Apollo Tyres: Investment Decision Dilemma Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

An Apollo tyre limited is the World’s biggest manufacturer of tyres which formed in 1976. It is one of the India’s five top companies with significant t market share and sales. The company seeks significant growth through organic growth and acquisitions in Africa and Nether land. By acquiring Companies in Africa and Nether land Apollo enters into the global market.

Apollo Ltd is planning to become the top manufacturer of tires in the world and is expected to be in the top ten manufacturers of the world. It seeks significant growth in share price between the years of 2007 to 2010 and is expecting the same in future.

Strengths

Apollo has the widest product variety and is manufactured tires of all segments in the industry. This wide variety of the products provide a wide range of customers. Wide ranges of customers give Apollo advantage over its competitors and reduce the risk of competition from the entry of new suppliers.

By acquitting foreign companies Apollo has spread already its operations to other countries which give Apollo strong geographical coverage and adds value to its global image. Its share price increased significantly in the last few years and hence provides strength to its financial position with a large amount of market share.

By spreading its functions to a global level its global image has become better and also has strong brand awareness about the product. India is the fourth largest rubber producer in the world which gives an Apollo national advantage over other multinational companies who don’t have such national advantage.

By providing after sales services and other client services with introducing a toll free helpline Apollo makes its brand image in India as well as outside the India therefore its sales from outside the India is also increasing year by year.

Weaknesses

Apollo has a low presence in latest car models which is facilitating company to charge premium prices and to get high profits, which other companies are getting by providing the latest models. Apollo also has a low presence in two wheeler and three wheeler segment of the tires.

Other companies like MRF and CEAT are operating in this segment generating more revenues than Apollo and enjoying a greater market share by attracting more range of customer. Therefore the low presence in this segment is biggest constraining in becoming the market leader. It could be the reason of low growth in sales in the years 2010 to 2012.

Opportunities

India is the second most populous country in the world and the income level of the residents is increasing significantly. With the increase in income level demand for automobiles has also increased. Therefore more tie ups with the automobile companies could provide an Apollo competitive advantage over others.

Apollo has a strong brand image among its customers all around the world. Apollo is not currently operating in the segment of two and three wheelers. A number of the Scotties and the bikes are increasing in India significantly due to the greater percentage of youth among the total population. Therefore, by operating in this segment there is a chance for Apollo it increases its sales revenue, profit margin and market share.

India is a country with the second most population strength in the world and mostly are poor’s therefore there is a low wage rate in India. So Apollo could acquire cost benefits and cost reduction as compare the other multinational companies where wage rate is high.Apollo Tyres Investment Decision Dilemma Case Solution

Threats

By acquiring foreign companies Apollo’s risk of currency fluctuation has increased and it has exposed to the currency exchange risk with a greater degree than the other companies who don’t have manufacturing units in other countries than India.

Apollo is operating in such industry or region where many different nations and international competitors are also operating; therefore there is a very high chance of price wars due to saturation in the industry.

Currently, Apollo is not operating in two and three wheeler segment while its competitors like MRF and cheat are operating in this segment, and getting the highest number of sales, margins and market shares. Therefore, its absence in that segment could affect its brand image which may result in loss of customers of other segments also............

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