There are two reasons why this figure is low. The first is that most tire manufacturers receive a 150-day credit to purchase rubber on the international market, which is not the case if they purchase it from domestic producers. And the second reason is that the credit is offered at LIBOR, which is the London Interbank Offered Rate. This is the interest rate at which banks borrow funds from other banks. Other petrochemical materials Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essay Supplier power is high in this category as India limps backwards in the case of oil-based raw materials like carbon black and chemicals which represent quantity terms but are cost drivers students. Additionally, the price of NTC fluctuates based on the prices of Caprolactum (a petroleum derivative), its main raw material. The prices of these materials are beyond the control of the tire industry. Bargaining Power of OEM Buyers OEMs are always in a strong position when bargaining power of buyers is concerned. The reason is that most of them have a contract with their respective tire manufacturer whereby tire prices remain stable for that OEM regardless of the market price. The benefits are given to them because they buy in bulk and the relationship gives the tire company what is called brand association. The scene in the replacement segment is quite opposite as the bargaining power for the replacement segment is moderate due to the fact that the buyers are not so strong as the OEMs. Demand in the bus and truck segment is still high due to poor road conditions in India, and the purchase is in small units. This is moderate as the industry faces opposition from the retreading sector around the world. This cheaper option, around 20 to 25% of the original cost of the tire, has been present in developed countries for around ten years. The threat of new entrants is moderate or can be termed low as the industry is capital intensive and the level of technological expertise required is also very specific. But if we consider the point of view of the domestic industry, this figure can be called high. The reason is that the global tire industry is already experiencing mergers and acquisitions in order to restructure itself. And as of now, India and China will be the hub of business when it comes to the tire industry due to their low production costs along with other relevant advantages. Keep in mind: this is just a sample. Get a custom paper now from our expert writers.Get a custom essayHigh as gradually the foreign players are able to spread their wings over the Indian tire industry and are also limited and each player is moving towards one technology automated such as ERP and SCM. Apart from the mentioned reason, the industry is witnessing a high competition scenario at present, due to various reasons such as rising input costs, low realization of the growing OEM segment where the vehicle segment is not ready to share the burden of tire manufacturers..