MASTER IN BUSINESS ADMINISTRATION [MBA]
INDIVIDUAL ASSIGNMENT - CASE STUDY
GOODYEAR TIRE AND RUBBER COMPANY
LECTURER: DR. HAZLIZA BT HARONNAME:HELLINA BT AHMAD KAMIL (2013137031) 1.0Synopsis
The tire industry is divided into two end-use markets, the original equipment tire market and the replacement tire market. Original equipment tires are sold by tire manufacturers directly to automobile and truck manufacturers. Goodyear is the second largest tire producer worldwide. It operates 44 tire product plants in 28 countries and 7 rubber plantations. Goodyear has the broadest line of tire products of any tire manufacturer. It is one of the best known and recognized brand names in the world. Goodyear is also one of the leading national advertisers in the U.S. Goodyear is the market leader for original equipment tires at 38%. Replacement passenger car tires account for 75% of annual sales for Goodyear. They are the market share leader in the U.S. replacement tire market. Passenger car tires account for 15%, light truck tires for 11% and highway truck tires for 23%. Goodyear brand tires have the broadest retail coverage with almost 8,000 "retail points of sale" or 20% of all US replacement tire locations. Nearly 2 million which accounts for 5% of replacement tires are being replaced annually at 850 Sears Auto Centers. Discount, multi-brand independent dealer’s market share rose from 7% to 15% between 1982 and 1992. Market share for replacement tires captured by retailers not serviced by Goodyear has grown from 17% to 35% (1982-1992). Goodyear’s market share declined 3.2%, or 4.9 million units between 1987 and 1991. Goodyear stores reported a 1% decline in replacement tire market share to 9%. 2.0CASE PROBLEM
The Sears proposal raised several strategic considerations for Goodyear. First, as a matter of distribution policy, Goodyear has not sold the Goodyear tire brand through a mass merchandiser since the 1920s, when it sold tires through Sears. Decision to sell Goodyear brand passenger car tires again through Sears would represent a significant change in distribution policy and could create conflict between its franchised dealers. Second, if the Sears proposal was accepted, several product policy questions loomed. Specifically should the arrangement with Sears include (1) only the Goodyear Eagle Brand or (2) all of its Goodyear brands? Sears would provide a great opportunity for Goodyear for several different reasons. Sears is a large National Retailer with 850 Auto Centers with potential sales on 2 million replacement tire sales annually. It gives Goodyear the opportunity to stop the bleeding of market share 3.2% loss over last 4 years. They could take advantage of Sears sponsored promotions for those consumers that have become more prices sensitive and less brand loyal. They can also position themselves as the premium national brand at Sears. 3.0GOODYEAR TIRE AND RUBBER COMPANY
Goodyear Tire and Rubber Company, headquartered in Akron, Ohio, was founded in 1898 by Frank and Charles Seiberling. The company began as a supplier of bicycle and carriage tires, but soon targeted the fledgling automotive industry. The Goodyear Tire & Rubber Company, incorporated on August 29, 1898, is a manufacturer of tires. The Company, together with subsidiaries and joint ventures, develops, manufactures, markets and distributes tires for a range of applications. The Company also manufactures and markets rubber-related chemicals for various applications. The Company is an operator of commercial truck service and tire retreading centers. The Company operates approximately 1,300 tire and auto service center outlets where it offered its products for retail sale and provided automotive repair and other services. The Company manufactures its products in 52 manufacturing facilities in 22 countries, including the United States. It operates through four operating segments representing its regional tire businesses:...
References: 1. Roger A.K & Robert A.P (2013). Strategic Marketing Problems. Cases and Comments.(Thirteenth Edition).England.
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