Mahindra & Mahindra in South Africa Case Analysis

Case analysis— Mahindra & Mahindra in South Africa

A brief statement of the problem

Mahindra & Mahindra Ltd. (M&M), founded in Mumbai, India in 1945, is a leading multinational automotive manufacturer. And M&M had been exporting its automobiles to South Africa since October 2004, while Mahindra & Mahindra South Africa (Proprietary) Ltd. (M&M (SA)) formally entered South Africa in February 2005.

In May 2011, the chief executive of International Operations (Automotive and Farm Equipment Sectors)—Pravin Shah was facing a “dilemma” when he was weighing his options on the company’s growth strategy in South Africa. He could choose to cooperate with its Egyptian vendor more tightly in contract assembly of M&M vehicles, while could choose to directly invest in South Africa to its own manufacturing facility. At the same time, Shah could choose to wait and see until the proper time which would be sustainable for the long-term development. Otherwise, he could use South Africa as the re-export hub to expand the African continent export market.

1. Which option should Shah chose?

From my perspective of view, Shah should choose to directly invest in South Africa to M&M’s own manufacturing facility, considering both the purchase behavior of South Africans and the South African government’s incentive policy. Besides two strategic plan— “M&M’s long-term plans to launch a global sport-utility vehicle (SUV) brand from South Africa” and “the launch of a new SUV for the South African market built on an altogether new platform”, there are several other reasons to choose this option. First of all, from the strategic attractiveness extent, M&M has a global perspective since it’s established at the beginning. And South Africa has been an important market in M&M’s global growth plans. And the local presence would be a more thorough production line, from components production to the customer service, which would improve the customers’...