W11548
Teaching Note
MAHINDRA & MAHINDRA IN SOUTH AFRICA
SYNOPSIS
The case describes the managerial dilemmas facing Pravin Shah, chief executive, International Operations
(Automotive and Farm Equipment Sectors) at Mahindra & Mahindra Ltd. (M&M), an Indian
multinational headquartered in Mumbai, India. Shah’s dilemmas pertain to the course of action with
regard to Mahindra & Mahindra South Africa (Proprietary) Ltd (M&M (SA)), the company’s subsidiary
based in Pretoria, South Africa.
Shah must choose from among four options. Should M&M (SA) collaborate with a local producer to use
the latter’s surplus capacity to assemble vehicles in South Africa? Should M&M set up its own
manufacturing unit? Should it wait and watch? Should the company tweak the current business model of
importing completely built units (CBUs) from India to expand into the African market by using South
Africa as a re-export hub?
TEACHING OBJECTIVES
To develop in students an appreciation for the roles that a subsidiary in South Africa can play within a
multinational enterprise’s global network
To analyse the growth options facing the subsidiary of a multinational company in relation to the
company’s South African, Pan-African and global strategies
To narrow down an option on the basis of three considerations: Does it fit with the company’s
strategy? Is it financially viable? Is it in line with the company’s existing capability?
ASSIGNMENT QUESTIONS
1. Which option should Shah choose?
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2. What is your assessment of M&M’s experience with its South African subsidiary to date?
3. How attractive is the South African auto market for growth and profitability?
4. What potential roles can M&M’s South African subsidiary play in the company’s global network?
5. What should be Shah’s recommendation to M&M’s board of directors?
TEACHING APPROACH
The teaching approach consists of six sequential steps (see Exhibit TN-1).
1. WHICH OPTION SHOULD SHAH CHOOSE?
The instructor can begin the class by showing the four options in four different columns on board 1. The
instructor can then ask the class the lead question above. During the first five to seven minutes, the
instructor can record the students’ arguments for each option — both pros and cons — as they come up in
the class discussion. The instructor can then summarize the discussion by asking a few chosen supporters
of each option to articulate their two major arguments in support of their point of view.
Next, the instructor can create a new column — Criteria. The instructor can ask the class to step back and
list the criteria that are implicit in the arguments they have already presented for or against a particular
option. The instructor should not push for closure at this stage but conclude this section by suggesting that
before making a formal decision for Shah, the class will review the criteria suggested and weigh those
criteria the class deems relevant.
2. WHAT IS YOUR ASSESSMENT OF M&M’S EXPERIENCE WITH ITS SOUTH AFRICAN
SUBSIDIARY TO DATE?
The focus of the discussion should be on how well the subsidiary in South Africa has done in terms of
growth, profitability and market share during the previous six years. Also of interest are the following
questions: How good is the subsidiary’s strategy? Does it have a good positioning? The class will likely
discuss the capabilities the subsidiary has developed locally. The observations of the class can be added to
board 2.
The instructor can conclude this section by asking whether students want to add any new criteria to the
list already started on the board. For example, if strategic fit was not considered a criterion initially but
has emerged during the discussion of the second section, it should now be added to the list.
3. HOW ATTRACTIVE IS THE SOUTH AFRICAN AUTO INDUSTRY FOR FUTURE GROWTH AND
PROFITABILITY?
This section can be discussed by the class in terms of three major trends: the potential of the market, the
nature of competition and the role of regulation. The observations by students can be listed on Board 3.
The instructor can then ask the class to identify the alternative strategies and the implications of each of
these three trends on M&M (SA), which can then be added to board 4.
The section can be concluded with a discussion on the opportunities available to M&M (SA) in the South
African market.
Teaching Note
MAHINDRA & MAHINDRA IN SOUTH AFRICA
SYNOPSIS
The case describes the managerial dilemmas facing Pravin Shah, chief executive, International Operations
(Automotive and Farm Equipment Sectors) at Mahindra & Mahindra Ltd. (M&M), an Indian
multinational headquartered in Mumbai, India. Shah’s dilemmas pertain to the course of action with
regard to Mahindra & Mahindra South Africa (Proprietary) Ltd (M&M (SA)), the company’s subsidiary
based in Pretoria, South Africa.
Shah must choose from among four options. Should M&M (SA) collaborate with a local producer to use
the latter’s surplus capacity to assemble vehicles in South Africa? Should M&M set up its own
manufacturing unit? Should it wait and watch? Should the company tweak the current business model of
importing completely built units (CBUs) from India to expand into the African market by using South
Africa as a re-export hub?
TEACHING OBJECTIVES
To develop in students an appreciation for the roles that a subsidiary in South Africa can play within a
multinational enterprise’s global network
To analyse the growth options facing the subsidiary of a multinational company in relation to the
company’s South African, Pan-African and global strategies
To narrow down an option on the basis of three considerations: Does it fit with the company’s
strategy? Is it financially viable? Is it in line with the company’s existing capability?
ASSIGNMENT QUESTIONS
1. Which option should Shah choose?
, Page 2 8B11M106
2. What is your assessment of M&M’s experience with its South African subsidiary to date?
3. How attractive is the South African auto market for growth and profitability?
4. What potential roles can M&M’s South African subsidiary play in the company’s global network?
5. What should be Shah’s recommendation to M&M’s board of directors?
TEACHING APPROACH
The teaching approach consists of six sequential steps (see Exhibit TN-1).
1. WHICH OPTION SHOULD SHAH CHOOSE?
The instructor can begin the class by showing the four options in four different columns on board 1. The
instructor can then ask the class the lead question above. During the first five to seven minutes, the
instructor can record the students’ arguments for each option — both pros and cons — as they come up in
the class discussion. The instructor can then summarize the discussion by asking a few chosen supporters
of each option to articulate their two major arguments in support of their point of view.
Next, the instructor can create a new column — Criteria. The instructor can ask the class to step back and
list the criteria that are implicit in the arguments they have already presented for or against a particular
option. The instructor should not push for closure at this stage but conclude this section by suggesting that
before making a formal decision for Shah, the class will review the criteria suggested and weigh those
criteria the class deems relevant.
2. WHAT IS YOUR ASSESSMENT OF M&M’S EXPERIENCE WITH ITS SOUTH AFRICAN
SUBSIDIARY TO DATE?
The focus of the discussion should be on how well the subsidiary in South Africa has done in terms of
growth, profitability and market share during the previous six years. Also of interest are the following
questions: How good is the subsidiary’s strategy? Does it have a good positioning? The class will likely
discuss the capabilities the subsidiary has developed locally. The observations of the class can be added to
board 2.
The instructor can conclude this section by asking whether students want to add any new criteria to the
list already started on the board. For example, if strategic fit was not considered a criterion initially but
has emerged during the discussion of the second section, it should now be added to the list.
3. HOW ATTRACTIVE IS THE SOUTH AFRICAN AUTO INDUSTRY FOR FUTURE GROWTH AND
PROFITABILITY?
This section can be discussed by the class in terms of three major trends: the potential of the market, the
nature of competition and the role of regulation. The observations by students can be listed on Board 3.
The instructor can then ask the class to identify the alternative strategies and the implications of each of
these three trends on M&M (SA), which can then be added to board 4.
The section can be concluded with a discussion on the opportunities available to M&M (SA) in the South
African market.
