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 ,because unlike other companies they do have a large research facility and road circuits which they use to test their tyres.
The weaknesses faced by Michelin which however is their management challenges include among others, the discrepancies in cultures for instance since Michelin is a multinational company, in countries like China there is conflict between the local culture and the French culture. This will be further explored in detail as the essay shall also shed light on how it can be addressed using the strategies like, think globally act locally

Table Of Contents
Introduction...................................................................................3
Discussion.....................................................................................4
Management Challenges.............................................................. 4
1.1 Challenges as a multinational company.................................4
1.11 Challenges in Europe............................................................5
1.111 Challenges in Europe and abroad.......................................6
Table 1 SWOT analysis of Michelin............................................7
2.1 Strength.................................................................................. 7
2.11 Weakness..............................................................................8
2.11Oppotunities.......................................................................... 9
2.1VThreats..................................................................................9
Conclusion..................................................................................10
Recommendations......................................................................11
References..................................................................................12

Introduction
Michelin company proves itself as the global leader in tire innovation, it provides forward-looking solutions to help the road transportation industry in its bid for attaining competitive edge and to meet society‘s ever pressing need for safety, fuel efficiency, and respect for environment. Michelin had been the first to patent the radial tires, which had been widely used and famous in the automotive industry. The company has had a century of progress and innovation in tire design and many product firsts. Despite the increasing material costs, Michelin has been able to increase its net sales and operating income significantly because of its strong brand portfolio of tire products. As it is presently, it is the world‘s number one tire manufacturer with a 19.4-percent market share. Michelin is currently the undisputed leader in the most demanding technical segments, and it provides design-advanced solutions to help the road transportation industry (Michelin, 2006).
Michelin offers a number of highly reliable products and services such as tires, distribution and services, mobility-enabling services, ground linkages and pressure monitoring systems, via Michelin, and Michelin lifestyle products.
In addition, Michelin has an extensive brand portfolio. All market segments are covered by leading national brands and well-positioned private brands: a large portfolio of strong regional brands such as Uniroyal in North America, Kleber in Europe, Warrior in China – and the Group‘s 2 world-class brands: Michelin and BFGoodrich (Michelin, 2006). This essay will assess the group‘s brand strength and management challenges. This essay will run a SWOT analysis of Michelin. It aims to provide strategies that Michelin can use to solve these challenges.
The analysis of this study will provide critical information on how to enhance the brand management and relationship-building marketing strategies. The present macroenvironmental changes in the global marketplace make it necessary Michelin to customize these strategies. Those strategies should be consistent and supportive of the overall organizational goals of this company. Michelin should analyze its business norms to make them responsive to external changes while still maintaining competitive advantage.(salkind 2006)

Discussion
1 management challenges
1.1 challenges as a multinational company
In this essay China shall be used as an example of management challenges faced with Michelin , since Michelin is a multinational company ,the major management challenges facing Michelin in countries like China where the company is now well established, is the conflict between the local culture and the French culture, the discrepancy in organizational characters between Michelin and the acquired Chinese company, and the gap between the organizational needs of the strategy.
Chinese culture is one that comprises of power distance and humility, that is to say people had great respect for fixed hierarchical relationships especially in workplaces. Conventional business structures reflected this, with the leader having natural authority. The top down tradition made subordinates less proactive. This led Promotions at work in many cases to be determined by age rather than the employees ability. The pay structure also rewarded seniority rather than merit. The “iron rice bowl mentality” symbolized guaranteed lifetime employment, leading to minimal pay differentials and no accountability.(jackie sheehan 2002)
Putting into action career management system was one of the main challenges in terms of hierarchy. Traditionally, the Chinese viewed functional departments as more important than supporting functions such as IT and personnel. Chinese employees respect functional managers a lot. They think that personnel people are closer to the general manager and feel that the career manager is another person jus looking at them
The Chinese had a high-context and non-verbal style of communication. It was high context in the sense that certain knowledge was already assumed, as opposed to a low-context culture, where more information was exchanged during each communication. Non-verbal communication included implied meanings, non-verbal cues, indirect statements and symbolic language. In addition, the Chinese were comfortable with silences or pauses in conversation. The indirect nature of Chinese communication came from a long history of close families and interpersonal relations. It assumed a shared understanding between communicants. For instance, Chinese businesspeople would rarely say “no” directly in response to a suggestion. Instead they would often propose that the matter be studied further. Similarly, open-ended questions were common, avoiding the possibility of forcing someone into a corner by requiring a “yes” or “no” answer. Rather than valuing directness, the Chinese were more likely to be polite but vague. Michelin's management placed more emphasis on processes and structures, allowing people to delegate more. Chinese managers were concerned that the rigid structure was an obstacle to speed in the decision-making process. Michelin required them to follow procedures to solve problems in a step-by- step manner as opposed to finding short cuts and quick fixes to solve problem. Having considered all these cultural differences and how its causing problems in the company as a multinational company the best strategy to use in order to move on from here is to use the principle of corporate culture where by the beliefs and behaviours that determine how Michelin's employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires..The management should also start to think of the principle and strategy of THINK GLOBALLY, ACT LOCALLY (Potter 1985). Michelin and the local employees' mindset and behaviours. In addressing these differences, Michelin must decide: whether it should be localized, how to balance between globalization and localization, and how to choose the timing for globalization?
1.11 Challenges in Europe
Michelin's present strategy consists of the competitive efforts and business approaches that managers tactfully use as a way of pleasing customers and to compete successfully. It represents management‘s answers to such fundamental business questions whether to concentrate on a single business or build a diversified group of business that caters to a broad range of customer or focus on a particular market niche. Such a strategy really reflects the managerial choices among alternatives and signals organizational commitment to particular products, markets, competitive approaches, and ways of operating the enterprise (Rangswamy et al 1993). The market is very concentrated and the competition is very stiff. Bridgestone is the leading player, with a 20.9-percent market share while Michelin follows closely with 20 percent. Sixty-six percent of the market‘s total revenues are generated by the four leading players in the industry. One reason for this level of consolidation is that the market at the moment has fairly low margins.. In order for Michelin to have excel over rivals like Bridgestone they should have a sustainable competitive advantage which has distinctive capabilities or resources that its competitors does not have. Kay (1999) argues that resources can be considered as unique or reproducible. A unique resource, for example the brand name Michelin, can be considered as an important asset that can be a basis of sustainable competitive advantage. Reproducible resource and capabilities, on the other hand, pertain to assets that can be easily copied or reproduced by competitors and do not offer the company the distinctive competitive advantage. A good example of a reproducible resource would be the process of manufacturing of passenger tires. Many are now able to produce passenger tires on their own and can learn the process more quickly and easily.
1.111 challenges in Europe and abroad
The raw material prices are getting higher by the day as world's economy continue to decline, this in turn is adversely affecting the bottom line of the company. The prices of natural rubber rose by nearly 29 percent in the last decade, the rise in natural rubber prices remained below 10 percent, but synthetic rubber prices increased by more than 18 percent. There is still a forecasted increase by a further 25 percent and petroleum-based products are forecasted to witness a price increase of 18 percent. This is likely to impact the margins of the company ,as so far the company is greatly affected. The impact on Michelin‘s margins would be more if crude oil prices and natural rubber prices soar to higher levels. This is a typical macroenvironment problem and really affects the company's competitive advantage.
2 . SWOT ANALYSIS
The SWOT analysis have been utilised in this assignment because it will help in the understanding of the core competency of Michelin that would give it a distinctive competitive advantage over its rivals. Above all, it provides the groundwork on (1) how the company‘s strategy can be matched to both its resource capabilities and its market opportunities, and (2) how urgent it is for the company to correct which particular resource deficiency and guard against to particular threats. It also raises questions about what future resource strengths and capabilities the company will need to respond to emerging industry trends and competitive condition.
The essay has identified the competing forces that could affect the overall success of Michelin in the global tire and rubber industry. Moreover, the need to be able to identify the strength and weakness of Michelin as well as external opportunities, and threats will be demonstrated in this section .Table 1 below illustrates a SWOT analysis of Michelin strategic capabilities. table 1:summary of Michelin's SWOT analysis
Strength Weaknesses
- Leading market position - Diversified operations - Global brand portfolio - Strong R&D capability - Diversified operations - Global brand portfolio - Strong R&D capability
- Weak revenue growth in Europe - Unfunded pension obligations
Opportunities Threats
- Booming car tire sales in the emerging market
- Growing truck tire demand in Asia - Positive outlook in the Aircraft industry -intense competition - Decline in North American CV market -Increasing raw material costs

2.1 Strengths
Leading market position- Michelin is currently the world‘s largest manufacturer of tires, the company has a market share of 27 percent in 2011. The company has a strong market position in truck tires, with a market share of over 38 percent in many geographic regions. The company has an equally robust market position in light vehicles and specialty tires such as aircraft tires. This strong market position provides the company with a competitive edge over its rivals.
Diversified operations- Michelin has diversified operations and a diversified geographic presence. It operates in over 170 countries. The company‘s revenue grew by 3.6 percent in 2010 as strong growth in North America and other countries offset weak revenue growth in Europe. In addition, the company serves several customer segments ranging from passenger cars to trucks to aviation.
Global brand portfolio-Michelin has strong brand equity in the global tire market. Michelin‘s logo, the Michelin Man or Bibendum, is well-recognized globally. The company has positioned Michelin and BF Goodrich as global brands. The regional brands of the company include Uniroyal in North America, Kleber in Europe, and Warrior in China. Strong brands provide the company with a competitive edge in the market place (Michelin, 2006).
Strong R&D capability- (R&D meaning research and development)Michelin has a strong research and development (R&D) capability. Its R&D team has 4,000 engineers in Europe, the US, and Asia. It is this strong R&D capability that has allowed Michelin to come up with innovative products such as Michelin X (the first truck tire to replace a twin mount) in 2000, the world‘s largest earthmover tire in 2001, the first anti-splash truck tire in 2002, (the first constant low-pressure agricultural tire) in 2003, and Michelin X-Ice North (studded snow tire for light vehicles) in recent years. Strong R&D capability has resulted in innovative products, which has helped Michelin gain market share in various geographic markets and product segments all around the world.
2.11 weaknesses
Weak revenue growth in Europe-Michelin performed poorly in Europe in 2005. Europe is the largest geographical market for the company, accounting for over 49 percent of revenues. Revenues from Europe has significantly declined because of the weakness of the European truck tire market. Continued underperformance in Europe would depress revenue and profit growth .
Unfunded pension obligations- The company has significant unfunded pension obligations. Unfunded pension obligations would force the company to make regular cash contributions to bridge the gap between pension assets and liabilities. Regular cash contributions, in turn, would put pressure on the liquidity position of the company, which is already strained by falling operating cash flow due to the current global economic melt down

2.111 Oppotunities
Booming car tire sales in emerging markets- Passenger car tire sales in emerging markets such as Russia, China, Mexico, and Brazil are forecasted to do well. With a strong market position in the passenger car segment, Michelin is likely to benefit from the growing demand for passenger car tires in emerging markets.
Growing truck tire demand in Asia- Demand for truck tires is rising in Asia, partially driven by a shift to radial technology and strong economic growth in countries such as India and China. Asia has now become the world‘s largest tire market in terms of volumes. Michelin has a strong position in many Asian countries. Growing demand for truck tires in Asia provide an opportunity for Michelin to boost revenue growth.
Positive outlook for the aircraft industry- The aircraft industry has been witnessing strong growth in recent times hence there is a high demand of aircraft tires. Michelin is a global leader in aircraft tires. A positive outlook for the aircraft industry would lead to higher demand for aircraft tires of Michelin.
2.1V Threats
Increasing raw material costs- The higher raw material prices the greater the negative effects it has on the company's growth and competitive edge.
Intense competition- Michelin faces stiff competition from global companies such as Bridgestone and Continental. In many emerging markets such as India, the company faces competition from regional companies. on top of that most regional companies have formed strong relationships with regional vehicle manufacturers. These regional competitors also have better distribution and brand recall in the replacement market. Intense competition from global and regional tire manufacturers could force the Michelin to reduce prices (low cost provider)(Kay 1999 ,sept )which would depress margins

Conclusion
Having considered all the management challenges facing Michelin, and also having run a complete SWOT analysis for Michelin, the company should leverage more on its consumer strategies, particularly establishing greater customer intimacy with its distributors and OEM. While Michelin continues to exhibit strong global brand, the company should constantly keep its cost competitive in order to deliver value for money to its customer. Moreover, in drafting its next branding strategic plan, it should aptly consider the following factors that are deemed improvement areas (lowest scoring items): eco-friendly tires. On the other hand, it may leverage more on its highest scoring items, namely, superior design in safety and fuel efficiency, product quality, and strong global brand. The company should consider to become the best cost provider
Michelin have to think globally but act locally, bearing in mind that localization does not mean that everything should be localized; a more appropriate explanation is that it endows a company to be more flexible or more adaptive to the local environment in its HR management. A global company should focus on a combination of global integration and local adaptation, allowing its employees to “think globally, act locally” (Washburn 2002). This should also be made the long-term objective for Michelin China, it cannot be a hurried process.

Recommendations
Michelin should recognise the importance of identifying the drivers of sustainable competitive advantages. The search for such drivers should not be restricted to tangible factors, but should be expanded to include intangibles. Indeed, the importance of intangibles such as corporate reputation,‘ brand equity‘ and customer-relationship management‘ (CRM) has grown rapidly in recent years as managers have recognized the significance of these factors in making their offerings stand out and in continuously attracting and retaining customers. What really matters is achieving a defensible cost and differentiation position in an attractive market and keeping rivals off balance through strategic investments, pricing strategies, and signals. The aim of both approaches is to determine sources of sustainable competitive advantage (Day, 1994). Various management tools should be developed to identify and determine the firm‘s strategic assets and staking out a competitive position in the market.
The BCG Growth-share matrix was developed after a series of mergers and acquisitions in 1960s. Executives needed an analytical tool to evaluate their diversification and to assist them in their investment and acquisition decisions. Michelin should try and adapt the Strategy of Merger and acquisition. Michelin acquired Shanghai Tire and Rubber Co so far.
Tire manufacturers, as with other companies within the automotive aftermarket, are experiencing raw material and energy-related cost increases, which they have been unable to offset by increases in efficiencies and productivity. Many companies have begun to recycle rather than scrap defective products, preserving margins through decreased raw material usage. Maintaining a diverse range of consumers also preserve margins by insulating companies against specific market fluctuation(Yoo 2001) Innovation aids companies, the introduction of electronic stability control systems means that companies that are diversified enough to produce them can also protect their market

References
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Michelin (2006). Michelin Annual 2005 Report. Retrieved September 7, 2006, from www.michelin.com/corporate/front/templates/affich.jsp?codeRubrique=20060414090253
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Washburn, J. H., & Plank, R. E. (2002). Measuring brand equity: An evaluation of a consumer-based brand equity scale. Journal of Marketing Theory and Practice, 10(1), 46-62. Kay, J. (1999, Sept.). Mastering Strategy: Resource Based Strategy. Financial Times.
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Salkind, N. J. (2000). Exploring research. Upper Saddle River, New Jersey: Prentice Hall