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 2000. Although MFS is to maximize
the lengths of the Michelin tires so that its customers will be less reluctant to premium prices,
which contributes more chance to re-purchase, the project itself cannot generate profits for
three consecutive years. Thus, the top manager left with unresolved issues
If MFS continued
How to address issues that prevent MFS to remain profitable.
Customers are reluctant to sign the contract.

Also the market is immature so customers do not immediately understand the benefits of this
program and see only the initial costs, increased dependence and high switching costs. In
addition, vendors are struggling to communicate and explain to the customer the benefit they
would gain that the solution provides.
Extensive training for contact employees, the company needs to educate its customers about
the offer and its benefits and financial management. Public relations and word-of-mouth and
advertising in the trade press, play a big role.
Internal conflict
While the objective of strong sales of traditional products s' was to push the sale of tires as
much as possible and the tires tying increased, MFS in turn pushes the product life be
prolonged as much as possible, thus potentially hurt sales of new forces. In this way, the
existing MFS represents competition for product sales people. Two sections have opposite
objectives under the same roof lifting Michelin conflict Massy inquisition and to the
fundamental value of the company.
Because conflict arises heterogeneous objectives, society is struggling to set goals and
manage sales between regions. The first answer to this question is to clarify each department
objectives. Product sales teams should focus their resources to attract new potential
customers and target segmentation. Otherwise MFS division would be in charge of taking
care of consumer tires until they cannot be retreaded, and then recommend them to redeem
the new Michelin tires. In this regard, instead of competing within Michelin, the company
would be able to satisfy existing customers and at the same time increasing its market share.
Another suggestion to reduce the complexity of management is re-organizing the company
structure. Due to the differences in nature between the team of TB and the MFS team, the
same department as having induced confusion in the perception of employees and directors of
leaves hard time sales design and manage project budget for both organizations. Moreover,
according to Michelin chart, each MFS teams under the supervision of the Regional Director
of Sales and Director MFS, which increases intricateness understanding and implementation
of the objectives set by the two directors. Therefore, the necessary adjustment is that MFS
leaders take full responsibility for all activities of the teams as they MFS MFS separate
department entirely. On this point, each branch has its exclusive and homogeneous and
mutually supporting objectives without frustration.
Complex Structure of costs
MFS offer different method of charging fees to its customers on the basis of kilometers
traveled per vehicle instead of Time and materials. Therefore it can result in a very difficult
process to ensure that the company is making appropriate profits. Failing to exploit one mm
rubber means addition of 6 to 7 percent of their cost. This is one of the main reason leading to
the loss of MFS.
To overcome this crisis, the company needs to build a comprehensive database to be able to
work so precisely as possible the mile Price- person should charge. It does this by calculating
a range of factors, such as tires that the fleet is running on and status. Having this database
would allow MFS to provide for the appropriate fee for each client, avoiding the problem of
never generating profit such a smaller sum.
Quality control process with the service provider
To facilitate geographic expansion, Michelin has decided to rely on service provider networks
to provide customer service. However, it leads to the dependence of the third order to
optimize the structure of costs and quality of service.
To remedy these problems, Michelin should provide a new method of payment service
providers. Instead of paying a fixed amount of money per contract, payment must be counted
on the retreading rate of customers served by service provider. That would put the service
provider on the same path that Michelin providing the best service so that the retreading rate
is maximized. In addition, adequate training for the third part of the "4-Life program" is
essential to ensure that the process is managed correctly. At this stage, Michelin should not
worry to become their competitors that their size is not sufficient to provide a big customers
tire management service.
Conclusion
The transition to the service area takes a lot of time and effort. MFS is a great solution to
create the competitive edge of the tires on the consolidated market. Initial investment is
needed to generate the long-term benefit. Until these issues are addressed properly, it is likely
that the project would soon be profitable.

Case Analysis Michelin Group 2

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CASE ANALYSIS

MICHELIN FLEET SOLUTIONS: FROM

Customers are reluctant to sign the contract.

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