1

BUSINESS POLICY TERM PROJECT

SERVICE INDUSTRIES
LIMITED
(TYRES & TUBES)

Presented By:

M. A. Hanan Rasool

6/22/2012 Presented To: Prof. F. A. Fareedy

 The Company
2

Service
Service Sales
Industries Corporation
Limited

Manufacturing Retail
Outlets

Tyres &
Shoes
Tubes

Distribut
ors

Wholesal
e / Retail 6/20/2012
 Project Objective
3

Devise a comprehensive business strateg

6/20/2012
 Industry Analysis
4
Market Share
60% 51% 50%
46%44%
39% 40%
40%

20% 10% 10% 10%

0%
2009 2010 2011

Servis Panther Others

OEM Tyres Demand Growth Rate
2005-06 1,040,248 25%
2006-07 934,534 -10%
2007-08 1,321,186 41%
2008-09 1,018,108 -23%
2009-10 1,473,722 45%
2010-11 1,677,100 14%
Average Growth Rate 1928665 (forecasted) 15%
Note: The figures do not include the production companies who are not members of the Association.
Source: Pakistan Automotive Manufacturers Association, historical data
 Internal Factor Analysis Summary
5

Industrys Internal Factors Weight Rating Weighted Score Comments

Strengths
Economies of scale and
0.2 5 1 High level of fixed costs
volume based business
Onlyafewcompetitors 0.05 4 0.2 Definesthenatureofcompetition

More motorcycles produced, more

Increasing demand trend 0.1 3 0.3
tyre demand
Higherbarriersofentry 0.1 4 0.4 Veryhighstart-upcosts
Exportpotential 0.05 2 0.1 Pakistanityrecostslesstoproduce

Weaknesses
Low profit margins 0.15 2 0.3 Decreases the chance of survival
Limitednumberofskilledlabor 0.1 5 0.5 Increasesemphasisonemployeeretention

Capitalintensiveinnature 0.1 4 0.4 Difficultyinexpansionplans

RequiresTechnicalExpertise 0.05 5 0.25 Technicalstaffrequiredtorunfactory

High marketing and promotional

High intensity of competition 0.1 3 0.3
costs
Total 1 - 3.75 -
 External Factor Summary Analysis
6

Industrys External Factors Weight Rating Weighted Score Comments

Opportunities
Alliances with OEMs for long-term
Strategic alliances 0.2 4 0.8
contracts
Market is yet to be Opportunity to breakdown the market
0.2 3 0.6
segmented and position product accordingly
Diversification into car tyres
0.05 1 0.05 Concentricdiversification-relatedproduct
manufacturing

Retreadingoftyrestosavecosts 0.05 2 0.1 Savecostsonrawmaterials

Governmentlobbyingfortaxrebates 0.1 4 0.4 Importantincentivetoexport

Threats
TyreImportsfromChina 0.05 4 0.2 Increasingmarketcompetitioninindustry

Imports of Chinese
0.15 3 0.45 Reducing overall demand from OEMs
motorcycles
Electricity crisis 0.2 4 0.8 Raises cost of production
Total 1 - 3.4 -

6/20/2012
 Strategic Factor Summary Analysis
7

Weighted
Strategic Factors Weight Rating Comments
Score

Alliances with OEMs for long-term

(O) Strategic alliances 0.2 3 0.6
contracts
(O) Market is yet to be Opportunity to breakdown the market
0.2 3 0.6
segmented and position product accordingly

(S) Government lobbying for tax

0.1 4 0.4 Importantincentivetoexport
rebates

(T)Electricitycrisis 0.1 4 0.4 Raisescostofproduction

(S) Increasing demand More motorcycles produced, more tyre

0.15 3 0.45
trend demand
(W) Low profit margins 0.1 2 0.2 Decreases the chance of survival
(W)Highintensityofcompetition 0.15 2 0.3 Highmarketingandpromotionalcosts

Total 1 - 2.95 -
6/20/2012
 The New Strategy
8

New
Strateg
y

6/20/2012
Thank You

6/20/2012