presentation business michelin
TRANSCRIPT
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a better way forward
Ange Rolyne
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1 – Company Presentation1.1. Main Elements1.2. Leaders, Organization and Management style1.3. MICHELIN Trade Guild1.4. Strategic Business Units
2 – A strategic business: tires2.1. Tire Production Rates2.2.Production Management2.3. Internal Diagnosis2.4. External Diagnosis2.5. Strategic Objectives2.6. Employee motivation and skills management
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1 – Company Presentation
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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
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1.1. Main Elements
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Michel Rollier, Managing Chairman and Managing General Partner, 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
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• 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 style
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1.2. Leaders, Organization and management style
To better understand its market, and meet its customers needs, The Michelin Group is organized into product lines, each one dedicated to an area of activity with its own marketing, production and development resources.
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1.3. MICHELIN Trade
Michelin main sector of activity is mobility
• Maps (Guides) • Global Positioning System
• Travel products selling• Tires
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1.4. Strategic Business Units
Tires (92%)Tourism and Navigation
S.B.UTourer Tires
Heavy Trucks
Other Tire
Maps
Guides
Digital products
Art of Living
Sport Equipments, gifts…
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Michelin specializing on a trade
(mobility) developed several strategic
areas while remaining 92% on the tire.
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2 – A strategic business: tires
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2.1. Tire Production Rates
51%
32%
6%7%
3%1%
TiresPrivate TruckTwo-wheeled Civil engineeringAgriculture Aviation
A view on Type ofTire productions rates
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2.2.Production Management
1. MIXTURE of 8 to 15 ingredients stirred, rolled or extruded.
2. dovetailing : carcass formation
3. tire mould Curing:
- Components bonding,
- Sculptures formation by vulcanization
4. Tread Poses
Tire fabrication process
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2.2.Production Management
200 raw materials…
• Basic Materials - Natural or synthetic
rubber - zinc - Brass….
• additives - suffers - steel - textile
- silica…..
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2.3. Internal Diagnosis
Financial resources
Forces and weaknesses
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financial resources- Capital : 289 994 844
€
2.2. Internal Diagnosis
Net debt 1 629 Million € Despite a significant level of debt, the business situation is
quite good because of good incomes.
2006 2007 2008 2009 2010Turnover 16 384 M16 867 M 16 408 M 14 807 M 17.89 BOperating income 1 118 M 1 319 M 843M 450 M 1 695 M
Net income 573 M 772 M 357 M 104 M 1 049 MOperating Margin 6.82% 7.82% 5.14% 3,04% 9.47%
Debt Ratio 88.35 % 69.81% 85.90% 55.10% 20.66%
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2.2. Internal Diagnosis• Knowhow
• patents
• A portfolio of activities• human values
• a strong presence
• outsourcing management
• high spending
• the deindustrialization Management of Michelin in France
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2.4. External Diagnosis
Microenvironment Analysis
Macro-environment Analysis
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Brief History
In the early 70's, the competition between tire manufacturers has increased in the United States and Europe, while in Japan, automakers continued to equip their vehicles with Japanese tires, knowing that they were inferior in quality the world. This support gave the time and resources back to Bridgestone for the learning curve, improve and achieve international levels of competition.
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 1970's.Technological innovation of the radial tire has allowed the French to improve the quality Michelin tires and to expand abroad by imposing a standard.
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.
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Concurrence
GOODYEAR
17.4%
SUM-ITOMO3.7%
MICHELIN
16.4 %BRIDGESTONE
19.1%CONTI-NENTAL
6.8%PIRELLI
3.8%
YOKOHAMA3.3%
COOPER2.4%
KUMBO2%
TOYO1.9%
HAN-KOOK1.8%
OTHER18.4%
Microenvironment Analysis
Their activity is mainly focused on tires development, production, distribution and marketing.
These markets are oligopolistic and segmented: firms can charge different prices in different markets.
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ConcurrenceMicroenvironment Analysis
Key People • Chairman, President, and CEO:
Shoshi Arakawa
• President: Kazuhisa Saikai • VP Finance, CFO, CIO, and
Director Internal Control Division: Koki Takahashi
Vying with Michelin to be the world's 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
Headquarters Japan Established March 1, 1931 Paid-In capital $ 26 BEmployees (consolidated) 139,822
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ConcurrenceMicroenvironment Analysis
Key People • Chairman, President and CEO:
Rich Kramer
• Strategic Business Unit Leadership
Headquarters USEstablished 1898Paid-In capital $18.832 BEmployees (consolidated) 72 000
Goodyear Tire & Rubber Co. is engaged in developing, manufacturing, distributing and selling tires and related products and services worldwide. It manufactures and markets numerous lines of rubber tires for automobiles, trucks, buses, aircraft, motorcycles, farm implements, earthmoving and mining equipment, industrial equipment and various other applications. The company operates its business through four operating segments representing its 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 involved in the development, manufacture, distribution and sale of tires.
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Porter's 5 competition forces model
Potential entrants
Customers and distributors
Government Role
Sector competitors
Substitutes
Suppliers
In terms of regulations and security standards, development policy
Bargaining Power
non-existent threat
Non-existent threat, Michelin has its own supply networks
Competitors arrival in Asian market
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Microenvironment AnalysisCompetitive advantage of Michelin
• Advantage related to the market: => Important and growing market in the long term• Advantage related to the
product: => Product innovation holder (eg Michelin Active Wheel)• Advantage related to technology: => constant innovation
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Microenvironment Analysis
• The primary mission of the group is to contribute to the progress of goods and people's mobility, facilitating freedom, security, efficiency and also travel pleasure.
• To do so, Michelin relies on its ability to innovate, its products and services quality, as well as the strength of its other brands.
Competitive advantage of Michelin
• Warrior in China as Uniroyal in America and Kleber in Europe allow Michelin to occupy the mid-range segment.
• RIKEN Known in his native Japan, also used as distributor labels. Warrior will experience the same double use.
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Microenvironment Analysissupply and demand
analysis: Suppliers
Practical application Michelin’s values
Regular exchanges of information
Collaborative planning, forecasting, and replenishment CPFR to improve supply
chain performance
Suppliers
"Michelin and its suppliers are inseparable''Luc Minguet, Chief Purchasing Officer
"Michelin and its suppliers are inseparable''Luc Minguet, Chief Purchasing Officer
"MICHELIN AND ITS SUPPLIERS ARE INSEPARABLE''Luc Minguet, Chief Purchasing Officer
Purchasing code
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Microenvironment Analysissupply and demand analysis: Customers
strong bargaining power of customers=> due to its leading position (leverage over distributors)
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Microenvironment Analysissupply and demand analysis:
Distribution
Two distribution networks complement the operational
• Euromaster in Europe100% Michelin subsidiary Constitution from the progressive
acquisition of dealer networks tire specialists
Distributes Tires and equipments
• TCI (Tire Centers Inc.). In North America
is specialize in commercial truck tire sales and service solutions. The manufacture of custom-mold and 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.
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Macro-environment Analysis
Regulation that requires manufacturers to lower levels of CO2 emissions from new vehicles disappearance of customs banners, lower transportation costs and the unification of markets
legal environment
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Economic Environment
Macro-environment Analysis
Economic crisis context lesseningcommands
Evolution in exchange rates
increasingunemployment
raw materials cost(rubber, energy, logistics)
Average Exchange rate:
1.24 In 2004 1.26 In 2006 1.33 in 2010
- 5000 Jobs Removal- relocation Asia
Rubber prices:$ 1,580 per tonne in 2006$ 3,200 per tonne in 2010
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2.5. Strategic Objectives
Specialization strategy
Diversification strategy
Internationalization strategy
Communication strategy
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Specialization strategy
Starcivil engineering Tire specialistagricultural tire2 wheels tires
Dogs
Aircraft Tire
Question Marks
Truck tire
Cash Cows
Passenger and light truck tires (winter tires)
Mc Kinsey matrix
• An attempt of diversification in the early 20th century…=> Construction of aircraft, michelines, trailers, of
landeaux…etc…
• A refocusing on tire in the 1930s
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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.
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Internationalization strategy
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 expected to increase by 2012
Since 1906, the Michelin Group internationalize to meet market expectations of the tire.
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Communication strategy
Michelin uses competition and sport partners to ensure global visibility and recognition to the 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 traveling exhibition is''Nunc Bibendum''tracing the major developments of the character graphics from the Michelin Man.
Michelin incorporates the environmental objective of sustainable mobility with adhering to a policy for sustainable development.
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2.6. Employee motivation and skills management
Strategic objective: Search people self-fulfillment in exercising their responsibilities, develop the diversity and richness of an human enterprise
Cooperation, responsibility and initiative promoted
Important training plan
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)
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The key success factors
• innovation
• Quality Differentiation
we can differentiate the presence of competitors in terms of two dimensions, from the key success factors: innovation and positioning line that is the quality differentiation. positioning line
inno
vatio
n
+
+
-
-
MICHELIN
Goodyear
Bridgestone
Pirelli
Continental
Yokohama Sumitomo
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Recommendations
By applying a strategy of specialization based segments of winter tires, high performance tire and tire leisure, Michelin could increase sales.
In the event that Michelin would like to conquer the market of manufacturer original equipment, to get that new vehicles be shod with tires of the brand, it would be interesting to focus on redemptions of auto manufacturers. Michelin could well benefit from the synergies between two businesses.
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