...Michelin II – The treatment of rebates* Massimo Motta 1 European University Institute, Florence, and Universitat Pompeu Fabra, Barcelona 27 November 2006 Forthcoming in a book on EU competition case studies, edited by Bruce Lyons (Cambridge U.P.). The author has not been involved in this case, and his information about the case was only and exclusively drawn from public sources, such as the Commission Decision and the Court of First Instance’s Judgment. I am very grateful to Chiara Fumagalli and Liliane Karlinger for their comments on a previous draft. 1 * 1 1. Introduction In 2001, the European Commission found that the French firm Michelin had – via its various types of rebates - abused its dominant position in the French markets for new replacement tyres and retreaded tyres for heavy vehicles, and imposed a fine of EUR 19.76 million to Michelin. 2 Two years later, the Court of First Instance upheld the Commission’s Decision in its entirety. 3 In many respects, this case is exemplary of the strict formalistic approach followed in abuse of dominance cases by the European Commission and the Community Courts, which severely limit the possibility of dominant firms to resort to certain business practices, such as exclusive dealing, rebates, tying. Indeed, the EU case law has so far disregarded the actual effects of the allegedly abusive practices (the Commission does not need to prove that exclusionary effects have indeed taken place, nor does it need to show that...
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...Michelin Overview. As a creator of modern day tyre, Michelin as a premium tyre brand has influenced the today’s world through innovation. Whether it be from developing materials for the space shuttle or shaping the way the globe moves through creation of modern day radial tyre, as a market leader Michelin has changed the world through leading the market with strong focus on the future. Market entry to China in 1989 was a right strategic move as predictions on market growth realized. Car and vehicle production increased significantly from 2002 in parallel with the demand of China’s emerging middle class. China’s tyre industry is growing exponentially in contrast to flattening US and European market, with expectation to be the biggest market in the next decade. With high growth and market potential Michelin are unable to succeed in the developing market as well as surrendered their leading market position in European and US market. Several factors can be attribute to unsuccessful market capitalization, however main one is inability to change with the market needs, and the idea that the western successful strategy can be duplicated with same results in Chinese market. Global Strategy Create synergy between Chinese and European market by divesting focus away from complex product portfolio and benefit from the economies of scales that can be produced in China. A European central office with focus on R&D can ensure competence to European customers, whilst simplifying the...
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...Michelin The Michelin Tyre Company Ltd, incorporated in 1905, was set up in 1889 by two brothers, Andre and Edouard Michelin. Now active in more than 170 countries, Michelin operates across all continents of the world, manufacturing and selling tyres for all kinds of vehicles, publishing maps and guides, and operating Specialist digital services. Most people recognize our world famous mascot, Bibendum, 'The Michelin man', looking good considering his age! My own division is concerned with tyres made for heavy goods vehicles over 3.5tonnes, including trucks, coaches, and buses. In the UK and the Republic of Ireland, we have an extensive sales force supporting thousands of tyre distributors, from tyres used in cars and trucks, to those used in specialist industrial and earthmoving equipment. To conduct environmental scanning, we adopt several approaches. We use joint panels with key national and regional trade journals, conducting telephone questionnaires with customers on challenges, issues, and developments in the haulage industry. Our sales Force in the UK and Ireland is responsible for collecting market intelligence, especially on competitors' actions and products. We work with the Road Haulage Association and the Freight Transport Association, which offers us a chance to mix with customers in a non-selling environment, and we belong to the Euro Pool organization, an independent body which acts on behalf of all European tyre manufacturers. Here, we declare our sales on a...
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...Summary: In early 1992, Goodyear Tire and Rubber Company executives were reconsidering a proposal from Sears, Roebuck & Company that was originally made in 1989. The proposal from Sears was for Goodyear to sell its popular Eagle brand tires through 850 Sears Auto Centers in the U.S. This proposal was declined in 1989 because Goodyear management felt that selling their tires through a mass merchandiser such as Sears would undermine the tire sales of company owned Goodyear Auto Service Centers and franchised Goodyear Tire Dealers. However, following a $38 million loss in 1990 and a change in Goodyear top management in 1991, the Sears proposal resurfaced. Two factors apparently prompted Goodyear’s renewed interest in the Sears proposal. First, the Goodyear brand passenger car replacement tire market share in the US had a 3.2 percent decline between the years 1987 and 1991. This share decline represented a loss of about 4.9 million tire units. Second, Goodyear executives believed that nearly 2 million worn out Goodyear brand original equipment tires were being replaced annually at some 850 Sears Auto centers. Goodyear executives believed the failure to repurchase Goodyear brand tires happened by default because Sears customers had such a remarkable loyalty to the company they were led to buy the best tire available that Sears had to offer, which did not include Goodyear brand tires. Problem: Primary: Goodyear’s primary problem lies within their current distribution...
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...William Woosley The Wizarding World of Michelin The Michelin Man, with a wave of his hand, brings the red car to a jolting halt. Standing mere inches in front of the just-stopped vehicle, we see a line of animals staring in awe and fascination at what just transpired. If not for the Michelin Man and his brand new HydroEdge Tires, our furry friends would have been goners. The HydroEdge, the advertisement brags, stops up to fourteen feet shorter in the rain, lasts up to 33,000 miles, and is number one in fuel efficiency; all seemingly great qualities to have in a tire. Looking more closely at the picture accompanying the ad we see a dreary selection of colors bringing life to the stylized cartoon world. A more in-depth examination of the near-road kill reveals a group of semi-anthropomorphic life forms that more closely resemble characters out of a Disney or Harry Potter movie than they do anything in the wild. Perhaps of most interest is the Michelin Man himself, and what exactly he is doing to the automobile to get it to stop in time. Considering the elements here, we can draw a fair conclusion that Michelin is not only advertising a great new set of tires, but voicing their firm support for all things magic and occult. Having been printed in a recent June issue of Sports Illustrated, one is left to wonder the audience of this particular advertisement. The picture has more the look of a Pixar movie poster than anything aimed at selling tires to adults. With a probably...
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...Tire Companies & Rubber Fabian D. Benson Instructor: Sharif Muhammad BUS620: Managerial Marketing 21 May 2012 Michelin North America is the world’s number one seller in commercial and heavy truck tires. Michelin North America has been around (in America) since 1907. It was founded in 1888 by Andre and Edouard Michelin brothers from France. Throughout the years this company has been in some stiff competition; like all companies go through that produce a certain product that is vital to the needs of companies, businesses, and individual needs. The competition has been Firestone, Bridgestone, and Goodyear. Although Michelin tires are by far the better product in the tire business out of the three brands, now that the economy is at one of the worse points ever; individuals are looking for the least expensive brand and product. When you have the best product it normally means you have the best technology, equipment to make the product, masterminds behind the ideas, and best goods and services. Along with being the best there is a high cost. Over the years Michelins tire prices have gone up with the cost of rubber. There are two types of rubber that Michelin uses: 1) Natural Rubber and 2) Synthetic Rubber. Synthetic Rubber is the cheapest rubber and the natural rubber is the most expensive. Rubber is a material from latex sap trees that is vulcanized and used in various products; it is the most important piece that goes into a tire. When looking at rubber...
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...Do you think Bridgestone should have manufacturing facilities in US? Why? Why not? Bridgestone is currently world’s 3rd largest tyre manufacturer with a market share of 10.2%. Its revenues are skewed in favour of Asia and Oceania market where its competitors Goodyear and Michelin are trying hard to make a dent to its business. Moreover Bridgestone’s market share in US (US accounts for 45%of the world tyre market) is just ~2%. 1980s is seeing a lot of consolidation in the tyre industry and three players have emerged as bellwethers of the market. They are Goodyear, Michelin and Bridgestone. Company | Capacity | Main Geographical area of business | Aims to enter | Goodyear | 40 plants in 26 countries. 4500 dealers, 2000 company operated stores | US (market leader). In the replacement market, it had a full line of tyres | Asia market | Michelin | 43 plants in 16 countries | Europe - 40%US - 11% | Asia market | Bridgestone | 15 plants in 6 countries. 2500 dealers in US | Japan – 46% | US and Europe markets | Bridgestone should have manufacturing facilities in US. We base our decision on the following analysis: 1. Bridgestone has a market share of 46% in Japan. It has acquired 4 manufacturing plants in the Asia Oceania region. It is the market leader in this geographic market. It has been able to set up strong OE relationships with automobile manufacturers as well. Almost half of the tyre shops in Japan sold Bridgestone tyres. Therefore it is well positioned to protect...
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...Goodyear: The Aquatred Launch (Condensed) Elaborated by: AMIRA ATHIMNI MERIEM BEN YEDDER REEM NASSAR RYM BELHADJ 0 Dr. Mehdi ZAHAF Mediterranean School of Business 17/10/2012 Outline Executive Summary ......................................................................................... 2 1. a. b. c. Situation analysis .................................................................................... 3 The market ................................................................................................ 3 Micro-environment ................................................................................... 3 Macro-environment .................................................................................. 4 2. a. b. c. d. SWOT analysis ........................................................................................ 4 Strengths ................................................................................................... 4 Weaknesses ............................................................................................... 4 Opportunities ............................................................................................ 5 Threats ...................................................................................................... 5 3. Main decisions ......................................................................................... 5 1 Executive Summary “The Aquatred” is the new innovative tires...
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...STRENGTHS Size Product diversity Total market coverage An American company International sales Generally increasing sales revenue since 1991 Brand recognition Brand loyalty Reduction in debt since 1991 Introduction of new tire lines The Blimp P/E ratio The world’s No. 1 tire manufacturer Patents: 2,903 Trademarks: 5 WEAKNESSES Size Declining stock price Internet sales Dealer contracts that my be inhibiting Internet sales Layoffs Sales declines in Europe, Asia, Latin America OPPORTUNITIES New international markets: China, India, Russia New international markets: Internet sales R&D expenditures\innovations THREATS Competition: Internet sales Wholesale club stores (tire sales) Bridgestone Cooper Continental Michelin Pep Boys (auto service stores) Midas (auto service stores) Auto Zone (auto service stores) Independents OVERVIEW OF STRENGTHS Size still matters and Goodyear has size. Its 1999 sales were $12,881,000,000 representing a one-year sales growth of 2%. Its net income was $241,000,000, a lot of money but a decrease of 64.7% from one year earlier. Despite that drop in net income, Goodyear paid a $.30 dividend. Its net income also beat Wall Street’s expectations. It has become the world leader in tire sales as a result of its alliance with Japan’s Sumitomo Rubber Industries. Goodyear ranks No. 130 in Fortune Magazine’s 500 list of large companies. Its product diversity includes the manufacture and sale of tires, industrial and consumer products from rubber including belts, hoses...
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...Laure MULLER BS5 2D STRATEGIC MARKETING TRENCO STUDY CASE 10.18.11 ISM MBA PROGRAM 1 Laure MULLER BS5 2D Introduction The operating conditions of a tire are more severe in Africa than in the rest of the world, said Alfredo Nembo, sales manager of Pirelli to the African continent. Weather, road conditions, intensive use of vehicles: tires that travel 100,000 km in Europe do not exceed 35 000 km in Africa. But Pirelli has solid experience in areas comparable to those of Africa: South America, Turkey. Our truck tires, for example, are enhanced compared to that Pirelli sells in Europe to better respond to high temperatures and loads. ".The African market and in our subject the Egyptian market is different from what we know in western countries. The marketing approach is different and strategies ...
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...This assignment shall be analysing the case study on Michelin .An exploration of Michelin's strengths and weaknesses both internally and externally, and most importantly identifying the management challenges faced by Michelin. This assignment shall thoroughly address how the challenges can be solved using the principles that were mastered during the study of Strategic Management. To find the strengths of Michelin, one will be looking at what the company is good at and also what they are doing well at. According to the case study ,the weaknesses are what Michelin is poor at and those things they need to improve on for Michelin to be successful and to grow as a company. So therefore their weakness are their major management challenges. By being able to look at the strengths and weaknesses of Michelin both internally and externally one can start to plan for Michelin in the future and to be able to look at what Michelin is going not so well and find steps to sort these problems out, which is what this essay will address. Some of Michelin's internal strength is that at the present they have three lines of production to follow. They produce the Michelin guide, and road maps, although their main line of production is their tyres .So the fact that Michelin is in more than one line of production gives them the competitive edge over their competitors. Michelin is committed to safety and is committed to keeping up with research and development in all their production and products...
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...Organizational Impact Paper Marian Robertson OI/361 August 12th, 2014 Paul Sam Organizational Impact Paper Riordan Manufacturing Inc is one of the driving firms in plastics injection molding. Riordan has companies in China, Michigan, California, Georgia, Albany and San Jose. The owner of the company is one of the Fortune 1000 enterprises better known as Riordan Industries. The company is distinguished by the imaginative art in designing plastics, which is the company’s innovative skill. The company has earned international recognition because of the design capabilities. One of the major products that Riordan manufactures are the heart valves, custom plastic parts, various sizes of electric fans medical stands and plastic parts. The impact that innovation, design and creativity have on the strategy at Riordan Manufacturing is to the designs of the company to be the leading company is using the material polymer to serve the needs of the customers and to make sure that they have answers to their challenges. Riordan also wants to obtain and achieve sensible profitability. For the success of the company, they will have to have a production plan that strong and grounded. In the processing stage, Riordan’s business in China serves the needs of handling of shipping to the company adequately. Therefore, the company has made a decision to put together a design of supply chains of electric fans to China. This plan will let Riordan know the size of resources...
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...THE WIDE LENS - What successful innovators see that other miss Introduction The discussion topic is the difference between great innovations that succeed and great innovations that fail. In particular, it is worth noting that company’s success depends not just on the ability to execute its own promises but also on whether visible or hidden partners deliver on their promises too. In other words, company’s success depends not just on its own efforts but also on the ability, willingness, and likelihood that the partners that make up its innovation ecosystem succeed as well. Thus, a new perspective must be adopted, a wide lens, with which to assess a company strategy using a new set of tools and frameworks that will expose a company hidden sources of dependence. The Innovation Behind Spot and Avoidable Failure Although great execution is a necessary condition for success, it is not enough. Indeed, while the execution focus draws attention to important aspects of a company strategy (developing customer insight, building core competencies, and beating the competition), it creates a blind spot that hides key dependencies that are equally important in determining success and failure. Examples: Philips Electronics despite sterling execution and rave reviews, Philips's high-definition TV flopped, because its value creation depended on other innovations (the high-definition cameras and transmission standards necessary to make high-definition TV work) that failed to arrive on time...
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... Goodyear’s principal business is the development, manufacture, distribution and sale of tires throughout the world. In addition to Goodyear brands tires, the company owns the Kelly-Springfield Tire Company, Lee Tire and Rubber Company, Delta Tire and they manufacture private-label tires. Goodyear was the world leader in tire production until November, 1990, when Groupe Michelin acquired the Uniroyal Goodrich Tire Company. Goodyear controls 20 to 25 percent of the world’s tire manufacturing capacity and about 37 percent of the U.S. tire-making capacity. The Goodyear brand is the market share leader in North America and Latin America, number two in Asia outside Japan behind Bridgestone, and third in market share in Europe behind Michelin and Pirelli. World tire production in 1991 was approximately 850 million tires, of which 29 percent were produced in North America, 28 percent in Asia, and 23 percent in Western Europe. Ten tire manufacturers’ account for 75 percent of worldwide production. The three largest tire manufacturers account for almost 60 percent of all tires sold worldwide. Groupe Michelin, headquartered in France, is the world’s largest producer, Goodyear is the second-largest producer and Bridgestone Corporation, a Japanese firm, is the third-largest tire producer. The tire industry is divided into two end-use markets: 1) The Original Equipment Tire Market. The original equipment tire is sold by the tire manufacturers directly to the automobile and truck...
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...foreign and domestic, such as Michelin, Firestone, Bridgestone, etc. (Also, “private label” tire manufacturers fit in this category?) The industry had, in the last year, experienced many acquisitions or takeovers of smaller tire companies by dominant firms with a bigger market share. The disappearance of the smaller players was indicative of a mature market, thick with price competition, yielding economic conditions that have almost completely annihilated profit margins for all players. At the same time, consumers were becoming savvy about the need for reliability and longevity in their replacement tires, which made it critical for surviving companies to adhere to the new demands. Of all the competing tire companies, Michelin and Bridgestone, in particular, posed the biggest competition to not only Goodyear as a company, but the aquatred as a superior tire. The major key points are that: i. Michelin and Bridgestone were planning to introduce a new tire in the next two years with an improved warranty of 80,000 miles. This was as a result of increasing demand for longer-wearing tires by the typical consumer. In contrast, Aquatred only had a 60,000 mile warranty and this point of product differentiation was bound to have an impact consumers. ii. Michelin had a much stronger brand loyalty in the market that Goodyear did. This was as a result of Michelin successfully positioning its products amongst quality and value conscious buyers. iii. Michelin had recently...
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