ANALYSIS OF THE CASE
Brief Background of the Case
Star Oil a gasoline services company started TBA (Tyres, Batteries and Accessories), a complementary business which added value to the core business of gasoline sales. The TBA business initial appeared successful as there was a strong correlation between petroleum sales and the auxiliary business but the profits of TBA started showing a progressive decline before turning into a loss making proposition. Star Oil decided to outsource the entire management to HBS (Hunter Business Group) who had a proven track record in turning around businesses dealing in the same domain.
As a part of the turnaround strategy, HBC implemented a number of steps. It started the “Gold Accounts” concept which identified potential customers contributing to a major chunk of the sales of TBA. HBG reduced the operational costs of marketing by adopting a matrix consisting of three types of channels, i.e. Direct Mail, Telephone Sales and Field Sales. The customer Contact Matrix was further sub-divided into AA, A, B, C & D categories depending on the sales revenue generated from them and the product mix of sales. The Problems
The first year of implementation of the turnaround strategy was successful. Though the overall sales revenue declined as compared with the reported sales of the previous year, the business started generating profits. However, there were a number of problems that were facing the TBA business. They were as follows:1. Decrease in projected revenues and hence profits for the current year.
2. Low growth in the ‘Gold Accounts’ which were contributing substantially towards both top and bottom lines.
3. Reduction in the number of successful service centres/Franchisees due to their conversion into ‘convenience stores’ by Star Oil.
4. Reduction of funds available for Operational costs and Marketing The Issues
1. What is the way forward for the TBA business?
2. How does HBG maintain the bottom...