|1.|| Read the following passage and answer the questions given at the end : |
Indian Tyre Industry is two tier. Tier–I accounts for over 85% of industry turnover containing a well–diversified product–mix and presence in three main segments, i.e., automobiles manufacturers, replacement market and exports. Tier–II companies are small in size, mainly concentrating on production of small tyres, tubes and flaps and the replacement market. The demand and growth for the industry depend upon primary factors like overall GDP growth, agriculture and industrial production, growth in vehicle demand and secondary factors, like ’ the infrastructure development, prevailing interest rates and financing options, etc.
Rock Hard Tyre Ltd. (RHTL) is a major player in Tier–I and it has maintained successfully the leadership position in the truck and bus market segment and the year 2005–06 witnessed a healthy growth of approximately 8% in this segment. However, steep rise in raw material prices with limited pricing flexibility impacted the profit margins of all the players including RHTL badly in the financial year 2005-06. In fact, the industry has faced consistent rise in major raw materials costs (natural rubber, nylon tyre cord, carbon black, synthetic rubber) in the last few years. All these have resulted in pressure on the bottom-line of the tyre companies despite the impressive
top–line growth. The year ahead still looks tough with no respite in the raw material prices and at the top of it, there is a great threat of increased flow of cheaper tyres from China into India. The cost–push continues unabated and with the industry players reluctant to take large price increase due to threat from China’s increased inflow, the challenge on profit margins is going to stay in future as well. The story on the demand front looks good in medium term with the economy continuing to do well.
To meet the future challenges and threats, RHTL has started a number of new strategic initiatives. As per one of such initiatives, the company has decided to change its business model and accordingly, it is trying to go closer to the clients, contact them, get orders from them but delivery will be done through the dealers. And, they will get less commission by 0.5% of the normal commission on such orders. To implement, the company has come out with innovative solution of SMS. Under it, the company will take orders and necessary relevant information from the clients directly through SMS and send SMS to the concerned dealer for necessary action. To provide necessary services, RHTL has tied up with Rainbow Mobile Ltd. a service provider for SMS solutions through 4242; it means that all SMS will be received and sent through 4242. In this way, the management of the company is very hopeful in improving its top–line by getting more orders and also able to reduce commission cost.
Another important strategic initiative taken up by the company is developing a very robust and feature rich ’˜Intranet Portal’ which is expected to enhance efficiencies, electronic workflows and replacement of paper in the system. It is expected to reduce administrative costs in a big way.
It is expected that such strategic initiatives will improve RHTL’s turnover and profit in the coming year. As a result, the year 2006–07 is expected to have an impressive financial performance.
| (i) || State the compelling reasons due to which the company is forced to change its business model. |
| (ii) || Why has the company adopted a changed business model mainly concerned with improving the top–line ? |
| (iii) || Mention two strategic initiatives taken by the company and making use of IT. |
| (iv) || It is mentioned above in the case –– “the company will take order and necessary relevant information from the clients”. Assume that you have been assigned the task of designing an effective and efficient database of the clients of the company, then suggest what “necessary relevant information about the clients” you would like to collect from the clients and how will you put them in the proposed clients’database. |
| (v) || Company in the recent past has successfully implemented ERP for integrating all managerial functions. Receiving orders from clients and sending them to dealers through SMS will require the integration of the same with the existing ERP. You are required to mention two important challenges the management will face in such integration. |
| (vi) || It was observed by the company that employees were not motivated to use intensively ‘Intranet Portal’ developed in earlier years. Suggest any five features that must be included in the proposed ‘Intranet Portal’ so that employees are motivated to use it very intensively. ||2+2+2|
| (0) |