TEX-FIBER CASE ANALYSIS

Market Attractiveness and Business Position Assessment

Ankit Jain Nahar (MS12A010) Archana Sinha (MS12A015) Jalaj Thakor (MS12A038) Kinjan Shah (MS12A040)

Tex-Fiber Petroloid Products Division

High Cost Impact of recession Decreasing number of orders Negative cumulative cash flow for PPD Heavy investment in Fixed asset and working capital

Tex-Fiber Petroloid Products Division

Assessment Levels

Product

Market Geography

End User Market

1. Oils 2. Petro-rubbers 3. FAS

1. 2. 3. 4.

US Europe Japan Third World

1. 2. 3. 4.

Construction Appliance Automobile Aerospace

Product level assessment Market Factors

Oil

Rubber

FAS

Market Size
Growth Price sensitivity Diversity of market

$1.17 bn
8% Very Sensitive Less

$0.5 bn
10% Sensitive Moderate

$0.66 bn
16% Sensitive High

Competition

Oil
Type Concentration Heavy Less

Rubber
Moderate Less Less Less

FAS

Financial / Economical

Capital Intensive Contribution margin

High Less

High Moderate

High High

Technological

Oil
Technology requirements Maturity Moderate Less

Rubber
Moderate Less High Less

FAS

Environmental

Recession Trends

High Neutral

Moderate Positive

Less Very Positive

Market attractiveness assessment Oil

Score Market size Growth Competition Financial Technology Environment and trends 1 0 0.5 0.5 0.5 0.5

Weight 10 15 20 30 5 20

Ranking 10 0 10 0 2.5 10

32.5

Market attractiveness Assessment Rubber

Score Market size Growth Competition Financial Technology and innovation Environment and trends 0 0.5 0.5 0.5 0.5 0.5

Weight 10 15 20 30 5 20

Ranking 0 7.5 10 15 2.5 10

45

Market attractiveness Assessment FAS

Score Market size Growth Competition Financial Technology and innovation Environment and trends 0.5 1 1 0.5 0.5 0.5

Weight 10 15 20 30 5 20

Ranking 5 15 20 15 2.5 10

67.5

Business Position: Oil Score Product quality Product specialization Manufacturing scale and cycle 1 0 1 10 10 15 Weight 10 0 15 Ranking

R&D
Marketing expertise Sales

0.5
1 0.5

20
15 20

10
15 10

Service

0.5

10

5
65

Business Position: Rubber Score Product quality Product specialization Manufacturing scale and cycle 1 1 0.5 10 10 15 Weight 10 10 7.5 Ranking

R&D
Marketing expertise Sales

0.5
0.5 0.5

20
15 20

10
7.5 0

Service

0.5

10

5
50

Business Position: FAS Score Product quality Product specialization Manufacturing scale and cycle 1 1 0.5 10 10 15 Weight 10 10 7.5 Ranking

R&D
Marketing expertise Sales

0.5
1 1

20
15 20

10
15 20

Service

0.5

10

5
77.5

Current investment opportunity 100 FAS

Rubber

Oil

0 100

Future opportunity: No strategy change 100

FAS Rubber Oil

0 100

Oil

Future opportunity: Recommended 100

FAS Rubber Oil

0 100

Strategy to adopt Oil: Harvest for short time period Rubber: Defend in the short run, Strive for growth in the long run through wide applications of the products, Target international market with increased sales force as its mostly B2B, it can be managed FAS: Strive for growth, Target third world countries market with innovative products and applications, Cost reduction and innovation through R&D investment Similarly an assessment can be done on market geography level, which would give a clear understanding of how much investment to be done in third world countries in the long run

Immediate stratgey to cope up with Cash Constraint Discount offers on Cash payment While approaching to previous customers who have large balance outstanding, discount can be offered on cash payment This plan can be offered to bulk buyers Focused sales force and distribution channel Reduce sale incentive for short time period Focus more on fast delivery to distributers so not to lose a customer Change in capacity utilization Leverage economy of scale with minimum price increase It will keep cash book ringing Look for other sources of raw materials Different sources and substitutes can be explored