Analysis of Tire industry

Tires are such an integral part of daily life that most individuals never give serious thought to them until they fail. Yet, the worldwide tire industry is a multi-billion dollar market that is characterized by a few sellers, intense competition, and international considerations including market barriers and currency valuations. Over the past 20 years, the industry has consolidated to the point that it might well be considered an oligopoly, yet the individual companies within the market do not behave in typical oligopolistic fashion. This research considers the industry as a whole, and the strategies of three companies in particular--Goodyear Tire & Rubber, Cooper Tire & Rubber and Michelin--and evaluates the strategies that these companies have elected to follow.

There are two components to the tire market: the original equipment market and the replacement market (Von Liew, 2002). The original equipment market includes those tires that are included on vehicles when dealers sell them; these tires are sold directly to the automotive manufacturers (such as General Motors and Ford), and included on the vehicle as part of the production process. Unlike many other vehicle components, however, tires are shipped with the name of their original manufacturer clearly visible, so being a part of the original equipment process can help build brand awareness and possibly brand loyalty. However, Ford and Firestone recently encountered problems with

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alliance is one that has proved beneficial to both companies, allowing both companies to expand their market shares without infringing unnecessarily on the other; both companies are, however, still relatively small participants in the tire market ("Cooper Tire & Rubber," 2001). Goodyear Tire & Rubber Goodyear Tire and Rubber is one of the world's largest rubber manufacturers, and is the largest American tire manufacturer. Incorporated in the late 1800s, Goodyear evolved into a multinational organization by focusing on rubber products (including hoses) as well as automotive tires. Tires, however, contribute most of the company's revenues, and the company's strategic business units are organized along geographic regions. These strategic business units include North American Tire, European Union Tire, Eastern Europe, Africa and Middle East Tire, Latin American Tire, and Asia Tire. Only the North American strategic business unit saw an increase in sales from 2000 to 2001, and as reflect in the appendix, the company's total revenues fell from 2000 to 2001 (2001 Goodyear Annual Report, 2002, p. 75). Like Cooper, Goodyear sells its tire products under several different brand names, including Goodyear, Dunlop, Kelly, Fulda, Debica

Category: Business - A