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Laos Tire

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Case Prompt

A manufacturer of tires in Laos has had a monopoly in the market for years due to high tariff on imports. If foreign producers wanted to import tires, they would have to pay a high import tariff which makes up 40% of the total cost to produce and ship to Laos. The Laotian government has now decided to lower the tariffs by 4% each year for the next ten years to open up the market to foreign companies and achieve lower consumer prices. 

Our client is concerned this move will affect their market position and hired us to investigate the effects and help them decide what to do.


Question 1: How would you approach this case?

I. Cost structure – Question 2: We have some data on performance. Take a look. What insights can you draw from this?

I. Cost structure – Question 3: What could be potential causes for such differences in unit cost?

II. Competitive position – Question 4: The client wants to understand the effects of the tariff reduction. How would you approach this?

II. Competitive position – Question 5: Can you take us through the future scenario to see the impact of possible entry by foreign producers?

III. Recommendation – Question 6: What solutions can the client push through to protect himself?

Further Questions

  • Is there a possibility that foreign players can enter the market sooner than 3 years?
  • What type of marketing/sales/distribution structures should Laos Tire implement to ensure customer loyalty?
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