Dealers Trade Tyre Other Trades

Auto-Spare Oil and Miscellaneous*

Parts Lubricants
1. Samy Auto Parts 80% - 15% 5%
2. Manickam & Co. 15% 80% 5% -
3. SKS Auto Centre 10% - 80% 10%
4. Auto Tyres 30% 70% - -
5. Balu Tyres 80% - - 20%
6. KSS & Co. 30% - 40% 30%
7. Batra Automobiles 90% - - 10%

Company/ Samy Manickam SKS Auto Balu KSS Ratna Total

Dealer Auto & Co Auto Tyres Tyres & Co Auto-
Parts Centr mobile
e
Apollo Tyres 3.0 - - 0.5 2.0 1.0 0.5 7.0
Ltd
Bombay 0.5 0.25 - 0.15 - 0.5 - 1.4
Tyres
International
Flat Tyres of 8.0 1.0 0.5 2.0 3.0 1.0 0.5 16.0
India Ltd 50 6.25 3.125 13 18 6.25 3.125
Dunlop 6.0 0.25 - 0.5 1.0 4.0 - 11.75
India Ltd
Goodyear 1.0 0.25 0.25 0.5 1.0 0.5 0.25 3.75
India Ltd
JK 6.0 0.25 - - - 0.5 - 6.75
Industries
Ltd
Modi 3.0 - 1.25 1.0 8.0 1.0 3.5 17.75
Rubber Ltd
MRF Ltd 3.0 4.0 1.0 3.0 2.0 1.0 1.0 15.0
Vikrant 1.0 - - 0.25 - 0.5 0.25 2.0
Tyres Ltd
Others 0.5 - - 0.10 - - - 0.6
TOTAL 32.0 6.0 3.0 8.0 17.0 10.0 6.0 82.0
25 17 10 8.5
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.