Learning from

Environmental Scanning

Apollo Tyres
GROUP 8
 Macro-Economic analysis for
tyre industry
(1)Demographic environment

 Agricultural performance in rural

areas
 Huge population growth
 2,61 lakh villages to be connected to
cities and towns with 16.04 lakh kms
or roads  good transport
(2)Economic environment

 Rising household incomes and higher purchasing power-----

increase in demand for passenger cars-increase in
demand(OEM demand) for passenger tyres-creates replacement
demand after 4-5 years

 Income distribution in India

 Decreasing no of households in the lower income segment

 Increase in GDP---positive climate for business growth--increase

in demand for freight movement;--increase in LCV demand-
increase in tyre demand (OEM)-creates replacement demand
after 1.5 years

 Monopolistic competition

 Falling raw material costs of rubber and carbon black-raw

material intensive-cost of tyres might decrease
(3)Socio-Cultural environment

 Bicycle tyres in unorganised sector

(4)Technological environment

 Accelerating pace of change

 Opportunities for innovation
 Vary the R&D Budgets
1. Necessity of Macroeconomic Analysis

 Economical Factors
 Political Factors
 Social and Cultural Factors
 Technical Factors
 Economical Factors
 Agricultural Performance
 Growth Rate of Industrial Production
 Expansion of Transportation Facilities
 Production of Vehicles
 Increasing Competition
 Other economic factors like Inflation,
Price of raw materials, availability of
skilled labour
 Political Factors
 Export Import Policies
 FDI regulations
 Govt. Expenditure on Infrastructure
 Tax Regulations
 Fiscal Policies
 Social and Cultural Factors
 Income and Purchasing Power of
people
 Lifestyle
 Spending Habits
 Influence of Reference Group
 Technical Factors
 Advancement of Technology
 Process Integration
 Distribution Channels
2.How Should Apollo tyres
tweak their strategy?
 Focus on Retrading of tyres

 Restriction on import of retraded

tyres
 Quality of retraded tyres is
equivalent to that of new ones
 Life of retraded tyres is little less
than that of new tyres.
  Expense of retreading is only 30 to
40% cost of the new tyre
 Focus on Technological
advances
 Tyre industry is highly raw material
intensive
 Raw material cost accounts for 70%
of total cost of production
 Technology is a very important factor
in reducing the production cost
 For Example, use of technologically
improved rubber and machinery to
reduce the production cost.
 Focus on LCV Tyres
 Demand for LCV tyres has increased
by 181% from 1996 to 2004
 This increase is more than the
increase in demand of any other type
of tyres
3.What are the straws in the wind?
Indications that affect future course
 Non-dependency on monsoon and agriculture,
against common belief of the company’s
management.
 Any changes in government policies, such as
taxation, regulations on salaries/wages and
investment in infrastructure.
 Illegal import of retreaded tyres into the
country. This factor should push the
company’s focus on retreaded tyres.
 Dominance of unorganised sector in bicycle
tyres. This indicates a considerable untapped
market, especially in rural areas.
THANK YOU!!