APOLLO TYRE CASE STUDY
-
Upload
ankur-patel -
Category
Business
-
view
9.373 -
download
7
description
Transcript of APOLLO TYRE CASE STUDY
APOLLO TYRES : Learning from Environmental Scanning
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.
Karan Sinha – Strategy Head
The cup of coffee…….
Worried
There is change everywhere..
•Volatile business envt.
• Tremendous economic growth
• Political scenario
• Societal changes
• Technology boom…
we need to do something otherwise we will get devoured by these changes in envt.
Satish Mehra – Chief operating officer
The whole data crunching is going to take a lot of time, cant go for it bcoz of busy schedule.
Hire BOSTON CONSULTANCY GROUP
to scan the macro envt. and present their findings with the impact on their company.
Methodology
To identify factors - drive economic growth in the country.
Selection of final factors - by statistical correlations
Development of ECONOMETRICS MODEL
The Indian tyre industry
• AGRICULTURE
• INDUSTRIAL PERFORMANCE
•TRANSPORTATION
•PRODUCTION OF VEHICLES
• Mainly dominated by Organised Sector.
• Unorganised sector holds bicycle tyres.
depends
seg
me
nt
• 2.61 lac villages
• 6.23 lac kms of metalled roads
• 9.81 kms of unmetalled roads
•4.12 lac trucks •1.27 buses•7.23 lac cars
potential
• RM costs 70% of cost of prod.
• Rubber and carbon prices - low
• Lower costs of prod.
• Free ex-imp policy
RM intensiv
e
The Indian economy
Liberalised foreign investment and exchange regimes.
Significant reductions in tariffs and other trade barriers.
Reform and modernization of the financial sector
Significant adjustment in govt. monetary and fiscal policies.
Higher growth rates Lower inflation
Significant increases in foreign investment.
Resulted in
After 1991…
Economic Growth
Increase in goods
transport
More mobility
Passenger transport
Increase in income
More production
More consumption
Increase transport demand
Good transportatio
n
Efficient movnt. of goods and services
Economic growth
Relationship between Transport and Economy
DEMAND FOR TYRES
3 SEGMENTS
ORIGINAL EQUIPMENT
MAKERS
REPLACEMENT EXPORTS
Primary driver of demand
2nd driver of demand
Less than 10% of total demand
Depends on automobile production
Depends on automobile output in the recent past
1996 1997 1998 1999 2000 2001 2002 2003 20040
100
200
300
400
500
600
Demand Graph
years
DEMAND
IN
LACS
Macro factors selected for econometrics
Macro Factors Rejected
Due to low or negative co relations.
Year ( time)
GDP Absolute
Inflation
Road length
Index of industrial production (IIP)
Service Sector Contribution
GDP per capita
Monsoon and Agriculture
National HighwayWages
Employment, PLR, FDI
SENSEX
lower costs for the tyre industry
Free import of all types of new tyres and tubes
Reduction in tariffs
Increase in production
Liberalized foreign investment
Increase in income
Adjustments in govt. monetary and fiscal policies
Increase in consumption
pattern
OPPORTUNITIES IN MACRO ENVT.
Increasing population
How macro economic analysis has a bearing on company's marketing strategy??
Inflation
Less consumption
Less production
Less transportatio
n
Schemes, discount.
Increase in income
Increase in consumption
Increasing demand of
vehicles
Increase in replacement
tyre segment
Can tie link with
automoblie companies
Eg…
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.