Michelin's position in the industry

Résumé du document

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.

Extraits

[...] 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, 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. [...]

[...] How successful has the industry been? What is your explanation for results reported in exhibit 14? Evolution of the Return on Sales ratio (ROS) between 1994 and Industry Big Three Small six Next three Evolution of the Return on Assets ratio (ROA) between 1994 and Industry Big Three Next three Small six The tire industry: In reference to the exhibit 14 and the graphs charts above, the tire industry during 1994 and 1997 was in a constant increase. Between 1994 and 1997, the ROS ratio increased by 17%. [...]

[...] This figure permits to highlight the good productivity of the industry. Although, we can say that the tire industry between 1994 and 1997 was successful with high margins and a constant productivity Big three The three” that describe the three leaders of the tire market (Michelin, Bridgestone and Firestone) have known during the same years exactly the same evolution than the industry in general. For them; the ROS and ROA have been boosted thank to: Better quality product and strong innovations. [...]

[...] - Acquire and manage the different technologies of the tire industry. - Make huge investment to compete with existing brands. - Have an access to the distributions channels (how to negotiate agreements with cars majors when we are a new brand?) - Acquire the loyalty of the end users (How acquire in a very short time a good image of brand that the main firms have built in one century?) Nevertheless, even if the possibility of new tire makers is very low, the probability of relative new entrants is high. [...]

[...] How successful has the industry been? What is your explanation for results reported in exhibit 14? a. the fives forces (Porter's model) Potential entrants: No new entrants clearly defined Suppliers: Syntetic / natural rubber Carbon black Other raw materials Petroleum components account for 60% of raw materials. Buyers: Car makers Chain of retailers Independent retailers Wholesalers/distributors Competitive Rilvalry Substitutes: No substitutes (No others products can replace a car or truck tire) Suppliers: Even if the tire industry absorbs 75% of the world‟s rubber production, negotiation power of the main firms of this sector is limited due to a strong dependence on the price‟s fluctuations of: - Petroleum components which represent 60% of a tire (the oil extraction remains the industry where prices are fluctuate the more and so, very hard to forecast) - Rubber components which account for 50% of a tire. [...]