Case Analysis Michelin Group 2

CASE ANALYSIS MICHELIN FLEET SOLUTIONS: FROM SELLING TYRES TO SELLING KILOMETERS

Presented By:

Kriti Gupta Shashank Kapoor  Sumit Ahuja Arcchit Mathur 

Michelin began moving to the services sector by launching a complete tire management solution called Michelin Fleet Solution (MFS) in early earl y 2! Although Although MFS is to ma"imi#e the lengths o$ the Michelin tires so that its customers %ill be less reluctant to premium prices& %hich contributes more chance to re'purchase& the project itsel$ cannot generate pro$its $or three consecutive years! hus& the top manager le$t %ith unresolved issues $ MFS continued • *o% to address issues that prevent MFS to remain pro$itable! •

+ustomers are reluctant to sign the contract! Also the market is immature so customers do not immediately understand the bene$its o$ this  program and see only the initial costs& increased dependence and high s%itching costs! n addition& vendors are struggling to communicate and e"plain to the customer the bene$it they %ould gain that the solution provides! ,"tensive training $or contact employees& the company needs to educate its customers about the o$$er and its bene$its and $inancial management! -ublic relations and %ord'o$'mouth and advertising in the trade press& play a big role! •

Internal conflict .hile the objective o$ strong sales o$ traditional products s/ %as to push the sale o$ tires as much as possible and the tires tying increased& MFS in turn pushes the product li$e be  prolonged as much as possible& thus potentially hurt sales o$ ne% $orces! n this %ay& the e"isting MFS represents competition $or product sales people! %o sections have opposite objectives under the same roo$ li$ting Michelin con$lict Massy in0uisition and to the $undamental value o$ the company! 1ecause con$lict arises heterogeneous objectives& society is struggling to set goals and manage sales bet%een regions! he $irst ans%er to this 0uestion is to clari$y each department objectives! -roduct sales teams should $ocus their resources to attract ne% potential customers and target segmentation! ther%ise MFS division %ould be in charge o$ taking care o$ consumer tires until they cannot be retreaded& and then recommend them to redeem the ne% Michelin tires! n this regard& instead o$ competing %ithin Michelin& the company %ould be able to satis$y e"isting customers and at the same time increasing its market share! Another suggestion to reduce the comple"ity o$ management is re'organi#ing the company structure! 3ue to the di$$erences in nature bet%een the team o$ 1 and the MFS team& the same department as having induced con$usion in the perception o$ employees and directors o$  leaves hard time sales design and manage project budget $or both organi#ations! Moreover& according to Michelin chart& each MFS teams under the supervision o$ the 4egional 3irector o$ Sales and 3irector MFS& %hich increases intricateness understanding and implementation o$ the objectives set by the t%o directors! here$ore& the necessary adjustment is that MFS leaders take $ull responsibility $or all activities o$ the teams as they MFS MFS separate department entirely! n this point& each branch has its e"clusive and homogeneous and mutually supporting objectives %ithout $rustration! Complex Structure of costs MFS o$$er di$$erent method o$ charging $ees to its customers on the basis o$ kilometers traveled per vehicle instead o$ ime and materials! here$ore it can result in a very di$$icult  process to ensure that the company is making appropriate pro$its! Failing to e"ploit one mm rubber means addition o$ 5 to 6 percent o$ their cost! his is one o$ the main reason leading to the loss o$ MFS! o overcome this crisis& the company needs to build a comprehensive database to be able to %ork so precisely as possible the mile -rice' person should charge! t does this by calculating a range o$ $actors& such as tires that the $leet is running on and status! *aving this database %ould allo% MFS to provide $or the appropriate $ee $or each client& avoiding the problem o$ never generating pro$it such a smaller sum! Quality control process with the service provider o $acilitate geographic e"pansion& Michelin has decided to rely on service provider net%orks to provide customer service! *o%ever& it leads to the dependence o$ the third order to optimi#e the structure o$ costs and 0uality o$ service!

o remedy these problems& Michelin should provide a ne% method o$ payment service  providers! nstead o$ paying a $i"ed amount o$ money per contract& payment must be counted on the retreading rate o$ customers served by service provider! hat %ould put the service  provider on the same path that Michelin providing the best service so that the retreading rate is ma"imi#ed! n addition& ade0uate training $or the third part o$ the 78'9i$e program7 is essential to ensure that the process is managed correctly! At this stage& Michelin should not %orry to become their competitors that their si#e is not su$$icient to provide a big customers tire management service!

Conclusion he transition to the service area takes a lot o$ time and e$$ort! MFS is a great solution to create the competitive edge o$ the tires on the consolidated market! nitial investment is needed to generate the long'term bene$it! :ntil these issues are addressed properly& it is likely that the project %ould soon be pro$itable!