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  3. Summary • Strategic mix • Product • Communication • International Strategy • International Markets • Management Strategy • Organisation • Funders • Financial aspects • Michelin’s stock share • Financial analysis & Key figures • Financial strategy

  4. Profile of Michelin Group • The leader of the world tire market with 19,6% of the market • International Staff based in Europe, the United States and Asia • Commercial Facilities in over 170 countries • Production sites close to markets, 74 production sites in 18 countries with an annual output of 190 million tires and 22 million maps and guide • A passion of racing, over 120 World driver and constructor championship titles since 1973

  5. Products • Tires and systems for every market : • Passengers cars and light trucks • Trucks • Agricultural vehicules • Earthmover and handling equipment • Subway trains • Aircraft • 2-wheel • Ground-chassis liaison and pressure surveillance systems

  6. Products • Integrated distribution and services networks • Euromaster in Europe • Tire Centers LLC in the United States • Mobility assistance services • Roads Maps • Accommodation/restaurant and travel guides • Michelin Euro assist • Michelin Fleet Solutions in Europe • Michelin Business Solutions in the United States • Michelin Lifestyle • Tire Advisor • ViaMichelin

  7. Innovations Michelin’s innovations have marked the development of the transport industry… • 1891 : The removal Tires It is with the bicycle that one will see appearing the first tire. A new age in land transportation had begun. • 1937 : The Metallic After years of research Michelin succeeds in developing a tire that can combine both rubber and metal. The "Metalic" is the first tire for heavy vehicles. It is a milestone in the development of the future radial tire. • 1946 : The radial revolution Avant-garde achitecture makes its mark on the industry The radial architecture consists in a carcass ply formed by textile arcs running from one bead to the other. The thickness of the crown and sidewall plies is different so that the work of each part of the tire is more specialized.

  8. Innovations • 1992 : Green X Energy saving technology. The "low rolling resistance" technology developed by Michelin cuts fuel consumption while maintaining all essential tire performance characteristics. Rolling resistance is on average 20% lower than in equivalent standard tires. • 1998 : Pax System With the Pax System, Michelin has once again succeeded in extending tire performance limits, just as it did with both the radial and the green tire. The new technology involves an inseparable assembly. Much more than a tire, it is a complete system. It is comprised of a tire with an entirely new architecture, a wheel, an internal support ring and a run-flat detector.

  9. Innovations And to prepare your travel, to find a hotel, a restaurant… • 1900 : The first edition of Michelin Red Guide • 1904 : The international guides came out covering Europe, North Africa,Egypt and other countries. • 1912 : Michelin's campaigns in favor of numbering and signposting French roads leads to the adoption of the first"crossroads markers". This is a first for France. • 1926 : Création of the first tourist Guide and the Good Food Star Classification for the provinces • 2000 : Bibendum elected « Best Worlwide logo of the century »

  10. Communication The communication of Michelin is organized around two axes: • The institutional communication : www. .com and objects communication (derivated products) • The communication on the Michelin products and services. www. .fr www. .com

  11. International Production in 4 steps • It all started in France • 1906 : Beginning of global expansion • 1925 : Producing it’s own raw material • From then

  12. International Strategy • Strategy choices • Growth strategy • The Multi-Brand strategy • Uniroyal example in North America

  13. International Markets • Here below are some graphs and figures about international markets Europe + North America = 2/3 of the total market The customers :

  14. International Markets • All the main markets are regularly growing Notoriety and quality: Michelin is No. 1

  15. Tires Makers market shares • In Europe In North America

  16. Asian Markets Japan still represents half of the Asian market and ¾ with the export sales Michelin must pay attention to chinese car makers : The growth forecast are massive (x3 !!!)

  17. MANAGEMENT STRATEGY 1906 :The beginings of global expansion Michelin very quickly began to establish itself industrially not far from the major car-makingin Europe and North America. In parrallel with its vigorous promotion of car transport, the company pay attention to a recent invention with a brilliant future : aviation. The first factory outside of France is built in Turin in 1906. Between 1955 and 1969 : To cope with the constant growth in tire market demand, Michelin undertook considerable industrial investissement over these 15 years. This major industrial thrust was necessitated by the astonishing growth of its commercial outlets :Michelin companies were now selling their products in over 140 countries. Since 1891 : New areas of activity : The compagnies in the Michelin Group moved into new poles of economic activity; they continued their development in South America, North America, Asia and Europe and strengthened their research capabilities by purchasing a Cray supercomputer in 1988. Innovation began to accelerate in all tire categories.

  18. ORGANISATION In order to apprehend its markets with precision and to work out the best strategy to satisfy and anticipate the needs for its customers, Michelin obtained an organization in lines produced. Each one dedicated to a perimeter of activity and having average marketing, development, production and commercialization. The lines produced are based on 11 services groups. At the regional level, the coherence and the synergy of the group are ensured within structures established in 5 geographical areas. The center of Technology is in load of research and dévelopement.Two structures of distribution of the products (Euromaster and Tire Centers) come to supplement this organization.

  19. ORGANISATION The direction is made up of 2 managers:Edouard Michelin and René Zingraff, surrounded of the executif Council (10 persons in charge for various units). These persons in charge are gathered within the College for the directors cash 31 members. Within the Michelin group, more than 126 000 people work with the service of the customer, on all the continents.

  20. Financials aspects The Financial Statements of the Compagnie Générale des Etablissements Michelin (CGEM) for the 2002 fiscal year show a profit of 332.4 million euros. During the General Shareholders’ Meeting, the company will propose to pay a dividend of 0.93 euro per share, net, before fiscal credit on May 20, 2003. The dividend paid for the 2001 fiscal year was 0.85 euro per share. This 9% increase compared to 5% the previous year, shows the Group’s confidence in its ability to further improve its performance in an uncertain economic situation.

  21. Michelin shares are traded on the Paris Stock Exchange. Trend for the Michelin Share and the CAC 40 Index

  22. 2002 Financial analysis • Michelin strengthens its “all terrain” capability: • Strong performance improvement in still challenging markets in 2002 • Financial robustness strengthened • In 2003, while the geopolitical environment renders inappropriate the disclosure of any income target, Michelin intends to further improve its performance.

  23. Key figures • Volumes sold: +2.8% • Operating income: +18% • Net income: +96% • Free cash-flow: +107% • Net debt: - 1 billion

  24. Financial Strategy • In a gloomy economic environment, Michelin improves its financial performance: positive FCF, operating margin is up. Net debt and working capital are down. Gearing ratio improves.

  25. Financial Strategy

  26. PORTER’s matrix New competitors : Brand distributors Customers : Car manufacturers & Car centers Self supplied of rubber production Substitute products : Train & boats

  27. SWOT matrix Weaknesses Strengths Opportunities Threats

  28. BCG matrix