Michelin's position in the industry

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Michelin's position in the industry

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Abstract

Michelin's position in the industry is impressive. Michelin is the leader of the tire industry on the global market and the second one compared to Bridgestone so it takes part of the three market leaders with Goodyear at the third position. To become one of the biggest companies, Michelin acquired Uniroyal and also had joint ventures such as with Siam Tire in Thailand. Michelin took the first place though Europe and North America but not in Asia where its position is not as good in term of market shares. However, Michelin had a problem which is quite significant. Although it led the market, it was too slow to implement its own innovations. Except in this last area, Michelin is very strong. It owns performing products, innovates all the time (PAX system or again for example C3M process), manages efficiency and has a reactive control in order to increase its robustness. To conclude, Michelin's position in the industry on the global market is fantastic but it might be able to do better.

What is your assessment of the fives forces, particularly the threat of rivalry, buyers, and suppliers?
1. The fives forces (Porter's model)
2. How successful has the industry been?
How severe are the threats to industry profitability?
What is your prediction about the future industry consolidation? Is more consolidation inevitable?
What is your evaluation of Michelin's position in the industry?

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Extract

[...] These three big competitors are confronted with the same opportunities. Their activity is mainly concentrated on the development, the production, the distribution and the marketing of tires. They involve in strategies of growth and control of the costs by increase of the productivity, the restructurings and strategic acquisitions. They benefit each in their zone of a market on which they, long-time, acquired a dominant presence. Prediction about future industry consolidation Each company aims at the excellence, to become the world the most competitive firm of the sector and to conquer the place envied by incontested world leader. [...]

[...] To speak with figures, Michelin has of market share in 1998 in Europe, it is the first one. It owned 82 manufactures in 19 countries with specific organization. Michelin employed 127000 persons in 1998 compare to Goodyear or Bridgestone with just 96000 employees each one. It makes about 90% of their sales outside its home market so in other words outside the France. Everybody knows that the research and development is very important for a company so that is why this talented company invest more money than all the competitors, Michelin spent of the sales compare to the average which is On global market, Michelin used a multiple of distribution channels which is a good way to sell products. [...]

[...] Another important deal was to reorganize the company with the continuous shift working by 1990 because the tire industry was in a period of restructuring and cost cutting. Michelin has perfectly deal with this change as well. Furthermore, in February 1996 Edouard has changed the company structure by replacing the centralized regional structure by nine operational units (each covering a major product line), this example show again the capability to Michelin to adapt itself to the market and then to respond to change in the tire industry. However Michelin is not perfect we can advice some recommendations to the company. [...]

[...] According to the data collected in the case, we have noticed that the replacement market are more profitable and the car tires are more buy compare to the truck tires principally in Europe and North America. We think that the truck tires market will be growth that why Michelin should be intensify this market by producing more and then sell to the end consumers. Michelin is well known though the world but its subsidiary brands are not that why it should uses marketing tools to add value to these brands. [...]

[...] The capacity of transfer is the degree of facility for a client to move from a supplier to another one. And because the tire majors are in a price and innovation war, it‟s very easy for a dealer to prefer a brand for another one. Potential entrants: Since 1986, the tire industry entered in period of numerous acquisitions, mergers and ventures. The result today is that this industry is leading by few giants (Michelin, Bridgestone, Simitomo ) and few followers and so the threat for those companies to see new comers enter this market is very low. [...]

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