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    Options That Are Available:-1. Contract Assembly 2. Own Manufacturing 3. Wait and Watch 4. Use South Africa As A Hub

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    KevinSimon
    Shah has four options to consider for expanding into the South African market: 1) Contract assembly, 2) Own manufacturing, 3) Wait and watch, or 4) Use South Africa as a hub. Contract assembly has pros of reduced costs but risks losing control, while own manufacturing demonstrates commitment but requires high production. Waiting has pros of using current model but risks high import duties. Using SA as a hub allows leading industry structures but has political and unfamiliar market risks. Given M&M's experience in SA, the document recommends finding an assembly partner to assemble CKDs in SA for the African market.

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    Options That Are Available:-1. Contract Assembly 2. Own Manufacturing 3. Wait and Watch 4. Use South Africa As A Hub

    Uploaded by

    KevinSimon
    38 views10 pages
    Shah has four options to consider for expanding into the South African market: 1) Contract assembly, 2) Own manufacturing, 3) Wait and watch, or 4) Use South Africa as a hub. Contract assembly has pros of reduced costs but risks losing control, while own manufacturing demonstrates commitment but requires high production. Waiting has pros of using current model but risks high import duties. Using SA as a hub allows leading industry structures but has political and unfamiliar market risks. Given M&M's experience in SA, the document recommends finding an assembly partner to assemble CKDs in SA for the African market.

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    Shah has four options to consider for expanding into the South African market: 1) Contract assembly, 2) Own manufacturing, 3) Wait and watch, or 4) Use South Africa as a hub. Contract assembly has pros of reduced costs but risks losing control, while own manufacturing demonstrates commitment but requires high production. Waiting has pros of using current model but risks high import duties. Using SA as a hub allows leading industry structures but has political and unfamiliar market risks. Given M&M's experience in SA, the document recommends finding an assembly partner to assemble CKDs in SA for the African market.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    38 views10 pages

    Options That Are Available:-1. Contract Assembly 2. Own Manufacturing 3. Wait and Watch 4. Use South Africa As A Hub

    Uploaded by

    KevinSimon
    Shah has four options to consider for expanding into the South African market: 1) Contract assembly, 2) Own manufacturing, 3) Wait and watch, or 4) Use South Africa as a hub. Contract assembly has pros of reduced costs but risks losing control, while own manufacturing demonstrates commitment but requires high production. Waiting has pros of using current model but risks high import duties. Using SA as a hub allows leading industry structures but has political and unfamiliar market risks. Given M&M's experience in SA, the document recommends finding an assembly partner to assemble CKDs in SA for the African market.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    What options should Shah

    choose?
    Options that are available:-
    1. Contract Assembly
    2. Own Manufacturing
    3. Wait and Watch
    4. Use South Africa as a Hub
    Continued
    Contract Assembly- Agreement with a local
    vendor to use the latters surplus facility for
    contract assembly of M&Ms vehicles.
    Pros- 1. Reduc tion in cost of shipping CBUs from
    India to Africa.
    2.Vehicles could be assembled in SA for
    export.
    3.Costs could be reduced by locally sourcing
    components.
    4.No need of major upfront investment.
    Cons- 1. Fear of loosing the control.
    2.Risk of threatening the brand image.
    Continued
    Own Manufacturing-Establish their own
    manufacturing facility.
    Pros-1.Demonstrate commitment to the
    customers.
    2.Opportunity to lock in the customers.
    3.Enhance brand awareness and loyalty.
    4.Provide after sales service.
    5. Beneficial Government
    regulations( MIDP)
    Cons-1.Pressure to sustain high production levels.
    2.Many of the vehicle production costs
    were fixed.
    Continued
    Wait and Watch-
    Pros-1.Sales suffered but confidence level had
    increased.
    2.M&M could use its prevailing business
    model.
    3.Take advantage of the recessionary period
    to reduce costs.
    Cons-1.Long order cycle and lead time.
    2.High import duty of 25 % .
    Continued
    Use south Africa as a Hub-Use SA as a hub
    to sell CBUs to other countries in African
    continent.
    Pros-1.M&M can take lead in shaping industry
    structures, segmenting markets and establishing
    brands.
    2.Long term objective of building a global
    SUV brand in Africa.
    3.Fastest growing economies in the
    region
    Cons-1.Political risks in many African countries.
    2.Unfamiliar markets of African
    continents.
    Continued
    M&M has built its distribution network , after sales
    service and has experience on trading in SA and
    what it needs is an assembly operation where it
    can also leverage economies in scale in low
    volumes.
    Under the current situation M&M should find a
    partner that will work under an assembly contract
    and assemble imported CKDs on behalf of M&M
    for its African market.
    3. How attractive is the South African
    Auto Market for growth and profitability?

    Formal Entry to SA: Feb 2005


    51% Subsidiaries/ 49% Local partners
    (Since October 2004)
    Entry Strategy: Focus on Niche SUV
    Markets,
    Segmented towards Passenger and
    Cargo traffic
    Value Proposition: At least 20-30%
    less than the nearest competition
    Shipment of Parts from India
    assembled in South Africa
    M&M Management style was
    considered tough from earlier days
    Global Plans: Same vehicle and parts
    launches simultaneously in Indian
    and South African markets
    In 5 years of doing Business in SA, M&M
    had sold around 11000 vehicles, securing
    1.2% of Pickup truck market share
    Future Goals:
    1. Increasing the existing market share
    upto 5%.
    2. Targeting Mining, Farming companies as
    well as Families for development of
    Pickup truck and passenger vehicles.
    3. Creating a strong loyal base of
    customers
    4. Creating an Entry point in South Africa.

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