Flat Tyres Case Analysis

Dealers Trade 1. Samy Auto Parts 2. Manickam & Co. 3. SKS Auto Centre 4. Auto Tyres 5. Balu Tyres 6. KSS & Co. 7. Batra Automobiles

Tyre 80% 15% 10% 30% 80% 30% 90%

Company/ Dealer

Samy Auto Parts

Manickam & Co

Apollo Tyres Ltd Bombay Tyres International Flat Tyres of India Ltd Dunlop India Ltd Goodyear India Ltd JK Industries Ltd Modi Rubber Ltd MRF Ltd Vikrant Tyres Ltd Others TOTAL

3.0

Auto-Spare Parts 80% 70% -

Other Trades Oil and Miscellaneous* Lubricants 15% 5% 5% 80% 10% 20% 40% 30% 10%

Auto Tyres

Balu Tyres

KSS & Co

Ratna Automobile

Total

-

SKS Auto Centr e -

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

1.0

0.25

0.25

0.5

1.0

0.5

0.25

3.75

6.0

0.25

-

-

-

0.5

-

6.75

3.0

-

1.25

1.0

8.0

1.0

3.5

17.75

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

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

Flat Tyres Case Analysis Flat tyres Inc is planning to push its sales from Rs 400cr to Rs 600cr. To achive the target it needs to streamline its distribution and sales channels. The organization is looking at two alternatives for achieving it – 1. To go in for more company owned sales offices and 2. To go in for an agency system. Both the alternatives had its pros and cons but the second alternative was found to be more viable as the cost of company owned assets for distribution would be extremely expensive. Upon visiting the second alternative, i.e. agency based system certain core conflicts came into the picture which was as follows. • •

Resistance of existing channel members to change Promotion of an existing dealer to a C &FA could aggravate the existing rivalry

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

Existing Market Scenario

As evident from the given figures that Flat Tyres enjoys a 19% market share in the Madurai market and is the second largest player. But without the support of faithful dealers and channel partners it would be situation hard to maintain. Hence it is imperative for the company to resolve the conflict among the exiting partners. The major cause of concern among the dealers is that Once Samy Auto Part clinch the CFA offer other dealers feel that it could tamper with the orders placed by dealer thus squeezing other dealers market share. Therefore they feel more comfortable with existing system. 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 without problems. • Recommendations – 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.