Case Study-Cooper Tire and Rubber Company

2322 Words Feb 27th, 2005 10 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, and

Therefore 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
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Rivalry among established companies

The OE market is highly consolidated with Goodyear, Michelin and Bridgestone dominating the slightly growing market. The competition is fierce, and the players in the market compete mainly on price and product technology differentiation.

The replacement market is more fragmented, and cost reduction is used as the key competitive strategy.

In both markets, competitive structure results in more rivalry as tire manufacturing companies have to fight to maintain revenues and market shares.

The exit barriers present in the industry lock incumbent companies from leaving the industry when profits are low. Main barriers are the investment in plants and equipments, pensions and insurance for workers.

The competitive structure and the high exit barriers show clearly that the rivalry among established companies is fairly high.

Power Of Buyers

In the OE market, the buyers are the automobile and truck manufacturers that buy tires in large quantity and are relatively few compared to the tire companies. They have the possibility to switch orders from one supplier to another in order to get the most convenient deal (quality products at low prices). As for tire manufacturers loosing one single buyer would mean loosing a large market share, and therefore the power of buyers is high.

In the tire replacement market, the buyers consist of independent tire dealers, service stations,
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