Mahindra Renault Limited 51:49 Strategic JV: New Cycle of Linkage-Leverage-Learning
Mahindra Renault Limited 51:49 Strategic JV: New Cycle of Linkage-Leverage-Learning
Mahindra Renault Limited 51:49 Strategic JV: New Cycle of Linkage-Leverage-Learning
Linkage
Learning Leverage
Linkage-leverage
• Linkage M&M • Linkage Renault
• Acquire new technology: M&M would get all
• Acquire new Technology : Moving from left
hand drive to right hand drive
important expertise needed to build monocoque or unitary
construction and advanced engine technologies • Market Penetration: To mark its presence in Indian market
• Market penetration: Expansion of product portfolio( in short period of time.
Addition of c-segment). • Resource sharing: As M&M has extensive manufacturing
• Resource sharing: Mahindra will benefit from the sharing of R&D knowledge(55 yrs) and low procurement and manufacturing
of Renault with them. cost.
• Time criticality: Market research by M&M shows strong demand • Conflict of interest: As Mahindra has no presence in C-
to c-segment (Logan) so developing a new product independently segment, so there is less chance of conflict of interest.
will require more time than producing by JV with an existing
product. • Leverage:
• Leverage : • Technological capability: Ready design of low-cost car Logan
was a huge hit in European market.
• Ability to keep procurement and manufacturing cost low
• Well established production facility
• Opportunity to mark its presence in Indian market
• Brand name: well established household name. • Learning:
• Learning: • Renault learned the lay of Indian market and ways of
• M&M gained engineering capabilities for making superior engines doing business in India.
and world class manufacturing practices to bring efficiencies
through JV.
Objectives
Renault M&M
Technology Exploit the technology of An opportunity to learn new
economies of scale technology
Resource Technology Market knowledge
Strategy Global expansion Develop core competency
Opportunity New market development New product development
Boost up the creeping sales
Expand customer base
Renault was eyeing global expansion along with India it also starting its operation in
Russia, Morocco, Romania, Colombia and Iran.
M&M is also trying to go global and showcase a product to rival.
Benefits of alliance
• Internal benefits:
• Reducing risk (equity sharing of 51:49) and cost of new market entrance and new product development.