Flat Tyres of India Ltd

Streamlining Distribution Network

Presented By: Somil Joshi (113) Prakhar Singh (100) Rakesh M (43) Varun S Pilla (119) Prajith V M (99) Tarun Gupta (117)

Introduction to the case
y

Objective ±
Flat tyres Inc is planning to push its sales from Rs 400cr to Rs 600cr. Streamline its distribution and sales channels

y

Alternatives ±
To go in for more company owned sales offices and To go in for an agency system

y

Alternative Chosen ±
Agency System was found to be more viable as the cost of company owned assets for distribution would be extremely expensive

y

Agency based system certain core conflicts came into the picture which were as follows
Resistance of existing channel members to change Promotion of an existing dealer to a CFA could aggravate the existing rivalry

Company/ Dealer

Samy Auto Parts

Manickam & Co

SKS Auto Centre

Auto Tyres

Balu Tyres

KSS & Co

Ratna Automobile

Total

Apollo Tyres Ltd Tyres International Flat Tyres of India Ltd Dunlop India Ltd

3.0

-

-

0.5

2.0

1.0

0.5

7.0

0.5

0.25

-

0.15

-

0.5

-

1.4

8.0 50 6.0

1.0 6.25 0.25

0.5 3.125 -

2.0 13 0.5

3.0 18 1.0

1.0 6.25 4.0

0.5 3.125 -

16.0

11.75

Goodyear Ltd

India

1.0

0.25

0.25

0.5

1.0

0.5

0.25

3.75

JK Industries Ltd

6.0

0.25

-

-

-

0.5

-

6.75

Modi Rubber Ltd

3.0

-

1.25

1.0

8.0

1.0

3.5

17.75

MRF Ltd Vikrant Tyres Ltd

3.0 1.0

4.0 -

1.0 -

3.0 0.25

2.0 -

1.0 0.5

1.0 0.25

15.0 2.0

Others TOTAL

0.5 32.0

6.0

3.0

0.10 8.0 25

17.0 17

10.0 10

6.0 8.5

0.6 82.0

Why is it important for Flat tyres to convince the players to stick withMadurai tyre market there are other it y In
prominent players like MRF, Modi rubber etc. y If the company fails to pacify the antagonized dealers it would lose the channel reach it enjoyed before thus giving edge to the competitors y This would also adversely affect the company strategy of expansion in the market.

Madurai Tyre Market

Madurai Tyre Market
y

Flat Tyres enjoys a 19% market share it is the second largest player in the area but without the support of channel partners the position can¶t be sustained for long Possible cause of concern among the dealers ±
Once Samy Auto Part clinch the CFA offer it could tamper with the orders placed by dealer thus squeezing other dealers market share

y

y

Possible alternatives ± As suggested by Deutsche and Rause the possibility of a negotiation between the company and dealers is not very high. But still the onus rests with Flat Tyres to convince the dealers about the benefits of the new structure. Some arguments that the company can make are as follows: The CFA is under the control of Sales Manager hence the possibility of muscling out the opponent is not there. With the expansions plans in process the availability of goods would be better under the umbrella of a CFA Other major players like Dunlop and JK Tyres also follow the same process and dealers like KSS and Balu etc comply with the structure

y

Recommendations
y

y

y

Although Mr. Krishna has tried to convince the dealers and failed he must retry with the above mentioned arguments. The company will have to maintain a mix firm tactics and concern for the dealer¶s fears. They could be presented with an alternative of a test run of the new channel and if some problems pop up then the company sales manager will be there to take of issues. The company must make sure that the dealers are not allowed to dictate terms as this could lead to long term problems for the company.