1. What are the strategically relevant factors in the macro-environment?

(PESTEL
analysis PESTEL = PEST + Environmental + Legal)
Basing on PESTEL there are numerous factors to be analyzed in order to have a clear
picture of the market.
 Any company looking to start, expand, and create affiliates needs to have a good
background information coverage. Since Macro-environment is based on a large market
full of competition, the company has a task to investigate the market in whichever
industry it is planning to launch. The following factors serve relevant to be strategically
analyzed for a supportive business environment. PESTEL represents Political,
Economic, Socio-Economic, Technological, Environmental and Legal factors.
 From the case study, political factors have influenced the expansion and survival of
Cooper Tire and Rubber. Besides, all other competitors were faced with same regulations
and an adjustment always facilitates survival.
 It is evident that political factors not limited to, foreign trade policies, labor law, tax
policy, political stability or instability in relation to overseas markets played a role in
shaping the current and future endeavors of these companies.
 For success in current undertakings an organization should be able to respond to current
and future anticipated legislations with relation to efficiency and long business
sustainability. In identifying the bigger picture of the business environment, the
organizations research and development department should obtain information from
relevant sources to maximize on accuracy and reduce errors in the course of action taken.
 For a long time governments have influenced business operations and profitability in
several ways. For instance, it is evident that political factors not limited to, foreign trade
policies, labor law, tax policy, political stability or instability in relation to overseas
markets played a role in shaping the current and future endeavors of these companies.
 Political
Government policy encouraged domestic production of smaller vehicles most of which
were imported. More stringent federal restrictions also encouraged domestic production.
Government regulations affected market dynamics. Government of china encouraged
exportation of produced tire products to the international market.
 Economic
The industries economy also favored Cooper Tire and Rubber. Firms were established in
rural areas which offered favorable cost in terms of land acquiring and employee loyalty.
Employee loyalty occurred as a result of employees being dedicated to a certain firm
owned by Cooper Tire and Rubber. As a result of its location, they did not have many
firms to jump to leading to lack of commitment. The company also implemented the
move into low-cost regions which was its plan for many coming years.
 To reduce initial cost of acquiring other companies and establishment of new firms,
Cooper Tire and Rubber invested in renewing old firms that had closed down. This meant
a third savings on the initial cost of acquiring new assets. It was easy for this company to
penetrate where it was less represented.
The market trend under Cooper’s coverage kept expanding due to establishment of new
manufacturing plants, distribution system and market place. So, it was able to get a large
market for its quality products.
 Technology
Integration of technology was also another advantage for Cooper tires enabling it to bring
new quality products to the market. This technology enabled up to date data collection
throughout the production process which provided accurate information on the
components being worked on. Use of technology enabled the company to schedule
accurate manufacturing schedules to meet customer needs.
Technology was also useful in virtualizing and testing features of the rubber products
such as durability and fuel efficiency. By integrating technology in these sectors, the
company reduced the amount of tires used for testing purposes.
 Environment
Low-cost environment was also another sector hunted buy Cooper. It is where the
company’s initial cost of setting up a new plant in a different location was low and
affordable. Also, due to high quality products, the customer’s expectations kept growing.
More technology and inventions including new raw materials for tire production helped
in meeting changing market demands.
The market Cooper Company dominated involved that of replacement tires. It had a large
market share due to people with durable cars maintaining them for longer periods. They
chose to concentrate on a different sector that the rest of the companies didn’t invest
much. However, other competitors joined.
What are the industry’s strategy-shaping economic features? (Dominant Economic Features
analysis)
 It includes sources for key inputs, substitute products, rivalry among competing
sellers, buyers and potential new errants.
 In the case study, there was advanced research and development that facilitated
updated market information. Cooper Tire and Rubber and its competitors relied
much on research and development. Computer technology aided in achieving new
designs for the market that suited changing needs. In staying favorably in the
industry, Cooper Tires minimized its costs on research and development as it had
specialized in replacement of tires instead of OEMs. As such, it already had ready
 data that was tracked from previous sales. However, other bigger competitors such as
Goodyear were able to produce both in the OEM and replacement industry. This did
not deter Cooper tires from sustaining the ever competing industry.
 Producing a wide variety of goods was also another strategy to stay in highly
competitive industry with companies applying different techniques in competing with
rivals. For instance, Cooper Tires participated in production of tires for passenger
vehicles while also engaging in production for racing industries. This increased
diversity of products that had a wide market coverage considering that they had
quality which was also a slogan in the company.
 Establishing more manufacturing plants and distribution systems. Years went by and
the company did not seize to expand by establishing of new plants where they
cheaply acquired deserted companies and reestablished them. Besides, the company
has always practiced low cost zoning where plants are located in rural areas that
provided low cost to establishment compared to urban centers.
 To efficiently deal with rivalry. The company had high quality goods that were also at
a favorable price since the management had always worked towards minimizing
costs.
What factors are driving industry change, and what impact will they have? (Driving Forces
analysis).
 Government regulations
Import and regulation policies, 35 percent tariff which discouraged tire importation from China.
While Cooper was a among major U.S. tire companies, China grew and flooded the international
market with rubber products which was unfavorable for U.S. companies. As such, the
government regulated this importation by introducing a 35 percent tariff which encouraged local
purchasing. This increased the market for other companies such as Good year, Groupe Michellin,
Pirell among many others.
 Competitors
More competitors entered the market and it called for constant innovation, technological
advancements among others. Cooper Tire also competed favorably as it was able to maintain
prices for its products and so there was little fluctuation in its product prices.
Companies kept realizing the benefits in the replacement tire market so they ventured in. as such,
competition became fiercer.
 Demand changes
Since majoring in the replacement-tire market, the company was faced with major challenges as
there was a reducing demand for replacement tires. This is as a result of reduced job security and
consumers in the United States no longer preferred brand loyalty. Even worse, replacement-tires
were losing market as consumers preferred spending less on old vehicles since there were newer
vehicles.
Due to new expressways and highways the demand shifted to low-cost speedy tires with high
mileage and energy efficiency. There was also need for new tire technology due to modern
vehicles with different safety regulations among others. It called for change in the production
process itself together with change in products.
 Technology changes
Over decades the tire product became a highly technical product due to the new techniques
applied in the production process. Due to changing technology, there are innovations such as
run-flat technology, multi-air chamber among other breathtaking inventions.
How are the industry rivals positioned in the market? (Strategic Group Map analysis)
 Product price relations.
Cooper Tire and Rubber has faced price competition from foreign companies such as those in
Asia and China. However, while these differences existed, Cooper Tire has been able to maintain
its product prices enabling it to easily survive market fluctuations
To compete favorably, other companies applied longer tire mileage warranty which offered extra
miles before a warranty voided. .
 Market size (Market share represented by the product, )
Compared to other tire manufacturers, such as Goodyear, Groupe Michelin, Bridgestone Corp
among others Cooper Tires had a lower market share. However, due to high quality and wide
geographical coverage, it had a high profit margin when considering cost of production and that
of selling the products. It also had a well-managed distribution system which was under its
control and ensured timely delivery of products. It also facilitated consumer-manufacturer
relation as it had direct feedback from its prospective customers.
 Product types (Quality, Diversity of Products)
It is evident that Cooper Tires had one of the high quality products in the market. It competed
favorably With Goodyear and Bridgestone among others. This is because of its outstanding
quality and resource management. Research and development was also enhanced to achieve
better innovations suit for consumers. It represented the United States in the international market
together with its counterpart Rubber Co.
What are the industry’s key success factors? (KSF analysis)
 Profit and loss
Profitability is among the major factors to be considered in an industry. Over the decades, the tire
industry has proved profitable even with the emergence of other companies in the same sector.
Private label products generated high profit margins for manufacturers. Cooper Tire profitability
continued to increase as the prices of OEM manufacturers increased. Major tire manufacturers
were attracted by replacement tire market and hence competed with Cooper Tire. It became a
challenge. However, Cooper tire has been able to recover from such occurrences.
 Competitive success or failure
Delivering of innovative high quality products kept Cooper in the game for a long time. Its
innovative skills attracted third party endorsements with other companies such as Zeon RS3-A
and Discoverer A/ T3 both of which continued holding the market earning significant returns.
This was a competitive success.
In collaboration with independent dealers, the company was able to reach a large market
internationally while maintaining its independent dealers.
 Resources for competitive capabilities.
Resources include a wide range of factors such as labor, raw materials, and energy sources
for the plants among many others. Cooper Tire had substantial resources and energy directed for
top growth initiatives. Based on organization capability perspective, Cooper Tire concentrated on
talent development and automation projects.
Is the industry outlook conducive to good profitability? (overall summary conclusions of relevant
findings) This is where to tie in the company’s prospects with your industry findings.
 For Cooper Tire, there is profitability in the industry as it is already established. Since the
year 1914 when it was established, Cooper Tire and Rubber has proved profitable for its
stake holders and employees. Besides challenges along the way, the company has been
able to recover within a short time.
 The company has also been able to lower production costs by always working towards
minimizing costs. This has been achievable as the company has had a trend of acquiring
new deserted companies and establishing newer plants at a cost that was a third lower
than establishing a new plant from scratch.
 Cooper has also been able to engage employees by treating the employees spouse as part
of the company. In addition, it has invested in employee training to maximize on
production and also minimizing costs.
 The perspective of low-cost operations has also been enhanced as the company tends to
decentralize its firms in rural areas which minimizes costs and employee commitment.

Identify and analyze key performance indicators (will include indicators for both financial and
strategic objectives; financial results should include a summary of relevant facts from your
financial analysis).
 Good employee relationship.
 Employees were involved at all levels of the organization. It is because Cooper Tire
believed in productivity from dedicated workers.
Hourly workers were also paid more if they produced more. Workers earned up to 7.5
percent bonuses for extra production. This encouraged workers to work even more hard
in producing.
Employees also made up 20 percent of stock. The company purchase of stock generated
up to an abnormal 6800 percent profit.
 During the year 2012-2013, Cooper Tire had a reduction in revenue from 4.2 billion to
3.2 billion. This indicated that the company faced challenges keeping with competition in
the market.