Mahindra Navistar Joint Venture

Introduction: Mahindra & Mahindra has set benchmarks in almost all automotive
sections i.e. two wheeler, three wheeler, tractors, sports utility vehicles, multi utility
vehicles except commercial sector. M&M wanted to enter into the commercial
vehicle segment with the help of technical expert. On the other hand Navistar, US
based International Corporation Navistar wanted to enter into Indian Market.
Navistar is a leading manufacturer of commercial trucks, buses, defense vehicles
and engines; having rich technical expertise. The match seemed apparently perfect
as both were fulfilling each others needs. The joint culture seemed to grow
normally but the strategies they adopted were not made taking market forces into
account, tool provided by Michael Porter i.e. Porters Five Forces was used to
analyze how the for. They ignored the market trend and the growth phase of the
joint venture had a complete mismatch with the industry growth. TOWS analysis has
also been conducted in order to understand that in spite of having technical
expertise of Navistar & strong network of M&M as strengths, the JV could not
succeed.
JV Formation:

Porters Five Forces:

TOWS Analysis:
TOWS analysis was carried out for Mahindra Navistar joint venture as the external
threat was one of the key reasons for the failure of the JV. Analysis involves process
of listing strengths, weaknesses, opportunities and threats. Threats and
Opportunities are examined first and Weaknesses and Strengths are examined last.
After creating a list of threats, opportunities, weaknesses and strengths, it has been
examines how the JV could have taken advantages of opportunities and minimize
threats by exploiting strengths and overcoming weaknesses. One of the strengths of
M&M is being one of the strongest brands in Indian automobile sector, besides the
technical expertise of the Navistar. The weakness of the firm was low technological
advancement which it was trying to come over with the help of JV. There was
certainly an opportunity as Indian automobile sector was pacing up, so the intent
was to catch the big market share. However, the threat was there from the existing
players as they could have used their earlier presence in the sector. Even though,
they did not have a strong network as M&M had, but unfortunately M&M could not
leveraged it.

The crux of the analysis is that even after possessing decent strengths, the JV could
not succeed because of the decline in sector & there were repercussions in the
organization because of the same.
Break Up of JV:
Mahindra Navistar struggled to gain a significant foothold in India's competitive
commercial vehicles market, where Tata Motors and Ashok Leyland controlled
around 70 %. In December 2012, Navistar announced that they were selling their
stake to Mahindra and exiting both joint ventures, Mahindra Navistar and Mahindra
Navistar Engines as the U.S. truck maker Navistar wanted to discontinue the
underperforming business and invest elsewhere. In 12 February 2013Mahindra &
Mahindra bought Navistar International Corp's stakes in the automakers' two joint
ventures in the country, in a $33 million deal. After breaking up the JV with
Mahindra they used Drive to Deliver as turnaround strategy, which is focused on
strengthening its North American core businesses and pursuing near-term initiatives
to improve the companys return on invested capital (ROIC) performance.
On 4 June 2013, Mahindra Navistar Automotives Limited was changed its name to
Mahindra Trucks and Buses Limited. Mahindra Navistar Engines Pvt. Ltd. will also be
renamed to Mahindra Heavy Engines Pvt. Ltd. Mahindra Trucks and Buses ltd is
further demerged into its parent company Mahindra & Mahindra Ltd from 1st April
2014.Even after the failure of JV Navistar continued sourcing components from India
while Mahindra continued provided engineering services to Navistar.
Aftermaths of JV Failure: