michelin group 6 erik bronger dimitrios koufos uday mudholkar julien st girons rachelle topacio...
TRANSCRIPT
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Michelin
GROUP 6
Erik BrongerDimitrios KoufosUday MudholkarJulien St Girons
Rachelle TopacioPatrick Wiebusch
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The History
• Founded by Michelin brothers André and Edouard
• Looking for new opportunities in 1889 when a cyclist came in with a flat tire
– It was a Dunlop rubber tube glued solidly to the wheelThis made it very difficult to repair
• A few years later they convinced carmakers of the utility of inflatable tires
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Bibendum• At the Lyon Universal Exhibition in 1894, the Michelin brothers
noticed a pile of tires on their stand.
• Edouard said to André: “Look, with arms, it would make a man”
• “Nunc est Bibendum” – Now it is time to drink! Michelin drinks the obstacles!
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The Company
• Family owned
• Special Status – Commandite Structure
• Very closed: “once almost as tough to enter as the no man’s land between the two Koreas”
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Maps
Tires
Guides
Major Products
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BCG MatrixIn
du
stry
Gro
wth
Rat
e
HighRelative Market Share
STARS QUESTION MARKS
CASH COWS DOGS
Passenger Car & Truck
Tires
Maps & Travel Guides
High
Low
Low
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Product Range
Michelin manufactures 28,000 different tires, from bicycle to space shuttle tires
Cars
Trucks
Agricultural
Planes
Bicycles
Space shuttle
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Business Model
Family Business
Engineering Excellence
Research & Development
Innovation
Centralized & Secret
Strategic Planning Welfare of Employees
“Gerance”
Boss Mistress
Number 1
C3M Process
Radial Tires
5% of Sales
Intelligent Tires
Competitive Advantage
“Young Edouard”
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Porter’s 5 Forces
Entrants
Buyers
Substitutes
Suppliers
Rivalry
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Power of Suppliers
• Highly sensitive to fluctuation of raw materials– Natural rubber
– Petroleum Derivatives
• Existence of cartels for natural rubber and petroleum– INRO
– OPEC
• Presence of strong labor unions in European plants
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Power of Buyers
• High buying power of car and truck makers in the OE market
• High buying power of independent dealers through group purchasing– Large retail chains i.e. Kwik-Fit, Speedy
– Small Dealers
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Potential Entrants
• High capital requirements
• Need for economies of scale
• Limited access to distribution channels
• Governmental and legal barriers
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Substitutes
• Growing refurbishment market
• No viable substitute for natural rubber
• Emergence of nanoparticle technology
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Industry Rivalry
• Highly concentrated industry, with C4 over 60%
• Products not highly differentiated – leading to market consolidation
• 1999 industry-wide over capacity of 30%
• Diverse competitors in terms of national origin, cost strategy and management style
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Industry Paradox
Commodity
Highly Technologically Sophisticated
Through:
• Branding
• High Quality
Customers
Industry
Differentiate
Products are...
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Branding Strategy
• Cover all segments with different brands• Offer a full range to dealers
Brand Trio Strategy
MICHELIN
BF GOODRICH
UNIROYAL“good”
“better”
“best”
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High QualityMichelin proves its products’ quality through supplying top Formula 1 and Rally teams
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SWOT Analysis
• Highly reputable brand• Technical reputation• Innovativeness• Not dependent on
home market
• Weak Asian Markets• Subsidiary brands not
well-known• Slow reaction time• Slow implementation of
own innovations• Product driven
company• No MBAs!!
STRENGTHS WEAKNESSES
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SWOT AnalysisOPPORTUNITIES THREATS
• Growth of private brands• Increasing power of independent
dealers• New processes by other major players• Goodyear becoming a low cost
producer• Continental becoming a system
supplier• Monopolistic prod’n of natural rubber in
Asia
• Only 20% - 25% of customers are lowest price buyers
• Sophisticated and “intelligent” tires
• Asia is largest growing segment• Outsourcing of tire & brake
system• Travel guides and maps using
the Internet
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Recommendations
GROWTH STRATEGY
Car navigation systems
Internet, Mobile Phones, PDAs
Strengthen brand marketing strategy
Bibendum balloon (like Richard Branson)?
NASA Space Shuttle Supplier and Concorde Supplier after crash
Enter Asian Market
Joint Venture production agreement with an Indian local Manufacture NPV=17.5MUSD (IRR of 20%)
Diversify
route planning, displaying maps
traffic and weather information
finding hotels and tourist places…
Alliance research for nanoparticle technology BASF or Degussa Huls
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Recommendations
OPERATIONAL STRATEGY
Review inventory policy
Optimization of entire Supply Chain
Upgrade Marketing & Finance
Attain more OE accounts•25% of its replacement car tire sales were generated by OE•Profound impact on the future replacement market
Faster reaction to market
Organizational Changes–Cost Cutting Methods–Training and Incentive Schemes for Employees
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Updates
• In 2000– Michelin stepped up production in the US to meet demand after tire recall by
Bridgestone/Firestone – Michelin revamped its operations in Asia, including a new joint venture in China
with Shanghai Tyre & Rubber
• In 2001 – The European Commission fined Michelin nearly $20 million, claiming the company
engaged in anticompetitive behaviour by abusing its dominant position in Europe
• In 2002– Michelin launches travel portal : www.ViaMichelin.com
• In 2003– Positive free cash flow for the 3rd year running, even after 30% increase in total
investments– Michelin-Babolat partnership for cutting-edge tennis shoes– Michelin produces digital maps for GPS systems
• In 2004– Michelin established a joint-venture with “Apollo Tyres”, India’s second largest tire
manufacturer
2000 200420022001 2003
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Questions &
Answers