CASE STUDY

Mahindra & Mahindra Mahindra & Mahindra (M & M) is a major player in the tractor and certain segments of the automobile market in India. After an impressive growth for a few years, India's tractor market has been stagnating from 1998-1999 to 2000-2001.

M & M has been selling its tractors and utility vehicles in foreign markets, including the USA. Some of the components for its products have been sourced from abroad. M & M has a 100 percent subsidiary in the USA, Mahindra USA, with a strong network of 100 dealers.

Mahindra has a five percent market share in the US market in the 20-30 horsepower (HP) range. As a part of the strategy aimed at building a global supply chain, Mahindra USA has signed a memorandum of understanding (MoU) with the Korean tractor major Tong Yang, a part of the $ 2 billion Tong Yang Moolsam group, according to which Mahindra will source high horse power (mostly 25-40 hp range) and sell them around the world under the M & M brand name.

To start with, the premium range of tractors will be sold in the US. M & M's current tractor range is more utility-oriented and lacks the aesthetic appeal that Tong Yang's tractors have, a must for a strong presence in the US market.

What are the advantages and disadvantages of global sourcing?

How will the foreign market expansion help M & M ?