MRF Limited SWOT Analysis Tyres Industry India

 

MRF Limited SWOT Analysis-Project Report on Tyres Industry in India

A business analysis of MRF Ltd., a company engaged in manufacture and distribution of tires, is provided, focusing on its strengths, weaknesses, opportunities for improvement and threats to the company. Strengths include benefits derived from its strong market position. Weaknesses include its involvement in price fixing allegations. Opportunities for improvement include growth in automotive manufacturing industry in India. Threats to the company include intense competition from rivals.

Strengths

Strong brand recognition

MRF maintains strong brand recognition in the tyre industry in India. For instance, it has received

many awards in the recent past. According to a study by the industry experts, MRF ranked highest

among the new-vehicle owners who are highly satisfied with their original equipment tyre brands. It

ranked highest among original equipment tyre brands with an overall score of 810 and performed

particularly well in all four factors that drive satisfaction for a second consecutive year. The study,

now in its 11th year, measures satisfaction among original equipment tyre owners during the first

12 to 24 months of ownership. The study measures overall satisfaction by examining four factors

including appearance, durability, traction/handling and ride.

Therefore, strong brand recognition allows the company to enter new markets with ease and also

enables it to launch new products. In addition, it also provides competitive advantage to the company

over its peers and helps in attracting new customers.

Vertically integrated operations

  

The company is vertically integrated its operations in terms of its core business. MRF is primarily

engaged in the manufacture and sale of rubber products. The company derives majority of its

revenues from its core business i.e. tyres, the rest comes from its presence in toys. It manufactures

tyres for all kinds of vehicle including two-wheelers, light commercial vehicles, passenger cars, heavy

duty trucks and buses and off-road industrial vehicles. Recently, the company also started

manufacturing tyres for aerospace and defense markets.

Further, MRF offers a range of services to its customers, ranging from helping them pick the tyre of

their choice to helping them maintain their vehicle. For example, the company provides one stop

shop for all types of tyres through MRF T&S franchises.The company currently operates more than

200 T&S shop across India. Through MRF Tyredrome, the company offers computerized wheel

alignment, wheel balancing, tyre changing, nitrogen filling, robotic car wash, optical headlamp

aligning, rim straightening and tubeless tyre repair. In addition, through MRF Institute of Driver

Development (MIDD), the company provides training to drive light and heavy commercial vehicle

(LCV & HCV). MRF has trained over 2,000 LCV and 700 HCV drivers. MRF also provides tyre

maintenance services.

Thus, vertically integrated operations provide MRF with significant advantages over less integrated

competitors and position the company to optimally serve its customers. Additionally, it enables the

company to constantly increase capacities and maintain market leadership and profitability in most

segments.

Weaknesses

Lock outs due to labor issues impact the sales

MRF has been suffering from labor issues in its facilities fro the past few years. For instance, in

2011, the company's manufacturing facility in Kottayam in Kerala was forced for a lockout for about

two days due to labor unrest in the factory. Consequently, MRF’s tyre production was severely hit.

Due to this, it reported a decline of 6.2% in its net profit for the second quarter ended March 31,

2011. Hence, such instances in the future could impact the production of tyres which could have a

direct influence on the company's revenues.

Involvement in price fixing allegations impacts the company's reputation

MRF is alleged to participate in price fixing and price hike allegations in 2011. During the year, the

Competition Commission of India (CCI) investigated the possibility of cartelization in the Indian tyre

industry based on a report submitted by its Director General earlier in the year. According to the

investigation, it is concluded that five leading Indian tyre makers including Apollo Tyres, MRF, JK

Tyre and Industries, Birla Tyres and CEAT along with Automotive Tyre Manufacturers' Association

(Atma) had acted in concert, violating section 3 of the Competition Act that deals with cartelization.

However, in October 2012, CCI acquitted all the five tyre companies, including MRF, of cartelization

charges.

Disclaimer-This SWOT Analysis Report should be used for academic purpose only and Copyright of MRF Limited SWOT Analysis is the property of MarketLine, a Datamonitor business.

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