FTL is a wholly owned UK subsidiary of GTC of the USA. FTL manufactures and sells tyres under a number of different brand names.
(a)     Firespeed, offering high product quality, at a price which offers good value for money.
(b)     Freeway, a cheap brand, effectively a standard tyre.
(c)     Tufload, for lorries and commercial vehicles.
FTL has a good relationships with car firms and distributors.

GTC is rather less focused: not only does it make tyres and some other components, but it also owns a chain of car service centres specializing in minor maintenance matters such as tyre replacement, exhaust fitting, and wheel balancing.
FTL has experienced a fall in sales volume, partly as a result of competition from overseas producers, in what is effectively a mature market. Moreover, sales of new cars have not been as high as had been hoped, and consumers are more reluctant than before to part with their money.
FTL’s managers have had meetings with GTC’s managers as to how to revive the fortunes of the company. FTL would like to export to the US and to Asia. GTC has vetoed this suggestion, as FTL’s tyres would compete with GTC’s. Instead, GTC suggests that FTL imitate GTC’s strategy by running a chain of service stations similar to GTC’s service stations in the US. GTC feels that vertical integration would offer profits in its own right and provide a distribution network that would reduce the impact of competition from other tyre manufacturers. GTC has no shortage of cash.
You are a strategic consultant to FTL.

Required:

(a)     Discuss the principal factors in the external environment that would influence FTL’s strategic choice

(b)     Describe the barriers to entry that FTL might face if it decided to enter service centre business
(c)     Assess whether FTL’s existing strategic capability gives it good chance of success in the

Answer rating: 100% (QA)

Solution As far as the general environment is concerned we can ana... View the full answer