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Case Study

Mahindra’s aftermarket business: Bringing Silicon Valley inside

By Charles Dhanaraj, Thomas W. Malnight and Ivy Buche

21 pages

December 2017

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Reference: IMD-7-1916

The case focuses on the challenges of achieving scale and profitability for an entrepreneurial business operating as a subsidiary of a large multinational company. 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 the fledgling business was re-branded as Mahindra First Choice in 2008. Mahindra First Choice Wheels (MFCW) was in the business of selling and purchasing multi-brand pre-owned vehicles, and Mahindra First Choice Services (MFCS) operated an automobile service chain. The case traces the growth challenges of the two companies as they shifted from a company owned and operated model to a franchise model to scale up aggressively, becoming India’s largest multi-brand certified used car player and a leading service chain for out-of-warranty vehicles. Displaying an entrepreneurial spirit they continually innovated to launch first-of-their-kind cloud-based services, such as online auctions, pricing guides, service estimates, etc., which were well received by the market. However, profits were elusive. At the same time, the competition was escalating as a new breed of online players entered the used car market. Going forward, the CEOs of MFCW and MFCS had to chart the strategy for achieving sustainable growth and profitability: How should they demonstrate a proven business model for aggressive expansion? Should they sell stakes to foreign private equity investors to strengthen their growth objectives? Was it time to expand overseas?

Learning Objective

Understanding the challenges of organizing an unorganized market
Creating and capturing value in a business ecosystem
Developing strategies for scaling up and expansion
Assessing the franchise business model
Identifying the advantages and disadvantages of corporate ownership for entrepreneurial firms

Keywords

Ecosystem, Car, Sales, Services, Franchise, Private Equity, Intrapreneur, Scaling, Growth, Profitability, Business to Business, Bricks and Clicks, Strategy, Multi-brand, Company Ownership

Settings

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

Type

Field Research

Available Languages

English

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