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 – increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, increasing transportation and logistics costs, talent flight as more people leaving formal jobs,
increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, 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 -
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.
High switching costs
– The high switching costs that Apollo Tyres has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
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.
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.
Learning organization
- Apollo Tyres is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Apollo Tyres is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Apollo Tyres emphasize – knowledge, initiative, and innovation.
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.
Cross disciplinary teams
– Horizontal connected teams at the Apollo Tyres are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
Ability to recruit top talent
– Apollo Tyres is one of the leading players in the Tires industry in India. It is in a position to attract the best talent available in India. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Organizational Resilience of Apollo Tyres
– The covid-19 pandemic has put organizational resilience at the centre of everthing Apollo Tyres does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Apollo Tyres has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Apollo Tyres has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses of Apollo Tyres | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Apollo Tyres are -
Interest costs
– Compare to the competition, Apollo Tyres has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
No frontier risks strategy
– From the 10K / annual statement of Apollo Tyres, it seems that company is thinking out the frontier risks that can impact Tires industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Apollo Tyres is dominated by functional specialists. It is not different from other players in the Tires industry, but Apollo Tyres needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Apollo Tyres to focus more on services in the Tires industry rather than just following the product oriented approach.
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.
Aligning sales with marketing
– From the outside it seems that Apollo Tyres needs to have more collaboration between its sales team and marketing team. Sales professionals in the Tires industry have deep experience in developing customer relationships. Marketing department at Apollo Tyres can leverage the sales team experience to cultivate customer relationships as Apollo Tyres is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Apollo Tyres is one of the leading players in the Tires industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Tires industry in last five years.
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.
High operating costs
– Compare to the competitors, Apollo Tyres has high operating costs in the Tires industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Apollo Tyres lucrative customers.
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.
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.
Apollo Tyres Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Apollo Tyres are -
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Apollo Tyres in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Tires industry, and it will provide faster access to the consumers.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Apollo Tyres can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Apollo Tyres to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Apollo Tyres can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Apollo Tyres can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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 -
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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
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.
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.
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Apollo Tyres is facing in Tires sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Tires industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Apollo Tyres can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.