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									     Michelin In China

Designed by
Michael Finsel

                 Michelin In China
       Industry Overview
Michelin does tires

Travel assistance services

Additional lifestyle products

                Michelin In China
       Case Introduction
Michelin in China
– Deals with Michelin’s expansion into the
  Chinese market and difficulties faced

– Our 360 degree evaluation

– Problems and actionable recommendations

                 Michelin In China
     Identifying Problems
Difficulties managing Chinese culture
Investment in State Owned Enterprise
Leisurely payment (Cultural issue)

Biggest Issue: Lack of consistency
throughout organization.

                Michelin In China
         Porters 5 Forces
Substitute Products
– Low cost tires (Kelly’s, Kumho)

Rivalry Amongst Sellers
– Goodyear, Firestone

                 Michelin In China
         Porters 5 Forces
Bargaining Power of Buyers and Sellers
– Remains suspect; buyers seek lowest cost tire
Resource Inputs
– Plentiful, though external issue
– Our case focuses on internal issues
New Entrants
– Very difficult due to competitive market share

                  Michelin In China
    Market Attractiveness
Rapid growth
Increasing industrial capabilities
Low cost advantage in manufacturing

               Michelin In China
        S.W.O.T. Analysis
 – China’s extreme size, diversity

– Foreign invested joint venture company
   • Shanghai Michelin Warrior Tire Co. Ltd (SMW)
   • Adds existing quality brand name

                   Michelin In China
 Michelin’s Principles of Respect
1.   Respect for customers
2.   Respect for people
3.   Respect for shareholders
4.   Respect for facts
5.   Respect for the environment

                   Michelin In China
Distinctive Management System
– Performance and Responsibility Charter
Personnel Management Department
– Satisfy Personnel requirements of groups entities
– Performance appraisals & career management
– Build Professional Individual Advancement
   • Use aspirations and proven skills

                    Michelin In China
Cultural differences
– Structure; STRC vs. SOE

Managers lack expose to modern techniques

Payment methods

                 Michelin In China
Overall Chinese communication and
decision making process
– Complicated transactions
– Conversations left out important facts and
– Lack of cemented trust between Chinese &

                 Michelin In China
Largest: Overall Chinese culture and its
effect on business
– Lack of consistant management principles
– Respect for fixed hierarchal business
– Chinese work toward NOT losing face; creates
  fear of correcting others and their mistakes
– Gaunxi; Chinese concept of mutually
  beneficial relationship

                  Michelin In China
Improve mangement process

“One Big Michelin Family”

Convert from traditional system to
modern management system

                Michelin In China
Management of cultural differences


Formation of new business relationships
– New culture needs change from traditional

                 Michelin In China
             Value Chain
Not a strategic issue; already successful
– Personal Management division
   • MUST execute similar strategy AFTER market in
     China is secure

                   Michelin In China
Must continue to benchmark against other
industry giants
– Firestone, Goodyear

                 Michelin In China
     Competitive Strength
80 plants worldwide

20% of global tire market

Heightened technological abilities

Strong corporate culture

                Michelin In China
  Michelin’s China strategy
Maintain a foreign joint venture

Allow STRC to manage SMW

                Michelin In China
           Action Plan
Focus and align values and vision

Educate and train managers in modern
and contemporary management tactics

Continue to improve business
technologies and strategies

                Michelin In China
           Action Plan
ALL must understand Michelin’s
operating methods

Consistently train management to
produce results based on vision

               Michelin In China
Thank you!

   Michelin In China

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