Sunday, October 13, 2019
Summary of Case Analysis: Goodyear Tire and Rubber Company Essay
Summary of Case Analysis: Goodyear Tire and Rubber Company 1.Ã Ã Ã Ã Ã INTRODUCTION GOODYEAR TIRE AND RUBBER COMPANY Ã Ã Ã Ã Ã Goodyear Tire and Rubber Company, was founded in 1898 and was the world tire production leader until November 1990 when Groupe Michelin took over after merging with Uniroyal Goodrich Tire Company. GoodyearÃ ¡Ã ¦s principal business is the development, manufacture, distribution, and sale of tires throughout the world. Its tires and tube sales represent 83 % of 1991 corporate sales of $10.9 billion with corporate wide earnings of $96.9 million. It has its owned Goodyear Auto Service Centers and franchised Goodyear Tire Dealers in supporting its distribution and sale of tires in US. Goodyear controls 20 percent of the worldÃ ¡Ã ¦s tire manufacturing capacity and 37 percent of US tire-making capacity and sales outside US represent 42 % of company revenues. Table 1 Ã ¡V Worldwide Market Share, 1990 In early 1992, Sears, Roebuck and Company (Sears), owner of Auto Centers proposed to sell GoodyearÃ ¡Ã ¦s popular brand tire, Eagle. This has raised GoodyearÃ ¡Ã ¦s management consideration due to the following facts: (i)Ã Ã Ã Ã Ã Goodyear brand tires has declined 3.2 % in market share (4.9 million units) for passenger cars between 1987 to 1991; (ii)Ã Ã Ã Ã Ã 2 million worn-out Goodyear tires were replaced with other brands at 850 Sears Auto Centers. 2.Ã Ã Ã Ã Ã THE ISSUE Ã Ã Ã Ã Ã The declining of Goodyear market share was believed due to the growth of warehouse membership club and the discount tire retail. See Table 2 and 3 below. In addition to that, about 2 million Goodyear tires were replaced by other brands at Sears Auto Centers in the Replacement Tire Market. Ã Ã Ã Ã Ã Table 2 Ã ¡V US Market Share of Tire Replacement by Retail Outlet Type of Retail OutletÃ Ã Ã Ã Ã 1982 (%)Ã Ã Ã Ã Ã 1992 (%) Traditional multibrand independent dealersÃ Ã Ã Ã Ã 44Ã Ã Ã Ã Ã 44 Discount multibrand independent dealersÃ Ã Ã Ã Ã 7Ã Ã Ã Ã Ã 15 Chain stores, department storesÃ Ã Ã Ã Ã 20Ã Ã Ã Ã Ã 14 Tire company storesÃ Ã Ã Ã Ã 10Ã Ã Ã Ã Ã 9 Service stationsÃ Ã Ã Ã Ã 11Ã Ã Ã Ã Ã 8 Warehouse clubsÃ Ã Ã Ã Ã 0Ã Ã Ã Ã Ã 6 OthersÃ Ã Ã Ã Ã 8Ã Ã Ã Ã Ã 4 TotalÃ Ã Ã Ã Ã 100Ã Ã Ã Ã Ã 100 Ã Ã Ã Ã Ã Table 3 Ã ¡V Pie chart of US Market Share of Tire Replacement by Retail Outlet Ã Ã Ã Ã Ã Ã Ã Ã Ã Ã The GoodyearÃ ¡Ã ¦s management is considering Sears proposal to sell its GoodyearÃ ¡Ã ¦s popular brand i.e. Eagle which basically affect it distribution policy. In summary, the above factors l... ...(b)Ã Ã Ã Ã Ã Price a.Ã Ã Ã Ã Ã To offer high incentive in terms of transfer of price to the franchise dealers and standard incentive to Sears Auto Centers. (c)Ã Ã Ã Ã Ã Advertising and Promotion a.Ã Ã Ã Ã Ã Strategize the advertising to notify and educate customers of the new and additional channels of Goodyear tire products in the TV and newspaper; (d)Ã Ã Ã Ã Ã Distribution and Sales a.Ã Ã Ã Ã Ã To review the existing franchise contracts with the franchise dealers and provide more marketing support to both franchise dealers and Sears. b.Ã Ã Ã Ã Ã To restrict distribution of tires, ie. Channels (franchise and Sears) will only be able to obtain distribution from authorized distributors and not directly from manufacturer, as this will ensure price stability. 7.Ã Ã Ã Ã Ã CONCLUSION The recommendation is to proceed with the review of distribution policy in order to allow Sears to sell Goodyear tires and expand the franchise dealersÃ ¡Ã ¦ business to include the on-stop-service centers. This decision will re-gain market share from the warehouse club and discount independent dealers and increase sales of 2 million tires annually as the distribution channels have increase and able to tap loyalty customers of Sears.