Case Analysis: Tire Rack

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1. Case Introduction

Somebody ought to stock a few of every tire, sell them over the phone, and ship

them, thought Mike Joines when he had trouble finding the right performance tires

for his sports coupe.

Joines approached his father-in-law, Peter Veldman and help him open a retail tire

store. After seven years, they were making so may phone orders; they closed the

store and added phone lines.

Veldman now is president and patriarch of Tire Rack, a family-owned Internet and

mail-order tire retailer. His wife, four of their six children and two son-in-law also

work for Tire Rack.

Tire Rack sells name-brand tires to consumers and to other retailers. For

consumers, Tire Rack ships to its network for recommended installers, or to their

homes, or to the service shop of their choice.

Customer service is Tire Rack’s priority. Joines says the goal is offering the “best

product at the right price in the shortest amount of time”

The company, which has more than a million square feet of warehouse space in

four locations, says it sells more than 2 million tires a year or a set for every 100

people who buy tires. Its website gets 2.4 million visitors a month, more than any

other tire company and more than many automakers, according to Alexa Internet,

an company that ranks Web traffic.

They are really a private family. None has been profiled in the media, and the

privately held company refuses to release financial information.

(O’Donnell, 2003, p. 3B)

2. Analysis

2.1 How does Tire Rack sell its products?

Tire Rack sells its product such as tires, wheels, springs, etc through internet

and mail-order ( They are selling

multiple brands, not pushing only one brand; therefore, customers have many

choices to choose the most suitable product for their needs.

Customer service is Tire Rack's priority. Its goal is offering the best product and

the right price in the shortest amount of time to customer.

They understand that by buying though internet or mail-order, their customer

cannot touch products, so they have to be knowledgeable to be convincing

enough to sell their products. Tire Rack’s sales staffs always test different

tires with varying states of wear on water, ice, or dry pavement to better help


2.2 Human Resource Management in Tire Rack

The family members who work at Tire Rack live within five miles of each other.

And all important positions in the company are hold by family members including

Veldman, his wife, daughters, and son-in-law.

Beside family members, there are about other 400 employees working in Tire

Rack. According to Mr. Matt Edmonds, marketing vice president, the working

relationship is almost “impossibly pleasant”. Creating a good environment is an

effective method to retain employees in the company.

2.3 Why is management succession so important in a family firm?

Succession planning involves deciding who will lead the company in the next

generation. Unfortunately, less than one-third of family-owned business survive

the transition from the first generation of ownership to the second, and only 13

percent of family businesses remain in the family over 60 years (Hillstrom, K.,

Hillstrom, L.C., 2002, p. 490).

Many small business owners concern about passing the business on to their

children when they prepare the succession planning for the business in the future.

There are two reasons for their concerns:

Firstly, the next generation not only needs the ability to operate the business but

also needs the education, talent, certifications and desire to carry on the service

(Megginson, Byrd, and Megginson, 2005, p. 40)

Secondly, most small business owner meet difficulties when they have more than

one child. That is how to treat all children fairly. Some owners groom one child

from an early age...
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