APOLLO TYRES : Learning from Environmental Scanni

Ankur patel (MBA-IB) Amity International Business School

Purpose of the Case Study

How to track and identify opportunities and threats in the macro-environment. How to assess the importance of demographic, economic, political and technological factors.

How to sustain, survive and grow in the changing business milieu.

Introduction
One of the leading tyre companies in India. Turnover of Rs. 2600 crore. 2nd largest in the country. 17th largest in the world. Major Competitors MRF, Ceat, JK Industries.

The cup of coffee.

There is change Volatile business envt.

everywhere..

Worried
Karan Sinha Strategy Head

Tremendous economic growth Political scenario Societal changes Technology boom

need to do something otherwise we will get devoured by these chang

is going to take a lot of time, cant go for it bcoz of busy schedule

Satish Mehra Chief operating officer

Hire BOSTON CONSULTANCY GROUP

e macro envt. and present their findings with the impact on their

Methodology
To identify factors - drive economic growth in the country.

Selection of final factors -

by statistical correlations

Development of ECONOMETRICS MODEL

AGRICULTURE

ly dominated by Organised Sector.

INDUSTRIAL PERFORMANC TRANSPORTATION

ganised sector holds bicycle tyres.

The Indian tyre industry 2.61 lac villages

segment

depends

PRODUCTION OF VEHICLES

RM costs 70% of cost of prod.

6.23 lac kms of metalled roa

Rubber and carbon prices - low

Lower costs of prod.

Free ex-imp policy

potential

RM intensive

9.81 kms of unmetalled road 4.12 lac trucks 1.27 buses 7.23 lac cars

After 1991

The Indian economy

Liberalised foreign investment and exchange regimes. Reform and modernization of the financial sector Significant adjustment in govt. monetary and fiscal policies. Significant reductions in tariffs and other trade barriers.
Resulted in

Higher growth rates

Lower inflation

Significant increases in foreign investment.

Relationship between Transport and Economy

Economic Growth

Increase in income

Good transportation

ncrease in goods transport

More production

Efficient movnt. of goods and se

More mobility

More consumption Economic growth

Passenger transport

Increase transport demand

DEMAND FOR TYRES

3 SEGMENTS

RIGINAL EQUIPMENT MAKERS REPLACEMENT

EXPORTS

2nd driver of demand Depends on automobile production

Primary driver of demand

Less than 10% of total demand

Depends on automobile output in the recent past

D E M A N D IN L A C S

Macro factors selected for econometrics

Macro Factors Rejected

GDP per capita Monsoon and Agriculture National Highway Wages Employment, PLR, FDI SENSEX

Year ( time)

GDP Absolute

nflation

Road length

ndex of industrial production (IIP)

Service Sector Contribution

Due to low or negative co relations.

lower costs for the tyreFree import of all types of new tyres an industry Liberalized foreign investment

Increase in income

OPPORTUNITIES IN MACRO ENVT. Adjustments in govt. monetary and fi

Increasing population Increase in consumption pattern Reduction in tariffs Increase in production

How macro economic analysis has a bearing on company's marketing strategy?? Eg Inflation Increase in income

Less consumption

Increase in consumption

Less production

Increasing demand of vehicles

Less transportation

Increase in replacement tyre segment

Schemes, discount.

Can tie link with automoblie companies

Strategies to stay in step with the changes..

Go according to the customers tastes and prefrences. Youth population is increasing Can go for campaigns attracting youth too go for DRIFTING, RACING, where tyres are a significant driver. Have tie ups with automobile companies. Can have tie ups in the rural areas where consumption of the two wheelers as well as tractors is increasing at an enormous rate.

Straws to the winds

If Apollo tyre makes tie-up with the various automobile industry then in the long run it will serve to the company .

For example: Hero Honda Motors has tie-up with MRF tyres and TVS Tyres.