Mahindra & Mahindra in South Africa: Strategic Recommendations

This case study examines Mahindra & Mahindra's (M&M) strategic decisions in the South African market. The assignment addresses key questions regarding M&M's growth strategy, including whether to establish South Africa as a hub for sales to other African countries. It analyzes the advantages and disadvantages of this approach. The analysis delves into M&M's performance in South Africa, assessing its growth, profitability, and market share, and explores the attractiveness of the South African automotive market, considering market potential, competition, and regulations. The case also examines the potential roles M&M's South African subsidiary can play in the company's global network and concludes with strategic recommendations for M&M's board of directors, considering factors such as market dynamics, competitive pressures, and future growth opportunities. The assignment also highlights the company's ability to adapt to the local market, its ability to manufacture and export vehicles and its ability to have a good relationship with the government. The case study is a valuable resource for understanding international business strategy, market analysis, and the challenges of operating in a developing market.

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Name
Institution
Date

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Question One
Shah should make South Africa a hub that will sell all imported CBUs to other African
countries.
Advantages
 This could lead to more significant African markets
 African nations never suffered during the global recession hence recovered faster.
 South Africa is ranked top in the business environment compared to other nations.
 South Africa already exports vehicles; therefore, they can use the knowledge to rule.
Disadvantages
 Stiff competition from other vehicle exporting companies in South Africa
 Wastage of time since ordering a car from India to South Africa takes about three
months
 Fast-growing economies also are faced with macro-economic risks.
Question Two
M&M has shown a powerful admission-level occurrence in the confined market in
South Africa. In less than six years, the company was able to earn loyalty and trust from the
local population because it offered high-quality services (Roux, 2016). The company made
sure that it manufactured and exported vehicles that could operate on the local roads and also
made sure that the cars were cheap and easily affordable to the local population. The
company was able to manufacture SUV vehicles that were able to confide a market variety of

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1.1% of the total market share (Morrell, 2019). Many roads in African countries are poor and
have huge bumps; therefore, while manufacturing a car, such factors must be considered. The
dealers of the cars were localized in over six provinces in South Africa to help customers
from all regions of the country to have excellent access to the vehicles. This idea has helped
reduce transportation costs and taxes imposed on cars, therefore, attracting more customers to
the company. The manufacture of quality cars that are suitable for local roads has attracted
more customers to the industry. According to Sharma (2018), the industry has grown
exponentially over the past few years due to the use of correct market strategies and
operations. Every year the company has had an increase in the total number of customers due
to the good quality of services that are offered by the company. Through the capturing of a
broader market, the organization has been able to increase its revenue every fiscal year. The
local manufacturing of cars has boosted the sales of the firm hence earning more income.
Question Three
Masondo, (2018), stated that the South African automotive company accounted for
over 11% of the exports the country manufactures. The country has witnessed a stable
economic growth rate, that has played a vital role in development of the automotivebusiness.
Despite the rates of growth to below as compared to other developing countries, there has not
been a decline in its growth. Most of the South African citizens are middle class hence having
a higher disposable income, meaning they can purchase and own a car. Most Africans dreams
are owning big vehicles, and therefore, the company has provided a platform for this to
happen. The citizens prefer foreign cars over domestic cars, thus allowing M &M to thrive
best in the South African market. The locals believe that imported vehicles are of good
quality and cheap as compared to the domestic ones hence preferring them. The local
producers offer the vehicles at a higher price while the M&M provides its vehicles at
affordable prices. This strategy has assisted the company to thrive and outdo its close rivals in

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the local market. Customers, however, prefer quality vehicles making the company reach and
capture a broader market. Besides, the government has lessened the bureaucratic procedure,
for example, reduced tariffs charged from imported products. This move has enabled the
company to ship its products in large quantities because of the favorable terms laid by the
government. The low tariffs charged on the vehicles mean the vehicles will also be cheap
hence attract more customers (Kattumuri & Kurian, 2017).
Question Four
India’s multinational firm has employed over 113,00 employees, about 12%
representing the foreigners (Haldipur, et al., 2017). Many people have been hired into the
industry and can earn a living and live a happy life. The role played by the M&M company is
vital for it to thrive in the global market. The company operating in South Africa has helped it
to attract foreign customers and also have better access to the African market. Furthermore, it
will assist in on-time delivery of products to customers. Its strategic location in over eight
provinces will facilitate the quick delivery of commodities to customers. According to
Gereffi (2019), the industry can act as an export hub hence reducing its dependency on Indian
operations. Basing its services in India will take time for decisions concerning a particular
issue to be made, thus negatively affecting the functioning of the company (Borg, et al.,
2019). Lastly, is that the company will reduce its risk when supported by local investors.
Investors will be able to fund and provide solutions to problems affecting the industry hence
improving its efficiency and effectiveness. The industry in South Africa plays a vital role in
the company.
Question Five
For the growth of the subsidiary industry in South Africa, the directors should
monitor the growth of the company and the fall of the automotive market. The

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economy of South Africa has, for many years, been crippled, and therefore the
company should be able to understand the customers spending patterns to be safe.
This will assist the industry in understanding the better results and deciding whether
to construct an industrial firm or use South Africa as a hub.

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References
Borg, M., Chatzipetrou, P., Wnuk, K., Alégroth, E., Gorschek, T., Papatheocharous,
E., ... & Axelsson, J. (2019). Selecting component sourcing options: a survey
of software engineering’s broader make-or-buy decisions. Information and
Software Technology, 112, 18-34.
Gereffi, G. (2019). Global value chains and international development policy:
Bringing firms, networks, and policy-engaged scholarship back in. Journal of
International Business Policy, 2(3), 195-210.
Haldipur, R., Narapareddy, V., & Vishwanath, S. R. (2017). Wipro Ltd.: The
Demerger of Wipro Enterprises. Asian Case Research Journal, 21(02), 347-
375.
Kattumuri, R., & Kurian, S. (2017). Sustainable urban development in India: a tale of
two Mahindra World Cities.
Masondo, D. (2018). South African business nanny state: the case of the automotive,
industrial policy post-apartheid, 1995–2010. Review of African Political
Economy, 45(156), 203-222.
Morrell, R. (2019). Vehicle for Southern African Knowledge? Men and Masculinities
and Research from South Africa. Men and Masculinities, 22(1), 34-43.
Roux, A. (2016). Everyone’s Guide to the South African Economy 12th edition.
Penguin Random House South Africa.
Saraf, P. (2016). Automotive in South Asia: From Fringe to Global. World Bank.
Sharma, J. (2018). The study of Training and development at Mahindra CIE
automotive LTD–Shaper, Rajkot.

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