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HAM BERGER STRATEGY CONSULTANTS

Join prestigious industry analysts and Michelin's CEO at the exclusive conference discussing the evolution, challenges, and future directives of the tire industry. Learn about historic milestones, market dynamics, and innovations shaping the sector. Gain valuable insights into competitive strategies, industry structure, and corporate governance. Engage with renowned experts and network to enhance industry knowledge and build connections.

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HAM BERGER STRATEGY CONSULTANTS

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  1. HAM BERGER STRATEGY CONSULTANTS Proudly presents:

  2. The Conference

  3. Hear from Michelin’s CEO and industry analysts

  4. Be informed

  5. Interact and recommend

  6. Javier Fungairino as Neil Mullineux The World Tire Industry Analyst

  7. Guillaume Beck as Edouard Michelin “Michelin Head Honcho!”

  8. Sophia Liang as Amelie Tyred Ham Berger Consultant

  9. Spencer Rosen as Phil Rubber Ham Berger Consultant

  10. Antonio Paguio as Chuck A.Tire Michelin Global Solutions

  11. Please welcome our first speaker:Mr. Neil MoulineuxTire Industry Analyst

  12. History • The tire industry was born at the • end of the 19th century by providing • bicycle tires. • Mid 20th - Dramatic quality improvement • Dunlop… …rubber tire • Goodyear… air-filled tire • Michelin…. the removable tire

  13. History • In the 1990s after a price war companies were not able to differentiate. They were not able to innovate like in earlier years. They had to concentrate on: - Increase in productivity - Capacity shortage - Organizational changes • Several tire makers formed alliances and joint ventures.

  14. Tire: A commodity product In history, tire companies have achieve to create cheaper and longer lasting tires. Improvements in this industry are slow and mainly based on modern technology. Competitive advantage Capacity utilization, cost structures. Operations management, and research and development. Industry Structure

  15. Competition • Michelin, Bridgestone, Goodyear, 54 % • Bertrand Oligopoly market - “the top ten firms - 80% of world production” • Brands - development of run-flat tires (such as the Michelin PAX concept) • Focus on the materials used, tire design, surface performance, winter tires….

  16. Please welcome our honorable guest:Mr. Edouard MichelinCompagnie Générale des Etablissements Michelin (CGEM)

  17. Corporate governance = Competitive advantage • COMMANDITE • FAMILY BUSINESS • CORPORATE CULTUREMichelinVille, Education, Healthcare… • IDENTIFICATION 2 Partners (+ 1 Interim) René Zingraff & Edouard Michelin

  18. 1924, Edouard Michelin: “When a fact contradicts theory, we should opt for the fact.” 2002, Edouard Michelin: “We have one profession and one mission: contribute to long-term progress in the field of MOBILITY

  19. My Mistress = R & D • Distribution Network • T.O.U. (SBU)

  20. Please welcome:Ms. Amelie TyredHam Berger Consultant

  21. Quiz Which 2 of Porter’s 5 forces have minimal influence on the tire industry? Power of supplier? Power of buyer? Rivalry among existing competitors? Threat of new entrants? Threat of substitute?

  22. Consumer Consumer Minimal Threat of New Entrants Minimal Threat of Substitutes Consumer Consumer Answers to the Quiz Which 2 of Porter’s 5 forces have minimal influence on the tire industry? • Unattractive Industry • Low margins • Capital intensity • Strong channel needed • High tech & knowledge • High Demand for Vehicle • Heavy truck freight needed esp. in developing countries • Short-term: eco-friendly, run-flat tires • Limited: maglev, hovercraft

  23. Power of Supplier • Tire manufacturers have low control over the price of raw materialsdemand & supply • Michelin’s raw material price went up 21% in 2003 • Rubber prices expected to rise 10~15% in 2004

  24. Power of Customer Segment Mix: Passenger Car-Light Truck and the Truck markets (accounted for 84.1% of Michelin’s sales in 2002) VS Original Equipment 30% Replacement 70% VS • Must shift production with car industry to growth markets • Car makers squeeze suppliers for lower prices • Loyalty Ratio: • 65% in Europe • 58% in North America

  25. Rivalry among Competitors

  26. Please welcome:Mr. Phil RubberHam Berger Consultant

  27. Weaknesses No. 3 in Asian market Time to market Bureaucracy Low productivity Lower brand visibility due to lack of outlets Strengths Tech. innovations Brand equity Bibendum Value added services Tire-related Maps & guides Global portfolio No. 1 in Europe and the World (sales) Family business structure with leadership embracing change Michelin’s SWOT

  28. Threats Job cuts changed the employment culture Maturity of industry Fierce competition Raw material price fluctuations Opportunities Asian market especially China High performance sector growth in Europe SUV segment in the US market Michelin’s SWOT

  29. Please welcome:Mr. Chuck A. TireMichelin Global Solutions

  30. Industry Review The tire market continues to grow but at a slower pace • $70B tire market • Projected 5% p.a. growth

  31. Industry Review Passenger cars, light trucks, and truck are the cash cows • 84% of tires sold are for cars, l-trucks & trucks

  32. Industry Review Asia, particularly China, is a key growth area • 88% of market is in Europe, N.A., Asia • China 15% growth p.a.

  33. Michelin Update 47% of sales comes from Europe

  34. Michelin Update Michelin invests on higher returns • Investments of €3.2b since 2000 • Build capacity of existing facilities • New developments such as China an Russia

  35. Recommendations MICHELIN

  36. GrowthRecommendations • OEM market to build brand loyalty • Replacement market for high growth areas (SUVs and upscale vehicles) • Growth in Asia and Russia • Grow awareness of other brands

  37. OperationsRecommendations • C3M process = flexibility & cost-effective • Inventory reduction • Productivity improvement • Outsourcing Non-core functions • Flexibility and Control • Price accordingly • Targets adjusted for business environment • Curb volatility by hedging • Invest in rubber tree plantations

  38. Competitive AdvantageRecommendations • Innovation, design, quality & marketing • Efficiency and speed to market • Customer satisfaction • Employees as the greatest asset • Corporate culture as the main driver of competitive advantage!

  39. Some Parting Words:Mr. Edouard MichelinCompagnie Générale des Etablissements Michelin (CGEM)

  40. Parting Words " A company’s performance is not assessed only in terms of its economic results. It is also measured by its ability to develop its employees and to take its place harmoniously in the communities and Society around it."Edouard Michelin, April 2003

  41. Open Forum What do you think?

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