Corporate Strategy of MRF Tyres

Corporate Strategy is the technique followed by a company to create value across different

businesses. It deals with how an organization can add value over and above which a business unit

creates by itself. This requires the corporation to invest in a valuable set of resources, craft the

business portfolio, and design the organization structure, systems and corporate functions to

share activities or transfer skills across businesses. Effective corporate strategy suggests that

issues of corporate strategy apply to firms of every size and in every sector. Corporate Strategy is

made in the headquarters by the Board of Directors in consultation with the Executive Officers.

Corporate Strategies are formed within tenure of 5-10 years. Corporate Strategy can be sub-

divided into 3 categories, namely Growth, Stability and Retrenchment.

Specifically mentioning the Corporate Strategy used by MRF Tyres is Growth Strategy. Strategy

aimed at winning larger market share, even at the expense of short-term earnings. Four Broad

growth strategies are diversification, product development, market penetration, integration and

market development. The growth strategy followed by MRF Tyres out of all the strategies is that

of product development. A product development strategy aims at developing new products in

case the existing products get saturated. Moreover, the product development strategy aims at

ensuring that the firm engages in continuous growth and development as well as focuses on the

aspects of product development to a considerable extent. The various categories of products

MRF manufactures are listed as below:

1. Heavy Duty Truck/Bus

Features:
 Special tread compound
Increased number of lugs
Special design with scoops at shoulder
Extra strong casing

2. Light truck

Features:

Special tread compound

Special design with scoops at shoulder
Extra strong casing
Aggressive tread pattern
3. MUV/RCV/Passenger Car

Features:

Non-directional tread pattern

Strong casing

4. Motor sports

Features:

Asymmetric pattern
Special pattern
Stable blocks
Rugged construction
Choice of compounds-soft, medium and hard to meet rallying needs

5. Off the Road

Features:
 Double Chevron
Non-directional
Tread reinforcing bar
Heavy buttressed lugs
Tough, cut-protected
Tread compound
Heat resistant under tread
Rugged heavy sidewall
Nylon construction

6. Military service

Features:

Very high void in tread pattern

Plain rib design
Wide tread & flexible shoulder and sidewall
High weather resistant tread compound
Double Chevron block design
Wide tread width & large ground contact area
Flexible sidewall & wider cross-section
Provided with highly weather-resistant tread and sidewall compound

7. Farm service

Features:

45 Knife action lugs for better penetration and cleanability

Big rigid shoulder lugs
Cut protected Nylon
Breaker and flatter tread
3 rib design with pronounced center rib
Chested shoulder rib
Strong nylon casing

8. Fork Lift
 Features:

Unique tread design

Cut protective tread compound

9. Two/Three - Wheeler

Features:

Front Fitment
Directional
Extended shoulders
Round profile
Sticky compound
Unique tread pattern

Business Strategy of MRF Tyres

The business strategy that can be followed by an organization can be overall low cost, overall

differentiation, focus with cost and focus with differentiation. The business strategy are

formulated by the Business Unit Heads under the advice of the Board of Directors and input

from functional heads. The time horizon for business strategy formation is less than 3 years. It

basically is formulated with a concern about how to successfully compete in a given market

place and achieve competitive advantage. The competitive strategy followed by MRF Tyres is

focusing with overall differentiation.

MRF manufactures tyres which are basically of higher price and have a wide range of assorted

products. There are several advantages which MRF obtains due to overall differentiation strategy.

The specialized products manufactured by MRF provide an edge against its competitive rivalry

because of brand loyalty by customers and resulting lower sensitivity to price. Differentiation

yields higher profit margins with the help of differentiating its products compared to that of its

competitors. It can mitigate buyer power because there are no comparable alternatives. As MRF

differentiated itself to achieve customer loyalty should be better positioned vis-a-vis substitutes

than its competitors. It can provide entry barriers for competitors as a result of customer loyalty

and the need for a competitor to overcome the product or service uniqueness.

Functional Strategy of MRF Tyres

Functional Strategy is the overall corporate strategy which an organization makes for various

functional areas such as marketing strategy, production strategy, financial strategy, HR Strategy,

Operations Strategy, etc. Functional strategy is developed by functional heads under advice of

Business Unit heads to achieve the functional goals.

Marketing Strategy:

Product: The basic definition of a product is anything that can be offered to a market to satisfy

a want or need. MRF differentiates itself from the competition, on its two pillars of High Quality

and Endurance.

Place: 7 plants located in various places in South India.2, 500 outlets in India and exports to over

65 countries worldwide. Its distribution channels include: Factories, Divisional and Regional

Distribution Centers, Carrying and Forwarding Agents and dealers

Price: MRF has been a leader in the Passenger Car tyre segment. By virtue of their market share,

they have traditionally been price makers. The rest of the tyre industry has followed the pricing

cues set by these leaders. Markup pricing is the common pricing method followed across the tyre

industry.

Promotion: Excellent brand recognition in all categories of vehicles in the tyre market.Sports

celebrities and event endorsements- a major vehicle for promoting their brand.