The Goodyear Tire & Rubber Company was founded in 1898 in a time that seemed especially remarkable, but the commencement was a bit eventful. Frank A. Seiberling who was 38 years at that time founded the company. He made a purchase of the company’s first plant with a $3,500 down payment. The amount was money borrowed from a brother-in-law Lucius C. Miles. It was challenging with sourcing of raw materials especially the rubber and cotton which were the lifeblood of the industry and this had to be transported from halfway around the world, to a landlocked town that had only limited rail transportation. Even the man, from which the company was named, Charles Goodyear, had died penniless 30 years earlier despite his discovery of vulcanization after a long and courageous search. The bicycle craze of the 1890s was booming. This meant that demand for bicycles was soaring. The horseless carriage, as some ventured to call the automobile, was a wide-open challenge for bicycles. AT this same time the depression of 1893 was beginning to fade bringing about a recovery. On August 29, 1898, Goodyear was incorporated with a capital stock of $100,000.
David E. Hill, who purchased $30,000 of stock, became the first president. But it was the dynamic and visionary founder, hard-driving Seiberling, who chose the name and determined the distinctive trademark. The winged-foot trademark, inspired by a newel-post statuette of Mercury in the Seiberling home, has been altered over the years. Yet, it remains an integral part of the Goodyear signature, a symbolic link with the company’s historic past. People like Seiberling, actually trying to liquidate family-owned property in 1898 when he ended up taking that once-in-a-lifetime chance to buy — at a bargain — the seven-acre tract that became Goodyear. People like George M. Stadelman, a man who avoided crowds and never made a speech, yet had a gift of integrity and foresight that guided Goodyear’s sales through a critical 20 years. People like Paul W. Litchfield, whose conviction and leadership helped inspire Goodyear’s development for nearly six decades.
With just 13 employees, Goodyear ‘s production began on November 21, 1898, with a product line of bicycle and carriage tires, horseshoe pads and — fitting the gamble Seiberling was making — poker chips. The first recorded payroll amounted to $217.86 based on the prevailing wage of 13 to 25 cents an hour for a 10-hour day. After the first full month of business, sales amounted to $8,246. Since the first bicycle tire in 1898, Goodyear pedalled its way toward becoming the world’s largest tire company, a title it earned in 1916 when it adopted the slogan “More people ride on Goodyear tires than on any other kind,” becoming the world’s largest rubber company1926.
Goodyear in the 20th century measures sales of nearly $20 billion, although it took 53 years before the company reached the first billion-dollar-year milestone. And it all began in a converted strawboard factory on the banks of the Little Cuyahoga River in East Akron, Ohio. Spanning the years, through all of those yesterdays, a legion of firsts and facts and figures appears that reflect the making of a company Goodyear is one of the world’s largest tire companies. It employs approximately 70,000 people and manufactures its products in 56 facilities in 21 countries around the world. Its two Innovation Centres in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry.
A close look at the strategies adopted by Goodyear over the past 2 to 5 years revealed some successes for the firm as they deployed some cost strategies, innovation and integrated marketing capabilities to leverage new product engines with outstanding marketing programmes to both trade and end users. They have done that with products such as Eagle GT, Assurance, Eagle F1 All season etc. The Capex of Good year in 2008 shows that there has been an increase in high value added (HVA) capacity. An increase of 50% by 2012 is the target set for Goodyear. Currently, the company has achieved 15% so far as at 2007). Strategy in 2008 Good year deployed the strategy below in 2008 Strengthened their balance sheet to capitalize on growth to improve their competitive position. Leveraged on favourable union contract Rebalanced their global footprint focussing on their supply chain. Goodyear as a result of competition has had to change its business model strategies employing the following: Leadership Product Leadership Increased distribution Brand building Lower cost strategy Cash is king and not customer They have had to change their strategies as they realise that competition is eating into their slice of the market share.
Emerging markets represent significant opportunity – China now has the largest commercial vehicle market; 2nd largest car market is Russian tire market which will soon surpass German market size. Brazil is sustaining 5% GDP growth driving volume and transition to HVA. The challenge that lies ahead of Good year is to leverage their expertise in market development to fully deliver in emerging markets. Good year will need a highly innovative business strategy to create a global competitive advantage so as to continue a high market share in the rubber industry.
A qualitative quasi -deductive paradigm interview was conducted to allow for further clarity, completeness of results so as to overcome elements of bias typical of quantitative methodological approaches in order to examine particular events (Miles and Huberman, 1994). In doing this the researcher arranged an interview with five of their managers from five of their branches to verify if managers should be actively involved in the business evaluation strategy of an organization to enhance global competitive advantage. The outcome of the interview was then analyzed using the grounded theory (Straus) Five interviews were conducted with Business Unit Leaders of Goodyear in order to obtain a strategic perspective on the knowledge management requirements of the enterprise (Corbin,1990). The researcher chose this method as it is widely employed offering help in the analysis of qualitative data. The purpose of grounded theory is to build theory that is faithful to and which illuminates the area under investigation allowing us to collect information on the knowledge requirements of the enterprise. Grounded Theory is more interested in theory building than theory testing, which makes it eminently suitable for areas of research that have had little attention and exploration (Yin, 1993). Grounded Theory specifically calls for the evaluation of “cases”. Some of the advantages of using Grounded Theory for research of this nature are as follows (Bajaj, 1998): Grounded Theory can be used where no general theory about the phenomenon (knowledge audit) exists. The purpose is to arrive at prescriptions and policy recommendations with the theory ‘likely to be intelligible to, and usable by, those in the situation being studied, and is often opened to comment and correction by them’ (Turner, 1981). Below are the questions and responses broken down in headings: Resulting from this process, a specification was drawn up describing the priority knowledge management requirements of Goodyear. This specification was then assessed against key components of the firm’s information technology infrastructure, and gap areas identified. On the basis of these gaps, an integrated solution was proposed, and the content to be delivered by this solution was defined. The functional requirements, architecture and operation of an integrated solution were discussed.
6 of the interviewees mentioned branding with increasing levels from 25% in 1970`s to 60% in 1990`s. With 9 mentioning the management of knowledge leading to innovation in types of tires which also saw rising levels of 32% in 1970`s to 80% in 1990`s while the remaining 5 indicated that the success has been due to information technology increasing from 18% to 68%. It can be deduced from the above that branding, knowledge management and information technology has contributed to the success of Goodyear and rightly so as these three in additions to other factors are mentioned in the success stories of some organizations. According to Ambler (1997), a successful brand provides an organization with profits and the potential to gain future profits, thereby creating an asset that has value. Knowledge on the other hand is an advantage competitively. It is well harnessed if it is linked with information technology. This is because information technology enhances the collection, mining and making sense out of data/knowledge to achieve a competitive advantage. Knowledge is very important for innovation regardless of how it is collected, analyzed and distributed. According to Hargadon and Sutton(2000) in their description of a ‘knowledge brokering cycle’ – good ideas are captured through scanning, exploration for new possibilities, these ideas are kept alive through their distribution, old ideas are brought back to life a new uses are found for them, and eventually these ideas are validated for its commercial use or potential.
Ohmae (1982) and Porter (1985) suggested that the survival of a business is impossible without a competitive strategy and that the actual strategy must be unique to the organization. It is against the backdrop that the 20 managers interviewed who for reasons of choice decided to be anonymous in the declaration of findings of this research. All the managers interviewed affirmed that they must be involved in crafting strategy (ies) indicating 100% support of this assertion. In support of Mintzberg (1994), they suggested that the following will be achieved if managers did the implementation. Manage stability- Managers must be implementing strategies of the organization and not planning them. Managers can detect discontinuity-Managers involved in implementation will be able to detect discontinuity from strategies set even though environments do not change regularly. Even the smallest of change effects not detected earlier can pose significant damages in the long term. Reconciling change and continuity-crafting strategy requires a natural reflection of the future, present and past. Too much focus on change can be damaging.
Environmental scanning- ideas come from a plethora of sources and are often triggered off by external changes in the environment. No organization is exempt from the need to innovate. SWOT analysis-a deliberate move into defining our strengths and weaknesses as an organization vis-A -vis our opportunities and threats is another business evaluation model to be used. With comparison to PESTEL, 5 FORCES, and ANSOFF MATRIX, SWOT analysis appeared as the most preferred and employed model for business analysis 13 of these interviewees representing 65% supported the use of SWOT analysis, but 4 of them mentioned 5 FORCES indicating 25%, while as the remaining 2 (10%) said PESTEL with Ansoff matrix no a preferred choice. It is not strange that respondents mentioned the SWOT, 5Forces and PESTEL as models to be employed for strategic evaluation. The SWOT serves as an introspection of Goodyear mirrored against the opportunities and threats in the external environment of the firm. It is the SWOT that feeds into the 5 Force as Goodyear can know its strengths in ‘upping’ standards for new entrants coming in to the tire and rubber industry, or its strengths to combat switching of clients to competitive brands such as Pirelli, Bridgestone firestone etc.
Leadership is responsible for creating an organization’s vision together with the right climate for creativity. This right climate will spark off creativity that will help achieve vision. It is only when the right climate is created that creativity and innovation will become a reality in Goodyear. So in answering the question, all in the organization must be responsible for innovation but the right leadership put in place will help complete the process for innovation in Goodyear. Gathering of information from different sources was aimed primarily at identifying the knowledge that the correspondents strongly perceive as things being of increasing value to the company and its performance. In order to institute the knowledge or strategy management requirement of the company, two forms of data gathered were under taken: Twenty of the top senior-most managers were interviewed in the various branches of Goodyear in order to obtain their perspective about the business evaluation strategy requirements considered to be highly innovative and effective in creating an advantage for them globally. Fifty five representatives of the various business divisions responded to questionnaire in order to understanding the operational requirement or strategy of each entity. Resulting from this process, a specification was drawn up describing the priority (rating) of the strategies (knowledge requirement) of the firm. This specification was then assessed against key components of the firm’s infrastructure and gap areas identified. On the basis of these gaps, solution was proposed. Once the interview was completed, a pattern and area of divergence were identified amongst the respondents. This was achieved by transferring portions of individual transcripts from senior managers interviewed into a shared spreadsheet under specific headings as identified during the process of analysis. Once this was done, areas of commonality were found.
The interview with senior managers provided sufficient indicator of importance of knowledge management in the market place. Many businesses spend all their time and effort to create competitive advantage through either cost-cutting, quality-enhancement, speed of delivery or continuous expansion of market reach. However, according to the senior managers, one of the most effective weapons every business can deploy in the competitive market place is to create an info-centric organization. It is their objective to make it a standard practice for everyone in the firm to be on the look-out for important information that can benefit the company. In order to realize any significant benefit from implementing the info-centric plan, leadership must ensure that at general or strategic meetings, reserve the loudest applause for the person with the biggest scoop of information provided for improvement. They should create a contest that offers attractive rewards for the person with the best idea to raise sales by say 25% in the coming year. An info-centric firm will be customer-centered and will therefore look at the customer first for the critical information needed to improve. Talk to the client regularly both informally and also through questionnaire and surveys. The client is the North-Star of the firm’s compass and everything ultimately focuses on pleasing and satisfying the client.
Commitment to continuous process improvement is extremely positive. Senior managers believed that the business must never get satisfied with their status or progress in the critical areas of their operation. They recognize that in a fast-changing world, rapid improvement is required to remain competitive. For the plan to materialize, they therefore will consistently acquire and apply relevant information to improve upon their business processes. It is common practice for them to have focus groups or quality circles with the main purpose of achieving specific reductions in lead time, cost, queues, client’s complaints, etc. the firm should continuously seek to achieve improvements in the various points on the value chain. They should focus on suppliers, raw materials, marketing and sales, order processing, production operations, finance and administration. Once the feedback from the responses to the questionnaires by the employees had been analyzed, it became obvious that there were content needs that were common across all the divisions. The specific content required by employees is identified below. The knowledge levels (strategy) are grouped into four main “subjects” as follows: Knowledge about leadership and capabilities expressed across the firm Knowledge about marketing approach of the firm across the industry. Knowledge about speed and pricing conditions among competitors in the industry Knowledge about the business opportunities within the company with regards to contact relationship management. Based on the above mentioned key knowledge areas, the respondents were asked to identify and rate specific content within each of the above context, according to its importance in terms of enabling them to add value to their performance and also enhance their competitive advantage in the industry.
For competitive advantage to be sustained it will be necessary for staff of Good year to be prepared both in attitudes and abilities so that they can meet the demands of customers in due time. Competitive advantage can come from better products in this case tires, customer perceptions, costs, competencies, assets, attitudes and relationships etc. A key issue is ensuring that it is sustained. It will sad on the part of Goodyear if staff lack the necessary competitive attitude in order to create growth and opportunities for the company. From the findings of the study, it can be deduced that managers should continue to show active participation in the business evaluation strategy of the organization to enhance a global competitive advantage. Three areas to focus on are Technology, Branding and Knowledge management leading to innovation.Technology, especially IT in product and process innovation, is emerging as a powerful facilitator of market innovation in both personal and business markets. For example, in rubber industry many firms now see flexibility of core product features as a major competitive weapon. A company’s ability to offer features such as flexible prices depends on whether its computer systems have been designed so that they can be quickly adapted to serve new market segments. In the rubber industry, application of new technology provides new entrants with the opportunity of rethinking the entire value proposition offered to customers. While the offer provided to customers by old-established companies is often standardized, new entrants can use advanced computing technology to provide more accurately targeted offers.
They can do so themselves or in conjunction with partners. A recent trend is towards knowledge management”, whereby firms work together in networks to create electronic packages of value for clients. It is new technology which provides market champions with the means for redefining markets on an economically viable basis. Importantly, skilful application of IT has reduced the advantages of scale and market share and so has diminished the cost advantages of large old-established firms. The Internet provides particularly exciting opportunities; especially for new entrant challengers, because these are not burdened by traditional forms of distribution such as retail branch premises. It is likely that nontraditional competitors with a mastery of IT, who are intent on building superior networks, will continue to make serious inroads into other tire markets. Specific customer segments identified by market champions are provided with access points at which relevant offers are negotiated. It is advanced technology which allows customers to be served simultaneously in two main modes the relationship mode, and the transaction mode. In the relationship mode an integrated profile of a customer’s financial needs is acted on over time; in the transaction mode supply at the lowest possible price is the aim. In times of fast changing markets and fast changing technology, businesses which want to safeguard their future must innovate. If they want to be proactive and develop further by organic means they must engage not just in occasional bursts of innovation, but in continuous change. Three main types of innovation can be pursued for this purpose.
First, market innovation – improving the mix of markets and how these are served. Second, product Innovation – improving the mix of offers. Third, process innovation – improving the mix of internal operations. In order to achieve and maintain competitive success in today’s turbulent marketplace, top management must spend at least as much time thinking about customers’ needs and how these might be met innovatively as thinking about internal operations. The assertion “experience is becoming irrelevant and even dangerous” is probably a deliberate exaggeration. But, to compete effectively in the future, a business needs to focus beyond the markets it serves presently and to concern itself with market innovation and the “total imaginable market”. Aggressive suppliers from other industries are adopting this wider approach. Not to be surprised by new competitors, incumbent suppliers in all industries need to concern themselves with market innovation. All businesses need to understand the changing needs of their customers. They must develop accurately targeted offers quickly and cost-effectively. Market innovation can help guide this quest by combining product line management with market opportunity analysis. When market innovation is bold and imaginative it provides not just a means for developing new business, but a revolutionary means for safeguarding existing business. The following conclusions are also drawn from the analysis and discussion of data collected in Chapter Four of the study: Goodyear is currently offering passenger tires, vehicle tires, commercial vehicle tires, RV tires and aviation tires. The departments represented in the survey results are finance, marketing, factory hands, research centers, focus groups. Focus groups representing customers claimed they were satisfied with the services provided by the company.
Majority of customers patronised RV, passenger vehicle, commercial vehicle with none for ATV and aviation tires. Goodyear had in place two research centers where ideas were approved and processed. Staff attendance to strategic sessions where strategies were formulated are as follows: 80% of the staff representing 16 staff had attended strategic sessions. Among the 80% who stated they had attended strategic session , 75% believed that a good strategy could go a long way to create a global competitive advantage. The rest of the 25% were however indifferent. 75% of those interviewed believed that an innovative strategy can create competitive advantage . However, 65% representing 13 of the staff stated that the procedures and requirements for innovation were complicated making reference to innovation as a preserve of the research center and not the entire organization.7 staff representing 35% however stated that the processes were less cumbersome and favourable to them. 55% representing 31 unit leaders/branch managers stated that the current innovation strategy is favorable . 45% of the respondents representing 9 respondents stated that the strategy is not favourable since it is very difficult to get staff workers to participate in the idea generation process of Goodyear. Finally, some analysts have referred to market champions as “innovative entrepreneurs” (Ghoshal and Bartlett, 1988). However, it is one thing to spot potential market opportunities, but quite another to make money from these. Potentially, there are large numbers of market opportunities. A business cannot win in all the markets open to it. Skilful market champions fight for the development of markets which their business can supply and dominate in some way. Effective market championing involves spotting positions in which the business can build and retain competitive strength. There is no point in choosing an innovation strategy which the business lacks the means to pursue over time. Skilful market innovation helps to focus the competitive strategy of a business. Customer analysis, competitor analysis and supply competence analysis are its essential ingredients. Skilful market champions appreciate the specific ways in which different customers buy. They know that some customers will have a preference for certain types of offers, while other customers will have quite different preferences. This means that the same core product can – and indeed, should – be offered quite differently to different market segments, if the aim is to meet buyers’ preferences as closely as possible.
From the above discussions of the data gathered and analyzed, the following recommendations are made from the conclusions drawn: Goodyear should implement a centralized approach in all its 55 branches Standard procedures should not be imposed on branches. This means that there will be an avoidance of mistakes on limits of innovative solutions and awarding moves which should not be missed. Understand the economic consequences of knowledge management practices in the enterprise Understand how knowledge management practices in the enterprise compare to those in competing enterprises Understand the role of knowledge management function in building enterprise capability for the future. The company should make it compulsory for every staff to suggest an idea that will help Goodyear introduce new processes or products that will keep them ahead of competition. This could be done by setting up an ideas portal which could be accessed by all in all branches. Good year should also intensify its environmental education programme, to educate both its customers and potential customers about effective management of the environment. The company should also collaborate with NGOs, Charities to organize alternative ways of disposing rubber so that customers will desist from pulverizing rubber which can be of severe damage to the environment.
The company should also make sure that every idea is carefully scrutinized and any approval given should be based on the innovation strategy for Goodyear. The idea should meet all requirements and procedures for approval. The company should also strive to increase its client base by making the public especially car manufacturers, distributors in the various markets in and around its area of operation aware of its products so as to increase its market share. The Headquarters should not set strict orders for all branches as the former will influence a branches ability to bring its resources into alignment with the changing environment. This could stifle innovation leading to de motivation in staff. The company should look again at the changing trend of managing knowledge more as these changes if not monitored could lead to some losses in the market share of God year by Pirelli, Continental AG etc. The company should also improve upon its social development programme so that it improves its image in its areas of operations. The company should demonstrate the willingness to suffer some loss of control, give more ownership to the branch managers in different country markets and link rewards to market performance but tie together more closely personal and corporate strategies. Management should allow their leadership styles to evolve in accordance with the changes in the workplace as the leadership style adopted at any point in time could impact on the linkages that the former has in encouraging innovation. There should be a regular strategic gathering of all senior managers from the 55 branches to review the company’s evaluation strategies. The use of webcasting could be an ideal way to saving costs deploying the power of technology. The regular review of the strategies could help Goodyear adopt newer and modern strategies thus staying ahead of competition. Strategies should be examined on its merits of whether it is acceptable to Goodyear’s stakeholders, suitable for the company and feasible to achieve.
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