Abstract

Hemant Luthra, Chairman and Arvind Mehra, Executive Director and CEO, Mahindra Aerospace needed to examine the prospects of the aerospace industry in India and decide on the organization’s growth strategy. Mahindra Aerospace was a leader among private sector organizations in India that, in addition to building capacity outside the country, had established manufacturing capacity in India for the aerospace industry. The top executives needed to take stock of how the situation had evolved since its entry into the industry to decide on the next major strategic moves. Luthra and Mehra had to decide the next major strategic moves for the company. The Mahindra Group had already established some relevant capabilities, and Mahindra Aerospace added some focused capabilities by acquisitions, and was well-poised to participate in engineering design, and also be a supplier to some majors. With strong technological capabilities relative to other new players and a relative cost advantage over traditional American and/or European players, Mahindra hoped to be able to chart a strategy that allowed them to move up the value chain. However, the top executives were sensitive to the unique features of the sector – long gestation periods for product development and production and high volatility in the market. Hence, prudent capital investment decisions were very critical for the long-term health of the organization.

Learning Objective

The objective of the case is to examine the challenges faced by India-based organizations that are in early stages of becoming multinational corporations. It is well-accepted that Indian companies were denied a ‘‘natural’’ growth path to become multinational corporations owing to pre-liberalization restrictions based on the licensing system and restrictions of foreign exchange transactions. After liberalization, many organizations have established themselves in the Indian markets, complemented their domestic capabilities with global capabilities by acquiring other international companies with domain-specific competencies, and are ready to participate in the global value chains. In this case, Mahindra Aerospace has to decide on the nature of its engagement in the six-stage value chain in the global aerospace industry.