Professional Documents
Culture Documents
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)
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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 ANALYSIS…………………………………………14
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 Analysis……………………………………………………17
3.7 Strength and Weakness……………………………………………...20
3.8 Strategic clock………………………………………………………..21
3.9 Ansoff Matrix………………………………………………………..22
4. RECOMMENDATION………………………………………………………23
5. CONCLUSION……………………………………………………………….24
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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. Introduction
IV. Conclusion
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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.
• Government laid stress on the mechanization of agriculture with a view to boost food
grain production. Therefore agriculture sector started receiving financial assistance.
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.
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• 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
scope for exports.
• Detoriating foreign exchange situation in western country, poor buying capacity and
comparatively cheaper import of second hand tractor from developed country reduces
the export of tractor from India in recent days.
• inflation may provoke higher wage demands from employees and raise costs
• higher national income growth may boost demand for a firm's products
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.
• 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
even during a draught period
• Animal power available is too inadequate to meet power demand of our farmers.
Mechanized operations are preferred to eliminate drudgery and delay, also labor
shortage during harvesting increased the use of tractor
• More farmers are opting for multiple cropping over last decade. Country's gross
cropped area increased by about 4.7%. This indicates the increased popularity of
multiple cropping.
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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.
• 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
into higher demand for tractors.
• Global warming
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
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• Agricultural policy
Diamond Analysis: This analysis is done to know the fairness and suitability of a market.
Diamond analysis:
Demand condition
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:
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Bargaining power of supplier: The stronger the power of suppliers in an industry the more
difficult it is for firms within that sector to make a profit because suppliers can determine
the terms and conditions on which business is conducted. For tractor industry:
Threat of Entry: the extent to which barriers to entry exist. The more difficult it is for
other firms to enter a market the more likely it is that existing firms can make relatively
high profits. For tractor 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:
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• The only option available is bull-plough
Rivalry: This measures the degree of competition between existing firms. The higher the
degree of rivalry the more difficult it is for existing firms to generate high profits. For tractor
industry:
• The rivalry is extremely high owing to the consolidation that the industry is
witnessing
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Five –Force analysis
Porter 5 Forces Analysis Summary Snapshot http://en.wikipedia.org/wiki/Porter_5_forces_analysis
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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Market share in Horse –Power segment
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Drivers of change: From the PESTEL analysis we can know the drivers of change
• 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
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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 an opportunity for growth in sales of tractor.
Threats:
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• 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 technological superiority which poses a threat to current players.
Organization analysis:
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worldwide for the quality of By 2015 it wants to enter Joint ventures,
its product and services. almost all continents of acquisition and
world merger with different
players in other
countries
Foreign competition.
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power segments of tractors. the urban, semi-urban
and rural areas.
USP – ruggedness and
performance.
BCG matrix:
Mar H
k et i
Gro g
wth h
L
o Market Share
w
Critical evaluation:
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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:
• The parent company has its own Infrastructure Company, IT Company and
Financial service company.
• Large infrastructure
2. Financial resources:
• The company has an equity capital base of Rs. 110.5 crore and the number of
shares are 11.05 crore
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• The market capitalization of the company, as on 30th March 2001, is Rs.
1,387.63 crore.
3. Human resources:
• Also in order to bring in young talent keeping in mind the long term
objectives, the group has started a formal Management Trainee Scheme
through campus recruitments. The move threw up an interesting observation,
that of acceptability of young blood working initially at operational level jobs
with older experienced people.
4. Technological resources:
• With plants in Mumbai and Nagpur, the farm equipment sector of Mahindra
and Mahindra manufactures tractors, which are state-of-the art and
technologically one of the most advanced.
• 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
unveiled the bio-diesel
• M&M has been seriously looking at technologies that will help enhance focus
on converting bio-mass to bio-fuels.
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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:
• 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 engines like CRDE, meeting the world's latest emission norms.
• The first Indian tractor with turbo technology the 'Mahindra Sarpanch 595 Di
Super Turbo'.
2. Production capability:
• Methodologies like TQM,QC story and QC tools, Six Sigma, DOE ( Design of
Experiments) and TPM ( Total Productive Maintenance) are available.
3. Marketing capability:
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• Highly motivated sales people
• To avoid the feeling of animosity and in order to build camaraderie, the group
has put in place a Mentoring system, where each management trainee has a
senior executive who plays the role of mentor.
• The mentor reviews the progress made by the trainee every two-three months
and provides guidance and counseling if the need so arises.
http://www.prdomain.com/companies/M/Mahindra&Mahindra/newsr
eleases/2003101820570.htm
http://mahindratractor.com/pdf/Samriddhi%20PR
%20_Raipur_Mar18,08.pdf
Strength Weakness
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1. Market leader in terms of market 1. The company is highly
share is its biggest strength dependent on the rural sector
Recommended strategy-
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Strategic Clock
High Arju
P Sarapan vumiput
n cha
er ra
ci
e
v
Moderate e Sha New
d an Sarapa
u ncha
ni
q
e
Low n
Price
Low Moderate High
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Ansoff Matrix (Product-Market Matrix)
New market
Existing
market
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. That’s why it acquired Jiangling Tractor
Company.
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 it’s 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.
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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
1. Marketing Recommendations:
2. Focus on Channels
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co-operative societies. Government partnership would impart a stamp of
reliability on Mahindra tractors and at the same time, provide -platfoa ³testrm
for the farmers who would definitely consider Escorts when buying a tractor in
future.
3. Expand geographically
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.
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Reference:
1. Tractor Industry - http://dsir.nic.in/reports/techreps/tsr042.pdf
2. Acquisition Candidates ±
http://www.preetagro.com
http://captaintractors.com/
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http://www.indianmba.com/Occasional_Papers/OP127/op127.html
13. IT² Information Technology and the Human Interface Tractor Vibration Severity
and Driver
Health: a Study from Rural India -
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WH1-45RFHJG-
2&_user=1007270&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C0000
50224&_version=1&_urlVersion=0&_userid=1007270&md5=1ac8bde5ae1ce37cf3fb
ee1102ef91d314.
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