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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
Strengths
 – 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
                Strengths
 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
                Strengths
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
            Weaknesses
Cultural differences
– Structure; STRC vs. SOE


Managers lack expose to modern techniques

Payment methods



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



                 Michelin In China
            Weaknesses
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
          Opportunities
Improve mangement process

“One Big Michelin Family”

Convert from traditional system to
modern management system


                Michelin In China
                Threats
Management of cultural differences

STRC is a SOE

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


                 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
          Benchmarking
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
relationships

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
Questions?
Thank you!




   Michelin In China

								
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