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    Hunter Business Group

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    PratyushGarewal
    Hunter Business Group was hired to turnaround the declining TBA (Tyres, Batteries and Accessories) business of Star Oil. HBG implemented several strategies including identifying "Gold Accounts" that contributed significantly to sales and reducing operational costs. While the first year saw profits return, revenues and profits were projected to decline. HBG is considering three options - maintaining costs and reducing marketing, implementing cost cuts across the board, or reducing costs by 20% while changing sales practices. Each option has tradeoffs that could impact the future of TBA. Key issues for HBG include whether reducing customer contacts will hasten declines, improving effectiveness with revised account criteria, and if the sales compensation structure needs changes.

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    Hunter Business Group

    Uploaded by

    PratyushGarewal
    106 views2 pages
    Hunter Business Group was hired to turnaround the declining TBA (Tyres, Batteries and Accessories) business of Star Oil. HBG implemented several strategies including identifying "Gold Accounts" that contributed significantly to sales and reducing operational costs. While the first year saw profits return, revenues and profits were projected to decline. HBG is considering three options - maintaining costs and reducing marketing, implementing cost cuts across the board, or reducing costs by 20% while changing sales practices. Each option has tradeoffs that could impact the future of TBA. Key issues for HBG include whether reducing customer contacts will hasten declines, improving effectiveness with revised account criteria, and if the sales compensation structure needs changes.

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    70750575 Hunter Business Group

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    Hunter Business Group was hired to turnaround the declining TBA (Tyres, Batteries and Accessories) business of Star Oil. HBG implemented several strategies including identifying "Gold Accounts" that contributed significantly to sales and reducing operational costs. While the first year saw profits return, revenues and profits were projected to decline. HBG is considering three options - maintaining costs and reducing marketing, implementing cost cuts across the board, or reducing costs by 20% while changing sales practices. Each option has tradeoffs that could impact the future of TBA. Key issues for HBG include whether reducing customer contacts will hasten declines, improving effectiveness with revised account criteria, and if the sales compensation structure needs changes.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    106 views2 pages

    Hunter Business Group

    Uploaded by

    PratyushGarewal
    Hunter Business Group was hired to turnaround the declining TBA (Tyres, Batteries and Accessories) business of Star Oil. HBG implemented several strategies including identifying "Gold Accounts" that contributed significantly to sales and reducing operational costs. While the first year saw profits return, revenues and profits were projected to decline. HBG is considering three options - maintaining costs and reducing marketing, implementing cost cuts across the board, or reducing costs by 20% while changing sales practices. Each option has tradeoffs that could impact the future of TBA. Key issues for HBG include whether reducing customer contacts will hasten declines, improving effectiveness with revised account criteria, and if the sales compensation structure needs changes.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    HUNTER BUSINESS GROUP : TBA

    ANALYSIS OF THE CASE


    Brief Background of !e Ca"e
    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 auiliary business but the profits of TBA started showing a progressive decline before
    turning into a loss ma!ing proposition. Star Oil decided to outsource the entire management
    to "BS ("unter Business #roup) who had a proven trac! record in turning around businesses
    dealing in the same domain.
    As a part of the turnaround strategy, "B$ implemented a number of steps. %t started
    the &#old Accounts' concept which identified potential customers contributing to a ma(or
    chun! of the sales of TBA. "B# reduced the operational costs of mar!eting by adopting a
    matri consisting of three types of channels, i.e. )irect *ail, Telephone Sales and +ield
    Sales. The customer $ontact *atri was further sub,divided into AA, A, B, $ - )
    categories depending on the sales revenue generated from them and the product mi of sales.
    T!e Pro#$e%"
    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. "owever, there were a number of problems that were
    facing the TBA business. They were as follows.,
    1. )ecrease in pro(ected revenues and hence profits for the current year.
    /. 0ow growth in the 1#old Accounts2 which were contributing substantially towards
    both top and bottom lines.
    3. 3eduction in the number of successful service centres4+ranchisees due to their
    conversion into 1convenience stores2 by Star Oil.
    5. 3eduction of funds available for Operational costs and *ar!eting
    T!e I""ue"
    6. 7hat is the way forward for the TBA business8
    2. "ow does "B# maintain the bottom line8
    9. 7here does "B# implement the $ost cuts8
    O&ion" A'ai$a#$e
    One obvious Strategy would be to reduce the +ield Sales and4or the fied costs. Another
    would be reduction of employees in TBA, but both options contain tradeoffs that can have an
    adverse bearing on the future prospects of TBA. "BA considers three options which are as
    follows.,
    O ption %
    6. :eep +ied $ost constant at ;6.< million.
    2. 3educe mar!eting and sales cost to ;6.95 million.
    9. =o need to abandon any territories, shutdown any facilities, scalebac! operations.
    5. >liminate field sales entirely (cost cut ;6.5 million).
    Option %%
    1. *aintain the fied component of operating epenses at 5?,5<@ of revenue.
    2. +ied costs froAen at ;6./B million.
    9. Sales and mar!eting $osts !ept at ;6.<C million.
    4. %mplement Dob cuts.
    O&ion III (H)#rid* (Se$eced O&ion* This option will be eercised by performing the
    following actions.,
    1. 3educe both fied and sales E mar!eting cost by /?@.
    2. 7holesale changes to freFuency of contacts.
    3. Try to increase no of gold accounts.
    4. Boost sales volumes among highest performers, reducing $ and )
    Ad'er"e I%&ac.
    This course action may have the following adverse impacts and hence we propose to have a
    review mechanism to be in place for fine,tuning and ad(ustments based on a Fuarterly review.
    The adverse impacts foreseen at this stage are as follows.,
    (a) 3educing contacts may cause decline in revenue.
    (b) 3eduction in dealer base.
    So%e +ue"ion"
    6. 7ould reducing the contacts hasten the decline8
    /. 7as it possible for team TBA to improve effectiveness by increasing #old accounts
    with revised criteria8
    9. 7ill we be able to persuade these dealers to stoc! and sell a composite mi of TBA
    products8
    5. %s it time for us to consider changes in the Sales $ompensation structure, viA, the
    balance between the fied and variable components8
    I""ue" ,!ic! HBG Need" o Ponder o'er
    6. %s there an emerging conflict of interest between Star Oil and "B# on the future of
    TBA business8
    /. )o we need to reestablish a correlation between the $ore Sales of Star Oil and well run
    +ranchisees of TBA to renegotiate the terms between "B# and Standard Oil8
    9. %s maimising TBA sales and profits adding value to Star Oil8
    5. %s this business model viable in the long term8

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