Identification
High Performance Tires is exposed to strategic issues such as William’s poor management skills, its leadership style and ineffective decision making skills have lead to speedy opening out of its retail outlets without consideration of High Performance Tire’s capabilities to provide resource for effectively running of outlets, which has further led to extensive debt financing and cost cutting strategies. Moreover, the absence of customer feedback mechanism and employee appraisal process have let the problematic issues remain unidentified, which have threatened the profitability of High Performance Tires in long run.
Recommendations
However, Jane William’s participation in business management can enhance William’s skills and expertise for making effective decisions and planning for future with consideration of available resources and capabilities of its business, meanwhile, highly underutilized outlets should be closed and resources should be focused on improvement of service quality through employee training and acquisition of professional employees, who have the skill and expertise of managing tire business; which will improve customer experience and their loyalty towards High Performance Tires and improved brand awareness. Meanwhile, customer feedback mechanism should be in place in order to compile customer feedback and this information should be used to appraise staff performance, who is directly dealing with customers. Further, customer feedback will also help in order to improve service quality according the customer preferences. Additionally, negotiations should be made with banks in order to restructure long term debts, which will not only give confidence to bank regarding the repayment of interest and principle but it will also help in reviving long established relations of HPT’s family business with banks. William Wallace’s cost cutting strategy has not only deteriorated the quality of products and services but it has also resulted in high employee turnover due to reduced wages, however, cost cutting strategy is a good way to control costs but this should be at the expense of poor quality goods and services being offered to customers, therefore, High Performance Tire should focus on other cost reducing opportunities available to it such as negotiations with suppliers for competitive prices of inventories, which will result in low cost of sales and high gross profit margin.
Meanwhile, William Wallace’s poor management skills of and expertise have been identified as weakness of HPT and his discouraging leadership style has been explained as a threat to High Performance Tires. However, the large number of outlets has been identified as strength but HPT’s lack of capabilities to provide resources for effectively running of outlets has been identified as threat to HPT. Moreover, high gearing has been identified as threat for HPT, which can lead to bankruptcy in the long run and cost cutting strategy has been categorized as weakness of HPT and lack of customer feedback mechanism and employee appraisal process has been mentioned as threat to HPT.
Analysis
Porters’ Five Forces
Barriers to New Entry
Since setting up of new outlets and distribution channels requires huge capital spending and in addition to this inventory of raw materials also required substantial investment, therefore, barriers to entry are quite storing but still there are chances of entry into tier and maintenance services industry but provided the cost of entry these chances are very low.
Buyers’ Bargaining Power
Customers are more important because they were sold on cash basis and there was no switching cost which could restrict customers from switching to other suppliers, which has given powers to retail customers. Moreover, the credit terms offered to corporate customers are more favorable than the industry norms, which mean that corporate customer, can also influence the market positioning of HRT Ltd.
Suppliers’ Bargaining Power
HPT’s suppliers have strong position in order to influence its prices because they have offered long credit periods to HPT, which is helping it to manage its working capital.
Availability of Substitutes
Lube stores are the alternative service solution for customer to get their vehicle repaired at their ease, which makes HPT competitive position weaker.
Competition
HPT is facing huge competition from Canadian Tire Company in terms of price, service quality and customer experience, which badly affects the competitive position of HPT.
SWOT Analysis
Strength, weakness, opportunities and threat (SWOT) analysis helps to identify the possible strengths in order to utilize them for exploiting identified opportunities, meanwhile, identification of weaknesses and threats will help HPT to overcome these weaknesses and counter the potential threats in order to protect its marketing position.
Strengths
HPT’s large number of retail outlets can be used as strength in order to target the customers, which will give easy access to large number of customers through already established outlets and in addition to large outlet chain William Wallace is willing to improve its business operations and he is taking active part in doing so. Meanwhile, participation of his mother Jane Wallace will help HPT in order to achieve profitability through ..............................
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
Jenny Chen, CA, CFA, CMC was hired Jane Wallace High bus. Jane, who inherited the company from her parents, to successfully manage the company for many years. When she handed over responsibility for her son William in 2001, he began to make some changes in order to increase the number of outlets to diversify their products, and reduce costs in the company. In 2004, the company was having difficulties and Jane decided to become more involved in the family business again. Jenny's task is to review and analyze the company's activities and recommendations. "Hide
by Dan Thompson Source: Richard Ivey School of Business Foundation 4 pages. Publication Date: July 25, 2006. Prod. #: 906B24-PDF-ENG
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