Michelin Case Study Solution
1. PROBLEM STATEMENT:
The fundamental problem that Michelin fleet solution faced was the conflict of business strategy which shifted from Product-oriented to service-oriented strategy. The company failed to create a value and Brand image of MFS in customers’ mind.
2. Situational Analysis
The Michelin Fleet solution’s internal and external environmental analysis will be exposed under the 5C model. Through this model, the company and the management can oversee the key strengths and elements that guarantee the sustainability and success of MFS.
I. Company
- Michelin has been dealing in the market of tires, offering high quality tires for trucks, and braded cars. It stated as a product-oriented company.
- Michelin has been a leading company offering high quality tires especially in truck category which is the second largest market after self-owned cars. The share in the market grew ever year by 5% on average approximately.
- The company has tremendous success in the tires market followed by Bridgestone. It has created its brand image by continuously offering high premium quality tires that worn out or lasts longer. It has been operating in the market for more than a decade, which has made its root strong in the market with good reputation and strong brand value.
- The company, with passing time, is aiming to shift its business from purely product-oriented company to service oriented company in the same category, by offering maintenance to the tires it produces, however, the sales and revenues are anemic in service section which is making the company’s management concerned about its extension.
II. Customers
- The major proportion of the customers that Michelin caters comprises of the truck drivers, and some big companies like Porsche.
- The market share of Michelin tires is increasing rapidly, depicting high popularity ad reliance ofcustomer base.
- The majority of the truck drivers in Europe requires the set of tires that does not require frequent repairs, in which the punctures and heavyweight carrying is an issue.
- The company designs truck tires in a way that it caters the markets of trucks carrying high pressure load, chemical carriers and fast delivery trucks; all these three categories are well-equipped and acquired by Michelin, with its customizes tire offering.
- Over the time, the company has analyzed that the customers are facing problems with tires like frequent punctures that affect the efficiency of the work, however, to counter the issue, MFS has developed a service which offers service to the truck drivers, but the issue that occurred was the lack of communicating the “value” I will bring to the customers.
III. Competitor
- Michelin is in direct competition with Bridge stone and Goodyear that are giving intense competition to the company in terms of pricing and distribution strategy.
- The market share of Michelin is 19.1% followed by Bridgestone 18% and Goodyear 17.3%.
- Goodyear and Bridgestone early targeted the same segments as Michelin, which are trucks and buses. These both companies are further planning to enter into the service market as Michelin has done.
- Intense competition is present between the three companies with sales margin of 18% each.
- Bridge stone and Goodyear have strong pricing strategy, which matches Michelin and other market players. However, both the companies are lagging behind in terms of tapping new markets, which will at some point, make the product a commodity. Michelin, on the other hand, is working to develop a differentiation strategy by entering into service sector, which gives it a first mover advantage and create distinction in market.
IV. Collaborator
- Michelin is planning to make its distributors its service providers.
- To make MFS successful, the company has to build strong relations with its distributors to win the competition, as the major business is dependent on the knowledge and handling of the distribution staff, which creates value and impact to the customer.
- However, the distributors in the current scenario are afraid to adopt the MFS business plan because in their view it will drive away the sales from the stations which is a hugeloss. Keeping that in mind, Michelin offers significant sales and profit to its distributors due to good brand image.
Michelin Harvard Case Solution & Analysis
V. Climate
- The political situation for the company has been favorable, however, due to economic downturn and inability of Michelin to communicate the value of the MFS, the company faced anemic sales for the three years after the launch.
- The market of tires is a cost sensitive market, where the companies with strong pricing strategy can only survive in the market which is why it is hard to attract customers for MFS and to pay premium for the additional service, which in their vison is just an additional cost.
- The customer base is price sensitive and especially the truck and buses markets are extremely price conscious, which makes it ineffective for the company to launch anything which offers premium quality...................
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