Apollo Tyres (APLO) SWOT Analysis / TOWS Matrix / MBA Resources
Tires
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Apollo Tyres (India)
Based on various researches at Oak Spring University , Apollo Tyres is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, increasing energy prices,
central banks are concerned over increasing inflation, increasing transportation and logistics costs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Apollo Tyres can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Apollo Tyres, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Apollo Tyres operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Apollo Tyres can be done for the following purposes –
1. Strategic planning of Apollo Tyres
2. Improving business portfolio management of Apollo Tyres
3. Assessing feasibility of the new initiative in India
4. Making a Tires sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Apollo Tyres
Strengths of Apollo Tyres | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Apollo Tyres are -
High brand equity
– Apollo Tyres has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Apollo Tyres to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Apollo Tyres has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Tires industry. Secondly the value chain collaborators of Apollo Tyres have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Apollo Tyres is present in almost all the verticals within the Tires industry. This has provided Apollo Tyres a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Apollo Tyres is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Tires industry. The technology infrastructure of India is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Tires industry
- digital transformation varies from industry to industry. For Apollo Tyres digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Apollo Tyres has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Operational resilience
– The operational resilience strategy of Apollo Tyres comprises – understanding the underlying the factors in the Tires industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Sustainable margins compare to other players in Tires industry
– Apollo Tyres has clearly differentiated products in the market place. This has enabled Apollo Tyres to fetch slight price premium compare to the competitors in the Tires industry. The sustainable margins have also helped Apollo Tyres to invest into research and development (R&D) and innovation.
Ability to lead change in Tires
– Apollo Tyres is one of the leading players in the Tires industry in India. Over the years it has not only transformed the business landscape in the Tires industry in India but also across the existing markets. The ability to lead change has enabled Apollo Tyres in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management in the Tires industry
– Apollo Tyres is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Apollo Tyres in the Consumer Cyclical sector have low bargaining power. Apollo Tyres has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Apollo Tyres to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Apollo Tyres has one of the best training and development program in Consumer Cyclical industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Apollo Tyres in Tires industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of Apollo Tyres | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Apollo Tyres are -
High dependence on Apollo Tyres ‘s star products
– The top 2 products and services of Apollo Tyres still accounts for major business revenue. This dependence on star products in Tires industry has resulted into insufficient focus on developing new products, even though Apollo Tyres has relatively successful track record of launching new products.
Employees’ less understanding of Apollo Tyres strategy
– From the outside it seems that the employees of Apollo Tyres don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Apollo Tyres has a high cash cycle compare to other players in the Tires industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee of Apollo Tyres is just above the Tires industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Apollo Tyres has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Tires industry over the last five years. Apollo Tyres even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Apollo Tyres products
– To increase the profitability and margins on the products, Apollo Tyres needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners in Tires industry
– because of the regulatory requirements in India, Apollo Tyres is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Tires industry.
Ability to respond to the competition
– As the decision making is very deliberative at Apollo Tyres, in the dynamic environment of Tires industry it has struggled to respond to the nimble upstart competition. Apollo Tyres has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the Tires industry, Apollo Tyres needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Apollo Tyres supply chain. Even after few cautionary changes, Apollo Tyres is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Apollo Tyres vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Apollo Tyres has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Apollo Tyres Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Apollo Tyres are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Tires industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Apollo Tyres can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Apollo Tyres can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Manufacturing automation
– Apollo Tyres can use the latest technology developments to improve its manufacturing and designing process in Tires sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Developing new processes and practices
– Apollo Tyres can develop new processes and procedures in Tires industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Building a culture of innovation
– managers at Apollo Tyres can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Tires industry.
Loyalty marketing
– Apollo Tyres has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Apollo Tyres can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Apollo Tyres can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Learning at scale
– Online learning technologies has now opened space for Apollo Tyres to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Apollo Tyres to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Apollo Tyres to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Apollo Tyres to increase its market reach. Apollo Tyres will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Tires industry, but it has also influenced the consumer preferences. Apollo Tyres can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Apollo Tyres can use these opportunities to build new business models that can help the communities that Apollo Tyres operates in. Secondly it can use opportunities from government spending in Tires sector.
Creating value in data economy
– The success of analytics program of Apollo Tyres has opened avenues for new revenue streams for the organization in Tires industry. This can help Apollo Tyres to build a more holistic ecosystem for Apollo Tyres products in the Tires industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Apollo Tyres External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Apollo Tyres are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Apollo Tyres.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Tires industry are lowering. It can presents Apollo Tyres with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Tires sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Apollo Tyres can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate Apollo Tyres prominent markets.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Apollo Tyres in the Tires sector and impact the bottomline of the organization.
Environmental challenges
– Apollo Tyres needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Apollo Tyres can take advantage of this fund but it will also bring new competitors in the Tires industry.
High dependence on third party suppliers
– Apollo Tyres high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology acceleration in Forth Industrial Revolution
– Apollo Tyres has witnessed rapid integration of technology during Covid-19 in the Tires industry. As one of the leading players in the industry, Apollo Tyres needs to keep up with the evolution of technology in the Tires sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Apollo Tyres business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Apollo Tyres can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Tires industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Apollo Tyres
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Apollo Tyres.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Apollo Tyres in Tires industry. The Tires industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Apollo Tyres may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Tires sector.
Weighted SWOT Analysis of Apollo Tyres Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Apollo Tyres needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Apollo Tyres is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Apollo Tyres is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Apollo Tyres to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Apollo Tyres needs to make to build a sustainable competitive advantage.