Strategic Marketing Assignment II by Group II (EPGDBM, JD)

8/2/2019 Strategic Marketing Assignment II by Group II (EPGDBM, JD)

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Submitted toDr. Haribandhu Panda

Course Facilitator

Submitted byAruna Kumar Sahu (S0805)

Deviprasad Das (S0813)

Julfukar Khan (S0823)

Pratik Kumar Das (S0841)

Sitansu Sekhar Sahu (S0860)

1

STRATEGIC FoRMULATION

MANAGEMENT OF

MAHINDRA&MAHINDRA


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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 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

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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

II. Industrial analysis

III. Organizational analysis

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.

The political factors related to tractor industry are

Government laid stress on the mechanization of agriculture with a view to boost food

grain production. Therefore agriculture sector started receiving financial assistance.

Subsidy on agricultural loans from government

Change in taxation policy

100% FDI policy

Regaining Agricultural dynamism, a key goal of eleventh Five year plan

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:

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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.

Less interest rate charged by banks for agricultural inputs

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.

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

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

Accelerated acquisition of technology capabilities to raises productivity in agriculture.

Continuous technological innovation

Renewable energy development. Ex, coal gas renewable

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

into higher demand for tractors.

Strong monsoons, increase lending by nationalized banks which leads to farming of

commodity prices money availability catapulted tractor demand.

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

Collaboration with government which shapes policy issues

Agricultural policy

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Diamond Analysis: This analysis is done to know the fairness and suitability of a market.

The analysis is given below.

Diamond analysis:

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Physical resources, financial

resources, technological

innovation, raw material and

skilled human power are

easily available.

Customers are more

demanding because there is a

need of more production inless time, numbers of bulls

for ploughing is decreasing

and they can use the tractor

for transportation purpose

also. Good financial support

for agricultural equipments.

This industry comprises of

14 players including 4

MNCs. There are big

competitors like TAFE,

Escorts, PTL, ITL, Eicher,

John Deer and New Holand

are competing in market

which leads to a healthycompetition.

Demand condition

Factor market Rivalary


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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 industrydepends 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:

The consumer base of tractor is highly disbursed throughout India.

Due to High switching cost tractors companies can compromise on quality and price

Lack of awareness among farmers like pricing, offerings. Etc.

there are a few, big buyers so each one is very important to the firm

This leads to low bargaining power of buyer

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:

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The related and supported

industry like casting

industry, Forging part

industry, Equipment

industry, Battery industry,

Engineer and Technological

industry, Marketingagencies, Piston and Ring

industry are available largely

which leads to high quality

product with low cost.

Related andsupported industry


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The suppliers do not pose any threat of forward integration

Though steel forms a major inputs , the tractor industry is not most important customer

for steel industry

Many number of supplier are there for tractor industry

Switching cost from one supplier to another is less

Hence bargaining power of supplier is less.

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 highprofits. For tractor industry:

The tractor industry is capital-oriented with intensive technology requirement

Need of a large dealer network

High switching cost

Competitors are very reactive towards new entry

Brand loyalty of existing brands is high in tractor industry, Ex, Mahindra in

rural market

Up to extent the existing companies have control over the suppliers

High startup capital is required

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:

There are no credible substitutes to the tractors

The only option available is bull-plough

Power-tellers very low power of substitute

Hence there is low threat of substitute for tractor.

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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

Entry of foreign players

Continuous technological innovation

Less merger and acquisition of tractor industry increases rivalries

Opening of world market

Hence there is high degree of industry rivalry.

http://dsir.nic.in/reports/techreps/tsr042.pdfhttp://www.escortsgroup.com/newsroo

m/newsroom_industry_news.html

http://www.unapcaem.org/Activities%20Files/A0611/P-In.pdf

http://www.thehindubusinessline.com/bline/2004/12/22/stories/200412220170020

0.htm

Five Force analysis

Porter 5 Forces Analysis Summary Snapshot http://en.wikipedia.org/wiki/Porter_5_forces_analysis

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http://dsir.nic.in/reports/techreps/tsr042.pdfhttp://www.escortsgroup.com/newsroom/newsroom_industry_news.htmlhttp://dsir.nic.in/reports/techreps/tsr042.pdfhttp://www.escortsgroup.com/newsroom/newsroom_industry_news.htmlhttp://www.unapcaem.org/Activities%20Files/A0611/P-In.pdfhttp://www.thehindubusinessline.com/bline/2004/12/22/stories/2004122201700200.htmhttp://www.thehindubusinessline.com/bline/2004/12/22/stories/2004122201700200.htmhttp://en.wikipedia.org/wiki/Porter_5_forces_analysishttp://dsir.nic.in/reports/techreps/tsr042.pdfhttp://www.escortsgroup.com/newsroom/newsroom_industry_news.htmlhttp://dsir.nic.in/reports/techreps/tsr042.pdfhttp://www.escortsgroup.com/newsroom/newsroom_industry_news.htmlhttp://www.unapcaem.org/Activities%20Files/A0611/P-In.pdfhttp://www.thehindubusinessline.com/bline/2004/12/22/stories/2004122201700200.htmhttp://www.thehindubusinessline.com/bline/2004/12/22/stories/2004122201700200.htmhttp://en.wikipedia.org/wiki/Porter_5_forces_analysis


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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.

TRACTOR COMPANY MARKET SHARE PERCENTAGE

M&M30%

TAFE 15%

ESCORT 14%

PTL 11%

ITL 11%

EICHER 9%

HMT ltd 3%

OTHERS 7%

Market share in Horse Power segment

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Tractor company/Market share 21-30hp 31-40hp 41-50hp


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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.

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Factors Drivers of change Changes

Political Investment by government These drivers are making the

market attractive.Extension of rural credit by

government

Subsidized by government

Economical Heavily depend upon rural

economy

Bank clamped down on credit.

Demand increases.

Credit availability at affordable

rate

Global economy melt down

100% FDI policy

High national income

Taxation policy

Social Land fragmentation Moderate effect

Animal for agriculture

Awareness

More farmers opting multiple

cropping

Per capita consumption is low

in India

Technological High technological innovation High quality product

Import of technology

Coal and Gas renewable

Ecological Monsoon

Cropping cycle

Global warming

Agricultural animal

Legal Collaboration with government This attracts the more players

Agricultural policy


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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.

Technological innovation: There are also several innovations taking place such

as fuel efficient tractors and tractor that use alternate energy source. These will be the

tractors of the future and if a company acquires competencies in this, it gains huge

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 veryhigh. For this, they need better rural and agricultural infrastructure. This might result

in an increase in demand for tractors.

In India, the penetration of tractors is 10 tractors per 1000 hectares of cropped

area, which is much below the world average of 19 tractors for the same. Thus there is

scope for the demand to increase.

Mahindra & Mahindra had acquired a majority stake in Punjab Tractors Limited

(PTL) in early 2007. PTL is a good strategic fit to the company, as it comes with its

strength of efficient design (strong R&D abilities) and the Brand Swaraj, which 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:

Dependency on monsoon: the growth of tractor industry is heavily dependent on

the growth of agriculture. Good monsoon increases the agricultural GDP and hence

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

technological superiority which poses a threat to current players.

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Farm land fragmentation: One measure characteristics of Indian farm land is

that they are heavily fragmented and are of small size. The farmers do not hold

sizeable chunk of land to use agricultural machinery like tractor in their land.

The company has a history of having invested in unrelated diversifications such

as telecom, holiday and resort inns, financial services, etc. which it has hived off as

subsidiaries from time to time when these turned unmanageable. This is a cause for

concern as such diversifications could divert the company's attention from its core

business. It is a dangerous tendency as it leads to destruction of shareholders value.

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

none in the world. The

founders of our nation and of

our company passionately

believed this. We will prove

them right by believing in

ourselves and by making

M&M Ltd. known worldwide

for the quality of its product

and services.

To provide highly

technological innovative

product

E-business Initiatives

and by out sourcing of

technology

Products that redefined

the market

By 2015 it wants to enter

almost all continents of world

Joint ventures,

acquisition and merger

with different players

in other countries

Foreign competition.

Plan to open 30 outlet pan in Restructuring of the

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http://www.aranca.com/samples/airsreport.pdfhttp://en.wikipedia.org/wiki/Tractors_in_Indiahttp://www.deere.com/en_US/deerecom/usa_canada.htmlhttp://www.deere.com/en_US/deerecom/usa_canada.htmlhttp://www.newholland.com/home.asphttp://www.aranca.com/samples/airsreport.pdfhttp://en.wikipedia.org/wiki/Tractors_in_Indiahttp://www.deere.com/en_US/deerecom/usa_canada.htmlhttp://www.newholland.com/home.asp


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India by next 4 year company.

Network of dealers,

sales offices, service

stations etc.

Mission: We dont have a

group-wide mission

statement. Our core purposeis what makes all of us want

to get up and come to work in

the morning

to make the production

system even more efficient

proactively following world-

class methodologies like QC

story and QC tools, SixSigma, DOE ( Design of

Experiments) and TPM ( Total

Productive Maintenance)

To usher prosperity; for its

customers, dealers,

employees, society and all

other stakeholders.

By developing good

citizenship behavior.

Keeping good relationship

with customers by providing

better quality service and

providing latest information

To be the market leader in all

power segments of tractors.

Strong market base in

the urban, semi-urban

and rural areas.

USP ruggedness and

performance.

BCG matrix:

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Market Share

New vision: to be the undisputed leader in world automobile and farming

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.

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Low

High

Mar

k et

Gro

wth

H

ig

h

L

o


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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

The market capitalization of the company, as on 30th March 2001, is Rs.

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

requirements of the group.

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:

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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.

It is the companies that have established Total Quality Management in their

entire business operations ranging from human resources, product development,

sales and marketing processes, vendors to its commitment to 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

unveiled the bio-diesel

M&M is a pioneer in R&D of alternate propulsion technologies in India 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:

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'.

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2. Production capability:

Methodologies like TQM,QC story and QC tools, Six Sigma, DOE ( Design of

Experiments) and TPM ( Total Productive Maintenance) are available.

Efficient and competent employees

Process control in production

Highest production capabilities( 1,50,000 tractors per year)

Larger rural initiative Mahindra Samriddhi, which aims to increase agricultural

productivity through creative farming techniques.

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 management

levels, where the emphasis is on strategy, leadership and change.

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Training and development programme to all level of employees.

Proper succession and career planning.

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/newsrel

eases/2003101820570.htmhttp://mahindratractor.com/pdf/Samriddhi%20PR

%20_Raipur_Mar18,08.pdf

Strength and Weakness of Mahindra Tractor

Strength Weakness

1. Market leader in terms of market

share is its biggest strength

2. The company's ability to introduce

new products in the market and to

generate sales from those new

products is a major strength. The

reason being that this is very

essential for any company, for its

survival in the long run.

3. The company has established its

brand name in other countries of the

world as well which is biggest

strength of a company to extend and

diversify the business

4. Large and effective distribution

1. The company is highly

dependent on the rural sector

2. Less technological ability as

compared to Foreign players

3. Low labor productivity

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http://www.prdomain.com/companies/M/Mahindra&Mahindra/newsreleases/2003101820570.htmhttp://www.prdomain.com/companies/M/Mahindra&Mahindra/newsreleases/2003101820570.htmhttp://mahindratractor.com/pdf/Samriddhi%20PR%20_Raipur_Mar18,08.pdfhttp://mahindratractor.com/pdf/Samriddhi%20PR%20_Raipur_Mar18,08.pdfhttp://www.prdomain.com/companies/M/Mahindra&Mahindra/newsreleases/2003101820570.htmhttp://www.prdomain.com/companies/M/Mahindra&Mahindra/newsreleases/2003101820570.htmhttp://mahindratractor.com/pdf/Samriddhi%20PR%20_Raipur_Mar18,08.pdfhttp://mahindratractor.com/pdf/Samriddhi%20PR%20_Raipur_Mar18,08.pdf


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channel.

5. Sufficient financial resources

Recommended strategy-

Strategic Clock

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High

Moderate

Low

Low Moderate High

Strategic clock helps to develops strategy with compared to competitors.

Direction and methods of strategy development:

Ansoff Matrix (Product-Market Matrix)

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Price

P

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Arju

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Sha

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Sarapanc

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New

Sarapan

cha

vumiput

ra


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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.

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.

24

Existing

product

New product

New market

Existingmarket


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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

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 market

position.

b. Develop in-house credit lending facility: Credit lending is increasingly playing

an important role in purchase decision process. Mahindra should try to give

lending facility to all by its own finance company in order to drive up demand

for its products.

2. Focus on Channels

a. Ensure higher distributor margins: Distributors have a significant impact on

shaping end- consumer preferences. Ensuring higher distribution margins would

provide necessary monetary incentive for distributors to tout for Mahindra

tractors, especially given very low levels of end-consumer awareness.

b. Provide tractors on lease through govt. agencies: Mahindra tractors can be

made available on lease in partnership with government agencies as sugar millco-operative societies. Government partnership would impart a stamp of

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reliability on Mahindra tractors and at the same time, provide -platfoa testrm

for the farmers who would definitely consider Escorts when buying a tractor in

future.

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 much

larger scale.

b. Diversify Tractors - Monsoons correlation: Tractor sales, as already seen, aredriven by monsoons. A bad 3-months monsoon season generally translates into

large inventories, as seen in the dry spell of 2001-03. Geographical expansion

would help diversify tractors sales monsoon correlation, thus bringing down

inventories to free up locked-up capital.

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/

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.htm

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

11. Gujarat innovator's Rs 1.6 lakh tractor -

http://www.rediff.com/money/2007/dec/18agri.htm

12. Tractor Industry in India -

http://www.indianmba.com/Occasional_Papers/OP127/op127.html

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http://dsir.nic.in/reports/techreps/tsr042.pdfhttp://dsir.nic.in/reports/techreps/tsr042.pdfhttp://www.preetagro.com/http://captaintractors.com/http://en.wikipedia.org/wiki/Mahindra_%26_Mahindra_Limitedhttp://en.wikipedia.org/wiki/Eicherhttp://www.mahindragroup.com/http://www.unapcaem.org/Activities%20Files/A0611/P-In.pdfhttp://www.thehindubusinessline.com/bline/2004/12/22/stories/2004122201700200.htmhttp://202.54.124.133/money/2005/sep/10spec.htmhttp://en.wikipedia.org/wiki/Tractors_in_Indiahttp://www.aranca.com/samples/airsreport.pdfhttp://www.rediff.com/money/2007/dec/18agri.htmhttp://www.indianmba.com/Occasional_Papers/OP127/op127.htmlhttp://dsir.nic.in/reports/techreps/tsr042.pdfhttp://www.preetagro.com/http://captaintractors.com/http://en.wikipedia.org/wiki/Mahindra_%26_Mahindra_Limitedhttp://en.wikipedia.org/wiki/Eicherhttp://www.mahindragroup.com/http://www.unapcaem.org/Activities%20Files/A0611/P-In.pdfhttp://www.thehindubusinessline.com/bline/2004/12/22/stories/2004122201700200.htmhttp://202.54.124.133/money/2005/sep/10spec.htmhttp://en.wikipedia.org/wiki/Tractors_in_Indiahttp://www.aranca.com/samples/airsreport.pdfhttp://www.rediff.com/money/2007/dec/18agri.htmhttp://www.indianmba.com/Occasional_Papers/OP127/op127.html


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13. IT 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=C00005

0224&_version=1&_urlVersion=0&_userid=1007270&md5=1ac8bde5ae1ce37cf3fbee

1102ef91d314.
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WH1-45RFHJG-http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WH1-45RFHJG-

Strategic Marketing Assignment II by Group II (EPGDBM, JD)

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