BUSINESS POLICY TERM PROJECT

SERVICE INDUSTRIES LIMITED

(TYRES & TUBES)

Presented To: Prof. F. A. Fareedy

Presented By:

M. A. Hanan Rasool

6/22/2012

1

The Company

6/20/2012

2

Service Industries Limited

Manufacturing

Tyres & Tubes

Shoes

Distributors

Service Sales Corporation

Retail Outlets

Wholesale / Retail

Project Objective

6/20/2012

3

Devise a comprehensive business strategy for Service Industries Limited

(SIL), with a view to GAINING AND MAINTAINING a sustainable

COMPETITIVE ADVANTAGE

Industry Analysis4

2009 2010 20110%

20%

40%

60% 46%39% 40%44%

51% 50%

10% 10% 10%

Market Share

Servis Panther Others

  OEM Tyres Demand Growth Rate2005-06 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

MC Tyres• Panther• Servis• Diamond

Internal Factor Analysis Summary5

Industry’s Internal Factors Weight Rating Weighted Score Comments

StrengthsEconomies of scale and volume based business

0.2 5 1 High level of fixed costs

Only a few competitors 0.05 4 0.2 Defines the nature of competition

Increasing demand trend 0.1 3 0.3More motorcycles produced, more tyre demand

Higher barriers of entry 0.1 4 0.4 Very high start-up costs

Export potential 0.05 2 0.1 Pakistani tyre costs less to produce

WeaknessesLow profit margins 0.15 2 0.3 Decreases the chance of survival

Limited number of skilled labor 0.1 5 0.5 Increases emphasis on employee retention

Capital intensive in nature 0.1 4 0.4 Difficulty in expansion plans

Requires Technical Expertise 0.05 5 0.25 Technical staff required to run factory

High intensity of competition 0.1 3 0.3High marketing and promotional costs

Total 1 - 3.75 -

External Factor Summary Analysis

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Industry’s External Factors Weight Rating Weighted Score Comments

Opportunities        

Strategic alliances 0.2 4 0.8Alliances with OEMs for long-term contracts

Market is yet to be segmented

0.2 3 0.6Opportunity to breakdown the market and position product accordingly

Diversification into car tyres manufacturing

0.05 1 0.05 Concentric diversification - related product

Retreading of tyres to save costs 0.05 2 0.1 Save costs on raw materials

Government lobbying for tax rebates 0.1 4 0.4 Important incentive to export

Threats        Tyre Imports from China 0.05 4 0.2 Increasing market competition in industry

Imports of Chinese motorcycles

0.15 3 0.45 Reducing overall demand from OEMs

Electricity crisis 0.2 4 0.8 Raises cost of productionTotal 1 - 3.4 -

Strategic Factor Summary Analysis

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Strategic Factors Weight RatingWeighted

ScoreComments

(O) Strategic alliances 0.2 3 0.6Alliances with OEMs for long-term contracts

(O) Market is yet to be segmented

0.2 3 0.6Opportunity to breakdown the market and position product accordingly

(S) Government lobbying for tax rebates

0.1 4 0.4 Important incentive to export

(T) Electricity crisis 0.1 4 0.4 Raises cost of production

(S) Increasing demand trend

0.15 3 0.45More motorcycles produced, more tyre demand

(W) Low profit margins 0.1 2 0.2 Decreases the chance of survival

(W) High intensity of competition 0.15 2 0.3 High marketing and promotional costs

Total 1 - 2.95 -

The New Strategy

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Marketing STP

• Product Differentiation

• Promotions and Advertising

• Need Based Segmentation

Strategic

Alliances – OEM’

s

• Pre-SellingRedu

ce Costs Internally

• Inventory• Re-word• Operational

Costs• COGS

Develop

Export

Markets

Penetratio

n Pricin

g

• Put financial Strain on Panther

New Strateg

y

Thank You

6/20/2012