Competitive Advantage

Market Share
Mahindra and mahindra has an overall market share of 8.4% in Four Wheelers Thus, the score allotted is

50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

Series1

Product Quality
The Logan ranks first in the J.D Power Asia Pacific 2007 India Initial Quality StudySM (IQS) in the Entry Mid-size segment with a score of 65 PP10O. Released in December 2007, this study serves as the industry benchmark for newvehicle quality measured at two to six months of ownership. Overall quality performance is based on both design quality and production quality problems per 100 vehicles (PP100). Mahindra Logan Diesel ranks first in the TNS Automotive TCS Study in the segment- Midxsize Diesel with exceptional score of 96 as per a study released in December 2007. Scorpio ranks first in the TNS Automotive TCS Study in the MPV/SUV segment with a segment leading score of 91 (joint first with Innova) as per a study released in December 2007. The score alloted is

Customer Loyalty

The score alotted is -1

Vertical Integration
M&M has comprehensive manufacturing facilities with high level of vertical integration. Its plants in Mumbai and Nashik manufacture multiutility vehicles and engines are produced at the Igatpuri plant. Light commercial vehicles are manufactured at the Zaheerabad plant in Andhra Pradesh and threewheelers at the Haridwar plant. The score alloted is -3

Product Life Cycle

Xylo is in the introduction stage Scorpio and Bolero are in the maturity stage Mahindra invests a lot on new products and innovations The score alotted is -2

Product Replacement Cycle

The company is focused on continuous product innovations Hence,product replacement cylce is fairly good The score alloted is -2

Growth Potential
The automobile industry is on a slowdown(17.7% decline in volumes) The company went through a decline of 11.2% in volumes The score alotted is 3.5

Profit Potential
The profit potential of the company is low The score alloted is 3.5

Financial Stability
The financial stability of the company is good The score alloted is 6

Resource Utilization
Integration of Total Productivity Management in order to increase its production.
Optimum utilization of energy as in the Zaheerabad plant, thus decreasing the energy cost as a percentage of manufacturing cost. This results in optimal utilization of resources, thus increasing the number of vehicles produced with the same/similar inputs. The score alloted is 5.5

Capital Intensity
Automobiles is highly capital intensive business involving: Complex and heavy plant and machinery Continuous product innovations Immense amount of technological upgradations
The score alloted is 5

Ease of entry into market

The entry barriers into the market are fairly high due to requirement of:

High capital investment Immense technological knowhow Continuous product innovations The score alloted is 5

Productivity/Capacity Utilization
The capacity utilization of the company is low
The score alloted is 3.5

Technological KnowHow
Manufacturing plants have ISO / TS 16949 2002 certification along with ISO14001:2004 & OHSAS 18001:1999 integrated certification Introduction of Worlds First Hydrogen 3-wheeler and also Indias First Hybrid SUV (Scorpio) The score alloted is -1

Competitions Capacity Utilization

In view of the current situation in the automobile industry the capacity utilization of all the players in the sector is quiet low The score alloted is -4

GAP Analysis
M & M has its presence mainly in the MUV and the LCV segment of the auto market In the MUV segment, it is the market leader and should look to consolidate its position In the LCV segment, the TATA Ace is the market leader, but M&M is close on its heels M&M has not fared well in the sedan segment with the Logan not performing as expected There are still untapped areas in the Indian Auto Market
One is the small car and super small car segment Other is the high end luxury and luxury SUV segment

Recommendations
The company is looking at an aggressive stance as is evident from the SPACE analysis done earlier. With the industry currently in recession, it would be a good opportunity to cast an eye on the future. Yes, the current GDP is not encouraging, as compared with previous years, but it is expected to turnaround by 2010-11. With this in mind, it would be better if M&M could concentrate on the segments where it does not have penetration. The mid size sedan segment is a good market with the Indian middle class slated to earn more and afford more. Both the Indigo and the Logan are in the lower price bracket in this segment, but the Logan has stiff competition from the Indigo since it offers more at a similar price. Diversify funds from the profiting MUV segment and explore the possibility of developing/introducing a high end sedan which can compete with the likes of Honda City/Hyundai Accent/Ford Fiesta/ Martuti SX4

Recommendations Continued
The small car segment is already saturated with market leaders MAruti, Hyundai & TATA continuously introducing newer models. Entering this market would not be without considerable risk The super small car segment which has the potential to interest the high end bike customers looks to be a lucrative one. With TATA set to explode the scene with the Nano, the time could be right for M&M to consider entering this market. There are two main reasons
With the industry currently in a recession, TATAs first mover advantage could be nullified to quite an extent M&M has the opportunity to develop the car after learning from TATAs mistakes. Since TATA is also entering uncharted territory, there could be challenges which they could not have foreseen. This can give M&M an advantage.

Recommendations Continued
Another possible area is the luxury sedan segment. According to us, it would be unwise as the entry and exit barriers in this segment are quite high. A possibility is the luxury SUV segment. With a range of MUVs like the Bolero, Scorpio and the newly introduced Xylo in its armada, M&M has the knowledge and the expertise to develop a high end SUV. The high end SUV market is currently dominated with players like Suzuki Grand Vitara, Ford Endeavour, Audi Q7 etc.