A Case STUDY A CASEStudy

Introduction

The Case is based on challenges faced by one of the leading tyre companies in India Apollo Tyres. The management wants to : Study the opportunities and threats in the macro environment Understand the importance of political, economic, social, technological, legal and environmental factors Use this analysis to sustain, survive and grow in the changing business scenario

SWOT Analysis

Strengths: Apollo is a leading player in the tyre industry,2nd largest in India and 17th largest in the world Aware, pro-active and committed leadership that recognises the threats and innovate to retain and expand its market share Foresight to outsource the market research to a top consulting firm in order to acquire the leverage to exploit the changes in tyre industry Quick response to changes in macro-economic environment and market conditions

Weaknesses: Lack of strong brand equity which disallows it to compete for market superiority at par with MRF, and confining it to domination in niche market segments Lack of presence in unorganised sector which might come into prominence with rising environmental consciousness No presence in two-wheeler and three-wheeler market segments

Opportunities:
The national thrust in road infrastructure and increase in road lengths

presents opportunities to cash in and expand, for the tyre industry Chance to reduce cost of production through cheap buy-out of raw materials with low carbon black and rubber prices New import-export policies allow free import of new tyres and tubes, thereby aiding production Rising disposable income as indicated by economic growth and rising GDP levels and expansion of the services sector, expresses the idea that the passenger car segment is bound to grow and Apollo tyres can build on this Gap in the radial tyre industry that may be capitalized upon Rising demand for two-wheelers in the rural sector where Apollo Tyres is conspicuous by its absence and can therefore look for diversification and penetration into a new market

Weaknesses: Imports from neighbouring countries like China and Thailand at competitive prices Entry of foreign players into radial tyre industry segment and therefore offering competition to the domestic tyre industry Rising inflation would lead to reduction in demands for original equipment segment Demand-supply gap filled by used and retreaded tyre industry Volatility in prices of raw materials influencing cost of production

Effect of macro-economic factors on companys marketing policy factors Political

Changes in policy related to setting up of new

automotive manufacturing units can lead to collaborations This can increase demand for original equipment market segment Stability of government can influence demand

Economic factors Introduction of import taxes on raw material and equipment can affect the cost of production Level of economic growth affects commercial demand of automobiles

Social factors Lifestyle and preferences of people impact their choice of types of automobiles Social norms impact the decision to own and use automobiles versus other means of transport Technological factors Advent of new technology necessitates collaborations with other leading players in order to maintain a competitive edge Technological developments that may increase or decrease use of automobiles. For example, Internet increases the number of people working from home and thus reduces automobile use for commuting

Environmental factors Physical/geographical conditions affect the ability to use automobiles of different types State infrastructure such as roads is also dependent on location Legal factors Legal provisions relating to environmental pollution by automobiles and waste tyres

Tweaks in marketing strategy

Collaboration and mergers with automobile companies as well as exploring vendor management to meet OEM demand After sales customer support is vital Involve IT to manage and update customer database. Analyse trends to forecast demand in future

Straws in the wind

Indian economy is one of the fastest growing economy in the world, increasing the purchasing power of the people leading to increase in demand of transportation needs Growing concern for environment is going to impact the choice of material used to manufacture tyres With rising fuel costs, the demand for fuel efficient tyres will grow Consumer preferences will continue to change and create opportunities for tyres to enhance the appearance of vehicles