Strategies- Combinations are IN!

Mahindra & Mahindra (M&M)...(Shift from Acquisition-to-Product development based  expansion strategy)

The news states that on 4^th, July,2012 M&M’s automobile division has inaugurated an Rs 100 crore R&D centre in Pune for its two-wheeler segment. M&M has now presence in every type of automobile segment ranging from two-wheeler, cars to air-planes.

 But its foray and expansion into two-wheeler industry is worth noting. M&M has adopted two expansion strategies in a row to tap this segment and establish itself as a competitive player in an already hyper competitive two-wheeler industry.

Strategy 1- (Merger and acquisition) M&M acquired Kinetic brand of scooters to gain quick entry in to the two-wheeler business. It helped the company to quickly establish itself and gain customer base leveraging on already successful products of Kinetic. After establishing itself initially, now the company has made a shift in expansion strategy and has turned inside for growth impetus/momentum.

Strategy 2- (Product Expansion) As stated in the news article also, the company is now heavily investing in its own research and development capacity to undertake ‘disruptive innovation’ and roll out clutter breaking products in the market.

This depicts that it is not necessary for a company to stick to any one type of expansion strategy. Instead it a wise for companies to thoroughly analyse its environment, its competitive standing, resources & capabilities, to choose a strategy or a combination of them in order to make inroads towards the top. And M&M is a perfect example of this; it has proven this phenomenon with the huge success it has got in SUV segment of cars. (There too it followed the same two strategies of acquisition and later product development).