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Case Study

Growing pains: Mahindra First Choice 2017

By Charles Dhanaraj, Thomas W. Malnight and Ivy Buche

16 pages

December 2017

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Reference: IMD-7-1926

The case focuses on the business and leadership challenges at the intersection of corporate ownership and entrepreneurship. Mahindra and Mahindra Ltd. is the leading utility vehicle manufacturer in India and the largest-selling tractor brand by volume in the world. The company launched its aftermarket business in 1999, and by 2012/13 it had stabilized into two independent companies, each with a CEO who was responsible for growth and profitability. Mahindra First Choice Services (MFCS) focused on providing affordable and reliable servicing for out-of-warranty vehicles, and Mahindra First Choice Wheels (MFCW) focused on creating an ecosystem for used car ownership. Both companies were bold and innovative, and aimed to create new markets to address an unmet need in India’s burgeoning used car industry. However, profits were elusive. Three strategic questions emerged: (1) Should parent Mahindra and Mahindra Ltd. continue to own MFCS and MFCW? (2) Should MFCS and MFCW be combined into a joint entity? (3) What ownership models (company owned, franchise or others) should be adopted to achieve success?

Learning Objective

Corporate ownership: Does corporate ownership help or hurt the growth of entrepreneurial initiatives?
Corporate structure: What are the synergies and benefits of the used car sale/purchase and out-of-warranty service businesses? What are the costs of ownership?
Ownership model: What ownership model(s) should be adopted for high growth and profitability?

Keywords

Car, Sales, Services, Value, Company Ownership, Private Equity, Franchise, Business Model, Growth, Profitability, Reduced Inequalities

Settings

Asia, India
Mahindra First Choice, Automotive, Automobiles
2008 - 2017

Type

Field Research

Available Languages

English

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