Flat Tyres of India Ltd

Streamlining Distribution Network

Presented By:
Somil Joshi (113)
Prakhar Singh (100)
Rakesh M (43)
Varun S Pilla (119)
Prajith V M (99)
Tarun Gupta (117)
Introduction to the case
Objective –
◦ Flat tyres Inc is planning to push its sales from Rs 400cr to Rs 600cr.
◦ Streamline its distribution and sales channels
Alternatives –
◦ To go in for more company owned sales offices and
◦ To go in for an agency system
Alternative Chosen –
◦ Agency System was found to be more viable as the cost of company
owned assets for distribution would be extremely expensive
Agency based system certain core conflicts came into the
picture which were as follows
◦ Resistance of existing channel members to change
◦ Promotion of an existing dealer to a CFA could aggravate the existing
rivalry
 Company/ Samy Manickam & Co SKS Auto Balu KSS & Ratna Total
Dealer Auto Auto Tyres Tyres Co Auto-
Parts Centre mobile

Apollo Tyres Ltd 3.0 - - 0.5 2.0 1.0 0.5 7.0

Tyres 0.5 0.25 - 0.15 - 0.5 - 1.4

International

Flat Tyres of India 8.0 1.0 0.5 2.0 3.0 1.0 0.5 16.0
Ltd 50 6.25 3.125 13 18 6.25 3.125

Dunlop India Ltd 6.0 0.25 - 0.5 1.0 4.0 - 11.75

Goodyear India 1.0 0.25 0.25 0.5 1.0 0.5 0.25 3.75
Ltd

JK Industries Ltd 6.0 0.25 - - - 0.5 - 6.75

Modi Rubber Ltd 3.0 - 1.25 1.0 8.0 1.0 3.5 17.75

MRF Ltd 3.0 4.0 1.0 3.0 2.0 1.0 1.0 15.0
Vikrant Tyres Ltd 1.0 - - 0.25 - 0.5 0.25 2.0

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
Why is it important for Flat tyres to
convince the players to stick with it
In Madurai tyre market there are other
prominent players like 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.
Madurai Tyre Market
Madurai Tyre Market
 Flat Tyres enjoys a 19% market share it is the second largest player
in the area but without the support of channel partners the position
can’t be sustained for long
 Possible cause of concern among the dealers –
◦ Once Samy Auto Part clinch the CFA offer it could tamper with the orders placed
by dealer thus squeezing other dealers market share
  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.