of business support and political
decisions can impact on many vital areas for business such as the education of the workforce,
the health of the nation and the quality of the infrastructure of the economy such as the road
and rail system.
The political factors related to tractor industry are
Government laid stress on the mechanization of agriculture with a view to boost food
Economical Factors: These include interest rates, taxation changes, economic growth,
inflation and exchange rates. Economic change can have a major impact on a firm's behavior.
The economics factors related to tractor industry are:
95% of tractor sales are on credit. Credit is extended by commercial banks, state land
development banks and regional rural banks.
Cost of tractors in India is the cheapest in world .The cost of a finished tractor here is
as much as the cost of gear box in developed countries. Hence there exists tremendous
Social factor: Changes in social trends like population increase can impact on the demand
for a firm's products and the industry as a whole.
The social factors related to tractor industry are
Due to land fragmentation farmers with small land holding are buying tractor
There is an increase in awareness among the farmers for the need of farm
mechanization and are keen to acquire tractor with the help of credit facilities from
financial institutions.
there is need for more tilling due to depletion of moisture and repeated cultivation of
land .It is precisely for this reason that the demand for tractors was well maintained
Technological factor: New technologies create new products and new processes.
Technology can reduce costs, improve quality and lead to innovation. These developments
can benefit consumers as well as the organizations providing the products. Sometimes the
technology reduces the life cycle of products. The technological factors related to tractor
industry are
Ecological factors: Ecological factors include the weather and climate change. Changes in
temperature can impact on many industries including farming. With major climate changes
occurring due to global warming, Acid rain, Green- house effect and with greater
environmental awareness this external factor is becoming a significant issue for firms to
consider. The growing desire to protect the environment is having an impact on many
industries, as environmentally friendly products and processes are affecting demand patterns
and creating business opportunities.
The ecological factors related to tractor industry are
Irrigation facilities reduce reliance on the monsoon and allow for quick yielding
varieties of food -grain .This reduces the cropping cycle to 3-4 months from the
traditional 5-6 months. Reduced cropping cycle require deep tilling which translates
Legal factors: These are related to the legal environment in which firms operate. In recent
years the changes legal factors of developed countries affected firms' behavior in other
countries due to globalization. Legal changes can affect a firm's costs if new systems and
procedures have to be developed and demand if the law affects the likelihood of customers
buying the good or using the service. The legal factors related to tractor industry are
Diamond Analysis: This analysis is done to know the fairness and suitability of a market.
The analysis is given below.
Diamond analysis:
Demand condition
Factor market
condition
Rivalary
Related and
supported industry
Five force analysis: from five force analysis we can know the industry structure and the
opportunity and threats. In is conducted to know about the immediate environment. The
competitive structure of an industry can be analyzed using Porter's five forces. This model
attempts to analyze the attractiveness of an industry by considering five forces within a
market. According to Porter (1980) the likelihood of firms making profits in a given
industry depends on five factors:
Bargaining power of buyer: The stronger the power of buyers in an industry the more likely
it is that they will be able to force down prices and reduce the profits of firms that provide
the product. For tractor industry:
Due to High switching cost tractors companies can compromise on quality and price
there are a few, big buyers so each one is very important to the firm
Though steel forms a major inputs , the tractor industry is not most important
customer for steel industry
Hence the barriers to entry are high. These barriers are however moderated by 100% FDI
policy
Threat of substitute: This measures the ease with which buyers can switch to another
product that does the same thin. The ease of switching depends on what costs would be
involved and how similar customers perceive the alternatives to be. For tractor industry:
The rivalry is extremely high owing to the consolidation that the industry is
witnessing
Entry of foreign players
Continuous technological innovation
Less merger and acquisition of tractor industry increases rivalries
Opening of world market
Key players: Today there are as many as 14 players operating into tractor manufacturing
activity in the count ry. However, about 90 per cent of market is shared among the top 5-6
players only. Mahindra and Mahindra continues to dominate the industry with close to 30 per
cent share, while other players like TAFE, Escorts, PTL, ITL and Eicher enjoys market share
of 15 per cent , 14 per cent , 11 per cent , 11 per cent and 9 per cent respectively.
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TRACTOR COMPANY
M&M
TAFE
ESCORT
PTL
ITL
EICHER
HMT ltd
OTHERS
21-30hp
31-40hp
41-50hp
<50hp
M&M
37.2%
44.9%
18.7%
57.6%
TAFE
30.4%
26.5%
41.6%
1.1%
11
Escort
18%
7.2%
0.9%
LT-JD
0.0%
0.5%
12.9%
29%
Sonalika
9.5%
10.5%
0.0%
0%
HMT
2.6%
3.7%
23.5%
4.6%
Others
2%
7%
2%
8%
Drivers of change: From the PESTEL analysis we can know the drivers of change
Factors
Drivers of change
Political
Investment by government
These drivers are making the
Extension of rural credit by
market attractive.
government
Subsidized by government
Economical
Changes
Demand increases.
availability
at
affordable rate
Social
Technological
Ecological
Monsoon
Cropping cycle
Global warming
Agricultural animal
Collaboration
Legal
government
Agricultural policy
Opportunity and Threats
Industry levels opportunity:
Huge increase in export: Indian tractors are cheapest in the world. It costs as much as
a gear box costs in a developed country. Indian tractors are gaining international
acceptance because of their standard. Thus there is a huge opportunity for exports to
various countries in Asia and Africa and exports have seen a growth of about 45% in
year 2007-08.
Increase in credit availability: More private banks are also now lending credit to
farmers along with nationalized banks for purchasing farm machinery. This provides
advantage.
The government has been trying to strengthen the exports of agricultural products.
As a result, the quality of agricultural products necessarily has to be very high. For
this, they need better rural and agricultural infrastructure. This might result in an
enjoys a strong customer loyalty for being sturdy and reliable. This acquisition has
an opportunity of getting advantages of economies of scale, sourcing benefits and
vendor rationalization.
Threats:
boost tractor sales. The sales dip significantly in the year when the monsoon fails.
Entry of foreign players: they are no cap of FDI that can be invested in this industry.
Hence foreign players who wish to enter this industry do not need a joint venture or
any tie up with the existing Indian tractor manufacturers. Moreover, the foreign
players like John Deer and New Holland who have entered in the market have
http://www.aranca.com/samples/airsreport.pdf
http://en.wikipedia.org/wiki/Tractors_in_India
http://www.deere.com/en_US/deerecom/usa_canada.html
http://www.newholland.com/home.asp
Organization analysis:
Mission/Vision
Goals and Objectives
Strategy followed
Vision: Indians are second to To
provide
highly
E-business Initiatives
none in the world. The technological
innovative
Products
that
Ltd.
known
Joint
almost
acquisition
all
continents
of
world
ventures,
and
in
other
countries
Foreign competition.
Restructuring
company.
of
the
Network of dealers,
sales offices, service
stations etc.
make
the
production
Experiments)
in the morning
Total
Maintenance)
15
and
TPM
Productive
dealers, By
developing
good
Keeping
good relationship
BCG matrix:
Mar
k et
Gro
wth
H
i
g
h
L
o
w
Market Share
16
Critical evaluation:
The mission and vision are very general. The objectives are according to mission and visions.
There should be specific strategy for each objective. As there are many brands under
umbrella brand Mahindra and Mahindra, so there should be separate for all brands. Some
objectives are not quantified
New vision: To be the undisputed leader of world automobile and farming equipment
industry.
New Mission: To provide best value for money to customers through best quality and most
cost effective products and services.
Resource analysis- There is two types of resources i.e. Stock resources and capabilities
resources.
Stock Resources: These are the resources which are required to start any business at base
level. Physical, financial and technological resources are coming under stock resources.
1. Physical resources:
High inventory capacity
The parent company has its own Infrastructure Company, IT Company and
Financial service company.
High quality equipments for production
Many number of own out-lets
Have own OEMs
Large infrastructure
2. Financial resources:
Highest market share
High value of market share
The company has an equity capital base of Rs. 110.5 crore and the number of
shares are 11.05 crore
17
1,387.63 crore.
3. Human resources:
The company is inducting senior management resources from diverse
companies like Xerox, Marico, Enron, Hindustan lever Ltd as well as from
engineering, tractor and automobile sectors. This enabled the company to
induct a talent pool with rich background which was suitable to the changing
business operations
resources, product
corporate citizenship
Mahindra & Mahindra, the leading Indian automotive manufacturer for over
60 years, today announced a landmark breakthrough in Indian alternate fuel
technology. M&M today formally announced its emphasis on bio-diesel and
had also set up its own bio-diesel pilot plant way back in 2001
M&M has been seriously looking at technologies that will help enhance focus
on converting bio-mass to bio-fuels.
Capability resources: These are flow resources which are coming from competencies of
employees and capability of organizations. Production capability, marketing capability,
human resources development capability and steering capabilities are coming under
capability resources.
1. Innovation:
18
The company has set up Mahindra Kisan Mitra (MKM), a Web site which
provides farmers the latest information relating to crops, weather conditions,
loans, insurance schemes, commodity prices, Government schemes, news and
events.
M&M carried our extensive studies on traditional engines and vehicles and
realized the need to develop vehicles for contemporary and fuel efficient diesel
2. Production capability:
Methodologies like TQM,QC story and QC tools, Six Sigma, DOE ( Design of
3. Marketing capability:
Huge distribution channel in rural, urban and semi urban area
Established brand name
Highly motivated sales people
As part of this initiative, 30 Mahindra dealerships have been transformed into
Samriddhi centers, offering the farmer easy access to technological know-how,
hybrid seeds, soil and water-testing facilities, demo farms, finance and
insurance, Internet updates and sales and servicing of tractors and tractor
implements.
Good advertisement strategy
After sale service for longer period
A quick one-stop-shop for promotion of company
4. Human resources development:
Thrust is on building leadership development at middle and senior
http://www.prdomain.com/companies/M/Mahindra&Mahindra/newsre
leases/2003101820570.htm
http://mahindratractor.com/pdf/Samriddhi%20PR
%20_Raipur_Mar18,08.pdf
Strength
Weakness
1. The
20
company
is
highly
Recommended strategy-
Strategic Clock
High
Moderate
Low
P
er
ci
e
v
e
d
u
ni
q
e
n
Arju
n
Sarapan
cha
New
Sarapa
ncha
Sha
an
Low
vumiput
ra
Price
Moderate
High
21
New market
Existing
market
Existing
product
New product
Market Development: Mahindra tractor is going to launch the old 21-70 hp tractors in china
market for which it has to develop its own market. Thats why it acquired Jiangling Tractor
Company.
22
Strategy of Consolidation: As it is operating in India market with its existing tractors it has
to reduce cost of production and to develop bases for differentiation to achieve competitive
advantage over other competitors.
Product development: As India is its its existing market and there are so many competitors
including 4 MNCs and other foreign players the company should develop new product. So
company has to develop its own R&D capabilities.
Strategy of Diversification: As Mahindra tractor is going to launch new product in new
market like china it should go for related diversification. In related diversification it has gone
for both vertical and horizontal diversification.
Horizontal Diversification: In this Mahindra has already acquired complementary company
like Yacheng vehicle utility company in China, Hinoday casting and Ferrites Company and
Castrol of India.
Vertical Diversification: These diversifications are goes along the value chain of a company.
In this company has gone for acquiring some advertisement agency, component part industry
and a market research company.
Methods:
Internal Development: Develops its own R&D, OEM and Finance company
Acquisition or by External support: Acquised various companies like PTL, Yacheng and
Jiangling for diversification both in Indian and Foreign market
Joint Development: Developed own engine oil jointly with Servo.
1. Marketing Recommendations:
a. Focus on 41-50 hp segment tractors: Industry analysis demonstrates a tangible
demand shift from 2130HP category to higher HP category while Mahindar
is less focusing on 41-50 hp category. Marketing efforts should be accordingly
re-directed towards the 41-50 HP categories to prevent further decline in
b.
market position.
Develop in-house credit lending facility: Credit lending is increasingly
playing an important role in purchase decision process. Mahindra should try to
23
give lending facility to all by its own finance company in order to drive up
2.
3. Expand geographically
a. Leverage international presence: Cross-geography expansion would help it
leverage synergies between the tractors and auto parts business units on a
b.
Conclusion:
From the above it is clearly found that the performance of Mahindra and Mahindra tractor in
this tractor market is very encouraging. And the business strategy is very highly competitive
and innovative. The company should concentrate on strategies like cost advantage and
differentiation. Also the emerging market of tractor industry is very encouraging, so only
thing is to follow the strategy which will be able to meet the customer needs. As far as
resource is concerned Mahindra & Mahindra is very strong in resource an d and capabilities.
24
Reference:
1. Tractor Industry - http://dsir.nic.in/reports/techreps/tsr042.pdf
2. Acquisition Candidates
http://www.preetagro.com
http://captaintractors.com/
3. Mahindra & Mahindra Limited
http://en.wikipedia.org/wiki/Mahindra_%26_Mahindra_Limited
4. Eicher Motors - http://en.wikipedia.org/wiki/Eicher
5. Escorts Group - http://www.mahindragroup.com
6. Tractor Industry in India Present and Future http://www.unapcaem.org/Activities%20Files/A0611/P-In.pdf
7. Tractor industry fortunes on the upswing http://www.thehindubusinessline.com/bline/2004/12/22/stories/2004122201700200.ht
m
8. The Escorts story: Can it be saved? http://202.54.124.133/money/2005/sep/10spec.htm
9. Tractors in India - http://en.wikipedia.org/wiki/Tractors_in_India
10. Indian Agricultural Machinery Market: An Investment Perspective http://www.aranca.com/samples/airsreport.pdf
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