Khalid’s
Tyre Store and Tyre Service Center
(A Business Plan)
Submitted to:
Dr. Professor Name
Dr. Osama Al-Kwifi
Submitted by:
Khalid Al-Khaldi
Amjad Awadallah
Shablan Al-shablan
Mohammad Alshuaifan
Metib Al Matar
Fall 2012
Table of Contents
I.
Executive Summary
II.
Company Description
2.1 Describe the business in general, what you will provide/sell/produce?
Company history
2.2 Mission
2.3 Objectives
2.4 Legal status and ownership
2.5 Location
2.6 General drawing for the business structure
III.
Industry analysis
3.1 Tyre Industry
3.2 Automotive Industry
3.3 Porter Analysis
IV.
References
|Page2
I. Executive Summary
This paper is a business plan for Khalid’s Tyre store and Tyre Services Center that
offers run flat tyre aside from the conventional automotive tyres. It covers the topics such
as company description, mission, objectives, products and services offered legal status and
ownership, location, general drawing for the business structure, industry analysis, market
strategy, financials, management, and other controls for starting up a tyre business.
This business plan highlights the feasibility of the business considering factors such
as product, price, promotion and place. The paper also presents some scenario on the
financial side of the business such as the projected income and expenses and expected
returns. The business plan aim to provide a complete planning and projections of the entire
process to start-up business in automotive tyre industry.
II. Company Description
A.
Company Description
The business that I intend to setup is a Tyre Store and Tyre services center type of
business which I will name Khalid’s Tyre Store and Tyre services. The main activities of the
business is to sell branded international made tyres such as Goodyear,
Bridgestone ,
Michelin, Pirelli, Hankook , Continental , BF Goodrich , and Yokohama. To supply tyre
products for commercial trucks tyres, off the road tyres, Recreational Vehicle tyres, racing
and aviation tyres. In addition, provide tyre services such as tyre installation, tyre pressure,
tyre repair, tyre rotation, wheel alignment, wheel and tire balancing of motor vehicles. The
tyre store that I intend to setup offers the RUN FLAT TYRE, a pneumatic vehicle tire that is
designed to resist the effects of deflation when punctured, and to enable the vehicle to
continue to be driven at reduced speeds (up to 55 mph (90 km/h)), and for limited distances
of up to 100 mi (160 km), or even 200 mi (320 km) depending on the type of tire (Wikipedia,
|Page3
2012). Offering run flat type of tyre will be a big difference of my tyre business from the
other existing tyre store that will give my business a competitive advantage.
B.
Mission Statement
Provide our customers with wide variety of top international brand tyres and quality
tyre services that exceed the expectations of our customers in the eastern region.
C.
Objectives
To start a one stop tire center to provide motorists in the Eastern Region (Dammam
and Al-khobar) with wide variety of quality branded tyres, tyre accessories and tyre
services. As well as, able to educate motorists about the types of tires specifically on RUN
FLAT tyres, tyre repair, and maintenance that can helps build a loyal customer base while
increasing profits.
D.
Legal status and ownership
The Khalids’s tyre and Tyre Services Center is a sole propriety type of the
business. And Khalid Al-Khaldi, who conceptualized and plan the business will owns and
manage the business.
E.
Location
The Khalids’s tyre and tyre service center will be located on Prince Faisal Bin Fahd
Road (28th Street.), also known as Pepsi Road, the heart of the busy business city of Alkhobar. It connects the city from far West (Dhahran) all the way to Cornice down East. I
will rent the facilities that are part of Al-khobar Towers Gas Station. It is a newly designed
modern arcade. This street is the primary nerve of Al-khobar city where I intended to office
my showroom for reason of exposure to more affluent businessman and create a strong
customer base.
F.
Business Structure
The Khalids’s tyre and tyre service center will be compose of six person manpower
which includes me as manager which will eventually increase as business flourish.

Manager

Tyre Store salesman (2)
|Page4

III.
Tyre Services attendants (3)
Industry Analysis
A. The Tyre Industry
With the increasing Saudi population follows proportional increase in basic living
essentials such as automobile demand. This together with flourishing used car market,
improving Gross Domestic Product (GDP), escalating number of vehicles plying on Saudi
Arabian streets are all driving force for the increase sales in tyre industry in the Kingdom.
The worldwide tyre industry turnovers stood at USD 151 Billion in 2011, which signifies a
positive outlook for tyre industry after the global economic turmoil. Today, the global and
Saudi Arabian tyre markets are growing at a much faster pace than expected. In 2011, the
automobile penetration in Saudi Arabia was recorded around 86% which is driving
replacement tyre market in Saudi Arabia. (Businesswire, 2012)
According to Saudi Arabia Tyre Market Forecast and Opportunities, 2017 the tyre
market in Saudi Arabia will witness phenomenal growth in near future. The tyre industry in
Saudi Arabia is forecasted to grow at the compounded annual growth rate of more than
10% for next five years due to increasing replacement tyre demand and re-exports in the
Kingdom. The outlook for the tire market in Saudi Arabia seems very promising, as
increasing overall consumer spending, population; demand for better quality tyres would
drive the tyre market to new heightened figures in the near future (Businesswire, 2012).For
this reasons, I believe that my business have a bright future ahead in this industry where I
will be part of its flourishing tyre industry.
B. The Automotive Industry as major players
The automotive industry is the major player in the tyre industry considering that
tyres are only one of the component makeup of an automobile. Since the Saudi automotive
industry is projected to reach approximately around SR26 billion in the coming years, as
industry experts projected. And an estimated 75 percent of all Saudi males of driving age
are owning at least one vehicle, Kingdom’s high automobile penetration rate have been
driving force of the rapid growth of the country’s auto parts such as tyres and after-sales
|Page5
service market such as tyre services, while creating opportunities for top and leading
international brands to sustain their expansion initiatives in the Kingdom and across the
GCC region. (Saudi Gazette, 2012)
C. Porter’s Five Forces Analysis for the Tyre industry
An analysis of the structure of the industry should be undertaken in order to find
effective sources of competitive advantage (Porter, 1985). Michael Porter’s Five Forces
Analysis uses concepts to derive five forces that determine the competitive intensity and
attractiveness of a market. It consists of forces which are close to a company that affect its
ability to serve its customers and make a profit. A change in any of the forces normally
requires a company to reassess the marketplace.
Michael Porter’s 5 Forces Analysis
1. The threat of substitute products
The existence of other tyre sales company increases the propensity of customers to
switch to alternatives in response to price and customer service. The only other viable
substitute would be unbranded or china made tyres which is lot cheaper in price but
unguaranteed quality which my company will not dare to offer. In addition, I would pursue
a total customer guaranteed satisfaction in as much as tyre services are concerned. Cost can
also be negotiable.
2. The threat of the entry of new competitors (high)
Tyre Sales and Tyre Services business does not require high capital to enter into
this kind of business. It is difficult to start-up in an industry where the existing firms
|Page6
already operate on cost and differentiation strategies (Chan et al, 2011, p.12). However,
offering run flat tyre would make a differentiation to other business of the same type and
by providing quality customer services via tyre services would overcome issues such as
customer loyalty and switching costs which could be another large barrier to entry.
3. The intensity of competitive rivalry
The tyre retailing business has many competitors that are equally balanced, and
therefore rivalry is high. The market for tyre is increasing and showing great potential in
the years to come as a business. For most industries, this trend is a major determinant of the
competitiveness of the industry. Sometimes rivals compete in non-price dimensions such as
services, strategic marketing, and connection which I intent to pursue.
4. The bargaining power of customers (low)
Buyers have limited leverage when it comes to bargaining because of their access to
standardized cost of supply and how competitive the tyre or automotive industry is. The
ability of customers to put the tyre companies under pressure is low so my company cannot
make any drastic changes to its prices. But since my company offers tyre services, this will
complement the tyre store. In Tyre services, customers have a good bargaining leverage
because of the following:

buyer volume

buyer switching costs relative to firm switching costs

buyer information availability

availability of existing substitute products

buyer price sensitivity

price of total purchase
5. The bargaining power of suppliers
In tyre sales, the bargaining power of suppliers is high because my business is just a
retailer of international brands of tyres and the suppliers or the manufacturers can dictate or
influence their products’ prices. In the industry, however, the bargaining power of suppliers
is high because suppliers’ goods are critical to the buyers’ marketplace success (Huvard et
al, 2011, p.8). Since, automotive tyres are integral part of a vehicle and with higher
demand means their product very important to the consumers where price of their product
can comprise their road safety. Suppliers can dictate the price of their products.
|Page7
IV. References:
AppsOnWheels.in (2012). How Tires Work: Tire Terminology and Tire Construction.
Retrieved November 5, 2012 from http://appsonwheels.in/blog/2012/10/how-tireswork-tire-terminology-and-tire-construction/
Businesswire (2012) Research and Markets: Saudi Arabia Tyre Market Forecast &
Opportunities, 2017. Retrieved November 5, 2012 from
http://www.businesswire.com/news/home/20120711006416/en/Research-MarketsSaudi-Arabia-Tyre-Market-Forecast
Run Flat Tire (n.b.) In Wikipedia. Retrieved November 5, 2012 from
http://en.wikipedia.org/wiki/Run-flat_tire
Sacha Orloff Group News (2012). Saudi Arabia Retail Prospects and Outlook 2012.
Retrieved November 5, 2012 from sachaorloff.files.wordpress.com/
Saudi Gazette (2012, October). Saudi automotive sector to hit SR26b. Economy. Retrieved
November 5, 2012 from
http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentid=2012
1014139513
http://www.vectorstudy.com/management_theories/porters_five_forces.htm
|Page8