7/29/2019 Mahindra Two Wheelers - Bracing the Backend for Headwinds

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MAHINDRA 2WHEELER SECTOR

BRACING THE BACKEND FOR HEADWINDS CASELET

Mahindra 2 Wheelers Limited (MTWL) offers a range of Scooters and Bikes and is

the first Indian two-wheeler manufacturer to enter the Moto Grand Prix

Championship. This caselet, titled Bracing the Backend for Headwinds is one of the

two optional caselets that can be chosen in this sector.

BUSINESS BACKGROUND

Mahindra entered the Two Wheeler industry in 2008 and launched a portfolio of

PowerScooters to critical acclaim in September 2009. Within a year of launch,

MTWL captured a double digit market share of the domestic 2 wheeler market. In2011, Mahindra became the first Indian two-wheeler manufacturer to enter the Moto

Grand Prix Championship, showcasing engineering and technology expertise on aplatform where the best in the world compete. The racing DNA was continued further

with recent launch of motorcycles such as Centuro and Pantero.

Mahindra 2Wheelers aspire to launch one new model every quarter for the next 10

quarters, to keep pace with the fast growing Indian Two-wheeler market. India is the

2nd largest 2wheeler market in the world, and the domestic industry is volume driven.

With several global players in the fray, the meat in the market lies in the commuter

segment which is also the most competitive. The other 2 ends of the spectrum are

relatively less developed, with product offerings widely dispersed on the price line.

The market is expected to grow by 5-6% in FY14, as against ~10% in the previousyear, with expected zero growth in bikes and a fillip from scooters. OEMs are

resorting to higher marketing spends and launching several new products and

variants to entice the Indian consumer to spend on 2 wheelers. Several new sub-

segments and niches have emerged, with OEMs aiming to create niches to dominate

and protect as a long-term hedge.

Some key attributes of the Industry currently are:Ineffective mass media plans; over-reliance on high-cost, low-impact traditional media; Capacity glut due to massive

expansion plans and low demand; Rising input costs, both in raw materials and

logistics; Greater adverse impact on small players in difficult market environment; too

many new launches that impede establishing of brand identities, and Rapid product

development plans. In the current phase, all players have been caught off-guard, and

aim to strike a balance between being conservative, yet innovative and aggressive to

ride out the storm. It is expected that the survivors of this phase will emerge stronger

with consumers being net gainers.

BRACING THE BACK-END FOR HEADWINDS

Under the market circumstances outlined above, develop the strategy to helpMahindra 2Wheelers brace their back-end for headwinds, by focusing on 2 levers:

Mahindra War Room 2013 2Wheelers - Bracing the Backend

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1. New Product Development strategy to enhance the product portfolio:

Which are the strategic areas or niche/new segments for MTWL to enter and winin the current environment?

What should be MTWLs approach in new product development that will createdisruptiveness in the market? What should be the trade-off between Rapid

product development and Sustained differentiation?

How should MTWL achieve a low-cost, high-quality development process? Whatstrategies can be adopted to reduce cycle time and lower development time? Is

there a better trade-off between Buy and Develop approaches in R&D?

2. Efficient Management of Operations

With most OEMs having installed capacity more than the demand, how shouldMTWL effectively use its capacity? How should the productivity of manpower and

equipment be maximized?

Is there any way of de-risking in the likely case of a change in the marketrequirements, or a further slowdown in the industry?

Having many vendors common across OEMs, how should a smaller player likeMTWL manage the vendor base to maintain continuity of supplies?

How can MTWL help its vendors manage their return on investment better?

Focusing on these areas, provide a comprehensive plan for MTWL to brace the back-

end for headwinds.

Mahindra War Room 2013 2Wheelers - Bracing the Backend

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