Professional Documents
Culture Documents
Team Members:
1. Adarsh Goyal BD22004
2. Aman Chawla BD22010
3. Mayank Jindal BD22024
4. Mohit Pandey BD22030
5. Rupav Tiwari BD22039
6. Vaibhav Aggarwal BD22057
MRF
● Strategy
○ 70% of MRF sales are in the tire replacement market
○ Manages 6 production facilities and a distribution network of 2500 sales outlets
○ Major portion of sales come from the commercial vehicle tire market
● Performance
○ 21% market share of overall tire sales market
○ 14% share of the tubeless tire market
○ Main supplier of Volvo Trucks and Tata Motors
JK Tyres
● Strategy
○ Considered to be the pioneer of radial tires
○ Developed radial technology in the commercial vehicle tire market
○ Marketed tires under 2 brands - ‘JK Tyre’ and ‘Vikrant’
○ JK Tyres has 4 of its own production facilities and its own brand distribution
network with 110 sales outlets
● Performance
○ 20.3% market share of overall tire sales market
○ 25.2% share and leader of the commercial vehicle market
○ 85% share in the radial tire market
○ Annual production capacity of 5.7 Million tires
Ceat
● Strategy
○ Manages 3 production facilities in India and 1 in Sri Lanka
○ Has its own brand distribution network with 100 sales outlets operating under the
name - ‘Ceat Shoppe’
○ Has the widest range of tires amongst its competitors, and manufactures 17
different types of tires
● Performance
○ 14% market share of overall tire sales market
○ Sales of US$300 Million
○ Exports comprised of 17% of total sales
○ 64% market share in Singapore, 42% market share in UAE, 22% market share in
the Philippines
○ Annual production capacity of 5.5 Million tires
Birla Tyres
● Strategy
○ 1 production facility setup in Balasore, Orissa
○ Benefitted from major technology transfers from Pirelli, primarily concerning the
construction of radial tire production lines for cars and LCVs
○ Exports products to more than 43 countries
● Performance
○ 7% market share of overall tire sales market
○ 68% production for commercial vehicles and LCV
○ 32% production for cars and tractors
○ Exports comprise of 30% of sales
○ Annual production capacity of 1.5 Million tires
Apollo Tyres
● Strategy
○ Manages 4 production facilities
○ Has its own brand distribution network with 188 sales outlets under 2 brands
i. Apollo Radial World - 140
ii. Apollo Pragati Kendras - 48
○ Has 2500 exclusive dealers and 2000 multi-brand dealers
○ Exports mainly to Latin America, Middle East, South Asia and Africa
○ Acquired Dunlop South Africa, a company operating in radial tires, on January
30, 2006
● Performance
○ 20.5% market share of overall tire sales market
○ Sales worth US$447.1 Million
○ Exports comprise of 8% of total sales
○ Annual production capacity of 6.1 Million tires
TVS Srichakra
● Strategy
○ Manufactured complete range of tires and tubes for mopeds, motorcycles,
scooter and 3-wheelers
○ Managed 1 production facility
○ Network of 2050 multi-brand dealers and 20 exclusive dealers
○ Cut costs on shop floor to combat increase in prices of natural rubber
○ Aims to increase share in replacement market to 15%
● Performance
○ Sales of US$39.8 Million
○ 11% market share in replacement market
○ Expenses on rubber account for 25% of total sales, down from 27% in 2004
○ Annual production capacity of 9 Million tires
Falcon Tyres
● Strategy
○ Distributes tyres under the Dunlop brand in India
○ Established long-term partnerships with Hero Honda, Bajaj Auto and Yamaha
Motors
○ Manufactures only cross-ply tyres but for wide range of vehicle types
● Performance
○ 2nd ranking producer of tires for 2 and 3-wheelers
○ Sales of US$38.7 Million
○ Annual production capacity of 7 Million tires
Goodyear India
● Strategy
○ Has 2 production plants in Haryana for radial and cross-ply tires
i. Aurangabad plant - Capacity of 1.5 Million tires
ii. Ballabgarh plant - Capacity of 1.8 Million tires
○ Managed a distribution network of 42 sales outlets and 8200 multi-brand dealers
○ Main radial tyre supplier to Maruti
○ Exports mainly to Pakistan, Nepal, Bangladesh, Sri Lanka, Australia
● Performance
○ Sales of US$148 Million
○ 14% market share in the car tire segment
○ Exports comprised of 10% sales
○ Annual production capacity of 3.3 Million tires
Bridgestone India
● Strategy
○ Focuses on radial car segment
○ Focuses on OEM market
○ Has 1 production plant in Madhya Pradesh
● Performance
○ Annual production capacity of 2.6 Million tires
○ 30% market share in radial car segment
○ Annual production capacity of 2.6 Million tires
4. How attractive is the Industry to the existing players? New Entrants?
For Existing players and new entrants, following factors will determine their interest towards the
tyre industry.
HITS
1. Doubled production of vehicles over past decade
2. Expanding market of two-wheeler and three-wheeler, throughout Asia.
3. Steady forecasted growth of ~10% in the next decade.
4. Rapid technological innovation in the tyre industry.
5. With improving road quality and car performance, and increasing fuel prices, demand for
better quality (radial, tubeless) tyres is increasing.
6. High value share (60%) of commercial vehicles tyres in India.
MISSES
1. Stagnant growth forecast (3%) for commercial vehicle tyres.
2. Strong competition from cheap imported car and two-wheeler tyres from China and
South Korea.
3. Increasing input cost, resulting in tighter margins for the manufacturers.
On the basis of the above hits and misses, for the existing player, the expansion into the market
looks promising, especially in regards to increasing penetration of radial tyres. Though
commercial vehicle tyres sales don't look promising in terms of volume, the High value share
compensates this.
For new entrants, it's difficult because the industry is organized and highly competitive with low
profit margins.
5. What are the core competencies of Michelin? Why have they still not entered India?
1.
Michelin has a strong global presence with around 19.4 percent of global share (by
value, 2004) and total sales of more than 15 million Euros.
Since producing its first tire in 1895, Michelin has been continually involved in innovation.
Innovation has been Michelin’s strongest competency. It has produced the radial tire,
tubeless tire, Michelin Energy Green tire and the unbeatable PAX tire.
Michelin has increased its portfolio of brands and targets a wide variety of vehicle
segments like trucks, motorcycles, farm vehicles, earthmover and aircrafts. It
strategically targets the car and LCV tire segment because of the continuous growth in
this segment.
Michelin carefully targets the market where a particular segment shows promising
growth. For example, emerging countries were less radialized and Michelin targeted the
commercial vehicle tire segment in these countries.
Michelins’ sales network spans over 170 countries and 71 production facilities in 19
countries. 85 percent of their total sales are from Europe (Euromaster) and North
America (TCI).
Michelin has also kept its input cost of raw material low at around 24 percent total sale
price as compared to other manufacturers who have an average input cost of 65
percent.
Michelin has maintained its No. 1 position since 2001, recording a market share (value)
of around 20 percent in each of the years from 2001-2004.
2.
Although Michelin is a world leader in the tire market, the breakdown of its total sales by
geographic zone clearly shows how unbalanced it is. It does not have a strong presence
in Asian markets. It neither has a production facility or any R&D centres in India.
To expand globally, Michelin relied on wholly-owned subsidiaries and joint ventures.
They used them to produce and distribute Michelin’s radial tires locally. The problem with
this is, they did little adaptation. The radial tires were more or less the same across the
countries. India being a developing country has different needs than the markets of
developed countries.
The Indian market already has a strong presence of reliable and trusted tire brands.
Although increasing, the radial tire market in India was still low due to factors like bad
roads.
6. If they should enter, what should be their strategy?
Taking a look at the Indian tyre and automobile industry, if Michelin wants to enter into India, it
has to do either as a solo venture or a joint venture. Looking at solo approach, it will take a
considerable time to form brand identity and establish a strong distribution network.
For joint ventures, Michelin can collaborate with CEAT tyres, considering CEAT’s product
portfolio and ability to manufacture different types of tyres for different conditions. This will help
Michelin to expand its portfolio and localize their product as per Indian needs. Also CEAT
outsources radial tyres and the void left after the cancellation of agreement with Goodyear tyres,
Michelin can bring in its expertise. Also michelin can tap on the distribution network.