Taurus Case Study

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Company Background

Christopher Columbus was probably the first European to handle rubber. Rubber has been used by the Haitian for centuries. In 1819 Thomas Hancock discovered that latex rubber can be masticated, but unfortunately mastication deprived rubber of its elastic qualities.

Charles Goodyear has discovered vulcanization in 1839, which solved the problem and also kept rubber products from becoming tacky. Hence the commercial uses of rubber multiplied greatly. Shortly thereafter, the rise of the automobile industry at the century’s turn resulted in a tremendous increase in the demand for rubber and its principal application in the manufacture of automobile and truck tires. The production of natural rubber entails collecting the juice of the 60-80 foot high Hevea brasiliensis tree, which is now plantation grown in such tropical countries as Brazil, Malaysia and Indonesia.

Taurus Hungarian Rubber Works has been Hungary’s most important rubber producer. The first Hungarian rubber factory was established in 1882, and in 1890 it became a public company under the name Magyar Ruggyantaarugyar Rt. Because Hungary lacked a domestic producer of automobiles at the turn of the century, the company supported the creation of an automobile plant, which was ultimately located in Arad, and the formation of the Autotaxi Company in Budapest. During the interwar period, the Hungarian rubber sector declined dramatically. After the nationalization of all rubber firms after the World War II, the Hungarian government pursued a policy of extensive growth for a number of years. In 1963, Budapest’s five rubber manufacturers-PALMA, Heureka, Tauril, Emerge, and Cordatic were merged into one company called the National Rubber Company. Purchasing, cash management, and investment were centralized, and a central trade and research and development apparatus was created.

In 1973, the company changed its name to the Taurus Hungarian Rubber Works. Taurus operates four separate divisions while engaging in a number of joint ventures. The four divisions were tire division, trade division, technical rubber division and, machines and modes division. It was obvious that at least the rubber industry’s tire segment had passed into its mature stage. In response to this situation, many major rubber companies had diversified away from the heavy competition within the industry as well as attempting to find growth markets for their rubber production capacity. Within the domestic market, various other Hungarian rubber manufacturers had surpassed Taurus in their growth rates as they jettisoned their low-profit lines and adopted newer ones with higher growth rates. Taurus’s market share of the Hungarian rubber goods industry had slowly eroded since 1970, and this erosion increased greatly in the decade of the 1980s due to the creation of a number of smaller start-up rubber companies encouraged by Hungary’s new private laws. With the aid of a major consulting firm, Taurus had recently conducted the in-depth analysis of its business portfolio. It was concluded that the company operated in a number of highly attractive markets but that the firm’s competitive position needed to be improved for most product lines.

In 1991 Taurus was to implement two types of projects; software projects dealing with quality assurance programs, management development, staff training efforts, and the implementation of a management information system and hardware projects dealing with upgrading the agricultural tire compounding process as well as upgrades in the infrastructures of various plants.

SYNOPSIS

Taurus Hungarian Rubber Works face the problem when Hungarian government passed the Corporation Law and want to reprivatize and recapitalize the state-owned company. When prepare for the privatization, Taurus found out the positioning is different within the product line. It is hard for the company to group the product line. Moreover, the international level...
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