In this case Goodyear Tire and Rubber Company’s executives were reconsidering a proposal made by Sears, Roebuck and Company. Due to decline in the market share of passenger car replacement tires in the US and the customer’s failure to repurchase Goodyear brand tires forced the executives to reconsider the proposal. Goodyear is one of the leading brands in the US and globally. Goodyear’s distributions channel mainly contains individual service companies, franchise and dealers. It is really important for Goodyear to have strong distribution channel.
Question: Should Goodyear and Rubber Company accept the proposal from Sears? Alternative 1: Goodyear Tire and Rubber Company accepts the proposal – Advantages:
There is more demand for the replacement tires and sale through Sears would encourage Sears’ customers to prefer Goodyear Tires. Goodyear will have promotion advantage, since Sears is one of the well-known hardware stores. Advantage of capturing the Sears customers and improving sales. Disadvantages:
Goodyear will require a significant change in the distribution policy and could create conflict with the franchise dealers. Goodyear might be forced to follow Sears’ specification for tire manufacturing. Uncertainty of customer preference is a concern since some buyers would prefer the same product at the time of replacement. This would undermine the tire sales of company-owned Goodyear Auto Service centers. Since Sears carries many other brands, Goodyear will have more competition in regards to the price and preference. Alternative 2: Goodyear Tire Company rejects the proposal – Advantages:
Company will not face any threats regarding losing individual franchise or dealer sales. The tire sales of company-owned Goodyear Auto Service Centers will not be affected and Company can have their own pricing policy. Disadvantages:
Goodyear will have to generate more promotional strategies to increase the...