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8 views

Presentation Notes

Uploaded by

Pranav Bhatia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Questions

The group must find out


1) why the organisations went for and formed alliances, how ( process
followed) ,
Steps
a. identifying potential partners 4cs
b. due diligence
c. negotiations
Tools to use alliance life cycle
(a) Alliance business case
(b) Partner assessment and selection
(c) Alliance negotiation and governance
(d) Alliance Management
(e) Assessment and termination

2) like theideal steps could be (dentifying potential partners, due diligence (for resources and
cultural fit) ,negotiation
3) (a) Alliance business case (need analysis for the aliance)
4) (b) Partner assessment and selection
5) (c) Alliance negotiation and governance
6) (d) Alliance Management
7) (e) Assessment and termination

2) what were the terms of engagement,


3) what were the hurdles/conflicts they faced ( if any),
4) the outcome/benefits/achievement as of now and
https://www.france24.com/en/20100416-renault-ends-indian-car-alliance-
mahindra-logan
End issue dip in sales and fierce competition
5) what is your takeaway from each organisation and
6) Was there any overall learning from these organisations, as well from the
chosen industry sector.

Include youtube video


key points to include
1. Did the alliance have dedicated alliance function
Other points
a. as we learned in the article on how to make strategic alliances work
Cultural clashes are one of the biggest reason why alliances fail
b. 4cs- Capability, Compatibility, Commitment, Complementary skills

The Indian motorist can now look forward to some exciting times on the road.
Mahindra & Mahindra and French carmaker Renault have joined forces. The joint
venture will launch the Logan, a mid-sized sedan in the first half of 2007. Logan
is just one of the many cars Renault plans to introduce in India. A vehicle
assembly plant is being set up for the purpose with an initial production capacity
of 300,000 cars per year. This partnership presents a win-win situation for both
companies and for Indian customers.
Company has launched car model Logan recently.Mahindra Renault Limited
was a joint venture formed between Mahindra & Mahindra and Renault
in 2007. This marked the entry of the Renault brand in the Indian market. A
manufacturing plant was set up in Nashik, Maharashtra, which produced the JV's
first offering - the Mahindra-Renault Logan sedan that was launched in 2007.
In 2010, the two partners reached an agreement under which Mahindra
bought all shares of Renault in the joint venture, while Renault continued
to be a supplier and service provider for the Logan. Post the break-up, Mahindra
launched a rebadged and renamed version of the Logan, called the Mahindra
Verito. Meanwhile, Renault entered the Indian market as a standalone brand with
the launch of the Fluence sedan and Koleos SUV in 2011.The Mahindra Renault
brand was on sale in India. It’s famous for its Mahindra Renault Logan, Mahindra
Renault Logan Edge models. The manufacturer 4.50 Lakh. There is no official
word from the manufacturer on its re-entry into the Indian market.

About Mahindra Renault


In February 2005 Mahindra & Mahindra and Renault decided to join forces to
produce and commercialize Logan in India. The joint venture is a 51:49
partnership between Mahindra & Mahindra and Renault. An investment
of about 100 million euros (Rs. 700 crore) was made to set a facility
with a production capacity of 50,000 cars per year. The Logan will be rolled
out from M&M’s state-of-the-art factory located in Nashik, which offers a
stamping shop, a paint shop with a top quality pre-treatment and an assembly
line specific for the Logan.

Comments after alliance and dedicated Person


appointed as MD of the alliance
Mr. Anand Mahindra, Vice Chairman & Managing Director, Mahindra & Mahindra
Ltd, said, "The Logan is a milestone for us as it marks our entry into the most
competitive segment of the automotive market. The global quality platform of
the Logan with its unmatched features makes it a landmark for the Indian car
industry. The strengths of Renault and our passion for outperformance and
customer centricity have offered a product that will appeal to the evolved Indian
customer.'
Mr. Carlos Ghosn, President & CEO, Renault SA, said, "Today signals a new step
in Renault’s global expansion. It marks the start of Renault sales on the Indian
market and sees the first right hand drive version of Logan created to meet the
needs of our Indian customers. I would like to congratulate the Mahindra Renault
team here in India for demonstrating how much can be achieved in a very short
period of time.'
Mr. Rajesh Jejurikar, Managing Director, Mahindra Renault Ltd, said, "The Logan
packs in the aspirations of the Indian car lover and sets standards in every
aspect, space, safety and engine performance. Add to this Logan’s fuel efficiency
– 14 to 18 km/litre in Common Rail Diesel engine and 10 to 13 km/litre with
petrol engine. The Logan delivers on our promise of great quality at a stunning
price.'

1. Why the organizations went for and formed alliances, and how
(process followed):

o Reason for Alliance: Mahindra & Mahindra (M&M) and Renault


formed an alliance to leverage each other's strengths and penetrate
the Indian automotive market.

M&M had a strong presence and understanding of the Indian market, while
Renault brought in advanced automotive technology and design expertise.

o Process Followed: The joint venture (JV) was formalized in


February 2005, with a 51:49 partnership between M&M and Renault.
The roles were clearly defined: Renault would handle purchase, engineering, and
quality, while M&M would manage finance, HR, distribution, and communication.

A state-of-the-art facility was set up in Nashik, and the JV office was established
in Mumbai.

2. Terms of Engagement:
o The JV was structured with M&M holding 51% and Renault 49%.
o Renault was responsible for purchase, engineering, and quality.

o M&M was responsible for finance, HR, distribution, and


communication.

o The Logan car was to be produced and commercialized in India, with


a facility in Nashik dedicated to its production.

3. Hurdles/Conflicts Faced:
o Economic Factors: The economic slowdown of 2008 and high cost
of auto loans in 2008 led to a decline in car sales and production
cuts.

o Pricing and Design Issues: Logan faced stiff competition from


other models like Maruti Swift Dzire and Tata Indigo, which were
more competitively priced.Logan's higher price was partly due to its
larger size, which attracted higher excise duty.

o Localization Issues: Only 50% of Logan's components were


indigenous, leading to higher costs compared to competitors who
had higher localization.

o Inflexibility: Renault's reluctance to modify the car's design to suit


Indian market preferences and to reduce the car's length to benefit
from lower excise duty.

o Distribution Strategy: Disagreements on sales and distribution


strategies, with Renault blaming M&M for erratic strategies and
M&M feeling the need for re-engineering the car.

4. Outcome/Benefits/Achievements:
o Initial Success: Logan was initially successful, becoming the
largest selling car in its category and winning several awards.

o Decline and Exit: Sales declined significantly by 2008, leading to


the JV's dissolution in April 2010. M&M bought Renault's 49% equity
and gained full control, rebranding Logan as Verito by April 2011.
o Continued Support: Renault continued to support M&M with a
five-year license agreement for supplying engines, transmission,
and key components.

5. Takeaway from Each Organization:


o Mahindra & Mahindra: Demonstrated strong market
understanding and adaptability.

The importance of flexibility and localization in product design to meet local


market needs.

o Renault: Showed the significance of maintaining global standards


and quality.

However, the need for balancing global standards with local market
customization was highlighted.

6. Overall Learning from These Organizations and the Industry


Sector:
o Importance of Flexibility: Successful JVs require flexibility and
willingness to adapt to local market conditions.
o Clear Role Definition: Clearly defined roles and responsibilities
are crucial, but there should be room for adjustments based on
market feedback.

o Economic Sensitivity: JVs must be prepared for economic


fluctuations and have strategies to mitigate risks.

o Localization: High localization can significantly reduce costs and


improve competitiveness.

o Collaboration and Trust: Mutual trust and respect between


partners are essential for the long-term success of a JV.

The case of Mahindra Renault JV underscores the complexities of cross-border


collaborations and the need for strategic alignment and adaptability to local
market dynamics.

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