SWOT Analysis of Wheel and Tyre Industry in Swaziland

2. Overview of Wheel and Tyre Services Market in Swaziland

2.3. SWOT Analysis of Wheel and Tyre Industry in Swaziland

2.3.1. Internal Factors – Strengths and Weaknesses

Strengths:

1. Tyre and wheel maintenance is not an option for motorist but a matter of safety and healthy road driving experience and all motorist are aware of the benefits of wheel alignment and balancing in a vehicle.

2. Entry Requirments: The laws and regulations under Commerce Registra of Companies department has in recent years stregthened the registration and operation of such companies such that no one company can operate without a proper licence certified by the Minister for Commerce Industry and Trade.

3. Demand vs Supply of Human Resources:

Unemployment rate in the country allows a business to employ staff at somehow cheaper rates (Gazetted by Government)

4. Few Competitors in the market: In

Mbabane there are only about three tyre and wheel companies and all congested in the city centre, which then allows a business model just outside town to benefit more and obtaining a high market share.

Weaknesses:

1. High cost of obtaining a registration certificate from the Registra of Companies in order to operate fully and legally

2. The process of obtaing registration and licence from the Ministry of Commerce is tedious and cumbersome

3. High Prices: Due to high costs in buying quality machines and maintenance costs of the machines thereafter.

4. High overhead costs: Electriccity costs has been escalating in recent years due to lack of locally produced power. 70% of Swaziland's electricity is imported from South Africa.

5. Insufficient supply of skilled labor: There is only a few skilled and experienced individuals that can be lured from the market which makes them to be a bit expensive.

DOI:10.6814/THE.NCCU.IMBA.030.2018.F08

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2.3.2. External Factors – Opportunities and Threats

Opportunities:

1. Improved Technology: Business opportunity in terms of supplier and buyer relationship. Marketing of products and services as well as

communication between customers and service providers will be effcient.

2. Neighbouring country, South Africa being the power house of Southern Africa: Acquisition of equipment from overseas and maintenance thereof will be easy.

3. The realtive small volume of tyre and wheel services competitors in Swaziland and Mbabane City at large presents an opportunity to exploit even more and more places.

4. The continuous development of the area presents an opportunity to bring the tyre and wheel business customers closer to the site thus growing the business.

5. The Laws and Regulations

governing the importation of Japanese cars present a continuous opportunity for the success of a tyre and wheel industry and increases customer base.

6. Accessing Financial Aid from micro lenders becomes feasible with a business proposition of this calibre considering the fact that the industry's future and prospects looks good.

Threats:

1. Financial Instability of the country:

The economic and political situation giving rise to inflation and interest rates could make consumers avoid tyre and wheel services and rendering them luxury in the process.

2. Our own customers i.e the private companies and government becoming competitors in the future and opting to provide the wheel and tyre services themselves.

DOI:10.6814/THE.NCCU.IMBA.030.2018.F08

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Porter’s five competitive forces in the figure 6 below analyze the competition in this industry and on each of the levels, it determines possible opportunities or threats depending on the strength of the competitive force.

Figure 6: The Five Forces Model applied to the wheel and tyre services industry in Swaziland

Risk of Entry of potential competitors – since there is a small volume of companies in this industry and relatively huge financial capital involved in venturing into it, the risk of entry is considered medium in this industry. Having said that, the possibility of new entrants is not ruled out and it is important that the established companies in trying to lower the risk of competitor’s entry put emphasis on branding and loyalty amongst its customers.

Rivalry among established firms – Tyres and wheel services industry rivalry is very low in

Swaziland and Mbabane market at large, since companies competitive advantage depends mainly on branding and loyalty and location of the tyre and wheel businesses. The fact that there are few companies also engaged in tyre and wheel services, they have the opportunity to

Rivalry Among

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increase or decrease prices without causing price wars. This however does not mean that the industry is not subject to threats of new companies taking risks to provide the tyre and wheel services leading to increased rivalry and price wars. Price wars could lead to reduced profits, laying off staff and to certain extent closure of already established businesses and only well-known brands with loyal customers could survive.

Bargaining Power of Buyers – The type of industry renders the bargaining power of buyers

low since they have a minimum power over the price. However, their only influence on the price could only depend on the choices of suppliers they choose due to how much they charge for their services and pricing by suppliers could either keep or chase customers.

Bargaining power of suppliers – The tyre and wheel industry services industry renders the power of the suppliers high since there are few companies that exist in Swaziland, mainly Mbabane market. In essence, the existing companies have the opportunity to either raise or reduce prices leaving the customers with no option but to buy in.

Threat of Substitutes – The tyre and wheel services industry is exclusive and can never be substituted for anything. So far, there has been no better product to replace tyres and wheels in the motorists’ world and this allows the companies to charge moderate prices and obtain additional profits. On another note, the introduction of other modes of transport systems besides road transport seems impossible in the country. Unlike in Taiwan where rail transport is an extremely important form of transportation due to high population density, Swaziland’s population does not attract train transport and this presents an opportunity for further growth in the tyre and wheel industry.