The problem that Michelin Fleet Solutions (MFS) face is more of an organizational than any other. A thorough restructuring is required for this new venture. The problem resides within them than the outside world as the same tire sales persons are reporting to the MFS director.
Michelin Fleet Solutions was a good idea sought by the management after seeing the market dynamics which proved to be very favorable for such a business. Michelin was the leader in its business, but offered the product at a very expensive rate. The service market had shown good prospects in Europe but MFS could not reap them efficiently.
The offer that MFS makes is that if the tire bought from Michelin wears out relating a certain key performance indicator, then it would be repaired in just as new for lesser costs. Which means that they would not need to buy a new one, instead for a considerably lower price it can get it repaired which would be just like a new tire. It is a good offer that the company made for its customers and is more likely to attract competitor’s customers increasing the market share of Michelin.
Coordination played a vital role in this case as firstly the message was not effectively passed to the employees due to untrained staff. Secondly, the departments within the company lacked coordination among themselves as most didn’t know what to do as they were previously associated with the tire business and now the service business did not easily go down their throat. It looked for them as an extra burden and they were not happy with it.
Various departments were worried as like that of replacement and of new tires because the MFS would affect their sales negatively with the tire long life. MFS could not get their point clear to them that if the idea of MFS worked then their sales will improve further, thus, increasing the market share.
The company faced no competition, however, others competitors from the tire business like Bridgestone and Goodyear had their eyes on this, as MFS was coming in the market. MFS had the first mover competitive advantage and only if they could capitalize it. The competitor will see this opportunity and will enter the market, therefore; decisions needed to be taken quickly.
The new idea “4-lives program” (which was an old one but never got implemented) gave 2-5 year extra life to the tire. Only if the Key Performance Indicators (KPI) were kept in accordance with the standard, the tire had to be in a certain situation to be serviced and if not it added costs to the company. Therefore, the KPI needed to be followed on to the distributers or the service providers so they can go accordingly. The problem was that it was never forwarded, therefore, putting burden on the financials.
Outsourcing was another problem as distributers did not conform to the contractual settings and thus, affecting the company in two ways; firstly, affecting the image as of non-standard service and secondly, increasing the costs per tire as they may be totally out of order and they are treating them. They needed training as well in order to conform to the guidelines set by the company for the treatment of the tires.
After a thorough analysis there are a number of alternatives that can improve the standing of MFS. Firstly; the training of the marketing staff (sales staff), which would be the most important step as they are the people responsible for generating most of the revenues. If they are trained well, then the message would be received by the customers as the company wants it to. The company should also use other sources of getting the information to the customer such as; print or electronic media.
Secondly; the delivery staff which does the actual work should also be trained because they are in direct contact with the customer and conformity to the contractual obligations should be made compulsory. These mostly comprise of distributers who also provide the services job, as it was outsourced by the company. If the job is accomplished according to the standards, then the company would benefit in both image and costs.
In both of the alternatives one disadvantage is the cost factor that would be taken to train the respective staff. The process would become slow, but it would be certain of achieving its goals………………
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