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prabhar oil company case study
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| Words: 2513 | Submitted: 11-Dec-2011
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Descriptiondiscussion about Prabhar oil company and Izo
ABOUT THE CASE
A leading multination oil giant Izo is planning to increase its market foothold in India, but is facing several challenges on the way to catch up with its competitors. Its rivals include public sector undertakings (PSUs) such as IOC, HPCL and BPCL which enjoy well-established brand presence, and distribution network in India’s near-stagnant automotive lubricants market. Creating a wider distribution network is however posing the biggest challenge for lubricants players in India. Public sector companies have an early advantage of a wider distribution network of petrol pumps. However, few private companies such as Castrol have made strong retail network in the bazaar trade. In this competitive business environment, Izo-a new market entrant- is facing a number of distribution challenges. This case highlights the problems faced by Izo in managing one of its distributors, POC, in its quest to quickly increase its market share.
INFORMATION ABOUT THE COMPANY&ITS ENVIRONMENT
About the company
The Indian lubricant market is very important: it’s the fifth largest market in the world in terms of volume. This market is very fragmented for many years with more than 22 big and small manufacturers with over 30 lubricant brands. There are two major distribution channels: the original equipment segment (OEMs), that represents 70% of the market share and the retail segment, which represents 30% of the automotive lubricants market. In this market distribution channel the salesperson does play a strategic role in the customers decision and relationship between the two organizations – buyers and sellers.
About the environment
Political Environment –The government has taken substantial steps for the liberalization of Indian auto lube market but still the Indian political environment has been more supportive to the domestic players, especially the PSUs, rather than private players and new MNC entrants. Administered pricing regime was subsequently eliminated and free pricing was permitted in lubricants. Deregulation encourages all the major multinationals such as Shell,Mobil,Exxon,Caltex,Esso,Elf,BP among others to venture their operations in the country with their foreign brand.
Economic Environment – The economic environment of emerging economy in India is very strong, which provide greater opportunities for growth. The Indian lubricants market is the fifth largest marketing in the world in terms of volume after the USA, China, Russia and Japan, valued at Rs. 17000 crores in 2009. The Indian market contributes 3-4 per cent of the global demand of 38.5 million tonnes per annum, growing at close to 6% annually. It has been broadly divided in to three major categories including Automative, Industrial and Marine&Energy applications. Among them, Automative segment comprised about 67% of total lubricant market or about 8-10% of global lube production.
Socio-cultural Environment – Understanding the social and cultural environment would be the key factor for each ...
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