Vision and Objective for Organisational Development
Discuss about the Global Connectivity and Evolution of Clusters.
Each organisation needs to clear their vision to develop a sustainable future for the long term. The vision and objective drive the organisation towards success by implementing effective strategies and continuing the programs and services. The greater leadership approach helps the organisations to undertake the right direction and achieve success (Leavy, 2016). However, each of the business organisations requires identifying the market feasibility at the initial stage. According to the market demands, the organisation needs to structure their strategic decisions to offer better products and services to the customers (Maria Stock, Zacharias & Schnellbaecher, 2017). The study is focusing on the organisational strategy and leadership initiatives of Goodyear Tire Brand. The observation of the vision and mission statement of the company would help in gathering the insights about the strategic direction. The study would also develop the porter’s five forces analysis to understand the market scenario creating effects on the brand. The study would also develop the understanding of the industry profitability and the market positioning. The information obtained from the various source would present the clear conceptualized ideas about the market segments feasible for the business.
Goodyear Tires has captured the leading position in tire manufacturing industry. After the establishment in 1898, the company has been paying the full focus on managing innovation and continuous improvement process (Chaplinsky, Estey & Chaplinsky, 2017). The company is associated with almost 64,000 employees in the different locations around the world (Corporate.goodyear.com. 2018). The company is committed to the continuous improvement and the delivering the high quality product to the business clients. In the year of 1916, the company adopted the slogan, “More people ride on Goodyear Tires than on any other kind” (Corporate.goodyear.com, 2018). In today’s date, the company earns the annual sales of more than $15 billion across the world. Some of the renowned international brands, such as Kelly, Dunlop, Fulda, Debica, and Sava are the part of Goodyear Tire Brand. The non-tire business even offers the polymers and the rubber products to various markets across the globe. In spite of the significant strategic decisions undertaken by the company, it has been observed that Goodyear Tires has been facing the continuous challenges from the market competitors and the external scenario. The study would thus highlight the market scenario to gather ideas about the business potentiality.
The mission of the company is appeared as a slogan for attracting the customers. The mission statement of the company is more people ride on Goodyear Tires than on any other kind. In describing the vision of the company, it is noticed that the company believes in continuous improvements and innovations (Corporate.goodyear.com, 2018). The company is focusing in strengthening the market position by offering the high quality materials for the products come under this brand, such as tires, rubbers, and polymers. Company has the potentiality to identify the game changing trends and the method of exploiting the emerging opportunities in this competitive market. However, the market competitors are posing many challenges due to the innovations and technological advancements. Concentrating on the current market needs, the business requires implementing the right strategic direction. In order to achieve the vision, it is essential for Goodyear Tires to focus on environmental factors.
Market Feasibility and Strategic Decisions for Offering Better Products and Services
Goodyear Tires has set the honor to develop the strong and growing leadership environment. The company leaders are much dedicated to build a learning environment to bring more innovations and develop the greater customer base (Cusumano, Kahl & Suarez, 2015). The established leaders in the company have focused on some of the key components to develop the strategic leadership. The following key components of developing strategic leadership are contributing to the organisational success.
The leaders of Goodyear Tires are concentrating on developing “70-20-10” leadership model. It signifies the 70% recognition of development process occur in the on-the-job activity, 20% of achievement through mentoring or coaching, and 10% through formal training process (Leadershipakron.org, 2018). The executives of Goodyear Tires strategized such division to portray the learning scenario for the associated employees that would increase their performance level (Moeller et al., 2017). Time scheduling and maintaining the high level of the time management skills would provide the greater level of the work efficiency. Moreover, these training facilities would help in generating the sense of motivation among the employees. The leaders invest the ample amount of time to create a development scenario that can create significant impact on the profitability level. Rich Kramer, the CEO of the company even invests almost 40% of his time to mentor or develop the performance skills of the employees (Lei et al., 2016).
Leadership development at Goodyear Tires is not only specified as the separate activity that intends to equip the associated leaders for generating expected results. The leadership development is a part of the global business strategy of the company. The company has created the systematic process to assess, attract, motivate, develop, and retain the best talent. The common leadership traits and integrate technologies help the employees to share the reference point and create the connection from every corner of the world (Vorasayan, 2016). The central metrics are measured through business results, monitoring the performance, and fostering accountability.
Goodyear Tires has tripled the corps of ‘ready-now successors’ since 2006. In fact, the company has been focusing on developing the leadership traits of the associates that can work systematically. It is even noticed that almost 75% of the leadership positions are filled by the internal members of the company that provides the growth opportunity to the associates (Thomas & Wilkinson, 2015).
The global tire market had witnessed a growth during 2012-2016. This had been an impact of the prevailing effects of the Euro zone crisis and a down fall in the crude prices which then affected the industry and the demand for tires across the regions suffered a low too. At the same time, the Asia Pacific region showed a great rise in the demand. Chinese tire brands have showed their dominance all around the globe. . This is because the price of the tires is comparatively lower than that of flagship tire brands. The global market forecast for the industry is $319 billion for the year 2022.
PESTLE analysis helps in providing detail about the operating challenges by the entire tire industry that will face different kind of prevalent macro environment other than the different competitive forces.
- Political factors play a significant role in the entire tire industry wherein it helps in determining the different factors that includes the long-term profitability of the entire industry. There are different kind of tax policies, employment laws along with different trade agreements as well. There are different kind of trade restriction along with tariffs and employment laws in the entire tire industry as well.
- Economic factors in the entire tire industry includes the foreign kind of investment along with availability of the raw materials along with inflation in the entire economy. The economic growth is the other necessary factors in the economic analysis of the tire industry
- Social factors include the different kind of growth rate of the entire population along with health of the customers in the entire society. The socio-cultural changes have to be analyzed effectively as this will affect the entire tire industry as well
- Technological factors of the tire industry include the different R&D activities along with analysis of the advancement of the technology as this will lead to industrialization of the entire economy as well.
- Legal factors- The legal framework of the countries around the globe varies from one another and any firm should evaluate these factors before entering into the industry. Some of the legal factors are antitrust law, discrimination policies, employment law, health and safety law in the workplace, copyright, patents and intellectual property laws.
- Environmental Factors- Different industries have different environmental standards to abide by. For the tire industry there are various factors that they need to consider like the weather, climate change, Recycling, Endangered species, renewable energies, air and water regulations of the Rubber and plastic industry. Considering the consumer waste management also has to be considered.
Goodyear Tires: Leading Position in the Tire Manufacturing Industry
All the factors are essential in nature wherein this will help in supporting the entire tire industry wherein this will help in analyzing the different changes in the entire environment. The economic growth has to be analyzed effectively as this will help the tire industry to face the challenges and this will increase their growth as well.
Porter’s five forces analysis is one of the most helpful management tools that analyzes the industry and develops the clear understanding regarding underlying opportunities for achieving profitability level. It is already noticed that Goodyear Tires brand has captured the leading position in the market. However, it is essential for the company to analyze the market feasibility to achieve high profitable parameter and long term sustainability. Porter’s five force analysis would provide the enriched ideas about the competitive forces in the industry that influence the profitability and develop the fruitful strategy for enhancing the competitiveness of the company (Kollenscher, Popper & Ronen, 2016). It would even ensure the right strategic direction for the company to acquire the long term profit. Michael Porter has introduced this strategic tool to identify the five major forces that have the clear impact on a firm’s profitability level in its industry. These specific forces are:
- Threat of New Entrants
- Negotiable power of the Buyers
- Negotiable power of the suppliers
- Rivalry among the existing market players
- Threats from the substitute products in the market
The following description would provide the clear idea about these forces that are creating the significant impact on the company’s profitability.
- Threats of New Entrants
The current advancements in the business technicalities and technologies are inviting new entrants in the market. The new procedures of conducting business by the Rubber & Plastic companies are continuously creating pressures on Goodyear Tires & Rubber Company. The new entrants in the market are continuously structuring the innovative business by offering the best products and services to the customers (Morecroft, 2018). For example, some of the entrants structure the low price strategy that attracts the customers much significantly. These companies reduce their costs before selling their products to draw the attention of the customers at the initial stage. This strategy helps these new entrants to build the effective barriers for safeguarding the competitive edge. Goodyear Tire needs to adopt more effective strategic approach to tackle such threats of new entrants. The company needs to focus on the following factors:
- The company requires developing more innovations in the new products and services. The innovation in new products would not only retain the existing customers, but would gather the responses from the new customers as well.
- It is essential for the company to develop the economies of scale for lowering the fixed cost per unit.
- The company requires concentrating more on the capacity building and spending money on the R&D process. It is notable that the new entrants do not take the attempt to enter in a market where the established player like Goodyear Tire already exists and upgrades the standards on a regular basis (Stindt et al., 2017). Such market players reduce the pathway of the extraordinary profits that discourage the new players in the industry.
These initiatives would be quite helpful for Goodyear Tires to retain the competitive position against these new entrants in the market.
It is notable that buyers’ demands are continuously changing and it increases day by day. Every purchaser tries to receive the best offerings that are available in the market in exchange of the minimum prices. This demand of the customers may pose the long term threats for Goodyear Tires. If the customer is smaller and much powerful, the negotiable power of these customers would be higher. Moreover, these customers would seek more offers and discounts (Leavy, 2014). Goodyear Tire has the smaller and powerful customer base due to which the risks of the higher negotiation are recognizable. Goodyear Tires accordingly needs to structure the strategy to manage such demands. The following strategic direction would be beneficial for managing their customer base.
- The company requires concentrating on building the large base customers. The establishment of the large base customers would minimize the negotiable power of the purchasers. Moreover, the company would receive the opportunity to streamline the production and sales process.
- The rapid innovation brought to the products is another suitable method of reducing the customers’ bargaining power. It is notable that the purchasers demand more offering and discounts on the established products. Therefore, if Goodyear Tires brings innovations the products and offers new products to the customers, it would limit their negotiable power. The development off the new products would also reduce the defection of the old customers to the competitors of the firm.
Application of the above mentioned direction would provide the strategic insights to limit the customers’ negotiable power for the long term perspective of the company.
The Mission and Vision of Goodyear Tires
Most of the companies identify the source of receiving their raw materials from the good suppliers. Goodyear Tires is not an exception in such context. The suppliers, who have the dominant position in the market, have the ability to decrease the margins in the market, earned by Goodyear Tires. It is notable that the powerful suppliers have the higher ability to use their negotiable power for extracting the higher prices from the firms. Therefore, the overall impact of the high power of negotiability signifies the lower profitability rate of Goodyear Tires. However, if the company would be able to maintain the right strategic approach, this negotiable power of the suppliers can be controlled. The following factors would help in achieving such purpose:
- The company requires developing the efficient supply chain management process by associating multiple suppliers.
- Moreover, the company can experiment with innovative product design by using different materials that would help the company to shift to another material if the prices of others go higher (Kollenscher, Popper & Ronen, 2016).
- It is quite essential for the company to develop the dedicated suppliers whose businesses solely depend upon the firm. For example, the companies like Nike and WalMart have developed the third-party manufacturers whose businesses are completing depending on these firms. Therefore, these suppliers have the minimum power of negotiation. The use of the third part manufactures is thus quite beneficial for Goodyear Tires.
The above strategic approaches would increase the profitability level as the cost of the suppliers would be lower.
The company would experience the significant loss in the profit level if the existing market players in the industry are intense enough to drive down the prices (Maria Stock, Zacharias & Schnellbaecher, 2017). The overall profit level can significantly decrease once the market players dominate the market. The Goodyear Tires operates in a market, which is highly competitive by the association of the rival companies. Such competition takes a toll on the long-term profitability parameter of the company as a whole. However, the company requires identifying the most suitable methods to deal with such competitiveness.
- It is essential for the company to identify the fruitful method of developing the sustainable differentiation that would distinguish the company from its competitors.
- The development of the appropriate scale would help the company to participate in the competitive market in a better way.
- The company can even collaborate with the market competitors to increase the market size instead of operating in a smaller market (Chaplinsky, Estey & Chaplinsky, 2017).
The above implications are much beneficial, especially when the market is dominated by the key market players in this industry. However, Goodyear Tires require observing the key market activities used by the competitors. The differentiation in the business operations develops the distinct characteristics and unique brand image of the company.
The industry profitability has to suffer when a new service or product is reaching to the expectation level of the customers in the market. For example, the services like Google Drive is a considerable substitute to hardware drive storage. If the substitute product offers a value proposition to the customers, it would affect the profitability parameter of the company in a most significant way (Kollenscher, Popper & Ronen, 2016). This value proposition would uniquely differential from the present offerings of the industry that can clearly pose the threats to other market players. Goodyear Tires may experience such downfall if the company fails to undertake the appropriate strategic direction (Kollenscher, Popper & Ronen, 2016). The following approaches would be beneficial for the company in considering the long term sustainability in midst of such substitute products and services.
- The company requires concentrating widely on the service oriented; rather than just product oriented.
- It is essential for the company to recognize the demands and expectations of the customers at the first place before manufacturing any good or service. Understanding the core needs of the customers rather than just the products offered to them would be helpful enough in minimizing the challenges faced due to the substitute products in the market (Lei et al., 2016).
- The company can even switch the cost for the customers that would increase the customer base and retain the existing customers as well.
The above implications concentrate on retaining the market profitability that can create the long term sustainability in the industry. The rapid innovations and the considerable benefits offered to the customers would be effective enough in creating the larger customer base for Goodyear Tires.
The analysis of the porter’s five forces provides the fruitful insights about the most impactful factors that may affect the profitability parameter of the company. It is notable that the company can easily identify the game changing trends and the method of exploiting the emerging opportunities in this competitive market. The managers of Goodyear Tires can shape these forces in their favour to create the high profitability.
Developing Strategic Leadership at Goodyear Tires
The trends in the current global tire industry are the key strength of Goodyear Tires brand. Such global trends are driving profitable growth of the company in a significant manner. Richard J. Kramer, the Chief Executive Officer of Goodyear Tires exclaimed, “The accelerating shift to high-value-added tires for both consumer vehicles and commercial trucks is the main product trend shaping the future of the tire industry” (Corporate.goodyear.com, 2018). It depicts the idea that the current trends in the business market demand the product differentiation that would accelerate the profit and growth of the company. He even stated that the growth of the tires represent the trend in a best way with the rim diameters of 17 inches and even larger. The market segment highlights that the business profits have doubled since 2010 and it is expected that it would be doubled again by 2020 (Mudambi et al., 2017). The connected business model is the most significant factor that drives profitability in spite of the higher competitive scenario. This business model of the company integrates the consumer-facing strengths, such as the effective CRM and powerful marketing relationships aligned with the distribution networks.
It is noticeable that it is much difficult to manage the complex elements within which a business operates and develops the business functions. However, Goodyear Tires provides the attention towards managing such complexity level to become the market leaders. On the other hand, it is highlighted that the company maintains the product variations in the vehicles offerings and changing expectations of the technology-enabled customers. The company is one of the largest tire companies in the world and it employs about 66,000 people all over the world and manufactures the products in 48 facilities (Thomas & Wilkinson, 2015). The two biggest innovation centers are situated in Akron; one is in Ohio and the other one is in Colmar-Berg. The company strives to develop the state-of-art services and products that are driven by the technologies and performance standard of this specific industry. The observation on these segments generates the idea that in spite of the higher market competitiveness, Goodyear Tires maintains the strategic direction and effective ideologies to retain the customers for a longer term.
Goodyear Tires has already captured the leading position in the Tire Manufacturing Industry. The company maintains the diversified strategies to become the leading tire producers. It has successfully executed a turnaround from the year of 2001 to 2003 even when it was on the edge of bankruptcy. The consistence growth in the business since the time is much remarkable. However, the financial crisis during 2008 and 2009 was the exceptions (Corporate.goodyear.com. 2018). The company has even established almost 53 manufacturing plants over 23 countries in the world. The major focus of the company is on the future growth of China as well as the enhancements of the profitability level in North America. The company is widely focusing on increasing the profit margins in North America by implementing the initiatives of cost savings. This profit margin has been significantly improving since the year of 2010. Afterwards, the company estimated to increase the profit margin in North America to 5% over next few years.
Leadership Model ’70-20-10′
In North America, the Goodyear Tires are sold in two different markets, such as the replacement tire market and OE market. The company sells almost 73% of the entire tire production on the replacement market. The above chart shows the entire US Consumer Replacement Industry Sales as per the demand levels of the long term trend. US has experienced the short and warm winters over the past two years due to which people did not require replacing their tires. However, afterwards, customer required replacing the log significant miles on their tires that expects the replacements of their tires (Cusumano, Kahl & Suarez, 2015). Therefore, Goodyear Tires expects a higher profit margin in the replacement market. The company requires identifying the market opportunities to develop the fruitful strategic decisions to exploit such opportunities and strengthen the competitive position in the market. The associated leaders are also much focused towards the development of the competitive position, which can ensure the higher profitability level. The high level of the business profitability would retain the competitive position of the business in current globalised world.
Conclusion
The study provides the insightful ideas about the strategic values of Goodyear Tires, which is the leading market player in the tire manufacturing market. The company believes in continuous quality improvement and innovations to stay competitive in this dynamic market. The company leaders are much dedicated to build a learning environment to bring more innovations and develop the greater customer base. The established leaders in the company have focused on some of the key components to develop the strategic leadership. The company has created the systematic process to assess, attract, motivate, develop, and retain the best talent. The common leadership traits and integrate technologies help the employees to share the reference point and create the connection from every corner of the world. Porter’s Five Forces analysis provides the enriched knowledge about the market competitiveness, which is quite challenging for the company to create long term sustainability. The obtained idea from this five forces analysis ensures that Goodyear Tires requires observing the key market activities used by the competitors. The company has developed the effective business model that has the potentiality to secure the competitive edge in this challenging business market.
References
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