Case Study Cooper Tire And Rubber Company

2334 words - 9 pages

Introduction"Cooper Tire & Rubber Company, founded in 1914, specializes in the manufacturing and marketing of rubber products for consumers. Products include automobile, truck and motorcycle tires, inner tubes, NVH control systems, automotive sealing, and fluid delivery systems." (http://www.coopertire.com/about/).The case study on Cooper mainly concentrates on the tire industry, andTherefore the following analysis will be based on this.Cooper Tire & Rubber co. has enjoyed much growth and strong returns. However, with intense competition and developments in new technology, Cooper must follow suite to maintain competitive advantage by balancing efficiency with cost specifically in the Replacement Tire Industry. To set the right strategies it is important for Cooper to first analyse the external environment, both on a macro and micro basis, and then assess the resources and capabilities/competences in order to get a detailed overview of the company.The External EnvironmentThe Macro environment; PEST frameworkPolitical/Legal AnalysisThe introduction of NAFTA and GATT has created new opportunities for tire manufacturers for the supply of cheap labour. Companies can reduce their costs by producing their tires in low-cost labour countries such as Mexico.The foreign trade sub zone status, which reduces the company's duty payments on imported raw materials, benefit smaller companies like Cooper greatly as it allows them to compete on an international level with relatively smaller budgets.The tire market is a heavily unionised industry, by URW the industry's union. Over the last years the union has won, after long strikes, increased wages and benefits for workers.EconomicalThe industry as a whole is influenced by the economic demand for vehicles, this is characterised by the strength of the economy and the disposable incomes of the consumers.The early 90's recession had a major effect on the industry. The decline in the car industry meant that the competition for replacement tires increased, whilst the original equipment demand fell. This resulted in many companies diversifying into the replacement market in a bid to compete.The gasoline prices have an effect on the tire industry, due to the number of miles driven by drivers. After many years with fluctuating gasoline price, the price is now reasonable and stable.SocialIn the tire industry, the standard of living has a direct effect on the demand for tires. An example of this is found in the sub urbanisation of the US community, which resulted in more wear and tear on tires, thus a need to change tires.In addition to this the transport industry, buses, taxis, and trucks were proving more popular than the rail system, thus increasing the demand for tires.Vehicle owners are often reluctant to spend money on replacement tires, as they do not want to spend money on an old car with the ambition to purchase a new vehicle in the short term. This social attitude has lead to low-cost tire producers being...

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