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SUMMARY OF CASE ANALYSIS: ¡VGOODYEAR TIRE AND RUBBER COMPANY
1. INTRODUCTION ¡VGOODYEAR TIRE AND RUBBER COMPANY
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.
Goodyear¡¦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 world¡¦s tire manufacturing capacity and 37 percent of US tire-making capacity and sales outside US represent 42 % of company revenues.
Table 1 ¡V Worldwide Market Share, 1990
In early 1992, Sears, Roebuck and Company (Sears), owner of Auto Centers proposed to sell Goodyear¡¦s popular brand tire, Eagle. This has raised Goodyear¡¦s management consideration due to the following facts:
(i) Goodyear brand tires has declined 3.2 % in market share (4.9 million units) for passenger cars between 1987 to 1991;
(ii) 2 million worn-out Goodyear tires were replaced with other brands at 850 Sears Auto Centers.
2. THE ISSUE
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 repl ...