Analysis of Strategic Orientation in Tyre Industry

V B Khanapuri, Associate Professor, National Institute of Industrial Engineering, Vihar Lake, Mumbai-400087 Email id: vbkhanapuri@gmail.com Fax: +91-22-28573251 Mobile No: + 91-9869436734

Sachin K Kamble, Associate Professor, National Institute of Industrial Engineering, Vihar Lake, Mumbai-400087 Email id: sachinnitie06@gmail.com Fax: +91-22-28573251 Mobile No: +91-9969018607

Raniprasad Palod, Industrial Engineering student, National Institute of Industrial Engineering, Vihar Lake, Mumbai-400087 Email id: rpalod@gmail.com Mobile No: + 91-9922412855

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ABSTRACT In the midst of a global recession, India's growth, despite its intrinsic strengths has not remained untouched. Economic woes across the world, prompted by the sub-prime crisis in the USA, have contributed to a slowdown which has had a far-reaching impact. More than an actual ground level impact, public sentiment has been hit and there is a general wariness in capital spending both at the personal level as well as the institutional level(1). The level of economic activity, performance of domestic automotive industry, and the faring of the transport sector directly influence the performance of the tyre industry in India. The tyre industry is linked to performance the Original Equipment Manufacturer (OEM) in the automobile Industry and also the replacement segment. With the replacement segment dominating the overall tyre demand in India, the industry remains inherently vulnerable to economic cycles. Additionally, there has been a change in the product offering along with new product development meeting the changing demands of the customers. While adoption of radials has become the norm in the passenger car segment, in the bus and truck tyre segment, its acceptance is still limited. Bus and truck radialisation could emerge in the long term as the quality of roads improves and the restrictions on overloading are better enforced. The practice of re-treading, which is gaining increasing acceptance, could pose a challenge to replacement demand in the medium term. Given the low levels of penetration of two-wheelers and passenger cars in the country, OEM demand is likely to increase, which in turn would push up replacement demand with a lag. The prospects of tyre exports from India appear healthy, following efforts by Indian companies to increasingly enter into outsourcing agreements with tyre producers in Southeast Asia, Eastern Europe and Latin America. Overall, tyre manufacturers are likely to tap the export market in an effort to boost sales. The increasing exports of bus and truck tyres (cross ply variety) from India to developing countries is because of the fact that developing countries are unable to source them from developed countries as these are no more produced there. Tyre imports are unlikely to pose a threat to the domestic industry, given that domestic prices are lower than international tyre prices (2). The study presents the overview of the Indian Tyre Industry with the performance of the key players in the Indian Industry. To understand the strategic orientation of these organisations, an attempt has been made to first understand the Vision & Mission Statements along with the various strategic initiatives taken up by these organisations. Furthermore, analysis on Key Performance Indices has been presented along with conclusions drawn from the study. The Page2

Methodology primarily adopted is through data collection from the secondary sources of information and discussions with key executives of one of the organisation from the tyre industry. The paper aims at critically analysis of Strategic Orientation which will help these organisations to address the key processes linked to the achievement of their strategic objectives. 1. Introduction India is among the few countries in the world that have achieved self-sufficiency in the manufacturing of automotive tyres. Little wonder, almost all the international auto-majors present in India have rolled out their vehicles on Indian-manufactured tyres. Tyre industry is highly raw material intensive with raw materials accounting for 60% of the industry turnover. The sharp volatility in the raw material prices, in particular the natural rubber prices, has been the bane of tyre industry in India. For instance, the natural rubber prices have gone up by as much as 40 % forcing the industry to import the commodity, as international prices have been ruling at a much lower level. Unfortunately, the tyre industry in India is faced with a situation wherein the import of rubber as raw material is discouraged while the import of tyres as a finished product is encouraged. The import duty on natural rubber is a hefty 20%, while those on tyres it is as low as 10 %. The industry has repeatedly asked for rectifying this aberration of inverted duty structure either by decreasing the import duty on natural rubber or by increasing the import duty on tyres (3). Tyre Industry is one of the raw material intensive industries in India. Raw material cost accounts for nearly 62% of tyre turnover and 70% of the production cost. Natural Rubber is the key raw material for the tyres followed by Carbon Black and Nylon Tyre Cord fabric and Rubber Chemicals. Nearly the Tyre Industry consumes 58-60% of the domestic Natural Rubber produced, and the latter accounts 42% of the raw material cost of the industry. The spike in input costs, and as sizeable portion of many inputs are being imported, the tyre sector witnessed sequential fall in margins in the quarter ended December 2009, despite strong demand growth. The industry has reported the anomaly of customs duty on raw material Rubber at 20% being higher than the customs duty on finished products - Tyres which is at 10%. On the back of spike in the rubber prices and increase in the tyre imports, Industry has urged Government to reduce customs duty on the Natural rubber from existing 20% to 7.50%. However, as an alternative it has suggested to increase customs duty on tyres from existing 10% to 20%. Page3

Also, India has entered into some regional trade agreements, which make the customs duty on import from select countries even lower. The Asia Pacific Trade Agreement permits tyre imports at 8.5% for passenger car tyres and at 8.6% for toher tyres. Likewise, South Asian Free Trade Agreement (SAFTA) facilitates nil customs duty on tyres imported from Bangladesh, Bhutan, Maldives & Nepal and at 5% from Pakistan and Srilanka. Similarly, Indian Singapore Agreement provides for tyre imports without any customs duty. Thus, the effective customs duty on total tyre imported is far less than 10%, and hence ATMA seeks cut in customs duty on Natural rubber from 20% to 7.5%. Duty Structure: Material Tyres Rubber Butyl Rubber Polyester Tyre Cord Styrene Butadiene Rubber Machinery Nylon Tyre Cord PBR Rubber Chemicals Steel Tyre cord Existing 10.00% 20.00% 5.00% 5.00% 10.00% 7.50% 10.00% 10.00% 7.50% 10.00% Proposed 20.00% 7.50% Nil Nil Nil Nil 5.00% 5.00% 2.50% 5.00%

Figure 1-a, ATMA Custom Duty proposal

Besides rubber, the Industry imports much of the proportion of other key raw materials like PBR, Steel Tyre cord, Nylon Tyre cord and Rubber chemicals. As much of the industry's demand for the above raw materials was not met locally, industry seeks reduction of customs duty on Nylon Tyre Cord, Steel tyre cord fabric and PBR from existing 10% to 5% each, and slash customs duty on Rubber chemicals from 7.5% to 2.5%.

The industry is looking for wavier on customs duty on some materials which were not produced domestically like; Butyl Rubber, Polyester Tyre Fabric, and Styrene Butadiene Rubber. Page4

The industry has also asked for waiver of Customs Duty on Tyre manufacturing machinery, (like Machinery (for working rubber), Extruders, Moulding / retreading tyres / inner tubes and other machinery along with parts) which will accelerate the pace of radialization in the country(4).

Global Auto Industry: Global car sales continue to gain momentum, with purchases in January 2010 posting a doubledigit increase for the fourth consecutive month, led by more than a doubling in volumes in China the worlds largest auto market. U.S. auto sales also advanced year-over-year for the fourth consecutive month, climbing to an annualized 10.8 million units, up from a full-year 2009 total of 10.4 million(5). Indias automotive market is driven by overall GDP growth, which has been about 7 to 9 percent for the past three years (2007, 08, 09). One estimate predicts GDP growth will level off at 6 percent annually and remain at that rate until 2020. As a developing automotive economy, India today ranks very low in terms of vehicles per 1000 people, but past experience in other markets suggests that as GDP per capita grows, the automotive market should also grow, as shown in Figure 1-b. India is the second largest two-wheeler market in the world Fourth largest commercial vehicle market in the world Fifth-largest bus and truck market in the world (by volume) Envisaged to be the seventh largest automobile market by 2016, and world's third largest by 2030 (behind only China and the US) A GDP per capita of US$3,000 is considered the inflection point where four-wheeler sales begin growing at a faster pace. However, one executive notes that there are 40 million Indian households that can afford a four- wheeler today but are not buying one(6).

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Figure 1-b, Growth in Vehicle sales tracks closely to GDP per capita.

Need for Competitiveness: Prosperity is determined by the productivity of an economy, which is measured by the value of goods and services produced per unit of the nations human, capital, and natural resources. Productivity depends both on the value of a nations products and services, measured by the prices they can command in open markets, and the efficiency with which these products can be produced. Productivity supports high wages, a strong currency, and attractive returns to capital and with them a high standard of living. Competitiveness, then, is measured by productivity. Many nations can improve their prosperity if they can improve productivity. Indias overall competitive position is weakened by its macroeconomic instability (109th) with the government running one of the highest deficits in the world (ranked 127th), unsustainable levels of government debt (ranked 113th), and fairly high inflation. Health and primary education is another area of con- cern, with poor health indicators (ranked 105th for both infant mortality and life expectancy), related to the high prevalence of diseases such as tuberculosis and malaria. Educational enrollment rates also remain low at all levels, with the primary educational system in particular getting poor marks for quality. Certain labor market efficiency indicators are also poor,including female par- ticipation in the labor force (ranked 122nd) and the facility with which firms can hire and fire employees (ranked 104th) (7). Page6

Strategic Orientation: Strategy is the roadmap for achieving the envisaged goals. Porter defined strategy as creation of a unique and valuable position involving different set of activities Strategy can be formulated into 3 generic types Overall cost leadership here a business aims at delivering its products at the lowest prices in the market and wins a large market share. Such businesses require tobe good at engineering, purchasing, manufacturing and distribution. A disadvantage of this strategy is that some other company will eventually emerge with still lower costs. Differentiation here a business aims at achieving superior performance in an important customer area valued by a large chunk of the market. It could strive to be the service leader, the quality leader, the style leader or technology leader. Customer Focus Here a firm concentrates on one or more narrow market segments. It first identifies such a segment and then pursues either cost leadership or differentiation in them (8).

Figure 1-c, Micheal Porters: Five Forces Model.

Vision and Mission statements are the long term objectives of an organisation. Strategy is a game plan for getting there. The business environment can be divided into external and internal. Page7

The internal environment is within the control of the organisation and it is governed by internal factors such as employee morale, production efficiency, advertising effectivenes, and customer loyalty. The dynamic external environment is out of control of the organisation. Focus is to realign the internal environment to the adapt fluctuations in the external environment. Some of the external factors are economic, social, cultural, demographic, environmental, political, governmental, and legal. Hence to sustain in competitive globalised environment, the strategic orientation in tyre industry is being discussed in this paper. 2. Objective Our Study is divided into four phases: I. II. III. IV. To perform a detailed analysis of the Indian tyre industry. To critically analyse the Vision and Mission statements of the selected tyre companies To identify the strategies required for achieving the Vision To analyse the relative performance of the selected companies on the implementation of the above identified strategies. 3. Methodolgy The above stated objective is achieved with the following methodology which consisited of four phases. PhaseI: In the first phase, focus was to analyse the Indian tyre industry. The analysis was done by gathering the information from secondary sources such as CMIE data base, EIS database. However information from journals & published research papers added value to the study. PhaseII: Post-analysis of the Indian tyre industry, top notch players in the market was selected. These key players represent the tyre industry as they are market leaders. The criterion for selection is information available from secondary sources such as CMIE data base, EIS database, journals and published reasearch papers. Vision and Mission statements of the Key players were identified.

Key players are, Page8

 Apollo Tyres J K Tyres Ceat Ltd. Bridgestone MRF Tyres Good Year India PhaseIII: To understand the strategic orientation of these organisations, an attempt has been made to first understand the Vision & Mission Statements along with the various strategic initiatives taken up by these organisations. The Methodology primarily adopted is through data collection from the secondary sources of information and discussions with key executives of the organisations from the tyre industry PhaseIV: Furthermore, analysis on Key Performance Indices has been presented along with conclusions drawn from the study. Information of last three years (i.e. 2007,08,09) available from secondary sources such as CMIE data base, EIS database, journals and published research papers is used for relative comparison. 4. Research limitations The secondary sources information was available upto financial year 2009. The analysis and comparision of key performance indices is done based on the available information and discussion with key executives. However the market is getting bigger and dynamic and the latest trends and information is not included into the study. This limits the scope of the study. 5. Analysis of the Indian Tyre Industry Tyre production has increased by a robust 11.8 percent in2009-10, after a lull in the preceding year. Tyre demand in 2009-10, will grow by 10.2 percent primarily driven by the Domestic Original Equipment Manufacturer (OEM) Market. Annual sales will grow by 11.8 percent and Industrys PAT Margin will grow by 480 basis points to 6.8 percent.

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Figure 5-a, Category-wise Historical & Forecast Demand

Tyre production rise can be attributed to Sharp rise in demand from OEMs and robust growth in off take in the replacement market. The OEM demand is directly proportional to the automobile off take (fig. 5-a). There has been a spurt in new models in the domestic car segment thereby boosting demand. The total OEM tyre demand is likely to grow by 15.8 percent to 382.3lakh units in 2009-10. The replacement market sales of commercial vehicles and two wheeler tyres increased by 17.3 percent and 7.2 percent respectively Y-O-Y basis. The detail segment wise analysis is attached in the fig 5-b.

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Figure 5-b, Tyre production surges on robust growth in replacement demand

Figure 5-c, Vehicle sales in India

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Figure 5-d, Automobile Investments in India

Tyre companies like Apollo Tyres, JK Tyres and Kesoram Industries are Scaling up capacities. Apollo Tyres is rasing up capacity of passenger car tyres at its facility in Gujarat at an investment of Rs.150 crore. Post commissioning the capacity will increase by 6000 units per day. The company is also setting up a radial tyre facility for Truck & Buses and passenger car types in Organdalam, Tamil Nadu at an investment of Rs. 2000 crore. J K Tyres is augmenting OTR tyre capacity by 4000 units at a cost of Rs. 120 crore in 2009-10 Kesoram Industries is implementing two projects in Uttarkhand which will expand its radial and bias tyre capacity by 100 tonnes/day and 125 tonnes/day. Bridgestone India plans to set up a new plant in pune at a cost of Rs.2025 crore. The company is also expanding capacity of Pithampur plant at an outlay of Rs. 259 crore. Post expansion the capacity of the company will increase to 4500 units/day (9).

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Figure 5-e, Expected projects to be completed in next 12 months in tyre and tube sector

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Figure5-f, Capacity Addition (Rs.Crore)

Figure 5-g, Market Share (percentage)

Sources: EIS Data Base 2000-2008 volumes, accessed Dt. 18th FEB 2010 Page14

6. Analysis of Vision & Mission Statements and Strategic initiatives Key Players MRF Tyres Apollo Tyres Vision Statement Not available on website A significant player in the global tyre industry and a brand of choice, providing customer delight and continuously enhancing stakeholder value (10). Mission Statement Not available on website Care for customers Respect for Associates Excellence through Team Work Always Learning Trust Mutually Ethical Practices J K Tyres To be among the most admired companies in India committed to excellence
(11)

Be a Customer Obsessed Company No.1 Tyre Brand in India Deliver Enhance value to all Stakeholders Enhance Global presence through acquisition Motivated and committed team development for high performance organisation

Ceat Ltd.

To provide total customer satisfaction through products and services of highest quality and reliability (12).

To nurture an exciting and challenging work environment with fairness and transparency

Bridgestone

Worlds undisputed No.1 tyre and rubber company in both name and substance (13).

Serving Society with superior quality

Good Year India

Our vision is to be ranked by all measures as the best tyre and rubber company in the world (14).

Undisputed leadership in our markets and in our industry is Goodyear's goal.

Figure 6-a, Vision and Mission Key Players

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6.1 Analysis of Indian Tyre Industry with appropriate Strategies. Vision of Indian Tyre Industry

Global Player (World Best)

Brand of Choice

Total Customer Satisfaction

Enhance Stake Holder Value

Figure 6.1-a, Vision Tyre Industry

The Vision and Mission statements for the selected companies (Figure 6-a) are studied. The Vision of Indian tyre industry is framed after series of brain storming discussions with Key industry executives and experts in the field. The Indian tyre industry vision is shown in figure 6.1-a

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Global Player (World Best)

Across Globe Presence

Meet Global Product Standards

Meet Global Process Standards

Mergers & Acquisitions

Best Quality
Products & affordable price

Minimum Cost & Environment friendly

Analyze Global Market i.e. Global Market Research

Deliver best in Class Products i.e. New Product Development Strategy

Upgrade existing products & Processes i.e. R&D Strategy

Figure 6.1-b, Global Player Strategic Analysis

Further, in this phase of the study, the Vision laid down by the selected companies has been analysed, as shown in figures 6.1-b, 6.1-c, 6-d & 6-e. Discussions with key executives from the tyre industies and the strategic initiatives taken to achieve the target have been noted down.

Brand of Choice

Closely linked to Product Performance & Product Visibility

Brand Building Process Brand Management Process After Sales Services Page17

Figure 6.1-c, Brand of Choice Strategic Analysis

Total Customer Satisfaction

To improve Total Product Experience Customer Relationship Management (CRM) Strategy Educate Customer Monitor Customer Satisfaction Value Added Customer Services
Figure 6.1-d, Total Customer Satisfaction Strategic Analysis

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Enhance Stake Holder Value

Social Environment

Busines Environment

Internal Environment

CSR Activities Profit Sharing Environment Mgmt. Systems

CRM Process SRM Processs Manufacturing Strategy

Cash Collection Cycle Bills payable process

Figure 6.1-e, Enhance Stakeholder Value Strategic Analysis

After the detailed analysis of the vision statement, it is interseting to know that critical strategies are necessary to achieve excellence. Crictical Startegies identified are, New Product Development Strategy Brand Management Strategy Manufacturing Strategy Supplier Relationship Management Strategy Page19

 Customer Relationship Management Strategy Although from the brainstorming discussions many strategies were triggered, critical strategies are selected based on the relative importance. Automobile industry is diversifying to fullest extent and many new models are getting launched year after year. Indian Government is also supporting the industry by impementing Goods and Service Tax (G.S.T), which will lead to affordable car for the end customer. Thats the reason New Product development, Brand Management and Manufacturing strategies are selected. The IT revolution has made Indian consumer more educated and he has no of cars to choose from. Automobile Industry focus is on Customer Relationship Management strategy.

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6.1.1 New Product Development Strategy New Product development have eight steps, Idea Generation, Idea Screening ,Concept Development and Testing, Business Analysis , Beta Testing and Market Testing , Technical Implementation, Commercialization & New Product Pricing(15). To evaluate the performance of key players performance metric of % R & D expenses to Sales ratio is considered, Figures 6.1.1-a to 6.1.1-c

Figure 6.1.1-a, % R & D Expenses to Sales ratio in 2007

Figure 6.1.1-b, % R & D Expenses to Sales Ratio in 2008 Page21

Figure 6.1.1-c, % R & D Expenses to Sales Ratio in 2009 After Comparison of the % R & D expenses to sales ratio, we have ranked the selected companies in decending order of the R & D investment, figure 6.1.1-d. Key Players J K Tyres Rank 1 Key Achievements Consistent Leader in R & D Investment Average R & D Investment of Rs. 13.6 Crores / Year(17) 85 tyre variants(18) Market Leader have most advanced precured retreading system in India 1st Indian Tyre Company to produce H, V and Wspeed rated tubeless tyres 1st Indian Tyre Company to introduce radial tyres for the farm category(19) 1st tyre manufacturer to roll out tubeless tyres in India In 2004 GT3, Eagle F1 and Duraco GA Brands Launched(20) Average R & D Investment of Rs. 3.2 Crores / Year(21) Highly Sophisticated Bridegstone R & D Center in Tokyo (22).

MRF Tyres

Apollo Tyres

Good Year India

Ceat Ltd. Bridgestone

5 Data N.A.

Figure 6.1.1-d, New Product Development Strategy ranking table Page22

6.1.2 Strategic Brand Management "Strategic brand management involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity." These concepts and techniques are to improve the long-term profitability of your brand strategies. The four steps involved are, Identifying and establishing brand positioning and values Planning and implementing brand marketing programs: Measuring and interpreting brand performance: Growing and sustaining brand equity (16). To evaluate the performance of key players performance metric of % Marketing and Advertising expenses to Sales ratio is considered, Figures 6.1.2-a to 6.1.2-c. Further Comparison of the % marketing expenses to sales ratio, we have ranked the selected companies in decending order of the marketing investment, figure 6.1.2-d.

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Figure 6.1.2-a, % Marketing Expenses to Sales ratio in 2007

Figure 6.1.2-b, % Marketing Expenses to Sales ratio in 2008

Figure 6.1.2-c, % Marketing Expenses to Sales ratio in 2009

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Key Players

Rank

Key Achievements Robust Network of 36 regional offices, over 3500 dealers and more than 100 agents(23) Higher dealer margins Dedicated Customer Service department assited by after sales support 1st International Ceat Cricket Rating System(24) Complete Market Coverage approach

Ceat Ltd.

MRF Tyres

Pull Marketing Strategy by focussing on aggressive marketing campaings MRF Cricket Academy Most Approved Tyre Brand in India

J K Tyres

Indias 1st and only tyre brand to get Coveted Super Brand status in prestigious super brand status(25) 1st company to launched new scheme of solving

Apollo Tyres Good Year India

4 5

the claim within 2 days(26)

--- Complete Market Specialisation Approach Colabaration with F1 formula race (global branding) Most Prefered tyre brands with OEM such as

Bridgestone

Data Not Available

Toyota, BMW, Ford and many more. Restricted in India to passanger car radial segment NICHE MARKET (27).

Figure 6.1.2-d, Brand Management Strategy ranking table

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6.1.3 Manufacturing Strategy To evaluate the performance of key players performance metric of % Energy expenditure to Sales ratio, Turnove Ration & % Maintenance expense to Sales ratio is considered, Figures 6.1.3-a to 6.1.3-c. Further Comparison of the all three ratios, we have ranked the selected companies in decending order of the marketing investment, figure 6.1.3-d.

Figure 6.1.3-a, Turnover Ratio Average from 2007 to 2009

Figure 6.1.3-b, % Energy Expenditure to Sales ratio average from 2007 t0 2009

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Figure 6.1.3-c, % Maintenance Expenditure to Sales ratio average from 2007 t0 2009

Key Players Ceat Ltd. J K Tyres Apollo Tyres

Rank 1 2 3

Key Achievements RPG BTT Six Sigma Team Award in 2005-06. Winner of RPG Quality award in 2003, 2004 & 2006
(28)

Rajiv Gandhi National Quality Award 2001 for its Kankroli Tyre Plant (29) Gold Certificate at Indian manufacturing excellence awards (30) IMPACT, stands for Integrated Manufacturing, Precision-Assembled, and Cellular Technology. # Material costs are reduced 15 percent. # Energy costs are lowered significantly # Curing time is cut 20 percent (31) Flexibility in Manufacturing proven from

Good Year India

M R F Tyres Bridgestone

5 N.A.

MUSCLEFLEX CONVEYER BELTING TECHNOLOGY (32) Focus on Lean Manufacturing Strategy (33).

Figure 6.1.3-d, Manufacturing Strategy ranking table

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6.1.4 Supplier Relationship Management Strategy To evaluate the performance of key players performance metric of % Outsourcing expenditure to Sales ratio is considered, Figures 6.1.4-a to 6.1.4-c. Further Comparison of the % outsourcing expenses to sales ratio, we have ranked the selected companies in decending order of the marketing investment, figure 6.1.4-d.

Figure 6.1.4-a, % Outsourcing Expenditure to Sales ratio in 2007

Figure 6.1.3-b, % Outsourcing Expenditure to Sales ratio in 2008

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Figure 6.1.4-c, % Outsourcing Expenditure to Sales ratio in 2009

Key Players Ceat Ltd. J K Tyres Apollo Tyres Good Year India M R F Tyres Bridgestone

Rank 1 2 3 4 5 N.A.

Figure 6.1.4-d, SRM Strategy ranking table Information regarding supplier relationship and sourcing was not available; this portion of the paper needs to be expored more. General trend all of the players are moving towards long term supplier collaboration.

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6.1.5 Customer Relationship Management Strategy To evaluate the performance of key players performance metric of Tyre Customer Satisfaction Index (TCSI) of The J D Power Asia Pacific 2009 Study. Refer figures 6.1.5-a. Further on Comparison of the Tyre Customer Satisfaction Index (TCSI), we have ranked the selected companies in decending order of the Score, figure 6.1.5-b.

Figure 6.1.5-a, J D Power Asia Pacific Study 2009 TCSI Score Sources: http://cars.zimbly.com/2009/05/jk-tyre-tops-jd-power-customer-satisfaction-stud/ JD Power Study Findings: The percentage of customers reporting a problem with their original tires has increased from 19 percent in 2008 to 22 percent in 2009. A notable shift in customer tire maintenance behavior in 2009, compared with 2008 increase in the proportion of customers using organized service providerssuch as selling dealerships and tire manufacturer storesrather than roadside tire servicing workshops. Customers who are highly satisfied (with satisfaction levels averaging above 884) are twice as likely to recommend or repurchase their current tire brand when buying replacement tires, compared with customers who are less satisfied.

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Key Players J K Tyres M R F Tyres BridgeStone Apollo Tyres

Rank 1 2 3 4

Key Achievements Highest Customer Satisfaction index, J.D.Power Asia Pacific Study 2009 (34). 2nd Highest Customer Satisfaction index, J.D.Power Asia Pacific Study 2009 (35). Run Flat Technology, claims 80 km drive after a tyres puncture (36). 1st Company to run a customer loyalty programme
(37).

Launch of branded retail shop-in-shop concept a Good Year 5 part of the companys strategic initiative in organized tyre retailing (38). Figure 6.1.5-d, CRM Strategy ranking table 7. Conclusion: The ranks are converted into equivalent score shown in figure 7-a. The information of relative comparison of the key players is summarised in the below figures 7-b & 7-c. To convert rank into appropriate score, we have assigned a scale from 1 to 50. Higher the rank more is the score, i.e rank 1 score is 50, while rank 5 Score is 10. Formula, Total Score= Score (for a relative rank) * Relative ranking Highest Total Score is 1st Rank. Rank Score 1 50 2 40 3 30 4 20 5 10

Figure 7-a, Scoring Criterion

Key Players

New Product Development Strategy

Brand Management Strategy Page31 Manufacturing Strategy SRM Strategy CRM Strategy

MRF Tyres Apollo Tyres J K Tyres Ceat Ltd. Good Year India

2 3 1 5 4

2 4 3 1 5

5 3 2 1 4

5 3 2 1 4

2 4 1 ---5

Figure 7-b, ranking table consolidation

Key Players

New Product Development Strategy

Brand Management Strategy Manufacturing Strategy SRM Strategy CRM Strategy

Total Score (out off)

R A N K

MRF Tyres Apollo Tyres JK Tyres Ceat Ltd. Good Year India

40 30 50 10 20

40 10 30 50 10

10 30 40 50 20

10 30 40 50 20

40 20 50 ---10

140(250) 120(250) 210(250) 160(200) 80(250)

3 4 1 2 5

Figure 7-c, Score consolidation From the score consolidation fig. 7-c, as far as Strategic orientation is concern J K Tyres have emerged out as leader for the five strategies considered in the study. For a new player to emerge as a global player following points can be worthwhile, i. ii. New Product Development Strategy: J K tyres consitent strategic focus of launching new proudcts and highest R & D investment. Brand Management Strategy: Ceats strategic customer services assited by after sales support.

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iii.

Manufacturing Strategy: Ceat have sustained strategic focus on Business Process Reengineering, which has questioned and challenged the basic need for existence of the process.

iv. v.

SRM Strategy: Ceat has gone fore-front to collaborate along with suppliers into deeper relationship. The suppliers are today business partners. CRM Strategy: J K Tyres is the only brand to get accoladed with SUPER BRAND status.

The findings of the study can be useful for a new player entering into the Indian tyre industry and can nurture pathway to the success. References: (1)- Apollo Tyres Management Discussion and analysis, Prowess, CMIE Data Base, Issue 09, (accessed 6th Feb 2010, 1500 hrs) (2)- http://www.fadaweb.com/accessed India, Sunday, (accessed February 07, 2010, 1510 hrs) (3)- Tyre industry: against all odds by Rajiv Budhraja Posted: Saturday, Aug 08, 2009 at 2054 hrs IST http://automobiles.indiabizclub.com/info/spare_parts/major_players_in_tyre_industry (4)-http://business.rediff.com/report/2010/feb/08/budget-2010-sme-cut-customs-duty-on-rawmaterials-for-tyres.htm (5)- Global Auto Report, Journal of Global Economic Research by Carlos Gomes, pg 1. (6)- Research paper Inside India by Bruce M. Belowski, Allan Henderson and Penny Koppinger in association with The University of Michigan Transport Research Institute and IBM Institute of Business Value, pg 7. (7)- The Global Competitiveness Index: Prioritizing the Economic Agenda by World Economic Forum, 2008-09, Chapter 1.1, pg. 27. (8)- Micheal Porters generic strategies, Harvard Business review, January 2008. (9)- CMIE database, issue December 2009 by Madhu Gupta, pg 1-6. (10)- http://www.apollotyres.com/cor_ourcompany_believe.htm ,(accessed February 08, 2010, 1510 hrs) (11)- http://www.jktyre.com/j-k-industries-limited.html, (accessed February 08, 2010, 1520 hrs) (12)- http://www.ceatyres.com/knowus_com_vision.html, (accessed February 08, 2010, 1530 hrs) (13)- http://bridgestone.com/corporate/finance/pdf/2008/bs_annual_2008_operation.pdf (14)- www.goodyear.com/corporate/about/glance.html, (accessed February 08, 2010, 1540 hrs) Page33

(15)- http://en.wikipedia.org/wiki/New_product_development (16)- http://www.1000ventures.com/business_guide/marketing_brands.html (17)- EIS Data Base 2000-2008 volumes, accessed Dt. 18th FEB 2010 (18)- Summers Project Report: http://www.Scribd.com/25371310-Bridgestone-and-MRF-tyreindustry-pg.13 (19)- Summers Project Report: http://www.Scribd.com, 19345343-A-Project-Report-on-ApolloTyres-Brand-Image-pg.15 (20)- http://www.goodyear.co.in/aboutgoodyear.html (21)- EIS Data Base 2000-2008 volumes, accessed Dt. 18th FEB 2010 (22)- Summers Project Report: http://www.Scribd.com/25371310-Bridgestone-and-MRF-tyreindustry-pg.12 (23),(24)- Summers Project Report: http://www.Scribd.com/ 26186734-Ceat-Tyres-MrktMarketing-Trait-Ceat-Tyres-Mrkt-Research-pg.30, (25)- Summers Project Report: http://www.Scribd.com/ 26186734-Ceat-Tyres-Mrkt-MarketingTrait-Ceat-Tyres-Mrkt-Research-pg.59, (26)- Summers Project Report: http://www.Scribd.com, 19345343-A-Project-Report-on-ApolloTyres-Brand-Image-pg.58 (27)- Summers Project Report: http://www.Scribd.com/25371310-Bridgestone-and-MRF-tyreindustry-pg.19 (28)- http://en.wikipedia.org/wiki/CEAT_Limited (29)- http://www.jktyre.com/jk-tyre-awarded-rajiv-gandhi-national-quality-award-2001.html (30)-Chairmans speech-Apollo Tyres Dt. 29th April 2009, Prowess database, accessed Dt. 18th FEB 2010 (31)- http://www.goodyeartires.com/about/testing/impact.html (32)- Summers Project Report: http://www.Scribd.com/25371310-Bridgestone-and-MRF-tyreindustry-pg.14 (33)-http://www.reliableplant.com/Read/10738/bridgestone-ceo-highlights-lean-focus-at-noriaconference (34) -http://www.jktyre.com/ (35) -http://cars.zimbly.com/2009/05/jk-tyre-tops-jd-power-customer-satisfaction-stud/ (36)-Summers Project Report: http://www.Scribd.com/25371310-Bridgestone-and-MRF-tyreindustry-pg.19 Page34

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