Apollo Tyres: Czech Republic Expansion and Business Environment Report

This report examines the business environment of the Czech Republic in relation to Apollo Tyres' expansion plans. It begins with an introduction to the business environment and provides background information on Apollo Tyres, a multinational tyre manufacturing company. The core of the report is a PESTLE analysis of the Czech Republic, covering political, economic, social, technological, legal, and environmental factors relevant to the company's expansion. Furthermore, the report applies Porter's Five Forces framework to analyze the competitive dynamics within the tyre industry, assessing the threats and opportunities for Apollo Tyres. The analysis considers factors such as new entrants, supplier and buyer power, the threat of substitutes, and competitive rivalry. The report concludes with a summary of the key findings and implications for Apollo Tyres' strategic decision-making regarding its foreign direct investment in the Czech Republic.

PESTLE of CZECH
REPUBLIC and expansion of a
multinational company in
CZECH REPUBLIC

Table of Contents
INTRODUCTION...........................................................................................................................3
Main body:.......................................................................................................................................4
Porters five forces of Apollo tyre: ..................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is the collection of external factors such as employees, customer
needs and expectation, supply and demand. These factor effect the function of the company and
how they works directly or indirectly as to accomplish desire goals and objective effectively. As
each business firm has to exit, survive and grow in the relation to the various forces of business
environment and the management must identify the change as to create a sustainable business
model for longer time period (Belas and et., al., 2019). The present report covers the different
areas of business environment and make changes as per the need and requirement of the
environment. In today modern world the business environment is changing rapidly and
management have to focus on the external environment which tend to reduce risk and
uncertainty. The company on which report is based is Apollo tyre which is planning to expand
the business in Czech Republic so the management have to focus on business environment as to
grow and expand the business.
Background of the company
This report is bases upon Apollo Tyres which is an multinational tyre manufacturing
company and it is seventh largest tyre making firm in the world. The organisation was
incorporated in Year 1972 and its first manufacturing plant was setup in Perambra , kerala India.
The company now has four manufacturing units in India one in Netherlands and on in Hungary.
They have nearly 5000 stores across the world and in which 2500 are exclusive outlets. There are
around 16000 employees currently working for firm and company have recently announced two
wheeler company tyre segment with the contract manufacturing company. The company has
second plant in Europe and it was inaugurated by the Hungarian Prime Minister, Viktor Orban,
in April 2017. The company also have opened there first service in Malaysia and the company
sell Verdestein brand tyres in Europe. Organisation is top manufacturing company for passenger
car radial tyre with an initial capacity of 5.5 billion capacity tyre per year which serve both
domestic and export market.
Main body:
Pestle analysis of Czech Republic
This is and framework to analyse the key factor for the company to expand at the global
level which influence an organisation from the outside. This offers people professional insight
into the external forces which impact the organisation. The analysis is flexible, so organisations

can use it in a range of different scenarios. People professionals and senior managers can use the
results to guide strategic decision making. In the context of Apollo tyre the company wants to
expand its business at Czech Republic as gain larger audience and provide better services and
product to increase profit. So the management of the company have to figure out the market of
Czech republic with the assistance of market research effectively.
Political factor: This factor consist of rules and regulation formed by the governing
party within the nation. The Czech republic have liberal democratic party which tend to be stable
and and which is beneficial for the company to expand the explore the business
effectively(Cepel, Belas and Dvorsky 2019). Apart from this, the government of Czech republic
is constantly implementing key economic reforms by privatizing its sector as to create more job
opportunities for the people. Hence this Apollo can take advantage to the political condition
which leads to increase the sales and profitability for longer time duration. In the recent years
governing party have recently utilize the monetary funds to consolidate the market as to increase
the public funds as to enhance the business atmosphere. The countries political system is always
been characterized by the regular struggle to improve the business in order to strengthened to
positioning of the company. However the company focus on FDI and there government have
implemented 100% foreign direct investment which aid nation to increase the economy in a well
define manner.
Economical factor: It is consider as the most vital factor as describe about the GDP,
inflation rate and per capita income of the nation. The gross domestic product of Czech republic
is to predicted around $279.8 billion and the company have open business environment and
different companies have great opportunities to grow and expand the business in lesser time
period. In the recent years economy have expanded the from 5% to 6.8% annually in the
previous year, which have witnessed the highest growth rate of nation in 15 years. Regarding the
FDI country have positive aspect and have stable and labile climate for the investment. The
Czech commercial code and the civil code are largely based on the German system and so
Apollo tyre have understand the economic structure which tend to reduce risk and uncertainty
present in the market. However the nation have excels in significantly in the economic
fundamentals which indicates the strong economical environment and have great impact of FDI
which help in increasing the economy of the company.

Technological factor: The Czech republic infrastructure is based upon the technology as
the company focus on more research and technology. Never less, according to the European
Innovation Scoreboard this has been identified that nation is been consider as moderate innovator
and it is beneficial for the organisation to expand and explore the business effectively. As the
country have more skilled human resources which leads to improve quality product and service
which lead to expansion and growth effectively. As technology have changed the way of doing
business the legislation body of Czech republic is support the innovation and help in increasing
the demand and supply present in the market. Along with this nation have proper infrastructure
and provide effective business structure for different company.
Social factor: This factor consist of individual beliefs , norms and ethnic background as
different countries have there own societal rules in which people carry forward there day to day
activities. In the context of Czech republic the people and the culture are open which makes
easier for the people to work and indulge in activities effectively (Cepel and et., al., 2019). On
the other hand the disposable income of the country is high which increase the power of
spending and it directly improve the efficiency of the nation. Improving working condition,
living condition and gender equality has been a key priority in nation. Apart from this Czech
republic offers various health benefits and employees safety which makes a safer social
environment of the company as to increase the nation capabilities effectively.
Legal factor: Effective legislation constitute a binding set of rules and regulation which
define the legal framework within the nation and organisation to corporate and work effectively.
This factor consist of different rules such as tax laws, international fee charge along with tariff
and other charges. Czech republic have less rules and regulation for exporting the goods which
are essential for the company to expand and explore the business effectively. Although nation
have strict law which covers about taxation policy regarding the flow of goods and services
which tend to bring more FDI as to boos the economy of the nation. The certain rules are applied
for Apollo which help in improving the sales and able to capture large market share effectively.
Environmental factor: This factor came into picture when government take
responsibility for improving the sustainability of nature as well as country. In this decade the
industry have capture the large market share and this have directly impact the environment and
make unhealthier of the people and society to survive. In the context of Czech republic the
government have taken effective measure as to control the flow of carbon emission. The

legislation have set different governing bodies as to regulate and track all the operational
activities of the company to make sure that they are working properly. With this, recycling
within the country increased form 1% to 16% over a decade and is still steadily increasing, and
landfill taxes have been implemented to make nation more eco friendly.
Porters five forces of Apollo tyre:
Porters five forces is the management tool to figure out the industry and understand the
leverage of profitability in the given industry(Civelek and et., al., 2019). For Apollo tyre
manager can use this model as to expand and explore the business and it also help in creating
strategies which is beneficial for the firm to expand and explore the market effectively. Here are
some factor which are explained briefly:
Threat of new entrants: The new entrants in this sector brings out the new ways to
expand the business as this threat to existing company. So this become essential for the Apollo
management to focus more on innovation as this lead to success and growth in a lesser time
frame. Hence the company can also take effective measure of cutting down the price and provide
new value to the proposition as this will reduce the impact of threat to some extent. As to avoid
such kind of entrants the company have to focus on innovation and provide new product and
services which lead to expansion and growth. Along with this firm can develop economies of
scale so it can lower the fixed price per unit and able to capture large market share.
Bargaining power of suppliers: All most all the companies in the rubber industry
purchase their raw material from the suppliers and this make a dominant position in the market.
So this is essential for the organisation to have proper supply of material as produce and deliver
goods to the market. The powerful supplier in this sector use the negotiation power to attract the
higher price from the firm. Apart from this, overall impact of higher suppliers bargain and its
lower down revenue for the company. In order to expand the business Apollo tyre manager have
to develop effective supply chain and have contract with multiple suppliers. Although firm can
bring out new design and also create dedicates suppliers as to maintain the suppliers needs.
Bargaining power of buyers: Buyers have become more conscious about the product as
well services which are offered by the organisation. As user wants to buy the offering available
by paying the minimum price as possible. In result it put pressure for the firm to earn profit for
the longer time period which allow organisation to achieve desire aims and objectives
effectively. As to reduce the bargaining power of user firm have create high end product and

service as create the value for the commodity. Along with this, by creating rapid new innovation
and discount leads to reduce the customer buying power effectively. Apollo tyre may bring
product which tend to reduce the defection of the existing customer and also reduce the
competition in a well define manner.
Threat of substitute: In case the new product or service meets a similar customer which
needs in the different way which slow down the profit earning of the product and service. There
are few alternative are present for the product in the market in which the company operates.
However few companies are present in the which earn very few profit. As this is crucial for
Apollo tyre to have better product and service which is essential for the firm to expand and
explore the business effectively(Davies, Iootty and Zouhar 2019). As to minimize the threat
organisation have to improvise there strategies and make sure to increase the product quality as
this method will help in improving the need and wants effectively. As Czech republic have
different companies which are providing similar service as company have to come up with new
technology which help in gaining trust of nation people effectively.
Rivalry among competitors: If the rivalry among the existing players in an industry
which is intense and this will drive down the price and decrease the overall profitability of the
company. As the market have become more tuff as there are different industry present in the
market with the similar product . This also impact takes toll on overall long term profitability of
the organisation. In the context of Apollo tyre firm have to take effective measure and build a
sustainable differentiation which tend differentiate the organisation from other company.
However firm can build large scale business which tend to increase the market share rather just
doing business at small scale. As company wants to expand the business in Czech republic firm
have identify the market and conduct proper research as to increase market share as well as sales
for longer time period.
Demand and supply scheme for Apollo tyre:
Demand and supply both are interrelated between the quantity of a commodity which
produce wish to sell at the different price and quantity that consumer wish to buy. The main
factor which effect the demand and supply of the product which tend to increase the sales and
profitability of the company (Dobeš, Virglerová and Kramoliš 2019). In result the price is
refereed to as the equilibrium price and represent an agreement between producers and the
consumer of the goods.

In order to create supply the Apollo tyre have to focus on demand and also the pricing
policies which help firm to maintain the demand and supply in the well define manner . For
example in the country like Czech republic the price of the tyre goes up which directly impact
the demand. In result the people of nation does not buy the product which force them to forgo the
consumption of tyre rather than any other commodity. As to manage the demand of tyre in
business as company have to focus on the marketplace and the consumption of cars of particular
nation which help in providing better data which leads to maintain the supply present in the
market. Unlike the demand relation to supply depend upon the economy of the country so
company must determine the price which change demand on the regular basis. The law of supply
says that the higher price, seller will supply more of an economic goods to the user. So
management of the company should manage these laws to determine the actual market price and
the volumes of goods which are traded on the market.
CONCLUSION
From the above states report this has been analysed that business environment is essential
for the organisation and it should be analysed to reduce risk and uncertainty present in the
market. Apart from this firm use Pestle analysis which help firm to analyse the market and
provide better product and service to consumer. Apart from this, it describe about the porters five
five forces which is used by the organisation to figure out the game changing trends early and
can swiftly respond to exploit the emerging opportunities by understanding the market
effectively. Hence there has been demand and supply which must be analysed by the expert of
the company which leads to increase the sales and profitability of the company.

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