Mahindra in South Africa - 982 Words

MAHINDRA amp; MAHINDRA IN SOUTH AFRICA BACKGROUND AND INTRODUCTION Mahindra and Mahindra is a leading multinational automotive manufacturer headquartered in Mumbai, India which started as a steel trading company in 1945 by two brothers J.C Mahindra and K.C Mahindra. Mamp;M has a labour force of 13000 and in 2001 profit before tax was 45 billion rupees. Currently the company has also extended its operations to small turbo prop aircraft and has a presence in the transportation media across land, sea and sky. Mamp;M see’s South Africa as a growth market which is competitive and fragmented. Mamp;M will also use South Africa as a globalization strategy. Shah is considering the following four options: * Signing an agreement with a†¦show more content†¦Using a local vendor even though Mamp;M did not have competence in the certification of the locally assemble vehicles, will mean a departure from the norm of Mamp;M. Investing in Mamp;M’s own manufacturing facility will buttress their mission of being a long term player in the automobile industry. It will also demonstrate to their customers their commitment to the local market which is a major factor in an industry where after sales service such as warrant is a crucial factor in attracting sales. Also, setting up its own manufacturing plant will present an opportunity to lock in customers at the beginning of the growth curve in the South African market. Raising funds will not be a problem for Mamp;M as they operate as a cash surplus company. Mamp;M will take advantage of the APDP programme and enjoy tax rebates. Mamp;M will however be under pressure to sustain high production level just to break-even but they will eventually make profits in the long term. The watch and wait option will allow Mamp;M to use the recessionary period to reduce fixed costs through outsourcing and streamline operations particularly for shipping and port related work. It will also improve its business processes and enlarge the reach and quality of its dealer network. However, Mamp;M will continue to pay a higher rate of 25% in excess of taxes on import duties as compared with its local assemblers and manufacturers. Use SouthShow MoreRelatedMahindra Mahindra in South Africa Essay example928 Words   |  4 Pagesï » ¿Case: Mahindra Mahindra in South Africa In May 2011, Pravin Shah, the CEO at Mahindra Mahindra, was evaluating four possible options of company’s growth strategy in the South Africa. 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