Documente Academic
Documente Profesional
Documente Cultură
and other related products. It manufactures tyres for all kinds of vehicle including two-wheelers, light commercial vehicles, passenger cars, heavy duty trucks and buses and off-road industrial vehicles. MRF maintains strong brand recognition in the tyre industry in India. A strong market position helps the company to have an edge over its competitors. However, there is intense competition from regional parts manufacturers and industry consolidation.
Strengths
Strong brand recognition Vertically integrated operations
Weaknesses
Lock outs due to labor issues Involvement in price fixing (company's reputation)
Opportunities
Growing automotive manufacturing Foray into fighter aircraft tyres
Threats
Intense competition Threat from cheap Chinese imports
Strong brand recognition MRF maintains strong brand recognition in the tyre industry in India. For instance, it has received many awards in the recent past. According to a study by the industry experts, MRF ranked highest among the new-vehicle owners who are highly satisfied with their original equipment tyre brands. Therefore, strong brand recognition allows the company to enter new markets with ease and also enables it to launch new products. In addition, it also provides competitive advantage to the company over its peers and helps in attracting new customers. Vertically integrated operations The company is vertically integrated its operations in terms of its core business. MRF is primarily engaged in the manufacture and sale of rubber products. The company derives majority of its revenues from its core business i.e. tyres, the rest comes from its presence in toys. It manufactures tyres for all kinds of choice to helping them maintain their vehicle. For example, the company provides one stop shop for all types of tyres through MRF T&S franchises. The company currently operates more than 200 T&S shop across India. Through MRF Tyredrome, the company offers computerized wheel alignment, wheel balancing, tyre changing, nitrogen filling, robotic car wash, optical headlamp aligning, rim straightening and tubeless tyre repair. In addition, through MRF Institute of Driver Development (MIDD), the company provides training to drive light and heavy commercial vehicle (LCV & HCV). MRF has trained over 2,000 LCV and 700 HCV drivers. MRF also
provides tyre maintenance services. Thus, vertically integrated operations provide MRF with significant advantages over less integrated competitors and position the company to optimally serve its customers. Additionally, it enables the company to constantly increase capacities and maintain market leadership and profitability in most segments.
Weaknesses
Lock outs due to labor issues impact the sales
MRF has been suffering from labor issues in its facilities from the past few years. For instance, in 2011, the company's manufacturing facility in Kottayam in Kerala was forced for a lockout for about two days due to labor unrest in the factory. Consequently, MRF's tyre production was severely hit. Due to this, it reported a decline of 6.2% in its net profit for the second quarter ended March 31, 2011. Hence, such instances in the future could impact the production of tyres which could have a direct influence on the company's revenues.
Opportunities
Poised to benefit from growing automotive manufacturing industry in India
The Indian automotive manufacturing industry has experienced strong double digit growth for the 2010 -2011 period. The industry is expected to maintain positive levels of growth from 2012 through to the end of the forecast period in 2016. According to MarketLine (a unit of Informa plc), the Indian automotive manufacturing industry grew by 11.8% in 2012 to reach a value of $77.6 billion. Moreover, MarketLine estimates that in 2016, the Indian automotive manufacturing industry would have a value of $109.1 billion, an increase of 40.6% since 2012. Moreover, it is estimated that in another 40 years, the Indian automobile sector will top the world in car production and around 611 million automobiles will be running on the Indian roads. The economic liberalization in India that happened in 1991 brought in an increase in competitiveness and a relaxation in restrictions. Post 1991, the Indian car market has been displaying steady growth. Many Indian automotive majors like M&M, MSIL and Tata Motors expanded their base both in India and abroad. The Indian automobile sectors healthy and financially viable growth led to the internal development and also gave rise to noteworthy India-specific investments by multinational car makers. Major global players like General Motors, Ford, Mercedes-Benz, Volkswagen, Suzuki, Honda, Fiat, Hyundai, Porsche, Audi and more are active in the country, so does in all other segments of the automotive industry. MRF is one of the leading manufacturers of tyres in India. Therefore, a growing automotive manufacturing industry in India would increase the demand for new tires and replacement tires, which in turn could drive the demand for the company's products.
Threats
Intense competition
Competition in the tyre industry is very intense particularly in India. The primary factors under which the company competes with other tyre manufacturing companies include price, quality, availability of raw materials, and strategic location of production facilities, among others. Some of the MRF's competitors include Apollo Tyres, JK Tyre & Industries, CEAT, Dunlop, Falcon Tyres, Goodyear, Modi Rubber, Birla Tyres, among others. These companies have much larger market size, revenue and customer base compared to MRF. Further, the entry of multinational companies (MNC) such as Goodyear, Bridgestone and Michelin into the domestic market may also create an intense pressure to MRF margins. MNC tyre makers have cornered a higher market share in India in the past few years due to their international relationships apart from superior technology. Since Honda, Hyundai and Toyota have an international sourcing agreement with Bridgestone; it is also the preferred supplier in India. Similarly, Goodyear is preferred supplier for Ford India. Therefore, intense competition from regional parts manufacturers and industry consolidation may reduce the revenues, profitability and cash flow, and also lead to pricing pressures, which may adversely impact MRF's profitability.