1. Redhawks Consulting Mahindra & Mahindra

2. How to position Mahindra & Mahindra (South Africa) while operating in the context of the parent company’s mission and managing risk.

3. I.Analysis I.PESTLE II.Porter’s Five Forces III.SWOT Analysis IV.SWOT Strategy II.Alternatives III.Recommendation IV.Implementation.

4. ● Population 50.6 Million Black Africans – 40.2M White Africans – 4.6M Other – 4.6M Target age group: 15-50 ● Economic Fastest growing economies in Africa carry highest macroeconomic risk 8 of top 10 global vehicle makers 3 of world’s largest manufacturers More than 200 automotive component manufacturers ● Social Brand conscious Black: 49% of middle income, higher disposable income, new vehicles, features are important, suspicious Buyer power is rising White: Earn higher income, spend more, less disposable income, used cars, functional is important ● Legal Motor industry development program Automotive production and development program Import duty rates/discounts External Analysis

5. Supplier Power Buyer Power Competitive Rivalry Threat of Substitution Threat of New Entry -Moderate -Moderate imput on price -High differentation of inputs -High presence of substitute inputs -Moderate supplier concentration -High -High price sensitivity -High level of company alternatives -Low switching costs -High buyer volume -High impact on quality -High -Many Alternatives -Lowcosts of substitutes -Moderate feasibility based on geographical location -Low -High cost barrier -High brand identity -High Government policy -High -High level of Competitors -High concentration of competitors -High globalization of industry External Analysis

6. Strengths Presence in all provinces Network of customer service outlets Weaknesses No distinctive competency No clear strategy for South Africa Miniscule market share Small profits No established brand identity No established trust with target market Opportunities New market potential in African continent Black African market growth Government contracts Threats Underdeveloped market in SA High risk of political/social unrest Recovery from global recession Cost of Tariffs and taxes Over-capacity Strengths Presence in all provinces Network of customer service outlets Weaknesses No distinctive competency No clear strategy for South Africa Miniscule market share Small profits No established brand identity No established trust with target market Strengths Presence in all provinces Network of customer service outlets Weaknesses No distinctive competency No clear strategy for South Africa Miniscule market share Small profits No established brand identity No established trust with target market Opportunities New market potential in African continent Black African market growth Government contracts Threats Underdeveloped market in SA High risk of political/social unrest Recovery from global recession Cost of Tariffs and taxes Over-capacity Strengths Presence in all provinces Network of customer service outlets Weaknesses No distinctive competency No clear strategy for South Africa Miniscule market share Small profits No established brand identity No established trust with target market Opportunities New market potential in African continent Black African market growth Government contracts Threats Underdeveloped market in SA High risk of political/social unrest Recovery from global recession Cost of Tariffs and taxes Over-capacity Internal / External Analysis

7. Turn- around AggressiveDefensive Diversify Internal / External Analysis Opportunities Weaknesses Strengths Threats

8. Alternative #1 Contract Assembly Alternative #2 Build manufacturing facility Alternatives Alternative #3 Wait and watch Alternative #4 Use South Africa as a hub Alternative #5 Exit Strategy

9. Contract Assembly Improve margins - reduces cost of shipping by 25% No major upfront investment Option for companies with low volume Must assemble 50,000 vehicles per annum and export to be eligible for tradeable certificate Import duty for CKD components: 20% 3-months lead time to commence operations 10 day vehicle ordering cycle Build manufacturing facility Standard for setting up own facility is annual sales of 6,000 units with a single brand selling 1,500 Must manufacture 50,000 vehicles per annum and prove content localization to be eligible for tradable certificate Have to maintan high production levels to break even Wait-and-watch Global automotive market has not fully recovered from recession Industry has just recovered from a sharp decline in new-vehicle sales in three consecutive years Import duty for CBUs: 25% Not eligible for tradeable certificate Use South Africa as a hub Individual markets have to be developed over time None of the 54 African countries has a sizeable middle class Political turmoil Exit Strategy Sell assets Divert resources to SsangYong Alternatives

10. Contract Assembly Manufacturing Facility Wait and watch Hub InvestmentNo Major Upfront Investment Low – Developed in India NoneHigh Potential Benefits 25% reduction in Shipping Costs Beyond Breakeven - Fixed Costs Spread over more Units No risk of losing investment High Growth Potential RiskLose all control Surplus Demand does not grow as expected Not ready to capitalize on unexpected market growth High costs and unknown environments Return on Investment Quick break even but low effect on margins Dependant on large growth in capturing market share SmallBreak even takes a long time Alternatives

11. Exposure to Risk Financial Feasability Aligned with Mission of Parent Company ◦ Long Term Player ◦ 50% Rule: even if demand falls by as much as 50%, each business has to remain profitable Competitive Advantage Presence in South Africa Alternatives

12. Contract Assembly Manufacturi ng Facility Wait-and- Watch Re-Export Hub Exit Strategy Key Success Factor WeightRankWeightRankWeightRankWeightRankWeightRankWeight Exposure to Risk,353*1,051*,354*1,41*,3551,75 Financial Feasability,253,752,5041,01*,255*,75 Alligned with Mission of Parent Company,2541,0051,252,5051,253,75 Competitive Advantage,102,204,402,203,303,10 Presense in South Africa,053,154,202,105,251,05 Total1,003,152,703,202,403,35. Ranking Scale 1: The alternative does not effectively address this criterion 2: The alternative may contribute to addressing this criterion 3: The alternative provides an average solution to this criterion 4: The alternative provides an above-average solution to this criterion 5: The alternative effectively addresses this criterion Alternatives

13. Alternative #5 Exit Strategy Recommendation

14. Highly unstable region Political, Social, Legal-All extremely high Hard to penetrate market Low trust from consumers Extremely low market share 1555 total cars sold in 2010 (less than 1% of market) Competitive market dominated by entrenched global players U.S., German, Japanese, Korean Slow economic growth Chance of another global recession Debt crisis Europe/U.S. threatens credit markets worldwide Potential growth does not currently outweigh costs and risks We can still reach the South African/African market without putting our assets at risk Recommendation

15. Mahindra & Mahindra South Africa Income Statement 200920102011 Revenues ZAR 198.685.150,00 ZAR 192.463.763,00 ZAR 270.766.948,00 Cost of Sales ZAR 199.642.431,00 ZAR 166.470.257,00 ZAR 221.703.228,00 Gross Profit ZAR -957.281,00 ZAR 25.993.506,00 ZAR 49.063.720,00 Other Income ZAR 369.597,00 ZAR 1.653.520,00 ZAR 138.082,00 Investment Revenues ZAR 1.138.512,00 ZAR 2.970.225,00 ZAR 3.145.901,00 Financing Costs ZAR 11.985.817,00 ZAR 4.518.481,00 ZAR 2.409.208,00 Operating Expenses ZAR 41.954.297,00 ZAR 22.425.423,00 ZAR 23.900.437,00 Profit Before Tax ZAR (53.389.286,00) ZAR 3.673.347,00 ZAR 26.038.058,00 Tax ZAR 14.664.466,00 ZAR 1.044.461,00 ZAR 7.293.834,00 Profit After Tax ZAR (38.724.820,00) ZAR 2.628.886,00 ZAR 18.744.224,00 Recommendation

16. 50% Rule Projections Revenues ZAR 135.383.474,00 Cost of Sales ZAR 110.851.614,0050% Drop Gross Profit ZAR 24.531.860,00 Other Income ZAR 69.041,0050 % Drop Investment Revenues ZAR 2.418.212,67Average of Previous 3 Years Financing Costs ZAR 2.409.208,00No Change Operating Expenses ZAR 19.120.349,6020% Drop Profit Before Tax ZAR 5.489.556,07 Tax ZAR 7.667.587,00 Profit After Tax ZAR -2.178.030,93 Recommendation

17. WhatWho Develop strategy for transition of resources to SsangYongBoard / CEO Develop PR/marketing strategy to mitigate negative brand reputation PR/Marketing Fulfill current obligations in South AfricaM&M (SA) Prepare Egyptian facility to accomodate additional demand if necessary Management Create marketing plan to increase sales from other locations Marketing Sell assets Finance / Management Assist displaced workersHuman Resources TransitionManagement Implementation

18. 1 month3 months6 months Develop strategy for transition of resources to SsangYong Develop PR/marketing strategy to mitigate negative brand reputation Fulfill current obligations in South Africa Create marketing plan to increase sales from other locations Prepare Egyptian facility to accomodate additional demand if necessary Sell assets Assist displaced workers Milestone Review Implementation

19. RiskProbabilityMitigation Solution South Africa/Africa market grows faster than expected Low Generate sales through imports from India and Egypt Parent Company does not approve of exit plan LowAdopt a wait and watch approach Implementation

20. Exit Strategy

21. Redhawks Consulting Mahindra & Mahindra