Company Analysis

SWOT analysis of Michelin Tyres

 

Michelin Tyres is a manufacturer of vehicle tyres based out of France. The tyre manufacturer is second only to Bridgestone which is the largest tyre manufacturer in the world. Michelin also sells tyres under the labels BFGoodrich, Kleber, Tigar, Riken, Kormoran and Uniroyal in addition to the brand name Michelin.
Michelin is also popular for its Red and Green travel guides, its roadmaps, the rating awarded by the Red Guide to eateries for the culinary excellence that they display.
The company has always been credited with a high brand recall since the brand is closely associated with the company mascot Bibendum, popularly referred to as the Michelin Man. Michelin also manufactures tyres for space shuttles, rails, aircrafts, heavy equipment, motorcycles and bicycles in addition to cars and other bigger vehicles. Michelin is also a key sponsor of high profile racing events such as Formula 1 and other premium sporting events.
Focus on features: Michelin tyres have always given high priority to features like durability, longevity, endurance, grip, fuel efficiency and noise control.
Deep understanding of customer needs: Michelin has always been focused on understanding and meeting customer driving needs. Customer research looks at driving needs of people both from a global and a local perspective.
Focus on innovation: Michelin labs base their research on innovative features from their experience with motorsports which makes them high on the endurance factor. Moreover, Michelin tyres are also innovation driven by process, material, and products.
Self-developed materials: In manufacturing the core components of the product Michelin does not use pre-existing materials but prefer to develop their own which have been found out after years of research. They also build their own machinery for testing and maintenance of tyres.
Green tyres: Michelin is the world leader in low energy tyres and also is focusing on creating sustainable and safer driving options that are easy in the pocket. This will make them a pioneer in the world’s path towards reducing carbon footprint.
Diversified portfolio: In addition to the tyre business for vehicles, Michelin also manufactures tyres for space shuttles, rails, aircrafts, heavy equipment, motorcycles and bicycles in addition to cars and other bigger vehicles. Michelin is also popular for its Red and Green travel guides, its roadmaps, the  rating awarded by the Red Guide to eateries for the culinary excellence that they display.
Lack of strong presence in emerging markets: Michelin relies excessively on developed economies in the Europe and USA for its revenues. It is still to establish a presence in emerging economies.
Critical Product Failures: Michelin has faced some serious product failures in the near past which made them lose money. One such example was that of the tyre with sensors which could sense punctures. This was a miserable failure and inspite of entering into tie-ups with Goodyear and automakers like Audi and BMW the product had to be pulled out of the market.
Opportunities in the SWOT analysis of Michelin Tyres :
Opportunities refer to those avenues in the environment that surrounds the business on which it can capitalise to increase its returns. Some of the opportunities include:
Growing demand for replacement tyres: The market for replacement tires is expected to grow in the next few years. A trend which has been existent for some time, because of increasing input costs and rising rubber and fuel prices, this trend is likely to stay for some time.
Increasing vehicle sales in emerging economies: Countries like India, China and Brazil are going to be the most lucrative markets for automakers in the next decade. The upwardly mobile population and increasing awareness of driving safety will increase car purchase. This means that these markets may also have more consumption of tyres.
Increased service orientation: Tyre companies have begun to vertically integrate and are also focusing on increasing the value-added services that they provide. This includes GPS tracking, digital services, wireless application protocol and mobile device tracking services amongst others.
Competition: The number of players in the tyre industry is growing. Bridge stone has been a market leader and inspite of repeated attempts Michelin has been unable to oust the leader. The biggest threat is the competition in the market.
Growing costs: The fuel prices, as well as the cost of rubber both of which is critical for tyre manufacturers, are increasing at an alarming rate. Adding to this is the cost of research which is also increasing.

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