M&M Case Analysis

Amsterdam Business School

MBA International Business, part-time

Assignment week 5, November 25th, 2013

Case: Mahindra & Mahindra in South Africa

What approach M&M should take to South Africa?

Michelle Donovan 10429859

Kivanc Ozuolmez 10429832

Mahindra & Mahindra entered South Africa by exporting automobiles in October 2004, and within six months they formally shaped their business structure by setting up a 51% subsidiary, as a joint venture with a local investment partner. Since then, M&M appointed dealers in all nine provinces of South Africa and also created a network of customer service outlets and a distribution network for spare parts.

Despite the global economic downturn between 2007 and 2009, from their first step into South African market till now (2010), M&M had constant market share growth in its niche SUV segment. M&M now expects to capture much larger market share with the new economic momentum both in South Africa and in other countries in the region. With a view to fully control and manage its business, M&M (SA) bought out its local partner’s stake in August 2009.

Although M&M (SA) did very well for 6 years, the new market share targets require M&M to review its strategies in South Africa and for the African market in general.

Manufacturing in South Africa vs Importing Fully Assembled Units

So far M&M assembled its vehicles in India and imported them into South Africa as fully assembled units. This, of course, had some advantages from an Indian production line perspective. But from the South African market perspective, M&M missed many advantages of manufacturing in South Africa;

* Government support in the form of subsidies or import duties for CKDs (MIDP and APDP plans)

* M&M pays 25% import duties for CBUs into South Africa (where it is 20% for CKDs)

* If assembly were done in South Africa, some components could be substituted from local market, cheaper than importing....