CS Inter Group I : Management Information Systems and Corporate Communications - December 2006

Indian Tyre Industry is two tier. Tier–I accounts for over 85% of industry turnover containing a well–diversified product–mix and presence in three main segments, i.e., automobiles manufacturers, replacement market and exports. Tier–II companies are small in size, mainly concentrating on production of small tyres, tubes and flaps and the replacement market. The demand and growth for the industry depend upon primary factors like overall GDP growth, agriculture and industrial production, growth in vehicle demand and secondary factors, like ’ the infrastructure development, prevailing interest rates and financing options, etc.

Rock Hard Tyre Ltd. (RHTL) is a major player in Tier–I and it has maintained successfully the leadership position in the truck and bus market segment and the year 2005–06 witnessed a healthy growth of approximately 8% in this segment. However, steep rise in raw material prices with limited pricing flexibility impacted the profit margins of all the players including RHTL badly in the financial year 2005-06. In fact, the industry has faced consistent rise in major raw materials costs (natural rubber, nylon tyre cord, carbon black, synthetic rubber) in the last few years. All these have resulted in pressure on the bottom-line of the tyre companies despite the impressive

top–line growth. The year ahead still looks tough with no respite in the raw material prices and at the top of it, there is a great threat of increased flow of cheaper tyres from China into India. The cost–push continues unabated and with the industry players reluctant to take large price increase due to threat from China’s increased inflow, the challenge on profit margins is going to stay in future as well. The story on the demand front looks good in medium term with the economy continuing to do well.

To meet the future challenges and threats, RHTL has started a number of new strategic initiatives. As per one of such initiatives, the company has decided to change its business model and accordingly, it is trying to go closer to the clients, contact them, get orders from them but delivery will be done through the dealers. And, they will get less commission by 0.5% of the normal commission on such orders. To implement, the company has come out with innovative solution of SMS. Under it, the company will take orders and necessary relevant information from the clients directly through SMS and send SMS to the concerned dealer for necessary action. To provide necessary services, RHTL has tied up with Rainbow Mobile Ltd. a service provider for SMS solutions through 4242; it means that all SMS will be received and sent through 4242. In this way, the management of the company is very hopeful in improving its top–line by getting more orders and also able to reduce commission cost.

Another important strategic initiative taken up by the company is developing a very robust and feature rich ’˜Intranet Portal’ which is expected to enhance efficiencies, electronic workflows and replacement of paper in the system. It is expected to reduce administrative costs in a big way.

It is expected that such strategic initiatives will improve RHTL’s turnover and profit in the coming year. As a result, the year 2006–07 is expected to have an impressive financial performance.
Questions ––

Also, you want a comprehensive re-design of your in-house menu that emphasize low-fat, low-cholesterol and organic ingredients.

Write a memo to your Vice-President with relevant materials persuading him to consider these health-related ideas that you feel could be implemented as part of a new employee health programme.

Dod’s work became increasingly haphazard and he spent endless hours on trivial things. He was pallid and overweight, and he tapped his fingers on any convenient surface. He smoked incessantly and allowed his suits to become stained and worn.

Dod’s consuming passion was management and he devoted his few leisure hours to lecturing student groups on management topics. Once he overheard himself being described as a ‘workaholic type’, but he dismissed the observation as a shallow remark from an irresponsible and weak colleague. One close associate said, “Dod gives too much and he takes no nourishment for himself, I‘m afraid that he will crack-up.” It came as no surprise to Dod’s colleagues when they heard that he was in hospital after a heart attack.”

In the light of the above scenario, comment on how Dod should have managed himself and highlight the characteristics that are typical of those who manage stress most effectively.