Apollo Tyres Case Solution

2. Introduction

Apollo Tyres Limited was formed in 1972, 47 years ago in Gurgaon in India. It has since grown into a globally trusted name when it comes to the manufacture and sale of tyres. Their corporate headquarters are still based out of Gurgaon, India; however, their presence scales over 100 countries globally (Apollo Tyres, 2018).

The Apollo tyres company markets its tires under our two separate global brands named: Apollo and Vredestein. The tires are sold globally via a giant network which comprises exclusive Apollo outlets, multi-brand stores and other branded retailers. The tires are manufactured in the multiple manufacturing facilities based in India, Hungary and the Netherlands (Apollo Tyres, 2018).

At the end of the financial year 2018, the company clocked a turnover of US$ 2.28 billion, backed by a global workforce of approximately 16,000 employees (Apollo Tyres, 2018). On March 31, 2018, Apollo Tyres traded in India on Bombay Stock Exchange as well as National Stock Exchange. Over 59% of shares are held by the general public, various government entities as well as banks and financial institutions making it a 41% privately owned firm (Apollo Tyres, 2018). Apollo is one of the few Indian companies that have grown to international recognition with a focus on quality and delivery of the product as per the demands of the market.

3. Resources and Competence Analysis

3.1. Value Chain Analysis

Value Chain is one of the core competencies developed by Apollo tyres over time. The system has been developed over the years to provide the customer with the best possible quality in tires. The value chain analysis is as below:

Firm Infrastructure

The firm is a family run business which is listed on the stock exchange. The holding pattern is such that the family retains 41% and the rest 59% are floated in the stock exchange (Apollo Tyres, 2018).

Human Resource Management

Apollo Tyres has an employee strength of 16,000 employees globally that have been developed to further the brand (Apollo Tyres Corporate, 2019b).

Technological Development

Apollo tyres have developed the technology needed to meet and cater to international standards. This is proven in the fact that renowned car producers such as Audi, BMW and Jaguar recommend Apollo tires (Apollo Tyres Corporate, 2019).

Procurement

Procurement by Apollo tyres is done on the level that is internationally safety standards approved and in such a way that production does not stop (Apollo Tyres Corporate, 2019).

On the primary activities, inbound logistics is a very important factor as raw materials are mostly brought in from India which has lower prices. Apollo has one of the most advanced manufacturing facilities in the world which complies with all safety regulations making it a unique manufacturing site. Apollo Tyres has established its retail outlets allowing them to provide a distinct marketing and sales strategy as well have superior control over outbound logistics. Apollo leaves behind its peers when it comes to after sales services provided which is why major car manufacturers trust its tires (IBS Center for Management Research, 2011).

4. VRIO Analysis

Apollo tyres have been successful in turning around its business by engaging in key strategic makeover at the right time. The product offering is valuable since the quality provided is best in class (Apollo Tyres Corporate, 2019). The manufacturing process is set up to produce quality products from the get-go and ensures a system that is not easily replicable by competitors. Quality is so important when talking about tires since it not only guarantees the driving experience but is also a tool for the safety of the driver and passengers; no one will be willing to take a risk on substandard tires which could be a threat to safety. The unique ideology of using dedicated outlets provides buyers with an exclusive feel which in turns translates into a strong competitive advantage. The after sales services are unique and provide Apollo tyres with a medium-term advantage since the service depends on in-depth staff training. 

5. Internal Analysis

5.1. TOWS Analysis

One of the core advantages that Apollo tyres have is the presence of already well-established network coverage across Asia, Europe and Africa which provides the company with the opportunity to expand into emerging markets (IBS Center for Management Research, 2011). So far, the company has had a sound financial position which has enabled it to establish its manufacturing plants in many countries such as the likes of India, South Africa, Zimbabwe and Netherlands. Its diverse product portfolio has contributed significantly to establish 4000 dealerships in India and over 900 in South Africa; despite that, the company seems to fall back in the two/three-wheeler segment and has a knowingly low presence in the latest car models' segment (IBS Center for Management Research, 2011). With the increased and effective brand awareness of the product and the rise in demand due to improved infrastructure availability, Apollo is on its way to get recognition in the market with the acquisition of US-based Cooper Tire and Rubber Co. which can be expected to be completed by the year end (IBS Center for Management Research, 2011). However, they still have a long way to go before they can claim themselves as the established market leaders (IBS Center for Management Research, 2011). But before Apollo can do that they face strict competition from both national and international brands which has led to significant price wars as innovation has made the attainment of technology cheaper. Additionally, the decline in the production of raw material such as rubber and the volatility in their prices pose a threat to the prospects of the unparalleled growth of the company (Kanwar, 2015). One factor that Apollo can use in its favour is its ties with automobiles companies as it is a major player in the B2B market. Yet the extent of effectiveness of having an international presence can be curtailed by any change in government policies related to export and import duties, as well as taxes on the automobile industry (IBS Center for Management Research, 2011).

For Apollo tires, the success has been in Focused Differentiation. The product offering is luxury in terms of quality, safety offered and safety guidelines met. There are few other competitors out there that offer amazing quality on such prices. With the Apollo brand being recommended by luxury car manufacturers such as Audi, BMW and Jaguar; these are not typical tires (Apollo Tyres Corporate, 2019). This strategy has worked for Apollo since it is a luxury product for which the higher you pay, the higher the rewards and benefits. All of the other options do not apply to Apollo since the main aspect of business conduction for them is the need for quality. And hence they can be priced at a margin as long as they guarantee quality (O'Keefe, 2018).  There are some other options that may be of interest to Apollo if they seek to expand into other market sections such as two-wheeler tires which are generally priced lower and hence will use the Hybrid or Differentiation strategies to be able to gain access to the market and successfully take over market share (Narasimhan, 2016).

5.3.  Market entry strategies

Based on their strengths, there are numerous market entry strategies that can be implemented by Apollo tires. The figure below enlists the ones being used and those not being used. When it comes to market entry strategies, it all depends on the organisations vision and management decision. In case of Apollo Tyres, the management is family-based, and as is typical of such companies, all entries have been well thought out and made in a manner to allow 100% control to remain within the company itself (Kanwar, 2015). Apollo has established manufacturing plants outside of India which is company-owned; resulting in Foreign Direct Investment with the establishment of company branches and retail outlets (IBS Center for Management Research, 2011). The export market is hugely catered to from the India plant which exports to Apollo stores as well as to the multi-brand stores that resell tires and car accessories. Another avenue used by Apollo is the bulk sale of tires to manufacturers of vehicles (Brouthers & Hennart, 2007).