1.1. Main Elements• Founded in 1889 in Clermont-Ferrand• Shareholders: The Michelin family and the public• limited liability company• Industrial and Tertiary activities: => tire production => travel assistance services • Implanted in 18 countries => 70 production Facilities
1.1. Main Elements
1.2. Leaders, Organization and management styleMichel Rollier, Managing Chairman and Managing GeneralPartner, And Jean-Dominique Senard, Managing General Partner. They are assisted by an Executive Council, comprised of eleven executives responsible for Product Lines, Corporate Services, Performance Divisions and growth regions.
1.2. Leaders, Organization and management style• In the early 20th century, the leadership style was paternalistic => creation for workers of: nurseries, clinics, schools, sportives associations…)• Today, this paternalistic side has given way to a more participatory style => strong corporate culture, social cohesion, motivation, respect for people.
1.2. Leaders, Organization and management styleTo better understand its market, and meet itscustomers needs, The Michelin Group is organizedinto product lines, each one dedicated to an areaof activity with its own marketing, production anddevelopment resources.
1.3. MICHELIN Trade Michelin main sector of activity is mobility • Tires • Travel products selling• Maps (Guides) • Global Positioning System
1.4. Strategic Business Units Tourism andTires (92%) Navigation Tourer Tires MapsHeavy Trucks S.B.U Guides Other Tire Digital products Art of Living Sport Equipments, gifts…
2 – A strategic business: tires
2.1. Tire Production RatesA view on Type of Tires Private TruckTire productions Two-wheeled Civil engineeringrates Agriculture Aviation 3% 1% 7% 6% 51% 32%
2.2.Production Management1. MIXTURE of 8 to 15 2. dovetailing : carcassingredients formationstirred, rolled orextruded. 3. tire mould Curing: 4. Tread Poses -Components bonding, - Sculptures formation by vulcanization Tire fabrication process
2.2. Internal Diagnosis financial resources - Capital : 289 994 844 € 2006 2007 2008 2009 2010Turnover 16 384 M 16 867 M 16 408 M 14 807 M 17.89 BOperating 1 118 M 1 319 M 843M 450 M 1 695 MincomeNet income 573 M 772 M 357 M 104 M 1 049 MOperating 6.82% 7.82% 5.14% 3,04% 9.47%MarginDebt Ratio 88.35 % 69.81% 85.90% 55.10% 20.66% Net debt 1 629 Million € Despite a significant level of debt, the business situation is quite good because of good incomes.
2.2. Internal Diagnosis •Knowhow •patents •a strong presence •A portfolio of activities •human values•outsourcing management •the deindustrialization Management of Michelin in France •high spending
2.4. External Diagnosis
Brief History The development of the automotive industry after the war supported the expansion of the tire industry, which has increased its capital investment, expanded its production lines and grown steadily since the 1970s.Technological innovation of the radial tire has allowed the French to improve the quality Michelin tires and to expand abroad by imposing a standard.In the early 70s, the competition between tire manufacturers has increased in theUnited States and Europe, while in Japan, automakers continued to equip theirvehicles with Japanese tires, knowing that they were inferior in quality the world.This support gave the time and resources back to Bridgestone for the learningcurve, improve and achieve international levels of competition. The tire industry has in the 80s and examples of advanced Japanese firms on U.S. and European markets with the acquisition of Western firms known. Western firms face a formidable challenge, while Japanese firms demonstrate their ability to manage foreign branches. Then came a downturn in demand for automobiles and as a consequence the demand for tires slows. In a global market affected by the recession, tire companies can rely on replacement demand and emerging markets, growth through takeovers, the absorption of firms or strategic alliances.
Microenvironment Analysis Concurrence Their activity is mainly focused on tires development, production, distribution and marketing.These markets areoligopolistic and OTHER GOODYEAR HANKOOK 17.4% SUMITOMO 1.8% 18.4%segmented: firms can TOYO 3.7% 1.9%charge different prices indifferent markets. KUMBO 2% COOPER 2.4% YOKOHAMA MICHELIN 3.3% CONTINENTAL 16.4 % PIRELLI BRIDGESTONE 6.8% 19.1% 3.8%
Microenvironment Analysis ConcurrenceKey People Headquarters Japan• Chairman, President, and CEO: Established March 1, 1931 Shoshi Arakawa Paid-In capital $ 26 B• President: Kazuhisa Saikai Employees (consolidated) 139,822• VP Finance, CFO, CIO, and Director Internal Control Division: Koki Takahashi Vying with Michelin to be the worlds largest tire maker, Bridgestone makes tires for a variety of vehicle types. In addition to passenger and commercial vehicle tires, the company makes tires for construction and mining vehicles, agricultural machinery, and aircraft. It also manufactures a range of non-tire products, including consumer products like golf balls and bicycles, polyurethane foam for industrial applications, and adhesive film for the solar industry. Bridgestone operates some 180 manufacturing plants in 25 countries and sells its products worldwide
Microenvironment Analysis Concurrence Key People Headquarters US • Chairman, President and CEO: Established 1898 Rich Kramer Paid-In capital $18.832 B Employees (consolidated) 72 000 • Strategic Business Unit LeadershipGoodyear Tire & Rubber Co. is engaged in developing, manufacturing, distributing and sellingtires and related products and services worldwide. It manufactures and markets numerous linesof rubber tires for automobiles, trucks, buses, aircraft, motorcycles, farmimplements, earthmoving and mining equipment, industrial equipment and various otherapplications. The company operates its business through four operating segments representingits regional tire businesses: North American Tire; Europe, Middle East and Africa (EMEA) Tire;Latin American Tire; and Asia Pacific Tire. Each of the four regional business segments is involvedin the development, manufacture, distribution and sale of tires.
Porters 5 competition forces model Government Role Potential entrants In terms of Competitors arrival in Asian regulations and market security standards, developm ent policySuppliers Sector competitors Customers and distributorsNon-existentthreat, Michelin has Bargaining Powerits own supplynetworks Substitutes non-existent threat
Microenvironment Analysis Competitive advantage of Michelin•Advantage related to the market: => Important and growing marketin the long term• Advantage related to the product: => Product innovation holder (egMichelin Active Wheel)• Advantage related to technology: => constant innovation
Microenvironment Analysis Competitive advantage of Michelin• The primary mission of the group is to contribute to the progress of goods and peoples mobility, facilitating freedom, security, efficiency and also travel pleasure. • Warrior in China as Uniroyal in• To do so, Michelin relies on its America and Kleber in Europe allow ability to innovate, its products Michelin to occupy the mid-range and services quality, as well as segment. the strength of its other brands. • RIKEN Known in his native Japan, also used as distributor labels. Warrior will experience the same double use.
"Michelin and its suppliers are inseparable Luc Minguet, Chief Purchasing OfficerMicroenvironment Analysis supply and demand analysis: Suppliers"MICHELIN AND ITS SUPPLIERS ARE INSEPARABLELuc Minguet, Chief Purchasing Officer Practical application Michelin’s values Purchasing code Suppliers Regular exchanges of information Collaborative planning, forecasting, and replenishment CPFR to improve supply chain performance
Microenvironment Analysis supply and demand analysis: Customers strong bargaining power of customers => due to its leading position (leverage over distributors)
Microenvironment Analysis supply and demand analysis: Distribution Two distribution networks complement the operational • Euromaster in Europe • TCI (Tire Centers Inc.). In 100% Michelin subsidiary North America Constitution from the progressive is specialize in commercial truck tire acquisition of dealer networks tire sales and service solutions. The specialists manufacture of custom-mold and Distributes Tires and equipments pre-mold truck retreads to the quality and process standards established by Michelin Retread Technologies, and the distribution of passenger and light truck tires to independent tire retailers.
Macro-environment Analysis legal environmentRegulation that requires manufacturers to lower levelsof CO2 emissions from new vehicles disappearance of customs banners, lowertransportation costs and the unification of markets
Macro-environment Analysis Economic Environment lessening Economic crisis context commands Evolution in increasing raw materials cost exchange rates unemployment (rubber, energy, logistics)Average Exchange Rubber prices: rate: -5000 Jobs Removal $ 1,580 per tonne in 2006 1.24 In 2004 - relocation Asia $ 3,200 per tonne in 2010 1.26 In 2006 1.33 in 2010
Specialization strategy • An attempt of diversification in the early 20th century… => Construction of aircraft, michelines, trailers, of landeaux…etc…Mc Kinsey matrixStar Question Markscivil engineering Tire specialist •A refocusing on tireagricultural tire Truck tire in the 1930s2 wheels tiresCash Cows DogsPassenger and light truck tires Aircraft Tire(winter tires)
Diversification strategy In addition to maps and guides as well as services and electronic travel assistance, the Group is developing spin-off product . Michelin LifeStyle is responsible for developing the new products which fall into three broad categories: - Practical products, auto-related and cycle, - Equipment for sport, leisure and work, - Personal accessories, gifts and culture of Michelin.
Internationalization strategy Since 1906, the Michelin Group internationalize to meet market expectations of the tire. Investments in growth areas: Central and Eastern Europe, South America (Mexico) and Asia (China) Objective: To meet the demand of emerging countries- 450 million € of investment in 2008- Tires produced locally- Increasing capacity of production(Plant construction, purchase of machines ...)production capacity of Michelin in emerging countries are expectedto increase by 2012
Communication strategyMichelin uses competition and sport partnersto ensure global visibility and recognition tothe group Michelin has a policy through a marketing campaign for multimedia communication and placing at the center of its European advertising Bibendum.Michelin has developed a travelingexhibition isNunc Bibendumtracing themajor developments of the charactergraphics from the Michelin Man. Michelin incorporates the environmental objective of sustainable mobility with adhering to a policy for sustainable development.
2.6. Employee motivation and skills managementStrategic objective:Search people self- Cooperation, responsibility and initiativefulfillment in exercising their promotedresponsibilities, develop thediversity and richness of an Important training planhuman enterprise Periodic development assessments =>speed mobility, internal promotion (managers and team leaders) Executive compensation includes a variable related to group performance and individual objectives Plan for executives stockoptions + ESOP (69% of employees)
The key success factors •innovation MICHELIN + Goodyear •Quality Differentiation innovation Bridgestone Pirelli Continentalwe can differentiate the presence ofcompetitors in terms of twodimensions, from the key success factors: - Yokohama Sumitomoinnovation and positioning line that is thequality differentiation. - positioning line +
RecommendationsBy applying a strategy of specialization based segments of wintertires, high performance tire and tire leisure, Michelin couldincrease sales.In the event that Michelin would like to conquer the market ofmanufacturer original equipment, to get that new vehicles be shodwith tires of the brand, it would be interesting to focus onredemptions of auto manufacturers. Michelin could well benefitfrom the synergies between two businesses.