APOLLO TYRE CASE STUDY

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ENVIRONMENTAL FACTOR AFFECTING ON APOLLO TYRE DEMAND

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APOLLO TYRE CASE STUDY

  1. 1. APOLLO TYRES : Learning from Environmental Scanning<br />Ankurpatel<br />(MBA-IB)<br />Amity International <br />Business School<br />
  2. 2. Purpose of the Case Study<br />How to track and identify opportunities and threats in the macro-environment.<br />How to assess the importance of demographic, economic, political and technological factors.<br />How to sustain, survive and grow in the changing business milieu.<br />
  3. 3. Introduction<br />One of the leading tyre companies in India.<br />Turnover of Rs. 2600 crore.<br />2nd largest in the country.<br />17th largest in the world.<br />Major Competitors – MRF, Ceat, JK Industries.<br />
  4. 4.
  5. 5. The cup of coffee…….<br />There is change everywhere..<br /><ul><li>Volatile business envt.
  6. 6. Tremendous economic growth
  7. 7. Political scenario
  8. 8. Societal changes
  9. 9. Technology boom…</li></ul>Worried<br />Karan Sinha – Strategy Head<br />we need to do something otherwise we will get devoured by these changes in envt.<br />
  10. 10. The whole data crunching is going to take a lot of time, cant go for it bcoz of busy schedule.<br />Satish Mehra – Chief operating officer<br />Hire BOSTON CONSULTANCY GROUP <br />to scan the macro envt. and present their findings with the impact on their company.<br />
  11. 11. Methodology<br />To identify factors - drive economic growth in the country.<br />Selection of final factors - by statistical correlations<br />Development of ECONOMETRICS MODEL<br />
  12. 12. <ul><li> AGRICULTURE
  13. 13. INDUSTRIAL PERFORMANCE
  14. 14. TRANSPORTATION
  15. 15. PRODUCTION OF VEHICLES
  16. 16. Mainly dominated by Organised Sector.
  17. 17. Unorganised sector holds bicycle tyres.</li></ul>depends<br />segment<br />The Indian tyre industry<br /><ul><li> 2.61 lac villages
  18. 18. 6.23 lac kms of metalled roads
  19. 19. 9.81 kms of unmetalled roads
  20. 20. 4.12 lac trucks
  21. 21. 1.27 buses
  22. 22. 7.23 lac cars
  23. 23. RM costs 70% of cost of prod.
  24. 24. Rubber and carbon prices - low
  25. 25. Lower costs of prod.
  26. 26. Free ex-imp policy</li></ul>potential<br />RM intensive<br />
  27. 27. After 1991…<br />The Indian economy<br />Liberalised foreign investment and exchange regimes.<br />Reform and modernization of the financial sector<br />Significant adjustment in govt. monetary and fiscal policies.<br />Significant reductions in tariffs and other trade barriers.<br />Resulted in<br />Lower inflation<br />Higher growth rates<br />Significant increases in foreign investment.<br />
  28. 28. Relationship between Transport and Economy<br />Economic Growth<br />Increase in income<br />Good transportation<br />Increase in goods transport<br />More production<br />Efficient movnt. of goods and services<br />More mobility<br />More consumption<br />Economic growth<br />Passenger transport<br />Increase transport demand<br />
  29. 29. DEMAND FOR TYRES<br />3 SEGMENTS<br />ORIGINAL EQUIPMENT MAKERS<br />REPLACEMENT<br />EXPORTS<br />Less than 10% of total demand<br />Primary driver of demand<br />2nd driver of demand<br />Depends on automobile production<br />Depends on automobile output in the recent past<br />
  30. 30. D<br />E<br />M<br />A<br />N<br />D<br /> IN<br /> L<br />A<br />C<br />S<br />
  31. 31. Macro factors selected for econometrics<br />Macro Factors Rejected<br />Year ( time)<br />GDP Absolute<br /> Inflation<br />Road length<br />Index of industrial production (IIP)<br /> Service Sector Contribution<br />GDP per capita<br />Monsoon and Agriculture<br />National Highway<br />Wages<br />Employment, PLR, FDI<br />SENSEX<br />Due to low or negative co relations.<br />
  32. 32. lower costs for the tyre industry<br />Free import of all types of new tyres and tubes<br />Liberalized foreign investment<br />Adjustments in govt. monetary and fiscal policies<br />Increase in income<br />OPPORTUNITIES IN MACRO ENVT.<br />Increasing population<br />Increase in consumption pattern<br />Increase in production<br />Reduction in tariffs<br />
  33. 33. How macro economic analysis has a bearing on company's marketing strategy??<br />Eg…<br />Increase in income<br />Inflation<br />Increase in consumption<br />Less consumption<br />Increasing demand of vehicles<br />Less production<br />Increase in replacement tyre segment<br />Less transportation<br />Schemes, discount. <br />Can tie link with automoblie companies<br />
  34. 34. Strategies to stay in step with the changes..<br />Go according to the customers’ tastes and prefrences.<br />Youth population is increasing –<br />Can go for campaigns attracting youth too go for DRIFTING, RACING, where tyres are a significant driver.<br />Have tie ups with automobile companies.<br />Can have tie ups in the rural areas where consumption of the two wheelers as well as tractors is increasing at an enormous rate.<br />
  35. 35. Straws to the winds<br />If Apollo tyre makes tie-up with the various automobile industry then in the long run it will serve to the company .<br />For example: Hero Honda Motors has tie-up with MRF tyres and TVS Tyres.<br />

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