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Case Code : CLINDM012
Publication date : 2006
Subject : Industrial Marketing
Industry : Machinery
Teaching Note : Available
Length : 05 Pages
Price : Rs. 100

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Key words:

Bharat Forge Ltd., Sundram Fasteners Ltd. (SFL), Amtek Auto Limited (Amtek), Tata AutoComp Systems Limited, General Motors, BMW, Volkswagen, Daimler Chrysler, Volvo, Toyota, Carl Dan Peddinghaus GmbH, Textron Deutschland Beteiligungs GmbH, MAN, DAF Trucks, Scania, joint ventures, subsidiaries, business strategy, global expansion strategy, production sharing arrangements, markets, steel components, transmission and suspension systems, acquisitions, exports, foreign direct investment, auto industry, customer base.

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Abstract:
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The caselet throws light on the global expansion strategies of some of the prominent Indian auto component manufacturers like Bharat Forge, Sundram Fasteners, Tata AutoComp Systems Limited and Amtek Auto Limited. It also focuses on the rising importance of the Indian auto component industry with foreign companies entering into production sharing arrangements and joint ventures as a result of the removal of barriers on foreign direct investment in India.

Issues:

   Entering foreign markets
   Exports, joint ventures, acquisitions, and setting up of subsidiaries as part of global expansion strategies
   India as an investment and manufacturing destination for foreign auto manufacturers
   Indian auto component industry after the removal of barriers on foreign direct investment

Introduction

The export of auto components from India increased from US$330 million in 1997-98 to US$1.4 billion in 2004-05. The global expansion initiatives of Indian auto component manufacturers into foreign markets were the prime reason for this growth (Refer Exhibit I).


Bharat Forge Ltd., Sundram Fasteners, Tata AutoComp Systems Limited and Amtek Auto Limited were some of the prominent Indian auto component manufacturers trying to expand their operations globally.

The major customers of these companies were automobile majors like General Motors, BMW, Skoda, Volkswagen, Daimler Chrysler, Volvo, Toyota etc. Exporting (Refer Exhibit II), entering into joint ventures, setting up wholly owned manufacturing units or acquiring manufacturing units abroad were the preferred modes of entry into foreign markets (Refer Exhibit III)...

Questions for Discussion:

1. Indian auto component manufacturers have focused on joint ventures, overseas acquisitions, and establishment of manufacturing units as a means to growth. What advantages would Indian auto manufacturers gain by entering into foreign markets?

2. Discuss the possible challenges that Indian auto manufacturers are likely to face in foreign markets, especially from political, legal and competitive forces.