M&M AND PEUGEOT

Strategic Alliances- Submission 2

Submitted by
Group 1B
Aditya Singh- PGP32323
Anand Shah- PGP32249
Arani Halder- PGP32110
Pratik Pednekar- PGP32292
Siddharth Mathapati- PGP32333
Scope of Alliance
The alliance between Peugeot Motorcycles and Mahindra & Mahindra is aimed to leveraging each
others complementary capabilities in multiple functional areas and creating new synergies in their
capabilities. The alliance will be carried out with Mahindra (MTWL) investing 13 million into Peugeot
(PMTC) to buy a 51% stake in the company, as well as 15 million in projects to be implemented by
the partnership.

The following paragraphs detail the scope of joint operations, mutual benefits that will accrue to each
firm, and other points of relevance.

Geographic scope

1. Guiding market entry with regard to local government and regulations: MTWL & PMTC have
considerable experience with the intricacies involved in setting up operations in their domestic
markets. Having such a partner will ensure a smooth market entry and no surprise factors.
2. Market access and global expansion: Mahindra has established operations in India and 17
other developing countries, while Peugeot is present in Europe and China. Each will provide
the other access to their existing distribution facilities.

Vertical scope (value chain integration)

1. Shared manufacturing (operations): Each of the partners will use a part of their production
capacities to build the others products. Specifically, Mahindra will offer its manufacturing
plants in India, while Peugeot will offer its plants in Europe and China.
2. Distribution network (outbound logistics): Peugeot has an established network in Europe,
while Mahindra has a small but growing network in India and will be leveraged by each other.
3. Technology transfer: MTWL has developed expertise in low-cost manufacturing and PMTC has
a proven technological competence through its R&D. The alliance will involve full technology
transfer between the two.
4. Knowledge sharing: PMTC has superior skills in the design and manufacturing process and the
same will be imparted to their Indian counterparts.
5. Joint purchasing (procurement): An increase in bargaining power with suppliers will result
from a centralized purchasing for both the companies.

Offerings

1. Product range: Mahindra and Peugeot will continue to operate as separate entities. Mahindra
will serve the mass-market segment while Peugeot will serve the premium segment, thus
creating a product line-up from one end of the market to the other.
2. Peugeot brand: PSA agrees to retain a minority stake in the firm, continue the Peugeot brand
and provide strategic direction.
3. Joint product development: Mahindra and Peugeot will collaborate on developing certain
aspects of products together (e.g., Peugeots assistance in developing the Mahindra Mojo)

Others

1. Funds infusion: MTWL would revive the loss making PMTC and provide stability by infusing
funds.