Case Solution for The Tire Maharajahs Competing with Chinese Exporters and Tire Multinationals for Industry Leadership in India

THE TIRE MAHARAJAHS: COMPETING WITH CHINESE EXPORTERS
AND TIRE MULTINATIONALS FOR INDUSTRY LEADERSHIP IN INDIA
CASE STUDY SOLUTION




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SYNOPSIS

The Indian tire industry has boomed in its domestic market, with companies expanding worldwide since the
1990s. A fast-growing economy, fuelled by rising middle-class access to private transportation and the
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improvement of road infrastructure, has led to high growth prospects for the Indian automotive industry, as
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well as the industry supplying tires. However, the Indian tire industry has also faced threats and uncertainties
from rising national and global factors that could hinder the expected expansion of Indian tire makers’ growth
and profitability. Adverse supplier and customer dynamics, stringent regulative interventions, highly-
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competitive domestic markets, and international trade tensions could cumulatively undermine the growth
momentum of the Indian tire industry or significantly deteriorate the profitability of Indian tire makers.
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The case presents an in-depth study of the Indian tire industry, its ecosystem, its profitability drivers, and




The Case Solution Starts From page 5

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ASSIGNMENT QUESTIONS




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1. What are the Indian tire industry’s key trends in the macro environment and key forces in the



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globalization of the industry? Highlight and rank by order of importance the threats and opportunities
that now have the strongest impact on Indian tire makers’ growth and profitability.
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2. Using Porter’s Five Forces framework, identify the companies with the strongest influence on the
Indian tire industry’s attractiveness. Provide a specific assessment of barriers to entry protecting the
Indian tire industry from foreign entrants.
3. To what extent does the Indian tire industry need to be segmented? What are the main key success
factors and value proposition in each segment? To which competitive systems are the Indian tire
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industry and segments linked?
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4. On the basis of the DuPont ratios, what are the generic strategies implemented by Indian tire
companies? What are the strategic changes that took place for these companies over the studied period?
What are the main profitability drivers of Indian tire companies?
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5. What modes of entry to foreign markets have been selected by Indian tire companies? Is there any
relationship between international intensity and corporate performance of Indian tire companies? Can
we identify any emerging multinational companies in this industry?
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6. What key company indicators could be used to map company positions and identify strategic groups?
What threats and opportunities can you foresee? Building on these maps, envision competitive moves
within the Indian tire industry, international expansion options, and entry by foreign competitors.




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,ANALYSIS

1. What are the Indian tire industry’s key trends in the macro environment and key forces in the




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globalization of the industry? Highlight and rank by order of importance the threats and




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opportunities that now have the strongest impact on Indian tire makers’ growth and profitability.

A PESTEL analysis focuses on the macro environment of the industry (see Exhibit TN-1 in the PowerPoint


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slides). It identifies the key structural factors that set the scene for deeper analysis. Using a PESTEL analysis
or another tool, strategic analysis and planning begin with the identification of key structural factors.
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PESTEL analyses are often done by students as case assignments, but the analyses are sometimes
overcrowded with too many factors. In this respect, an exercise of ranking the main opportunities and threats
will be useful for students as a formative exercise to strategically think, prioritize, and synthetize the macro
environment’s issues and challenges.
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The global environment of the tire industry can also be assessed through a global integration/local
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responsiveness framework. Tire products involve the activity of many different industries. Off-the-road
(OTR) and medium and heavy commercial vehicle (M&HCV) tires are sold through business-to-business
transactions, which means that the end user will be a professional driver supervised by a fleet manager. The
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use of tires mounted on industrial heavy-duty vehicles and the optimization of tire management can lead to
complex technical consideration related to these crucial spare parts, the only point of contact to the ground.
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In contrast to OTR and M&HCV tires, personal vehicle and 2- and 3-wheeler tires are mainly sold, directly or




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, TECHNICAL APPENDIX




M&HCV



M&HCV
2/3 W




OTR



OTR
OE




OE




OE
PV



PV
RT




RT




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Global Integration Score


A. To what extent do customers have similar
demands for functionalities and design across
1 3 3 3 4 4 5
countries?
Very different (1) to very similar (5)
B. To what extent do products or services have a
high proportion of standard components across
countries components? 2 4 4 3 4 5 5
Low proportion of standard components (1) to high
proportion (5)
C. To what extent are customers (or distributors)
operating in different countries and centrally buying
5 1 3 5 2 5 5




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your products or services?
Buying locally (1) to buying centrally (5)




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D.




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G.
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The Case Solution Starts From page 5